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What I learned from John D. Rockefeller

John D's guilty pleasure was golf, reading books has long been mine.

I read 80 books in 2017, and Titan has become one of my favourite biographies alongside Andrew Carnegie.

Yes, I'd heard of Rockefeller before reading Chernow's 800+ page behemoth of a book, but I never understood how much power Rockefeller had.

Nor how much wealth he created.

Rough analogy but imagine if one man built a website that controlled 90% of all traffic on the Internet, and he managed to strong arm ISPs into giving his website preferential treatment to all others at a lower price. All while the Internet grew into the most important product in our lives.

That's what Rockefeller did when he started Standard Oil in 1870, which controlled 90% of all oil in the United States at its peak.

The control of oil is still important, but back then it was the primary light source (before the introduction of electricity), and of course, the fuel for the humble automobile.

What I was most impressed with was his ability to gain influence over the railroads that transported his oil, forcing them to give Standard Oil the lowest rates (because of the volume they could give the railroads), until no one else could compete with them.

This didn't work forever, in 1911 the U.S. Supreme Court ruled Standard Oil to be dismantled for violation of federal anti-trust laws.

Standard Oil was broken int 34 seperate entities, who remain as some of the highest revenue producers in the world, ExxonMobile and Chevron are two. I think it's safe to say Standard Oil may have been the most powerful company ever.

Rockefeller's peaked at around a billion dollars, that's ~$400 billion in 2018 dollars when we adjust for inflation, he made up ~2% of the national economy as an individual.

Then along with Andrew Carnegie, he created the structure for what we now think of as philanthropy by giving away the majority of his wealth (through his donations, John D. Rockefeller Junior's, and Frederick Gates).

Clearly, there are a couple of things we can learn from this guy.

Ryan Holiday said this of Titan at the start of 2013:

A biography has to be really good to make read you all 800 pages. To me, this was one of those books. Since reading it earlier this year, I’ve since found out it is the favourite book of a lot of people I respect. I think something about the quality of the writing and the empathic understanding of the writer that the main lessons you would take away from someone like Rockefeller would not be business, but life lessons. In fact, when I went back through and took notes on this book, I filled out more cards for Stoicism than I did for Strategy, Business or Money. I found Rockefeller to be strangely stoic, incredibly resilient and, despite his reputation as a robber baron, humble and compassionate. Most people get WORSE as they get successful, many more get worse as they age. Rockefeller did neither of these things, he grew more open-minded the older he became, more generous, more pious, more dedicated to making a difference. Does that excuse the “awful” things that he did? Well, the things he did really weren’t that awful so yes.

Stay calm in chaos

Rockefeller had barely started his career when the Panic of 1857 struck, believed by many to be the first true worldwide economic crisis.

And like all financial downturns, it didn't last long. The economy had largely recovered by the end of the American Civil War, in 1861.

If Rockefeller is anyone to go off, maybe more of us should wait until market panic to start our career. Whether it was the Panic or Rockefeller's gift he always had coolness under pressure – a skill he kept throughout his life.

And a skill that continued to benefit him as he took over the burgeoning oil economy, and through the financial panics of 1873, 1907, and 1929.

As Rockefeller once said:

I always tried to turn every disaster into an opportunity.

And that he did.

Be greedy when others are fearful

I think Warren Buffett and Rockefeller would have gotten along, Rockefeller made a lot of money during market fluctuations, because his goals were always long-term.

In his 1997 shareholder letter, Jeff Bezos issued a similar manifesto albeit with different words called It's all about the long-term where he laid out his approach to business and running Amazon. He said his decisions would always be made with a long-term lens and with a focus on market leadership.

Rockefeller may be even better at this than Bezos. When Rockefeller was 25, a group of investors offered to give him $500,000 to invest at his discretion if he could find the right oil fields to deploy the money into.

He set out, returning a few days later, money in hand. He couldn't find an opportunity that he thought would work in the long-term, so he refunded the money. Keep in mind, $500,000 back then was a hell of a lot more than it is today.

Zigging while others zag

There has been much criticism of Rockefeller's approach to business. There will be more. A competitive field like the oil business, as Sam Hinkie said in his resignation letter, necessitates a zig while...competitors comfortably zag.

And like Hinkie, Rockefeller often chose not to defend himself against much of the criticism, largely in an effort to stay to true to the ideal of having the longest view in the room, to borrow from Hinkie again.

Or as Rockefeller said:

If you want to succeed you should strike out on new paths, rather than travel the worn paths of accepted success.

And I'd like to remind you that the shrewd penny-pinching Rockefeller who abused his market leading position again and again until he controlled the majority of the US's oil supply is the same Rockefeller who's family gave it all away. Zigging while others zag.

We're all biased

Rockefeller may have done the most of any single individual to push the scientific revolution into motion, paving the way for modern medicine. The ironic thing is Rockefeller was a proponent of homeopathy, but did more than anyone else to, inadvertently, destroy its credibility.

Despite evidence piling up against homeopathy:

John D. Rockefeller Snr. instructed Frederick Gates, his financial advisor, to issue major grants to homeopathic institutions.

Instructions that Gates, an advocate of conventional medicine, ignored sending $350 million in donations to orthodox medicine and hospitals.

We don't get less biased, we just get more money. We all need our own Gates to point us in the right direction when we're heading in the wrong one.

While many people try to say they're not bias, others put people in place to be their check. This is tricky, and getting harder to do as we have more chances every day to react, but if you want to have any real success you often have to be willing to be like Rockefeller, slow, deliberate, and calm in your decisions. All the while moving away from, not with the crowd.

This is difficult, emotionally and intellectually – but Rockefeller, among others, shows us how valuable it can be.