Apr 15, 2021
John D. Rockefeller is considered the richest man to ever live. His net worth, when adjusted for inflation, would be more than $340 Billion in today’s currency, beating the richest person alive today, Jeff Bezos, by more than $150 Billion (Source: celebritynetworth.com).
In today’s episode, we’ll learn how Rockefeller became so successful through his entrepreneurial journey. We’ll discuss what tectonic shifts (including the lightbulb, automobile, Civil War, railroad, and more) he leveraged to boost his success. We’ll also detail the other secrets like perseverance and stress management that he used to accomplish so much.
Rockefeller’s Entrepreneurial Journey
His Start in Entrepreneurship
John D. Rockefeller was born on July 8, 1839. By the age of 16, Rockefeller had his first real office job as an assistant bookkeeper. After success in that job, he partnered with Maurice B. Clark to start their own business in produce. The company, Clark & Rockefeller, earned $4,400 in the first year and $17,000 in the second, which is about $530,000 in today’s currency (Sources: biography.com and the successbug.com).
Standard Oil Co.
In 1863, Rockefeller went into the oil business, opening up a refinery near Cleveland, Ohio. Many others sought success in the oil business but ultimately failed. Rockefeller’s success in this venture may have been because, unlike other refineries that would keep the 60% of oil product that became kerosene and dump the other 40% in rivers and massive sludge piles, Rockefeller sold the 40% others were wasting as lubricating oil, petroleum jelly, paraffin wax, tar, and other by-products. In other words, he monetized an asset he already had.
Rockefeller grew Standard Oil Co., and by 1872, he had purchased 22 of the 26 competitors in Cleveland. The company also acquired their entire supply chain, adding their own pipelines, tank cars, and home delivery network (Sources: biography.com and the successbug.com).
Standard Oil controlled more than 90% of the oil industry, causing legislators to take notice. Congress passed the Sherman Antitrust Act and the Federal Trade Commission (FTC) was created. Rockefeller had to dissolve Standard Oil and allow each property to be run by others, though the corporation’s board maintained control over the individual properties (Sources: biography.com and the successbug.com).
In 1909, “New Jersey . . . changed its incorporation laws to effectively allow a re-creation of the trust in the form of a single holding company. Rockefeller retained his nominal title as president until 1911 and he kept his stock.” However, in 1911, “the Supreme Court . . . found Standard Oil Company . . . in violation of the Sherman Antitrust Act.” At this time, Standard “still had a 70% market share of the refined oil market but only 14% of the U.S. crude oil supply. The court ruled that the trust originated in illegal monopoly practices and ordered it to be broken up into 34 new companies.”
These companies included Continental Oil, which is now part of ConocoPhillips; Standard of Indiana, which is now part of BP; Standard of California, which became Chevron; Standard of New Jersey, which later became, Exxon, and is now part of ExxonMobil; Standard of New York, which became Mobil, now part of ExxonMobil; and Standard of Ohio, which became Sohio, now part of BP.
“Rockefeller, who had rarely sold shares, held over 25% of Standard's stock at the time of the breakup. He and all of the other stockholders received proportionate shares in each of the 34 companies.” Rockefeller had reduced control over the oil industry. However, over the next 10 years, the breakup would prove to be immensely profitable. “The companies' combined net worth rose fivefold and Rockefeller's personal wealth jumped to $900 million.” (Source: wikipedia.org)
Rockefeller believed in the Methodist preacher John Wesley’s dictum "gain all you can, save all you can, and give all you can." (Source: wikipedia.org) It isn’t possible for me to include all of Rockefeller’s philanthropic endeavors because there are just too many, but here are a few.
“In 1884, Rockefeller provided major funding for Atlanta Baptist Female Seminary in Atlanta for African-American women, which became Spelman College. His wife Laura Spelman Rockefeller, was dedicated to civil rights and equality for women.” When speaking about Laura, Rockefeller said, "Her judgment was always better than mine. Without her keen advice, I would be a poor man."
“The Spelman Family . . . along with John Rockefeller, were ardent abolitionists before the Civil War and were dedicated to supporting the Underground Railroad. John Rockefeller was impressed by the vision of the school and removed the debt from the school. The oldest existing building on Spelman's campus, Rockefeller Hall, is named after him.” (Source: wikipedia.org)
After his retirement, Rockefeller also helped pay for the University of Chicago, donating more than $80 Million to it. He helped found the Rockefeller Foundation and the Rockefeller Institute for Medical Research, which was later named Rockefeller University (Sources: biography.com and the successbug.com).
Rockefeller “founded the Rockefeller Sanitary Commission in 1909, an organization that eventually eradicated the hookworm disease.” (Source: wikipedia.org) By the end of his life, he had donated more than $530 million to various causes (Sources: biography.com and the successbug.com).
This is one of the best parts of capitalism and entrepreneurship. They give entrepreneurs the resources and ability to make far greater social contributions.
Tectonic Shifts Rockefeller Leveraged
The Light Bulb and the Automobile
Before the introduction of electricity, oil was the main source of lighting. Whale oil was expensive, but kerosene helped that become available to the working and middle classes, and Rockefeller took advantage of that. However, the invention of the lightbulb changed all of that. It “gradually began to erode the dominance of kerosene for illumination.”
Standard Oil had to adapt to this tectonic shift by “developing a European presence, expanding into natural gas production in the U.S., and producing gasoline for automobiles, which until then had been considered a waste product.” (Source: wikipedia.org) Rockefeller was able to find success with the tectonic shift of the automobile.
Food Supplies During the Civil War
As mentioned earlier, Rockefeller and his partner went into the produce business early in his career. Their business did well in its first two years, but when the Union Army called for large amounts of food and supplies in the Civil War, their profits soared.
During the Civil War, “Rockefeller tended his business and hired substitute soldiers. He gave money to the Union cause.” He said, “I wanted to go in the army and do my part. But it was simply out of the question. There was no one to take my place. We were in a new business, and if I had not stayed it must have stopped—and with so many dependent on it.”
“When the Civil War was nearing a close and with the prospect of those war-time profits ending, Clark & Rockefeller looked toward the refining of crude oil.” (Source: wikipedia.org)
Rockefeller “was well-positioned to take advantage of postwar prosperity and the great expansion westward fostered by the growth of railroads and an oil-fueled economy. He borrowed heavily, reinvested profits, adapted rapidly to changing markets, and fielded observers to track the quickly expanding industry.”
Standard Oil “became one of the largest shippers of oil and kerosene in the country. The railroads competed fiercely for traffic and, in an attempt to create a cartel to control freight rates, formed the South Improvement Company offering special deals to bulk customers like Standard Oil, outside the main oil centers. The cartel offered preferential treatment as a high-volume shipper, which included not just steep discounts/rebates of up to 50% for their product but rebates for the shipment of competing products.” (Source: wikipedia.org)
Our Business Should be About Our Passions—Not Money
“If your only goal is to become rich, you will never achieve it.” - John D. Rockefeller
Rockefeller truly loved what he did. He knew business would be better if there was something bigger behind it than money (Source: 2x.co).
“I know of nothing more despicable and pathetic than a man who devotes all the hours of the waking day to the making of money for money’s sake.” - John D. Rockefeller
Though Rockefeller wasn’t perfect, he cared a lot about his credibility. He often struggled to get the amount of money he needed to achieve his goals, but he won the trust of banks and investors, enabling him to take his business farther than he would have been able to otherwise.
It is said that Rockefeller remembered 3,000 of his employees’ names (Source: 2x.co). An impressive accomplishment that showed his employees that he cared about them, pushing his credibility through the roof because of the respect they likely had for him.
By showing people we care about them by doing something as simple as remembering their names, we can boost our credibility. In addition, it will help us build stronger relationships with those we work with.
Building “Skyscrapers” on Land We Own
As Standard Oil grew and purchased its competitors, it got into the business of buying pipelines and terminals and setting up a system of transport for its own products. Standard came to control or own almost every aspect of the business, and its grip on the industry tightened. It even bought thousands of acres of forest for lumber, drilling, and blocking competitors from running their own pipelines (Source: biography.com).
While the monopoly was later deemed unlawful by Congress, we can still learn the value of controlling the aspects of our businesses from this example. If we build our business on a platform that we don’t own, we have limited control over that platform, and the platform can change the rules and have a huge impact on our business.
Other Secrets to Success
“I do not think that there is any other quality so essential to success of any kind as the quality of perseverance. It overcomes almost everything, even nature.” - John D. Rockefeller
As entrepreneurs, our businesses might not take off right away despite our hard work. Rockefeller had to start out his career as an assistant bookkeeper before he could start the business he wanted to. He persevered in that job until he and his partner could start their own business.
Sometimes our goals take longer than we expect, or we have to do things we don’t want to in order to reach them. It is important to keep our goals in mind and let them drive us when things aren’t how we want them to be. If we work hard and persevere, things often get better.
Keeping a Cool Head
When circumstances went wrong and others began panicking, Rockefeller was known for keeping his cool. Even though he started his career during a great market depression, he remained calm, being careful and watching others learn from their mistakes (Source: forgefinancialfreedom.com and 2x.co).
“I always tried to turn every disaster into an opportunity.” - John D. Rockefeller
We, too, can keep our heads during stressful situations, and it will help us make better decisions. It will also encourage our employees and associates to remain calm as well.
There were several periods of Rockefeller’s life where he experienced great stress. In the 1870s and 80s, Rockefeller was carrying out his plan of consolidation and integration and was being attacked by the press while doing so. He complained that he couldn’t stay asleep most nights. He later said, “All the fortune that I have made has not served to compensate me for the anxiety of that period.”
When he was in “his 50s Rockefeller suffered from moderate depression and digestive troubles; during a stressful period in the 1890s he developed alopecia, the loss of some or all body hair.” Rockefeller started wearing toupées by 1901. Unfortunately, his hair never grew back. However other health complaints subsided when he lightened his workload.
To help manage his stress, here are a couple of tactics Rockefeller used.
The Importance of a Consistent Schedule
Rockefeller had to keep a meticulous schedule, planning every minute, otherwise, his day would fall into chaos. He never diverged from it. However, he didn’t let it control him either. He was the master of his schedule, and the schedule was not the master of him.
By keeping such a strict schedule, he was able to be in the present moment. He could focus more easily because he devoted time to each of the important things in his life, and therefore, he wouldn’t get distracted by other things (Sources: forgefinancialfreedom.com and 2x.co).
“Singleness of purpose is one of the chief essentials for success in life, no matter what may be one's aim.” - John D. Rockefeller
The Importance of Rest
One aspect of Rockefeller’s schedule was his time dedicated to rest. He loved to nap after lunch and dinner. When he was in his 30s, he installed a telegraph wire between his work and home so he could spend 3-4 afternoons during the week at home, gardening and enjoying the outdoors (Source: cnbc.com).
Entrepreneurs often forget how important balance is in life. We often get excited about the ventures we are working on and forget that it is crucial to take time to relax or be with loved ones so we don’t exhaust ourselves and burn out.
“It is remarkable how much we all could do if we avoid hustling, and go along at an even pace and keep from attempting too much.” - John D. Rockefeller
During his childhood, Rockefeller attended a local Baptist church with his mother and siblings. Rockefeller’s mother was very religious. She was a major influence for him in religious matters. While they were at church, she would encourage him “to contribute his few pennies to the congregation. He came to associate the church with charity.” Religion became a guiding force throughout his life, and he believed it was the source of his success (Source: wikipedia.org).
As a devout Northern Baptist, Rockefeller read the Bible daily, attended prayer meetings twice a week, and even led his own Bible study with his wife. He supported Baptist missionary activity, funded universities, and heavily engaged in religious activities at his church. While traveling the South, he donated large sums of money to churches belonging to the Southern Baptist Convention, various Black churches, and other Christian denominations. One time, Rockefeller paid for a slave's freedom, and another time he donated to a Roman Catholic orphanage. As he grew rich, his donations to churches became more generous (Source: wikipedia.org).
Here are some of my key takeaways from this episode:
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