#336 How To Lose A Few Billion Dollars: Samuel Insull

0:00 Do you remember Sam Insul? The billionaire utility tycoon from Chicago? Do you remember how his empire collapsed? And how he lost two or three billion dollars. how the newspapers at the time

0:11 Called it the biggest business failure in the history of the world. You may remember the battle that the United States government had To extradite insul from Greece. But chances are You don't remember.

0:22 That insul had been in the electric business As long as there had been an electric business. That he had started as Thomas Edison's private secretary in eighteen eighty one. That he

0:33 More than any other man was responsible for founding the business. A centralized electric supply. That he organized The Edison General Electric Company, now known as GE. And that he worked out

0:46 A model of nationwide product distribution that virtually all other American industry copied. That he practiced and popularized Mass production and selling at the lowest possible cost.

0:59 Long before these ideas were attributed to to Henry Ford. That he was the first to successfully apply on a large scale. The concepts of the load and diversity factors are On which all utility rates are based today.

1:13 That he brought into effect. The natural monopoly principle of utility companies. That he helped create the open end mortgage that's used in financing expansion of many businesses outside of the electric industry today. That he was the father of effective government regulation of public utilities and the creator of rural electrification. That he pioneered successful welfare programs years before most of business, labor, or government

1:35 took any significant steps in that direction, that he helped develop the idea and techniques of modern public relations. And he was the crucial link between P T Barnum and Madison Avenue. And that he devised methods of marketing securities that made possible gigantic Modern corporations.

1:52 Next to Thomas Edison, Sam Insul is the name That you should remember as the most important And perhaps the most notorious person In the electricity business. That was an excerpt from the book I'm gonna talk to you about today, which is Insul, the rise and fall of a billionaire utility tycoon.

2:09 And it was written by Forrest McDonald. This is a very old book. It was first published in nineteen sixty-two. And what the book uh lays out is that insul was not just a company builder, but he's actually an industry builder. So you could think of What Rockefeller was to oil. What Henry Ford was to the automobile.

2:27 uh what JP Morgan was to finance and what Carnegie was to steal. Sam Insul. was to electricity. But unlike Rockefeller, Ford, Morgan and Carnegie Insul made. Terrible, drastic mistakes.

2:39 at the end of his career and he dies. Broke. And so for you and I, this is going to be one of the scariest books. Uh that we could talk about because The idea that you can be wildly successful.

2:50 Maybe the most successful businessman in the nineteen twenties. Have an amazing fifty three year career and still be over leverage and risk everything and die. with no money is terr absolutely terrifying. So I'm going to start with the relationship

3:04 That he had with his father. Insul is born and raised in England. And what is most interesting is that he had all of his dad's positive traits. And none of the negative ones. So his dad was described as imaginative. Clever.

3:18 And enthusiastic what his dad did not have. Was energy, practical sense, and fortitude. Sam's father was idealistic, impractical, and intellectual. That is not how you would describe Sam. Sam was very smart, but he was pragmatic, very much like Thomas Edison. And another way Sam differs from his dad is

3:36 There's a line in the book where it says his dad was not interested in earning a living. Uh, Sam was the exact opposite. He loved operating companies, he was A workaholic. It says when he was

3:46 His standard work day was sixteen hours a day from the very beginning of his career and all the way up until when he was in his seventies, he was still working sixteen hours a day. Yeah, he loved operating companies and he was as we'll see, he's very, very gifted. at operating companies. And after finishing the book and then rereading all my highlights before I sat down to talk to you. I think is m maybe his mo most important trait. Is that he had

4:07 The the author says that he had near demonic energy. I'm gonna read this paragraph to you. This is incredible. And this starts out when he was really young and he had incredible energy and work ethic up until At the very end. He was small, but his physical endurance was boundless. And his energy was inexhaustible. He had a peculiar metabolic makeup.

4:25 He awoke early. Abruptly. Completely. Bursting with energy. Think about that. He's opens his eye and he jumps out of bed. Uh, with a burning desire to achieve mission success is the way I put that.

4:37 So he'd be bursting with energy, yet he gained momentum as the day wore on and he would work long into the night. Later on, much later on as a m as a matter of fact. Uh as an adult, he learned to relax, but relaxation was a learned thing. to be resorted resorted to only when he v was v on the verge of physical Collapse.

4:56 This sounds like Thomas Edison, too. Uh relaxation was an act of will. His body always told him to go and go and go. Because he came from the lower middle class. And sometimes he was c very close to poverty. Uh, from his dad's what I would call laziness.

5:11 Uh He had to s he started working really early. Starts having to support the family. I think he's he's working uh more than full time when he's fourteen. And so there's a description of him. uh early on, but this is some again characteristics that he maintains. Drus entire life. The way I would think about

5:26 When you analyze and read about Sam, is he had a very gifted and deductive mind. So it says Sam's most obvious attributes. was a capacity for racing through large quantities of reading material. Effortlessly perceiving its important assumptions and generalizations. And thoroughly assimilating its salient details.

5:45 The way his mind worked, it said he reasoned from particulars. to generalizations about all the information that he was able to consume. He learned to see to the heart of relations between things. And to grasp the underlying principle so clearly That he could perceive ways to shift them around.

6:02 And make them work even better. As we'll see when he goes to America. To become the private secretary. of Thomas Edison. I think he's twenty one at the time. Essentially his job was hey, we have this gift inventor now systematize all the businesses around him. And so that's exactly what Insul did.

6:17 And he's gonna wind up working in that industry for the next fifty three years. But when he's a young boy, he's reading They call them they would call them self help books, in fact. Uh one of the these authors. Uh this guy named Samuel Smiles.

6:30 that Insul was reading about actually wrote a series of inspirational books that we'd call self-help today. In fact, one of them So it's it's like a combination of self help. and like uh biographies. So what he's like reading biographies of lives of great engineers, but one of the actual titles that he read and had a a made a huge effection on it on his life. was a book called Self Help. And these books in their day sold a ton of copies. So it was like they they inspired thousands of young

6:53 uh Englishmen. With this idea that if you exercise lifelong learning and self discipline and honesty and thrift and prudence Then fortune would follow. And so he would take some of these lines, he would have these maxims that he'd repeat. And he would repeat them throughout his life, ever since he was a young man. So I just want to list a couple of the ones that that stood out to me.

7:13 So the first one is idle hands are the devil's workshop. Number two, time is money. Number three, things are simply done or not done. Number four, one reveres one's family. Number five, only that which is useful is good. That reminds me of

7:29 One of my favorite Thomas Edison quotes he says that sale is proof of utility. Edison was famous for only wanting to invent things. that had actually a commercial application and its whole point is like you know it's useful because people will buy it. Sale is proof of utility. So again, only that which is useful is good.

7:45 And six, survival of the fittest. And so Sam's first job, he's fourteen years old, he gets a job. uh that this firm of auctioneers and he's just an office boy. basically having to do whatever it is they need done, just like Carnegie before him and Rockefeller, we see this over and over again. He'll just start acquiring all these skills that make him more valuable to the company, even at a young age. So Rockefeller would learn bookkeeping, Carnegie We learn how to be a telegraph operator.

8:09 Insul's version of that, he's he's becomes a stenographer. And just like Carnegie, who would stay up late into the night learning uh how to be a telegraph operator, Insul was doing the exact same thing. It says he worked at a long into the night every night until he had become an expert stenographer. The other night I was having dinner with two founder friends and we had we end up having this very interesting Discussion on Samsung. And actually went it it inspired me the next morning to go and reread all my highlights.

8:32 of from Sam Dell's autobiography. And there was a description of something Sam was doing early in his career. It might have been in one of his first projects where he was building on that student housing uh in Michigan, if I'm not mistaken. And there's a note I left myself that I had forgotten. And it says, uh, do the best you can with the opportunity in front of you. Opportunity handled well. Leads to more opportunity. Opportunity handled well leads to more opportunity. So

8:55 Becomes a stenographer. Realises hey this is a very valuable skill set. These older, more successful businessmen. Are in need of it. So I will not just learn it, but I will st spend nights and weekends becoming the very best

9:07 uh sonographer I can be. He's like Fifteen. When he's doing this, right? And as a result His boss at this auction auctioneer company.

9:16 Actually knows the editor. Of the founder and editor of the magazine Vanity Fair. And he needs help. His name is Thomas G. Bowles, so He actually needed a person to come at night. And be his stenographer. And so because Sam

9:31 did the best he possibly could with the opportunity that was in front of him. and opportunity handled well leads to more opportunity. He winds up being a very close and important nighttime employee for this well connected and powerful Founder and editor of Vanity Fair.

9:46 And so if you think about this. Sam Insul at this point is a PSD, which you and I have talked about over and over again. Poor, smart, and determined. He doesn't he's not connected to He doesn't know high finance, high business. He doesn't know uh the most powerful people in the country. But

10:00 Thomas Bowles does. And now he is r at the right hand of Thomas Bowles. So it says Bowles was intimate with many important politicians and able to gain entrance almost anywhere through his personal and family connections. Insul would go to Bull's home. Four nights a week to take dictation.

10:14 From eight until midnight. He would s he would This is something that Insul was f was famous for. Remember they said he had demonic energy? He said sleep was unimportant. So he would arise at four the following morning. Right. So keep in mind, he's working all day. He's got a full time job.

10:28 At the auctioneer. All right. Then he goes and he works for Bowls. Uh from Eight until midnight.

10:35 Then he sleeps for four hours, wakes up at four in the morning, transcribes all the notes that he took for bulls and then delivers that to the printers on his way to his day job. Now this is very important because you and I talk about this relationships run the world. And so the way that Sam Insul is going to build a relationship And the really probably the only path.

10:55 To build a relationship with extremely influential and powerful people that can help you, right? Is service first. He's not like, Hey Gimme gimme. Let me go Pick your brain. No, it's like I'm going to work excessively hard for you.

11:06 I'm going to provide a valuable service for you first. And as a result, Thomas Bowles teaches him about The highest end of business and politics and finance. And more important maybe maybe more importantly, or just as importantly, maybe so we think about this. Sam starts to become very comfortable around in the presence of very powerful people.

11:25 And so now Sam starts to see, oh, this is a path to advancement. What does he do? He just is like okay, well I'm just gonna keep you know, being an office boy and keeping a sonographer. He's like, No, I need to t to acquire more skills. So then he starts to teach himself bookkeeping. Uh he went up.

11:39 buying a bunch of like essentially almost like a course is where you could think about this. that would teach him bookkeeping and accounting. And then he starts keeping an imaginary set of double entry books to practice. Then he's reading every spare minute of the day and it's not like this guy has a lot of uh spare minutes, right? He devour classic works and political Economy, history, literature, and biography. He had the ability to commit

11:59 to memory everything he read. He also had the ability to focus, which is again is I think is e becoming even more and more rare. in the world the modern world that you and I live in today. Says he developed. The ability to concentrate on a single single subject.

12:12 And to completely shut out everything else no matter how pressing. He learned to systemize. And render efficient whatever he dealt with. And so that is a hint to what is probably his greatest skill in operating businesses. People would bring him in from other companies and just like he could come into your company and just build systems to make uh every single company he was in involved in.

12:32 He found ways to systematize it to make it more efficient. Without that skill, you and I would not be talking about him today. This book would not have been written on because essentially what like his main achievement is that he developed, right, the business model for the modern electric industry. And he wind up he does this by turning a luxury product into a necessity.

12:49 His like flagship accomplishment in life. Him more than any other History made electricity. Universally cheap and abundant.

12:58 What blows your mind is when you go and read these books, especially in like this Robert Barron era. It's they they essentially had a Very similar idea, even if they didn't put into words. It's like how do we turn a luxury product into a necessity? Okay, so I wanna fast forward A few years insult is nineteen and he still has his habit of reading and and using the best

13:17 Like absorbing as much useful information as possible, he winds up coming across this Article that talks about a thirty one year old American inventor named Thomas Edison. And salmon soul is blown away. And after putting that article down, he goes and finds every single possible thing he can find on Thomas Edison. And he reads it all.

13:34 In Doing so. Edison becomes Insul's hero. And a nineteen year old Sam Insel does not know he's about to get fired. For no fault of his own.

13:44 He doesn't know this is the going to be Probably the best thing that ever happened to him. So his boss that he's been working there for what, four four and a half years. Gives you. In solar review, he's like, You're incredible.

13:55 Uh you're diligent. And unfortunately we have to fire you and just like, Well, what's going on? Their most important customer that was spending hundreds of thousands of dollars a year, and that's in the eighteen seventies, eighteen eighties. wants his son to enter the business. So he's got essentially Intel gets fired because the the company he's working for

14:13 The most important customer, the son needs a job. And that job that he gets was formerly done by Sam Insul. And as you can imagine, he's crushed, he's humiliated. He's somewhat depressed. But he doesn't stay depressed for long. He's like, Okay, I gotta find another job. I gotta support myself.

14:29 And he winds up getting a job. His new employer is this guy Called Colonel George. Why did I say this is probably the most important thing that ever happens to him? Because Colonel George, it was the European representative of Thomas Edison. This is one of Thomas Edison's companies. This is not has nothing to do

14:45 with electricity yet. This is when he was making innovations in the early telephone industry. So Colonel George hires a young Sam Insul. He's like, Wait a minute, this guy can do everything. Not only can he be my stenographer, he can be my bookkeeper.

14:59 And so what he does is he allows Sam Insul to read Every single thing inside the company about all these contracts and all the businesses they're doing for Edison. This is Rockefeller did the same thing, if you remember on the multiple Rockefeller episodes I've done. He becomes like the the bookkeeper at this like produce commission house. Yeah, it's called Hewitt and Tuttle. And what he does is he's like, Hey, I'm just gonna read through the history the complete

15:22 uh history of the company. She goes back and reads all the books and everything about that. Uh, they say by the time Rockefeller was done, he knew more about the company than the founders did. You're seeing something very similar. in Sam Insul's life. And so here's a description of that. He says he went through systematically Uh, every scrap of paper concerning Edison that he could find in the office.

15:39 And he committed most of it to memory. When Edison's chief engineer Can't his name his name's Edward Johnson. When Edison's chief engineer came from America to London to supervise the installation of the first European telephone exchange, he found that Sam Insul. Who again is nineteen at the time. He found that Sam Insul knew more about Edison's business affairs in Europe.

15:58 Then Colonel George did. And so if you think about what's happening is This is really incredible. Step one. Learn about Edison. Step two, build a relationship by serving Edison's chief engineer. So

16:11 By this point, Edison's already insul's hero, right? So he's like, Okay, I'm gonna tie my fate He thinks. Edison is so special, he's like we need to tie our feet together. How am I gonna get a job? How can I work? How can I meet? Thomas Edison. And so this is what he says. He's like, Well, to do I must do two things. I have to learn everything I could about the technical aspects of Edison's businesses.

16:29 And I need to build a relationship with Johnson. And so how does he do that? Same way. does acts of service. He doesn't ask for something. He's like, These people are really important. I how can I what can I do to help them?

16:40 So he spends every single minute with Johnson's engineers as they're building this uh European telephone exchange in London, right? And he's like, He asked them a bunch of questions. But he'll do anything. He's like hey Can I carry your pliers? Can I help you string wires?

16:53 Every single aspect of the business, and this is something that Sam does for his entire life. He probably knew more I mean he's the one that vertically integrated the electricity industry, so he definitely did. He knew just he knew every single aspect of the business. It's just his modus operandi and whatever he's Whatever he does, and you see it in nineteen. In this telephone business.

17:10 And so after a few months of this, Johnson becomes familiar with him, right? He's like, Okay, I know who this guy is, he's obviously smart. I'll spend some time with them. But he o was also complaining this is funny. Uh Edward Johnson. Remember Edison's chief engineer.

17:22 complain loudly about the laziness of Englishmen who refuse to work on weekends. And so Sam hears him say this. He's like, hey, he volunteers. He's like, I will come to your home on the weekend and I will work without pay. And so w of course. Uh Johnson accepts. He's like, Okay, cool. And

17:39 At this uh soon, Sam Insul is doing all of the secretarial work. For Edison's chief engineer. And Johnson realizes, hey, this kid is gifted. I need to find a job for him. It says says

17:51 Johnson was soon convinced uh conceived of the ideal function for Sam Insul. Edison was always doggedly s systematic and practical regarding His inventions. But he conducted

18:03 His personal and business affairs in a slip shod manner. Johnson believed that Sam Insul was just the sort of fellow Edison ought to have around him is a private secretary. and general business partner. And so by this point we're, you know, nineteen, what are we, nineteen, twenty years.

18:21 into Sam Insul's life. It's very obvious. The book has just started. And there's a great line that Lyndon Johnson has said over and over again. That are in the biographies of Robert Carrow. I also talked about on episode three oh five that it did on Robert Caro and LBJ. It's do everything and you will win. That's one of my favorite maxims I've ever heard. Do everything and you will win.

18:40 If you heard My episode on the mind of Napoleon. Right, that book is so hard to find. It's episode three oh two. It is obvious. When you study Napoleon, when you study the L B J, when you study a lot of the people you and I talk about.

18:50 If they didn't say it out of their mouth. Their actions are showing that do everything. And you will win. Most people will do will not do everything. And so W we see he he he wants to go to America.

19:03 He wants to work for Thomas Edison. There's no opening yet. Johnson's trying to figure out how can I get him in. And during this window of uncertainty, this time period, right? It's not like staying so.

19:13 I I think you already know by now, this guy's not gonna sit down and do anything. He wakes up with demonic energy. So this is what he did. During this wait, he was neither idle. Nor waiting. He re read every one of Edison's European contracts.

19:27 And then took it upon himself to write weekly letters to Johnson summarizing The fluctuations in the telephone situation and outlining Edison's shifting interest in connection with it. These letters proved to be the best selling points Johnson could have. in recommending insul. And when Edison's private secretary suddenly resigned,

19:45 Insul was on his way to New York. Now this is incredible. Everybody around insules like you are insane because he's like, All right, I'm out of here, guys. I'm going I'm jumping on a boat and I'm going to America. And they're like What do you do what's your job? He's like, I don't know. There's no job description.

20:00 What are you getting paid? I don't know. I didn't ask. And so you have all of his family and friends like you're nuts. You can't go, you don't even know what your job is, you don't know what you're gonna get paid, and you're gonna get on a boat and go and cross the Atlantic. And this description of Sam Insel is one of my favorite ones. In the entire book, doubting yourself is very, very dangerous, something

20:18 That's come up a bunch. To have been swayed by such such objections would have been completely out of character for him. One of his most deep rooted traits absolutely unable to imagine the possibility of his own failure.

20:32 He entirely lacked the sense of caution of those who doubt themselves. Caution. Like relaxation. Was unnatural to him. Insul gets on the boat.

20:43 Right. He gets on the boat. He lands. He gets in New York, you know, just after a few week journey. He gets in New York. It's night time. The sun had just set. Johnson meets him there, he's like, Hey, we have no time to wait. Like we're pushing. Right, we're pushing the pace here.

20:56 W he takes him straight. to Whomas Edison's at because At this point in Edison's career He had just completed

21:03 his successful experiments on electric lighting and so this is when he closes temporarily closes Menlo Park. moves to Manhattan, he's getting financing from JP Morgan and he's trying to build out This is direct current, right? So this is the very early days. I mean it is the earliest days of the electrical lighting industry. And again, going back to this idea that there's a something that happens over and over again. Can you turn a luxury product into a necessity?

21:24 And you do that by making it universally cheap and affordable for everybody else. They knew what they were trying to do. Because insul, Johnson And Edison said things like this we will make electric lights so cheap.

21:37 That only the rich will be able to burn candles. So Johnson brings insult Edison. And they look at each other like, Oh my God, this guy's so young And at the time This is Intel was twenty one.

21:48 Right, but he looked a little younger. And Edison is just thirty four years old. This is you know, I'm obsessed with this because I talk about this all the time. Cause if you Google Google image search. Thomas Edison. You're gonna see the old like the the the white haired Edison, you know?

22:02 And this idea it's like Oh, we get insight and there's a bunch of uh like super old books. uh mentioned in this book. And one of them is like it talks about like the very early days, like when Edison was in his twenties. And it was written by a guy that was like one of his helpers. So I just ordered it. It should be here in like two or three weeks. It's like very hard to find.

22:18 But I I'm obsessed with this idea. It's like, Okay, yeah, Edison at the very end of his career, that's fascinating. He's the he's the you know, the the elder statesman. Uh, he's going on these road trips with Henry Ford. He's probably the one you know he is one of the most famous people on the planet. This is Edison before that. This is thirty four year old Edison still trying to Figure things out. Now that did not mean

22:39 That he w he was already, you know. Pretty famous. And he had a bunch of inventions under his belt. And so There's this great paragraph I wanna read to you from the book. Because it really like allays some of the fear.

22:50 That Insults family family and friends. I was like, You're crazy. Don't go on the boat. Like, why are you doing this? You don't know where the job is, you don't know what you're getting paid. He's like, Yeah, but I get to work with Thomas Edison. And so here was Edison's resume at thirty four. Here was the man who had invented the stock ticker. The multiplex telegraph. The mimeograph machine.

23:08 The phonograph and the transmitter That made the telephone practical. The man who said he had invented and was about to give the world electric lighting. Electric power and electric transportation. The man who would invent in the next decade.

23:21 The motion picture And discover the principles that made possible radio and television. Енсо, о кор. If you're a tw young twenty one year old Or really any age, and you have the ability to sit to literally be the private secretary.

23:36 To go everywhere to to be his linchpin to the world. You of course you do it. This was a a a genius idea. uh in risk that turned out to not not be that very risky. that a young Sam insult did. So the first thing Edison's doing is like, Hey I'm having he's like fighting with JP Morgan and a bunch of his financiers. They won't give him the money he wants.

23:55 To extend uh his electric convention. So he's like I don't you know, I don't care. I'm going to I have to figure out how to do this myself. Take a look at all my resources, young Sam Insul. Because remember, he had been writing there essentially what he's gonna do, he's gonna sell off a bunch of like his patents and and licenses. For his telephone business.

24:11 I say, can you go through this? And tell me what I should do. Now, how would Thomas Edison and Johnson know that he should do that? Well, remember that Intel was writing these weekly letters. I said I'm reading every single thing. I'm reading all the contracts, all your licenses. I know the lay of the land over here. This is what you should do. So the first job he does, he says, Hey, listen.

24:26 Edison tells me goes, I got seventy eight thousand dollars. I need to finance my new undertakings. And I'm ready to sell everything that I own. And the most valuable thing that Edison owned at this point That he believed was his European telephone securities.

24:39 So the first job is insul has to go through All of this paperwork again. And say okay, where's the best play place that we can sell the dozens of and they have all these different securities, different kind of securities. We have, you know, dozens of these.

24:52 Where do we go? How do we do this and how much do you think we can make from them? Remember, this job is starting the first night that he gets there. Let's say the sun sets. This is in February, so what time would the sun set? Maybe we have five?

25:04 In the afternoon, something like that. He works all the way through the night. By four in the morning, he had gone through every single one of these transactions and had a plan. on how to distribute them and sell them for the highest possible possible price. Edison's like, Okay, this is the guy. So he goes, Hey, what what do you want to make? And Insul's like, I don't care, just pay me whatever.

25:24 And again, think about that. It's like pay me whatever, I'm going to prove my worth to you. And then it's not like Edison had Edison's not Uh organized. So if someone asked if someone was to go back in time and ask Sam, Hey Uh what were you doing for Edison? Uh whatever was necessary is the what is the the the answer. Whatever is necessary.

25:43 And so there's just one paragraph I want to read to you. That describes this. He systematized Edison's office without attempting To systematize Edison's own activities. Edison whole Edison's whole method of work. Insul later recalled.

25:56 Would upset the system of any бізнес офіс. He cared not. For the hours of the day or the days of the week. And it's so talk about D it's not like he he he had a set schedule, right? He would work on whatever he he thought was most important or most interesting at that time.

26:12 And so sometimes it's He would talk to all all the people on the staff for two or three hours about An invention or a thought that he had Uh the night before. Or he'd spend

26:21 Two or three days in a row. trying to say, Hey, I just got I just created something. Now I'm gonna spend two or three days Just running experiment after experiment with as little sleep as possible. To try to push this idea into some kind of practical application as soon as possible. And then once he figured like he saw the problem, he would hand it off to somebody else to turn it into a product. But there was no like organization or rhyme or reason.

26:42 to Uh like the way Edison spent his time. And there's a great description of this a few pages later where it says Systematic as Edison was so first of all says Edison possessed a colossal ego, course. Uh, but systematic as he was when pursuing his own ends, he had an almost pathological hostility.

26:58 To any form of sister. System Order or discipline imposed from without. So the mandate is clear. build a business around me, systematize that business, do not try to systemize the way I spend my time.

27:11 I do not want input. From others on how I'm doing that. And so I mentioned earlier I really think of insul and A lot of the like Carnegie and and Rockefeller and Uh and for it.

27:21 Th they're definitely company builders, but even more bigger than that, they're industry builders. And so Intel was the same way. Uh, because remember Edison's gonna give up on electricity.

27:31 Uh, Insul stays stays with it for his entire life. He works with Well, let me just read this line to you. says uh That was to be Insel's job for nearly twelve years with Edison and forty years thereafter to make Edison's system.

27:44 Work. And so why do I say it's really industry building'cause Listen to what they all the things they have to invent. Uh that you just wouldn't if you're not

27:53 Building an industry. the the inventions, the electricity inventions could not be immediately used with existing devices. So to make his electric light useable Edison. And insul.

28:04 And then to create the manufacturing industry to make them. an engineering organization to install them and a central station industry To buy them.

28:16 Hundreds of minor parts of a complete electrical system had yet to be devised. They had to develop practical switches, sockets, cables, junction boxes, wires, insulators, fusers, meters. Filaments Voltage regulators. And scores of other devices.

28:31 This is company building on hard mode because it is industry building. So the great thing about insult, especially from Thomas Edison's viewpoint, is like you could just drop them in anywhere. It's like, hey, there's a problem over here, just go fix it, and then you can just know that he's gonna fix it. Without Uh having to think about it. So This is where he drops him into the company that eventually becomes uh general electric.

28:51 Now What's fascinating here is the value transfer that happens Between Addison and insul. And the value is not in money.

29:00 Uh Insul's not making a bunch of money. He's twenty five years old at this point. But he is building a world class network and then Like priceless experience. So he's gonna take this network and experience that he builds. Or that he he picks up working for Edison and then apply it to his own business.

29:15 A few years later. But I do want to s point out because Yeah. It's kinda crazy is like how much time I had spent uh with this book. So first of all the book is not easy to read.

29:27 And it's not'cause it's bad writing. It's because there's so much it's so high like information dense. And there's so much going on'cause uh Insul's gonna wind up having hundreds and hundreds of companies and it's very complex. Uh structures. So

29:40 Let's say the book is three hundred and fifty pages. It's not. It's probably seven hundred pages because I had to reread Uh huh. Several pages multiple times. But What is happening is while I'm reading the book.

29:52 I forget. Like the intro is hey this guy The subtitles The Rise and Fall of a Billionaire Utility Tycoon. He is so gifted. Uh and has such great ideas. that I had to remind myself over and over again while I'm reading this book.

30:06 This has A Terrible. Unhappy. disastrous ending and you just cannot believe and that's why I think it it's really gonna resonate my brain.

30:16 And why I want to talk to you about it. Is because It doesn't matter how many great decisions you make throughout your fifty year career. If you over leverage yourself, you can ruin your entire life work and you can die.

30:28 With no money. and no like all your accomplishments wiped out. So I'm gonna get to that in a minute because You see his fatal flaw. that barring, excessive barring and excessive leverage just became this deep rooted habit with them. And you'll see that'cause he's gonna mention in a minute. So this is all the stuff that he's accumulating.

30:44 just in the short four years. So now I fast forward to four years in the story, it's only twenty five. But he's met virtually all important finger figures. In the business world. He had accumulated a bunch of experiences, which would ultimately prove very useful in the business that he's gonna set up and run for the next 40 years after that. that he knew everybody who was anybody in the electric business.

31:05 He had picked up first hand knowledge of urban politics on a depth and a scale. That was rare. He had learned enough about manufacturing, selling, promoting, administration, and organizing. And he had also learned the meaning of credit and what it could do, barrowing became a deep rooted habit with him.

31:21 He would say never pay cash. When you could give a note. And so I just want to pull up a couple of things. that came to my mind. They all come from Charlie Mungan and Warren Buffett. Uh when I got to this part because

31:33 He own a bunch of different companies. One of them, let me just give you the idea of like high how highly leverage he is. After the Great Depression, this guy's gonna wind up barring like another two hundred million dollars. Again, he had gone through a bunch of This is the very difficult part about this is like He'd gone through a bunch of different financial panics. He didn't n he didn't really believe this was his fatal one of his fatal flaws, I should say. He didn't believe the Great Depression was anything different. He's like, Oh, this is like I've been through a bunch of financial panics. Everything will be finally be back in like a couple of months, a couple of years. And so

32:00 He he literally called to the The White House with a bunch of other a bunch of other like prominent American businessmen and Hoover's like, Oh, this is, you know, just do conduct business as usual. Now all this falls. The weird thing is when you read about insulin in in the biographer too, and I I watched a couple of videos on him as well. They all like Oh, it wasn't his fault, it was the Great Depression. It's like no no no, it's always

32:20 It's always the founder's fault. It doesn't mean he was I don't think he committed fraud. Uh he he winds up uh I I'm not even gonna talk about that. Uh it's later on in the book though.

32:30 he winds up going to trial, he he beats every single trial. From what I c my reading of this, it's very hard to tell. I don't believe that he did this. I just thought he made a bunch of terrible, terrible decis decisions and had way, way, way too much leverage. So I'm getting ahead of myself. Let me just read this because this idea came up to me. It's like oh never pay cash when you can give a note. And so what I did is I went to founders notes and I searched leverage.

32:51 And specifically this note that I had in my mind on the dangers of leverage. And the fact that this is coming from Warren Buffett's shareholder letter. And he says, like most people won't heed history's warning. So I just want to read, because this is essentially exactly what happens, very similar to what happens to Sam Insul. Warren Buffett says, unquestionably, some people have become very rich through the use of borrowed money. However, that's also been a way to get very poor, which is exactly what happened to Insul. When leverage works, it magnifies your gains. Your spouse thinks you're clever and your neighbors get envious, but leverage is addictive.

33:22 He was addicted to it from a very early age. And maybe you had to. I'm not like again, I'm not sitting here, oh, I wouldn't have done this if I was him. I would never have that. Like Highly likely that Sam Insel's smarter and more talented and more accomplished than I am. And so it'd be very arrogant to think that if I was presenting in the same situation that I wouldn't have made his same decisions. The point is like we need we're learning from history because hit learn as Munger said, learning from history is a form of leverage.

33:44 It's to know this shit. So oh, I don't do this if I'm ever presented with that opportunity, right? So I want to be very clear. Uh, when leverage works, it magnifies your gains, your spouse thinks you're clever, and your neighbors get envious, but leverage is addictive. It seems that he was very addicted at an early age. Maybe he had to be, I don't know.

33:58 Once having profited from its wonders, very few people retreat to a more conservative practices. Uh and to repeat As we all learned in the third grade and some relearned in two thousand eight. Any series of positive numbers, however impressive the numbers may be, evaporates when multiplied by a single zero. History tells us that leverage

34:17 all too often produces zeros. even when it is employed by very smart people. It's impossible to read this book and not think that Sam Insole was very smart. Right. That is the danger. So that is why it's going to latch onto your and I'd brain. It's like oh my god. This happened to him.

34:30 I need to avoid this. Leverage, of course, can be lethal to businesses. Companies with large debts often assume that these obligations can be refinanced as they mature. this something happened with insul. He was guaranteed. Don't worry, you have unlimited credit. And then the bank said, Oh You don't. And

34:44 Renner to rap. That assumption is usually valid. Occasionally though, either because of company specific problems or a worldwide shortage of credit, which is what he goes through and so goes through. Maturities must actually be met by payment. For that only cash will do the job. And

34:58 Of Warren Buffett shoulder there. Two quotes that I always think about. on the dangers of too much leverage. Charlie Munger said smart men go broke three ways. Liquor, ladies and leverage.

35:10 Uh Sam and Soul was married to the same woman his whole life. He never drank a drop of alcohol in his entire life. He did not grow bro go broke bet because of ladies or liquor. He went broke because of leverage. Warren Buffett. Whenever a bright and rich person that is what Samuel was, he was a bright and rich person. Warren Buffett, whenever a bright and rich person goes broke, it's usually because of leverage.

35:31 And so this is a very important six year s in Sam Musil's life because He is now essentially saying, Hey, s Thomas Sendison's like you you have to run the company. And Edison is He he's not

35:44 interested in like he he's off on other things now. Right? He got it started and then goes off and does something else. And he does it's not like he's gonna give you a list of like this is what you should do. This is what he tell This is what he tells him. Edison says, Do it big, Sammy.

35:59 Make it either a big success or a big failure. And so he takes over company. Uh the stock is around twenty five dollars. uh a share. They have two hundred employees. Six years later, the stock will be a hundred and fifty dollars a share and he has six thousand.

36:12 People. And so not only does he have to be a manufacturing of all this electrical equipment But he also has to become this is where he has to learn how to be a financier. And he says that almost times a magician. because of this rapid growth that the company is is having

36:25 They're perpetually short on cash. And so that is why they're always having to They have no operating capital, so they're constantly having to borrow, borrow. A lot of it's debt. uh actually way more of its debt than than was equity, which was was uh interesting as well. They actually had a lot hard time to get people to invest in the the company.

36:44 And so this is a description of this problem he's having. He spent almost half his time going from bank to bank to borrow and to beg Money on short term notes. And juggling his available cash and credit. With extreme dexterity in order to make ends meet.

36:56 This experience was frantic. Nerve wracking and disgusting to him. Now these companies are going to be Essentially taken over and recapitalized by uh a combination of Henry Villard. And J P Morgan.

37:08 There's more about the details of that in the book. Um, but I really the reason I wanna bring this up is'cause I really want to hammer home how insul operated,'cause I think these principles, again, minus the leverage, are are very valuable to this day. Fortified for the first time with working capital, INSO reorganized and integrated the manufacturing operations, rendering them vastly more efficient. Insul followed a set of basic principles that he would follow throughout his career. Remember, he is Somewhere between twenty five and thirty one years old, uh that they're describing him here.

37:36 The first was to expand. Expand by raising new capital whenever possible. Expand by plowing profits back into the business. Expand by borrowing every nickel he could lay his hands on. The next was to treat his workers generously and human Generusly and humanely. So I need to pause there. Did this constant expansion?

37:53 Remember, he's trying to turn. A luxury product. Into Something that is universally cheap. and abundant and he knew from the very get go. Like he scale is the key to that. I have to be I have to build

38:04 In some cases the biggest uh electricity generating plants in the world. And obviously to do that he's gonna need a ton of of cash. Uh the next was to treat his workers generously and humanely, not out of sentimentality, but for the sound economic reason that discontent breeds stoppages. And stoppages are inefficient.

38:21 Irrational and costly. Another principle was to spread fixed costs. This is related to his desire to expand and scale, okay? Another was to spread fixed costs as thinly as possible by diversifying operations in order to keep the plant busy at all times. Keep that idea in your mind for later on, this idea of like okay, how do we spread fixed costs

38:41 cost as thinly as possible. He's gonna vertically integrate. This is w it's like It'll make a lot of sense. Like why does he keep buying electric park companies and then these electric traction, um, and like these electric electric essentially like trolley or train companies. It'll make more sense in a little bit. But really the the main point is because he wants us spread as his spread as fixed cost as simply as possible. by diversifying operations in order to keep the plants busy at all time. And then another one is sell products as cheaply as possible.

39:05 before he had any proof, it was his belief That lower prices would bring greater volumes, which would then lower unit costs of production and thus yield greater profits. Okay, so everything I just described to you he was doing in New York. But at the very beginning of the book it mentions, hey It's that billionaire utility tycoon from Chicago. How did he get to Chicago and why did he go?

39:26 So because he's one of the most prominent people in the early electricity industry. People ask him for advice. Uh he gets a letter from the Chicago Edison Company. And they're looking for a president.

39:37 And so they're like, Hey, do you know anybody that'd be good for the job? Like who's the best person we could hire? And I don't think they wrote this letter thinking that they would get him. Because at the time he's running General Electric, that's a fifty million dollar Company? Which is insane.

39:52 And he's making thirty six thousand a year just in salary and with, you know, obviously other compensation in there. And Chicago Edison Company is one fiftieth the size. It's not even a million dollar company. And in the letter they're trying to find somebody that would work for twelve thousand dollars a year. So A third of the salary. Uh one fiftieth.

40:11 Of Like the market cap value. But they are offering something That is enticing. And whoever they hire gets to run things the way that they want it to run. Like they're looking for an operator, right? These are just investors and and board uh and members of the board.

40:26 He's gonna take the job. Then when he's leaving He said, Let me actually get there. I'll skip ahead real quick. Uh he gives us toast and he says that one day he's gonna make the the Chicago Edison bigger than General Electric. And everybody else except him laughed.

40:40 He was not joking. He did he believed. That he was going to do that. And so it says the job opportunity Uh if he took it. would be bound only by the limits of his own ability and ambition. I don't think he believed he had any

40:54 uh limits on his ability and his ambition. And he wasn't gonna actually S offer himself up for the job. He's actually having a conversation with his mom. And

41:04 And he's like, I would take the job, but you know, they're asking me to f the best To f help them find the best. Like possible fit. And his Mom's like, what are you talking about? Like you should do that. She goes.

41:14 Uh they asked him in his capacity with edis as uh with the GE. To recommend the best available men. Did they not? Well Then he was the but was he not the best available man?

41:24 And so he should sit right down and he obviously believed that he was the best available man, right? And so his mom's like, You should sit right down. And write them a letter saying so. And so he sends the letter back and they're like, Oh Oh yeah. Oh.

41:36 I didn't even know this was a possibility. Yes, please take the job. And so he accepts the job and then he says, Hey, I want you to do I have one Uh like demand. Uh, you need to issue two hundred and fifty thousand dollars in new stock. Remember the stock

41:50 The market cap is eight hundred and eighty five thousand at the point. He takes a job. He says you need to issue two hundred fifty thousand dollars or more in stock. And you need to sell it to me. uh to buy the stock and so borrow the entire sum. from Marshall Field, who's this older successful Entrepreneur.

42:05 who in his old age figure that the best possible place to invest money was in bright young men. So Yeah, we still see the exact same thing today. You have you know, wildly successful people. Jeff Bezos is still making investments. Right. And what's he doing? He's like The best possible place to invest.

42:20 is probably bright young entrepreneurs. And so we see the same exact thing. Uh same thing here, where Marshall Field's like, Yeah, I'll loan you the money because this is a great investment for me. And so this is the point in which Insul goes and this is what he's going to This is his starting point for the next forty years. This is he's going to turn this company and other companies into this giant Holding company, conglomerate, whatever you want to call it.

42:40 And uh it's gonna be phenomenally successful, worth you know, a couple of billion dollars right before it collapses. And so he comes to Chicago And he's like, Hey, we're gonna invert the way other people think about electricity. We're gonna try to make electricity cheaper, not Uh more expensive. And to do that, I need the largest possible base of customers. And so we have to aim for a monopoly. Now, you and I know today, like utility companies are

43:02 Sound like I can shop around. It's like oh I well, my electricity's they're they're government mandated like uh monopolies, right? That was Insul's idea.

43:10 The world we're living in was influenced by this guy that we're you and I are talking about. So it says insul was thinking differently from the others in one vital respect. To most others, monopoly was desirable because it would enable them to charge higher prices and thus make more money. To insul, it was imperative. Because it would enable him to build on a broader base of customers. All of his thinking was therefore inverted. Their thinking was based on the premise that electricity should be considered a luxury product.

43:33 And that should be sold at the highest possible price. Insel's thinking was based on the premise that electricity should be considered for everybody, even the smallest consumer. And that for able to fulfill that goal. It should be sold at the lowest possible price. And it is for that reason that Insel set out To do

43:48 to to build a monopoly before it was mandated by the government. And you see this at the very beginning because the very first meeting he has with the executive committee for this new company, Chicago Edison, that he's taking over, he's like, All right. Uh we need to buy our second largest competitor. And so they help raise the money and they do that. Uh, three months later he goes, Okay, now we're gonna buy our biggest competitor.

44:06 And those first two moves. Now, this is why Key I know I've repeated this a lot, why he you can really think of him as like the one way to think about it was like the Rockefeller Of The electric utility industry? Because Rockefeller believed that too. He's like, Listen, you if you're gonna you're competing with a bunch of people, let's say you have twenty competitors.

44:23 Don't go for number seventeen and eighteen. Go for the top. Try to knock out the first guy. In this case he um insul knocked out the second guy and then the first guy. 'Cause it's like if you can achieve that, then the rest of'em fall follow. And so

44:35 After that With the combination of Chicago Edison and his two largest competitors. Uh he is running at the time. uh the largest electric power station in the world, and he would continue to do so for the next forty years. And another thing that he had

44:48 in common. This is why like I always say that the the the most important lesson from history entrepreneurship is a the importance of focus. It's not like this guy was like, Hey, I know More than anybody else in the world. about the electric industry. Let me go diversify into something else. Like why would you do that? He understood the potential of his industry in a way that others did not.

45:05 You can say the same thing for Rockefeller and Oil. Like Rockefeller is the the it just pops up off this page over and over again. I think of Edwin Lan. When you know, he created the the his the in no the like his invention created his industry which then he had a monopoly on for for forty plus years.

45:20 He's like no one else in the world because we're patent protected. Can make Instant photography and you want me to go make a copier and you want me to go make a printer? It's just many examples where he's talking to people inside his company's like, No, we're only gonna do things that other people cannot do. And that is just one of the main main benefits

45:35 And so What does he do? One of his earliest decisions is like he's buying these electric uh these other uh electric generating companies. But then he goes and he buys Fort Wayne and Chicago Arc like companies. Why is he doing that? This is his first step in vertical integration because these people are manufacturing electrical equipment

45:52 That uh the people generate these generating plants need. He's like, Oh, I'm gonna buy this company because all the other smaller companies of him have to go to these companies. To buy stuff they need. And listen to this. This is gonna be Rockefeller too. Th this policy quickly paid off, caught between bad times and difficulty even in buying replacement light bulbs. Six of the small central stations in Chicago

46:12 gave up in eighteen ninety four. This is the cle this is Cleveland Massacre's win in like a couple of months. I think Rockfellow swallowed up what like seventeen or twenty five of his competitors, smaller competitors or something. This is something it's very similar to happening here in Chicago. in eighteen ninety four and eighteen ninety five. These all these six smaller stations sold out to Chicago Edison, so he knocked off

46:33 Two Then you knocked off. Oh, he knocked up the second biggest competitor. Then he knocked off the first. Now that that company combined with those three companies, right? He's the biggest player in town. Now he's found found way to get Six other smaller people.

46:45 To sell to him. So they sell they sell to Inso when he won, Insul was always generous to the losers, paying them f more for their plants than they were worth. Rockefeller did the same thing. This is incredible. Uh this was not uh this was not be him being benevolent, but good business. This is a great line.

47:02 Intel recognized that while money may not buy friends. It will keep many a man from becoming an enemy. And people while they're watching him do this, like this is dangerous, you shouldn't do this, this is a a little boutique. You know, this is a tiny little business. What are you doing? Yeah, optimists.

47:17 At his time. Right? They're like okay. How many possible customers can you have in a s uh city of Chicago? The the most optimistic in the early uh electric uh lighting electricity industry, right? They guess that

47:30 Maybe, maybe one day you might be able to get twenty five thousand customers, Sam. twenty five thousand customers. Like you're spending a lot of money for only twenty five thousand customers. You know what Sam thought that number was? He's like, Well, how many people live in Chicago?

47:44 And they're like a million people. He's like, Okay. So I'm gonna get a million people. Think about that. His guess for how big his market is, and he actually shot underneath that, he's gonna get way more than a million people.

47:55 Think he wants to uh Think his company's j wind up. Combined. producing all the electricity for like one eighth of the entire country's population. But think about this. Everybody around him d again, this is why I I tied it in with focus and he imports of like

48:09 You if you understand the potential of your industry In a way that others do not. Why the hell are you diversifying into something else? Just keep going down that curve, right? Because Th other people that thought they understood maybe somewhat as much as he did.

48:20 They were forty times He their most optimistic projections We're forty times smaller. Right. Then insults.

48:29 And insults were even what Maybe ten, I don't even know how many people were in the country at the time. And there's a hundred million people in the country. That means he was off on his own estimate.

48:40 By what, twelve, thirteen times? And so look what he achieves in his first six Years. Oh, and I didn't even mention this is he's doing this during a financial panic. So again. I think you can learn w the wrong lessons from your own experience because like I've been to a bunch of Friend Expanics, I survived them. And I even prospered on them. What's what how different can the Great Depression be? Ooh, yikes.

48:58 Could be very different actually. And so he uh half a dozen years, so he's got six years. Many of these are during some kinda uh like bad financial Depression, but not the Great Depression. uh his company was ten times as large as it had been

49:11 When you took it over. And during this period, so that's twenty four. consecutive quarters, he was able to pay a quarterly dividend of at least two percent. twenty four times in a row. And so he has a great understanding of what we would call public relations, even though there was no such term as public relations.

49:27 In his day. And this is what he realizes, he's like, Well, okay. The the bigger I get, the more scale I get. Uh, the cheaper I make remember, he's he's going for Monopoly, so he can make it cheaper. And as a result, his customers love it.

49:39 They w go from, you know, having to to burn uh, you know, kerosene or candles and now they have electric lights. And so He's a beloved person in his community. He's built a lot of relationships with A bunch of politicians

49:52 And he has a great Line about this. So he says more profound than his organizational ability was Insul's sense of public relations. To him, the moment of applause was the moment for action the moment of applause was the moment for action And so he's beloved and he goes, Hey

50:06 These should be government regulated monopolies. That was his idea. So he goes, he initiates And he brings to successful conclusion. the movement for utility regulation in United States. And he believes this is necessary because he believes that you have to expand, you have to spread all your c your fixed costs over the the largest customer bases possible.

50:25 This is the most effective way to do this. Some people have described this as regulatory capture. And so this push to for this like legalized monopoly It helps him expand, which obviously was what he his goal is. It's like I have to spread all my fixed costs over the largest customer base. Uh if I have a legalized monopoly.

50:39 that's going to the it's the best way, the best tool I have to extend extend my customer base. Now Here's the problem too, where this is uh This constant expansion is the way they thought about the the constant raising of debt. If you go back to what

50:54 Uh, Warren Buffett said earlier, companies with these large debts often assume that these obligations can be refinanced as they mature. That assumption is usually valid. Occasionally though, either because of company specific problems or worldwide shortage of credit, returning must actually be met by payment. And for that only cash will do the job when that happens to Insult, he doesn't have any of the cash, and so he loses everything. But the way they looked at it was, Hey, we to expand this new industry, we need we're gonna need vast quantities of debt capital.

51:18 And It says electric companies like modern governments borrow money That they that they cannot and do not attend to repay except by perpetually refinancing. They are borrowing money.

51:31 That they do not and cannot intend to replay Expect except. By perpetually refinancing. And so this constant need for more money. Uh, that's ever present'cause he this guy never stops expanding.

51:44 Uh, it actually leads to the invention. They credit him with the invention of the open ended mortgage. And That's W the I think the the main um like lesson here is that the way you position and frame things actually matters and it can actually get people to comply with your request. uh for something that they previously declined. And so he goes to the

52:03 to the board or the executive committee. Uh and he says, Hey, I need a hundred million dollars in bonds. This is eighteen ninety six. They're like are you Are you crazy? What do you think? Hundred million dollars in bonds.

52:14 And a year earlier, he had tried to get them to do six million dollars. So this is like again how fast this guy moves and like how his ambition is And his scale. Like think about that. Last year he goes to them, he's like, I need six six million dollars in bonds. They said no. comes back the next year he goes, Okay. And you said no on six million. But I need a hundred Mm a hundred million bonds.

52:33 And they tell him no again, of course. And so he went to talking to a friend of his who actually had a lot of experience in financing the early railroads in the United States. And then he had this idea. He goes, Hey Um You're gonna have a hard time convincing your your

52:45 You're bored. To to accept that. I have a way you can like reposition this. He says, Why don't you ask them for a mortgage with no limit? And he says a mortgage or no limit might seem much smaller and more conservative than one with a limit of a hundred million dollars. And you sound like that sounds crazy. How could that possibly work?

53:01 Insel proposed to them a mortgage of no limit and they accepted. Under this mortgage, insul would issue half a billion dollars. In bonds. Before He was through.

53:12 So you come and put a number on it, that hundred that hundred million scares the the crap out of'em. Then you said hey I essentially have like this open ended mortgage I'll draw from it, you know, little by little or whatever the case is. They accept it. And then over the long term he actually gets five times the amount that he actually want that they initially

53:26 uh did not approve. And this is where this is the interesting thing. He was ascribing to other people like when he's raising capital on the people inside of his company, like what is he doing? And he called it massing production. According to this book. They say he is the one that came up with the term

53:40 Mass production. Insul soon began describing what he was doing as massing production. Think about it as a massing production, right? A phrase that his publishes shortened to mass production long before historians Mistakenly ascribe that term to Henry Ford. massing production turned into mass production. Another Very fascinating idea.

54:02 Remember, he was acquisitive by nature, right? So he's buying all these companies. And what he realizes is like okay, well I'm buying them. Sometimes I'm I'm paying more than they're worth because uh money's a good way to avoid people being em enemies with me, right? I want people on my t on my side. think of a Rockefeller essentially built a a company full of founders, right? You just bought their company and then he's like, Hey, you guys are talented, come advise me.

54:22 And then you'll be rewarded with standard oil stock. Now, this is fascinating. So he he starts buying all these new properties. Like, Oh wait, I'm not only appro applying scale, I'm acquiring customers, I'm acquiring equipment. More important than that. I get talent. So he's like aqua hiring people back in the day, right? He would devise methods and he would detect talented people.

54:42 And if he thought they were talented, he would partner with them or buy their entire company. And so he said new properties were the most prolific producers of executives inside of the insul organization. That sounds a lot like Rockefeller. Another Rockefeller esque thing. Sell at the lowest price possible. Sell ridiculously low. Uh, he sold so low that no one could afford not to have electricity service. To win customers insult sold electricity at rates so low

55:06 They appalled Other Central station men. That's like Rockefeller trying to buy you out and you're saying no and then he just shows you your bo his books. He's like and you're like, Oh my God. This guy can make a profit at prices that would drive me out of business.

55:21 to win customers he sold electricity and rates so low that they appalled other Central Station men. Now he is building a public utility. So He's gonna need an advanced understanding of public relations. And he understood that you must craft the story and you must educate your customers. So there's three separate examples I think all go together. that talk about this advanced understanding of public relations and I think there's just a lot of good ideas.

55:42 In here. And so it says uh he displayed a An advanced concept of public relations. I care not, he said. How good U operate he's uh how able

55:52 Uh maybe the management of your property. So he's talking about to all these he's got I don't even know, hundred and fifty subsidiaries, it's This is where it gets so complicated and I think led to his downfall. was how complicated is organizational structure and how many different um uh entities were involved, or how good your engineer may be and how perfect your plants are. Unless you can conduct your business.

56:13 as to get the goodwill of the community in which you are working, you might as well just shut up shop and move away. He's talking about public relations. Convinced that the vulnerability of utilities Derived from a lack of popular understanding

56:26 Insul attempted to educate his customers. He began making public appearances at every opportunity. He was instructing employees in po in public relations. He established an advertising department. Which soon expanded. Into one of the first full fledged public relations departments in existence.

56:42 He published a magazine called Electric City. And and distributed Uh the magazine free of charge by the tens of thousands all over Chicago. But he said by far the most effective device insul had for winning the over the public was rate cuts. This is exactly what Henry Ford did later on his career when the model T was up running.

57:00 Up and running. He stopped he he he effectively was able to stop paying for any advertising because all he did was try to uh root out any inefficiency and w any waste. And just keep making His his automobile manufacturing plants more efficient?

57:13 Thus allowing him to drop the price of his car. And so every time you drop the price of the car, it would be picked up in the newspapers. And that made him beloved because I you know, this thing that used to cost six thousand dollars six thousand dollars and only be available for the rich, I can buy it for two hundred and fifty dollars. So again.

57:27 The most effective device that Insel had for winning over the public was rate cuts. The cuts were simply good economics, but they also created immense publicity, just like I described for Henry Ford.

57:38 uh immense publicity value. Who had ever heard of a public utility voluntary Voluntarily cutting its rates. He hits on that idea that you need to pay attention to public opinion. These are your customers. This is very important to you. The customers. Obviously he's he's heavily regulated, so also influences The customers are also voters.

57:54 For from Insul's position, the task ahead was thus One of swaying public opinion. And at a time when public relations and mass selling were in their infancy In this art, insul had few peers. And so they make the point later on the book. It's like listen, say there's fifty thousand people.

58:10 Who understand the necessity of the service that you provide, right? But there are a hundred million Americans that have not even thought of it. He says our task is to see that the figures are reversed. Right, so it's fifty thousand people that understand the importance of all the work that goes into what we're doing.

58:26 But there's a hundred million. Those hundred million those are potential customers. We need to reverse that. We need to make the people that understand and are customers of ours. The majority. And one way to do that is to

58:37 One, make your product as valuable as possible. Like as the value to cost ratio excessively high, right? But also tell them what goes into making and delivering the service that they enjoy. So He had later much later on the book. He has these two rules.

58:51 They they said it was a concise summary of like his principles of public relations. And this is now insul writing, right? He says practically everything that a public utility company does affects the relations between the company and its customers. And anything it does is therefore an item of public relations. The first objective in public relations work is to produce the best possible service at the lowest predictable rates. Why? Because that is of the greatest interest to the public.

59:18 And then once that's taken care of, that leads us to the second. The public is in no position to judge service and rates. When it knows nothing about the multitude of detain involved in furnishing the service. So Let me read this, finish reading this. Hence The second objective in the public utility industry's public relations work Right?

59:35 Is A public well informed On the tangible details. as well as the social and industrial significance of an i of the industry in all its ramification. What is he saying?

59:46 This is exactly what David Ogby said in the nineteen sixties. What Claude Hopkins said. In The early nineteen hundreds, nineteen tens, which is apparently Sam Insul had derived from his own experience. You need to tell your customers what goes into making your product.

1:00:00 It may be normal to you because it's your everyday thing. It is not normal to them. And if you explain and you educate your customers, they will find it fascinating. And as a result, they will it will make the service and the product that you you provide more valuable in their eyes. That is absolutely incredible that he understood that.

1:00:18 At the time in which he did. So This is the end result of his career before the collapse, right? By the time it was over, electric power would be so abundant and cheap in the United States That people who had never expected to use it. Found it as natural and as necessary as breathing. So there is going to be a ton.

1:00:37 of regulation. uh that is put into To law after the collapse. of his empire. Uh it there's a there's a there's something that takes place that I have to tell you that

1:00:48 Well shocking to me, might be shocking to you. Uh, every employee of Insults. uh companies were stock salesmen.

1:00:57 So What does that mean? Like the employee that would come and check your meter. would also like knock on your door and try to sell you stock in the company. This is crazy. Uh, he would see his personal personal fortune increase from around five million dollars in nineteen twenty seven to a hundred and fifty million in nineteen twenty nine.

1:01:15 And then tumble by mid nineteen thirty two. To zero and below. To a net indebtedness so large That as one banker put it, he was too broke to be bankrupt. With him.

1:01:29 Вендс оз. Of stockholders. Who shared his faith. in his own invulnerability. And so they set the context where I could see a lot of people that like since you say, Hey, you know, Insul was like

1:01:42 Uh this is a macro economic environment. The Great Depression is kind of out of his hands. Yeah, but it's your choice to take this. Like this is when I read this paragraph, it's gonna sound very familiar. Uh, like you know, we've gone through many times where like credit and money is essentially free. And that was happening in the late nineteen twenties. And so you have all these bankers, they come up to them. And they're

1:02:01 They they try to like essentially just fill like they're delusion him with Easy credit. And they really, in many cases, like beg him to accept it. For any purpose. And so one of the banks that's gonna wind up screwing them over later because they're like, Oh, the money's there, the money's there, we'll back you and then they wind up losing their ass, so they can't back him.

1:02:18 is Continental Bank and they would come up to him. And they're saying, Hey, just so you know, if you fellows ever want to borrow any more than the legal limit, all you have to do is organize a new corporation and we'll happy lend we'll we'll be happy to lend you Another twenty one million dollars. They said that at a party. I mean it's like please take twenty like set up another company doesn't even know matter if you know what you're gonna do with the money yet. Let me just let me wire let me wire you. Let me send you this twenty one thousand twenty one million, please.

1:02:42 Uh another banker, Mr. Insul, isn't there something you could use Or ten million dollars for anything? Anything, something? Just let us give you ten million dollars. And so at the same time this is happening.

1:02:52 There is a corporate rater. by the name of Cyrus Eaton. Who is starting in late nineteen twenty. Uh twenty seven. And for the next several years, he s begins buying up large blocks.

1:03:04 of stocks. in insules companies. And so he's got Three main companies. And this is where the story gets really, really, really confusing. Uh, somewhere between nineteen twenty and nineteen twenty nine, Insul realizes that he did not control enough stock in his operating companies to prevent a takeover.

1:03:19 And so he creates two investment companies through which he could control the utilities. And that may have been the case if it wasn't for the Great Depression, but those become over leverage. And as the prices go down, he keeps having to put up more and more collateral. Uh, we'll get there in one second. So I'm gonna give you like a brief overview. You have the great depression.

1:03:35 And again, like Without these act his actions. After the Great Depression, he his company's Could have survived. You know, it's not like you're gonna cut uh like you're gonna cut your electricity unless you absolutely are in complete dire s situations.

1:03:48 But it's what he does, is like how much money and debt he takes on after, like dur In the beg after and the beginning and through the Great Depression, this this is I don't have any words to describe this. I don't understand this. I don't understand how somebody so smart And so accomplish, and with so much experience.

1:04:05 Does this. So it says Then came the great crash in October. The first thing he did was go to the rescue of his employees who were caught with margin brokerage accounts by supplying him from his personal portfolio whatever additional collateral they needed. Ten days later, as if nothing had happened. Ten days after the the the crash in October, right? Black Friday.

1:04:23 Or Black Tuesday rather. Sorry, not Black Friday. Black Friday's the sales. Okay. So Black Tuesday. So it'd be October twenty ninth, nineteen twenty nine. Uh ten days later, as if nothing had happened he proceeded with the long planned opening.

1:04:35 of the palatial new civic opera house. He undertook a huge new venture. uh of a construction on a natural uh gas pipeline that he was running from Texas to Chicago. That is a project, that one project alone would cost eighty million dollars. Remember, this is eighty million dollars, nineteen twenty nine dollars, okay? What he did next would suggest that he was possessed of delusions of grandeur.

1:04:54 Supremely confident that this depression would be th neither longer nor more severe than those he had weathered in the past. He expanded far more than turned out to be prudent. He returned to debt financing. And he bought Eaton's holdings. So that's that corporate reader.

1:05:08 Insels company spent two hundred milyen dollars. On capital investment during nineteen thirty. Most of that is debt. So Two hundred million times that by twenty to get a rough estimate of today's dollars. And he did that in one year. I don't understand this.

1:05:26 I I kept every page I'm like, why is he doing this? Why is he doing this? No so I'm leaving myself. And then I get to this point. It's like this is a fifty year successful career destroyed. This is terrifying to me. And so people around him were shocked That he was willing to take on more than two hundred million dollars of new debt in the wake of the great crash. This reminded me of If you listen to the episode that I did on Ten Turner.

1:05:47 It's episode three twenty seven. He winds up getting having to get bailed out. uh by John Malone. And John Malone says something in that book that's that I think applies to uh Sam and Soul. John Malone describing Ted Turner says

1:06:01 He took his leverage too high, and the structure of the leverage was a problem. So he spends that two hundred million debt, right? Then he's gotta buy out this corporate rater. They agreed a sixty three million dollar transaction. goes back to the bet to the bank, right? And then they pull. Four times in the month of May and June in nineteen thirty.

1:06:17 Uh, the the president of Continental Bank Uh said That they'd be behind him all the way, four times and so refused. Then he came back a fifth and Ensel said yes. He says the only way to finance this purchase was through bank loans secured by the stocks from his two holding companies.

1:06:34 So six fifty somewhere between fifty six and sixty three million dollars more. Of debt. Right, secured by stocks from his two holding companies. Uh they get the the Chicago can't he's usually dealing with Chicago banks at the time. Then he has to go to New York. He hates the New York bankers.

1:06:49 He has to go to New York because Chicago can't fulfill this, right? And he says the various loans were extremely complex. What did John Malone just say about Ted Turner? He took his leverage too high. And the structure of the leverage was a problem. This is exactly what's taking place in Sam Insul's life and career at this point. And he's doing this in a market that's dropping like a stone. Each drop in the market would force the investment trust.

1:07:09 to put up more collateral against their bank loans. If the market were driven down far enough. The bankers would have As collateral the entire portfolios of Insul's company. With that. control of the whole insole.

1:07:21 Empire. And so as this is happening, what do you think the reaction is? They keep buying. They ignore they're ignorant of the danger. And so this is what they were doing in essence.

1:07:32 They would buy up in social securities on the exchanges and then try to sell as much as possible in small lots. through their secondary market, which is like the customer ownership. Uh, and then the guy that is doing this for insul said very so this. It's very simple, he said.

1:07:46 You can't go on buying your own stocks forever. Sooner or later you run out of money. In spite of everything he knew, Insul could not As late as mid summer nineteen thirty one bring himself to believe That he was in serious danger.

1:08:00 But he was. The end was very near. Uh to keep the market up. through the summer they try to keep the market up through the summer of nineteen thirty one, but in September England went off the gold standard and the New York Stock Exchange reacted with complete hysteria. Short sellers spread a rumor that Insul was dead or dying.

1:08:16 And in that week alone. The stocks of his three companies dropped by a value of a hundred and fifty million dollars. As the market declined, they had to put up ever increasing amounts of securities as collateral against their bank loans by mid December. The well had run dry. Every nickel of the combined portfolios

1:08:36 Of the two investment trusts. We're in the hands of bank creditors. That is a Reynolds wrap. The creditors then in turn demand That he resigns on Monday, June Sixth, the deed was done. Insul dictated and signed papers all day drafting resignations from chairmanship and presidencies.

1:08:52 and receiverships of sixty odd corporations. All afternoon as the orgy of registrations and resolutions. Newspaper men swarmed around Insul's door. When it was over. He emerged.

1:09:05 His statement to the press Was a single sentence. Well, gentlemen. Here I am. After forty years.

1:09:11 A man without a job. He eventually flees. and it's extradited back to the United States, put on trial multiple times. beats every single trial that can never prove any fraud. I do believe his statement that he made and he says I've erred, but my greatest error was in underestimating

1:09:27 The effect of the financial panic on American securities. And particularly on the companies I was working so hard to build. He didn't even understand the danger he was in. I worked with all my energy to save those companies. I made mistakes, but they were honest mistakes. They were errors in judgment. But not dishonest. Manipulations. I do think that's

1:09:43 That is true for fifty three years. For his fifty three years. of labor to make electric power universally cheap and abundant Insul had his reward. From a grateful people. He was allowed to die outside of prison.

1:09:58 He does not live for long. The only remaining enemy of insults was boredom. Like Napoleon, Insul was required to suspend his declining years. in well fed inactivity. For two more years his life dragged on, he followed the news of business and politics with keen interest. But there was rarely anyone with whom to discuss these subjects.

1:10:18 And Insul was ill equipped to play the passive spectator. On the morning of july sixteenth Insul entered a Paris subway and while waiting for a train he had a heart attack and died. His body remained unidentified for several hours, and the official Police statement reported.

1:10:34 That he had nothing in his pockets. And that is where I'll leave it for the full story. Highly recommend getting the book. If you buy the book using the link that's in the show notes, you'll be supporting the podcast at the same time. That is three hundred. And thirty six books down. One thousand ago.

1:10:49 And I'll talk to you again soon. Okay, so two quick things before you go. Number one. Founders only. I'm doing an in person conference for founders and CEOs with founder mentality.

1:10:59 In Austin, Texas, March twelfth to the fourteenth. If you have not yet applied to go, go to foundersonly.com. That's founders with an S. Everything I do is founders with the S. Okay. So foundersonly.com. Uh make sure you apply. I'm going through all the applications. It's listed. It's limited to 150 slots. I'll probably send out like two hundred invites and then whoever just finalizes the registration fastest. We'll get those. So if you've already applied, make sure you check your email.

1:11:25 Uh, I'm emailing, I'm sending messages on LinkedIn. So check both those places. And just try to finish your registration as fast as possible. If you have not yet applied, there is still time. Jump in Um and then every single person that applies will obviously go on the email list in case I fill this one out. Uh before I get to your application.

1:11:43 And therefore you will automatically be notified. I'm doing a bunch of in person events and conferences'cause my goal is to help other founders build relationships with other founders. It's been There's two things that I'm asked for the most, right? uh is let me get for years I was asked can I get access to your notes and highlights?

1:12:01 Uh that's founders' notes. And then Hey, can you build some kind of community Uh, can I meet other founders that listen to founders? How can we facilitate that? the way I do this is like I build relationships in person. I just think it It helps jump start things.

1:12:15 Um and so anyways. There's a bunch of people speaking at this conference. that are a perfect example of this. These people are Unbelievably impressive. They are very important to me, and we've built a relationship over the last two years.

1:12:29 Because of the podcast. And so I'm calling in favors. These are people that in some cases have Never spoken publicly. uh and in uh in other cases speak publicly very, very rarely. We're not going to be recording anything. This is you have to be there.

1:12:43 or you miss it kind of thing. So if you are interested in doing that, if you're a founder or a CEO Uh, there'll be other events that are, you know, open to mu much more people, but for the very first one Hundred fifty people. just uh for founders and CEOs Founders only dot com

1:12:59 Uh apply if you haven't. And then if you see a message from me, just try to respond as fast as possible. Uh I'm dedicating the next I'm good this will be done within the next like seven to fourteen days, maybe, something like that. So time is of the essence. The second thing. Uh, is if you have not yet subscribed to Founders Notes, go to founders notes.com and get access to what I believe is the world's greatest.

1:13:23 And world's most valuable uh notebook for founders. I was sitting here thinking today as I was listening to this episode,'cause I listen to every single episode before it goes out. Again. Um, and I was just s sitting here thinking was like imagine a young Sam Insul, right? You have somebody

1:13:39 So it's super smart, super determined, super dedicated. They he will no matter where he starts in life, he's going to make his life a success. And so he finds people he admires and then reads every single thing he could find about them. you know, Thomas Edison being the the best example of that. And I was like, Imagine if Aunt Sam and Soul's life uh alive today and he had access to to founders notes. So what founders notes is in case you don't know

1:14:04 is for years. I have been adding every single highlight. And every single note on all the books that I read. For this podcast. uh into this app called ReadWise, right? And then I've gone

1:14:17 for years on other people's podcasts and I tweet about it, I link I post on LinkedIn about it's like ReadWise is the best app I pay for. I I could not make the podcast without it. That is legitimate. People think I say this over and over again, people like you have such a good memory. I promise you I don't. It's cause I re read and re read and re read. Same book, same highlights over and over again. And the reason I'm able to do that is because this app allows me to put all my notes, all my highlights, everything

1:14:41 on how I make this podcast, right? All the research. Um, and if you really think about I've essentially sat in a room by myself For eight years like a maniac. uh documenting the best ide best and worst ideas from the history of entrepreneurship. So we can all learn from them, right? And like Charlie Member said, learning from history is a form of leverage.

1:14:59 And so for the first few years like it was really hard to keep track of all that. And then I discovered Reed Was like, Oh, this is genius. And then for years people were sending me messages like I can I get access to this access to it and I said no every time. Like I I don't know, a thousand, two thousand p I didn't count, but it's a lot of people ask this. And

1:15:17 I said no because I thought it was like a my secret sauce. Like oh, like what if you get access to it and then you like w start a competitor to founders. I don't think people are gonna start a competitor to founders. Like I realized that was a very like zero sum uh mentality it was having. And because what would happen is like I would talk

1:15:36 to other founders and like we'd be on the phone they'd have a problem and I was like, Oh, I would just be searching. I'd bring something up, they'd say something and I'd search my all of my notes and highlights I'd come up with something it was like really helpful. I was like, Oh Well Not everybody can be on the phone. Like why don't

1:15:49 And I do this in in person in conversations too. Uh, in fact I just had a dinner the other day with three other founders that listen to this podcast and we spent sh essentially spent like Two or three hours just talking about all the biographies we're reading. uh like Phil Knight, Cornelius Vanderbilt, Steve Jobs, Edwin Lane, we're talking about all this. And so I pulled out this app over and over again. In fact all three of them subscribe to r to Founders Notes, so they had it too. But In any case, uh

1:16:13 I was like, Oh, this is like a superpower. This is why it's the most valuable Uh notebook. four founders in the world. So it is right now it is I would not sign up. And this applies to Founders only and founders notes.

1:16:25 This is only for people that already have successful companies. Uh there's obviously no free trial, you'd have to pay for it. What I consider a free trial is like the podcast is a giant free trial. It is free. You can listen to three hundred and thirty six episodes. As much as you want, listen to them over and over again, take your own notes, whatever the case is. So What I'm trying to build is excessively high value.

1:16:46 And I would only do it. Is I would only do this. This is only for people that have Uh already successful companies because those are the people that are gonna get the most value out of it because they already have a way to turn that knowledge that's in founders' notes into profit. So

1:17:00 Think about like a young uh Sam Insel or anybody, anybody running a company is like, hey, I wanna learn every single thing I can about Steve Jobs. So there's a a few different ways that I Uh I use founders' notes. Um and then I there's when you sign up, you'll get a welcome email and it goes into detail about this. So it gives you a an idea and oh my God.

1:17:19 I saw a preview. of the founders GPT. That is going to be another feature in Founders Notes. Uh, I'd sign up now because as I add features, obviously the price will go up. I don't have a landing page yet. So I'm you just have to go off this description and do you think like it's valuable if I use I use the product every day, so that should tell you something, right? Uh

1:17:39 This is this is this thing's gonna be nuts. I have so many ideas for it. It's gonna be incredible'cause uh I'll get there. Like I'm getting excited. So I'm gonna be testing it for the next few weeks. It'll pop up. If you're already an existing subscriber, don't worry. Uh you'll be notified that when this feature's available. Um I don't know if I've ever been

1:17:57 more excited about anything. So the way I use founders notes right now. is When you log in, right, and you sign up, you're dropped onto this page. And at the very top page, it's gonna be self-explanatory. It says search highlights. So this is put in any you could put in a name, something you're thinking about, a problem you're having in your company, how do I build a sales team, what should I do about marketing, hiring, recruiting, advertising, anything that pops to your mind, you search highlights and it'll pull back every single time. that that's been mentioned either in a note or a highlight of mine. So that is something I use every day. So right now there is no app. This is just in your browser. So you can use the browser on your computer or your phone. I leave if you I would once you log in, just leave it up in your browser.

1:18:40 Um I search this thing every day, multiple times a day. Okay, so that is by far the most valuable feature. This is where but like when I Again, I know I know it's the most valuable feature. But what I think is like excessively

1:18:54 Special. Is This thing called the highlights feed. And Again, this is

1:19:02 think about who I who I had in mind when when I wanted to make this, right? When I contacted the team at ReadWise and I said, Hey uh both of the founders listened to the podcast and I was like, um, hey, we should build a product together. I wanna essentially give people access and see exactly what I see. And I want it to be a

1:19:22 a new product and I wanna call it founders' notes. And so that's that's how this thing came to be. And I knew already the people that are gonna get the most value out of it already have a successful company. So that's why I say it's for them. So those people also read a ton, right? There's a high. positive correlation between success Entrepreneurial success and reading. And so the highlights feed is very special because

1:19:42 Think about all the other platforms that we're giving our attention, right? It's like kinda Just algorithms throwing things in our face. You're seeing like random posts from, you know, somebody you went to high school with twenty five years ago. Or, you know, somebody angry about something else. It's just like

1:19:59 You know anything that gets engagement. And the way I think about highlights feed, the highlights feed feature, right? It looks like this is what my friend Morgan me and my friend Morgan Housel the best selling author. Uh talked about. It's

1:20:11 A smart Twitter feed. Is what it looks like. Or a smart Facebook feed. And the highlights feed is a random highlights and notes. Right? You go on it and instead of scrolling, this is i like if obviously the reason

1:20:25 I said you should have a successful company'cause usually, you know, those people also read as well. And If you could read this thing for ten or fifteen minutes a day, or whenever you want to, really. Uh, sometimes I read for a couple of minutes. I've been lost in here for hours. Uh

1:20:37 And what happens is like it's almost like A random it's like history's greatest entrepreneurs, a random sampling of history's greatest entrepreneurs speaking directly to you. Like I just clicked on it, and there's two quotes from poor Charlie Mo uh Portroy Zominac, right? Then there's one from Ted Turner. Then there's one from uh John D Rockefeller, then there's three in a row

1:20:55 Uh from Sam Zell. Then there's uh two from Napoleon. There's one about Balenciaga and like it just goes on and on and on. And some of them, you know, it depends on the context of what's going on in your career. Some of'em aren't gonna be meaningful for you. Just like when you're scrolling

1:21:11 Any other feed. Uh but They're really good prompts for your thinking and reminders of the lessons that we're learning on the podcast, because you can listen to every single episode, and I know a ton of people that have. But you're gonna forget a lot of stuff. Our our mind is meant to like forget, you know, ninety ninety percent of the stuff we take in. So that's why I think repetition. Is the mother of learning. It's so important. I think that's what the highlights feed does. I'm sitting here scrolling away, I'm talking to you. It's like here's another great idea.

1:21:36 on uh David Ogreby, for example. Uh, he took an idea from Henry Ford and he says following Henry Ford's advice to his dealers that he should solicit by personal visitation, I started by soliciting advertisers who did not employ an agency at all. So he's talking about the how he started his his agency when he was like thirty five years old. And the fact is it's like yeah, I can go and say, Hey, hire me And fire your existing agency, but I or I should just do what Henry Ford did.

1:22:01 And it's like go to the people. buy personal visitation that don't have any like it's easier to sell somebody that doesn't have an advertising agency already. uh partner as opposed to like getting them to switch to some unknown entity. And you'd be shocked at how much like you you're And you'd be shocked at how much either you didn't know or you had forgotten.

1:22:19 Uh, here's another one that's that's fascinating. That's talked about this is the book my friend Jimmy Sony, he's a good friend of mine now. He's the author of this book called The Founders, which is on the beginning of PayPal, and it talks about how competitive in the end of it's really competitive all at all times, but especially during the top dot com. uh bubble how competitive it was for uh engineering and like really A plus talent. And something that Musk

1:22:40 uh that helped Musc out. He's just like, hey, I got a lot of my own money in this. And so uh there's the unexpected benefit of putting so much of your own wealth in helps with recruiting'cause they're like this guy has I think at the time I don't remember how much of his of Musk's net worth, but he had a ton. I think he got like After selling zip to, you know, twenty eight million dollars. What is that after taxes? Who knows? Fifte million? Something like that? And then he's telling this guy thirteen million? I have thirteen out of my fifteen million dollars in this company, it has to work. Uh so there's just these weird ideas that happen, and what happens which I've heard over and over again from a ton of founders is like an idea

1:23:17 or comment on the podcast, or reading in a book, or reading founders' notes will go into your brain. It'll Go it'll go through everything else that's particular to your company and on the outside it's something unique and usually beneficial to your uh company. So that's the way I think about highlights feed. It's like It's very interesting and special.

1:23:34 Um, I don't even want to confuse you, but almost be like it it could be like a separate app, which whatever. Maybe I'll test that personally and see if that it's just it's fascinating. It's very, very fascinating. And then Finally, uh I guess I don't wanna talk your ear off. Um

1:23:49 Books. the book section and just go by books. So last last week I talked about You can go read all of the highlights from Brad Jacobs' book. And in Brad Jacobs, when I was reading about Brad Jac Jacobs, I was really thinking a lot about Danny Meyer and I hadn't read Danny Meyer's autobiography.

1:24:05 Setting the table. For years, but it is excellent. And so then you can go and I think there's what, fifty nine I said? No, twenty nine, sorry, twenty nine highlights. And so those twenty nine highlights, you know, probably take ten minutes to to read and really think about. And it's shocking how much you can learn. You know, just by reading.

1:24:24 thirty highlights from a book, or forty four highlights from a book, or seventy one highlights from a book. So that's a brief overview of how I use Founders Notes. You can sign up, invest in a subscription. For what I think is the world's most valuable notebook for founders at foundersnotes.com. Uh their annual subscription. So

1:24:41 Every day the I'm adding more highlights, every day the better. So if you think about that now, you sign up now, within the next year, I'll add another fifty books and probably, I don't know, four thousand more highlights. The more highlights and notes that are added, the deeper the ideas go and I think the the context around them. uh only get more valuable with time. So all right. That's enough for me.

1:25:02 Yeah, if you have not yet subscribed, highly recommend doing that. I think that is for sure. Subscribing to foundersnoses.com. is the best way to support the podcast if you want to travel to Austin, Texas and hang out with me. for three days is all inclusive. That means if you get to you have to get yourself to Austin But then the event Uh

1:25:22 is everything's included in the price. So the event, all the talks um all the lodging, all the food, everything. It is a private. I rented out this entire private venue. It is is not open to the public. The only people that will be on the property will be people taking part in founders only. So if that sounds interesting to you, that is foundersonly.com Founders notes dot com, both of those Uh links will also be

1:25:48 In the show notes. Thank you very much for your attention. Thank you very much for listening to Founders. And I gotta get going and re start reading again for the next episode. I'll talk to you again soon.

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