1 hours 27 minutes 36 seconds
🇬🇧 English
Speaker 1
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So this is
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the second time that I've read Henry Ford's autobiography, and it was even better the second time through.
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And it's because as the second time through, I finally realized it's less of
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an autobiography, and it's more like a manifesto. It's like 1 of history's greatest entrepreneurs is having a one-sided conversation with you and saying, hey, this is my philosophy on company building, and this is what I think you should do. And so before we jump into the book, I wanna tell you about the sponsors of this episode, but I also wanna tell you about this experience I had this past weekend.
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So I wind up flying out to California for
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a quick 48-hour trip. My friend Sam Hanke, who's also 1
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of the sponsors of this podcast, invited me out there. And I had like an open 4 hour window. I think this might've been on Saturday morning and actually got to meet up with David from the acquired podcast.
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00:40
And just like I love talking to other founders, I love talking to other podcasters. So me and David actually did a hike around Stanford and he gave me some really good advice. So last week was the first time ever that I ever read ads on any podcast.
Speaker 1
00:52
And what David told me is what he liked about my podcast is that it feels like it's 1 person talking to another, but the only thing he would change is like when you're reading ads, it sounds like you're reading on a script. And he's like, you should just talk just like you do for the
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rest of the podcast. And so
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my response was, damn, that's really good advice. Why didn't I think of that myself? And then I thought to take it 1 step further, there's a reason why this podcast is called Founders and not Companies, right?
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01:13
We focus on the people behind the products. So if you don't know what Tegus is,
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01:17
an easy way to think about it
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is it's a search engine for business knowledge. So the same people, like the people that listen to this podcast, they're founders, executives, and investors, right? Those are the same people that use Tegus to do research on companies.
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01:28
And if you go to Tegus' website, which is tegus.com, then you'll see all the different products they offer. And then I was thinking, people aren't here for me
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to like go through the website and tell you what the product is about. It's like the person behind, like my advantage, right, is that I always focus on the people behind the companies.
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01:45
And so I've actually talked to the CEO and the founder Michael of Tegas multiple times And before I even talked to him the person I was introducing us was describing because Michaels Co-founder is his actually twin brother and I just love this description of him even before I met him I was
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like, oh, I know I'm gonna like this guy because they described these twin brothers as ultra competitive, ultra hardworking nutcases that go really fast. And we got along right away. The first time
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I talked to Michael, we talked for over an hour.
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It became immediately obvious that he's got the same kind of relentless dedication to serving his customers and to building a truly great product that all the entrepreneurs that you and I study on this podcast do. What you're about to hear in this podcast is Henry Ford having that same relentless dedication. Henry Ford, and I talk about this
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in the podcast, all he talks about is, listen, the entire point of a business is to serve other people. And when I talk to
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Michael, I'm like, oh, this guy's got the same laser focus on serving his customer that Henry Ford had on serving his customers.
Speaker 1
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So if you're interested in supporting this podcast, go to tegus.com. I'll leave the
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link below, but it's T-E-G-U-S.com, and you can get a free trial. And if you wanna learn more about the conversations that I've had with Michael, I did like a 9 minute, I talked about it for like 9 minutes at the end of last week's episode. And the next sponsor is 87 Capital.
Speaker 2
02:52
This is Sam Hinckley's very unique venture firm.
Speaker 1
02:55
At the end of today's episode, I'll tell you all about our weekend that we had together. But what I think you should do is you
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just go to 87capital.com and just read it. It's read. I've never seen another venture capital firm website like this.
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I've talked to Sam a ton over the last year. He's got a very unique and odd brain.
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And I always tell him
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I was like I don't even think you understand how other people talk about you. They just hold them in excessively high regard. And it's because he'll repeat like over and over again.
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03:24
He should have the longest view in the room which is obviously beneficial to founders because how many people that you and I said in this podcast when I'm working on the same company for like 4 decades, right? But once Sam finds somebody that he's interested
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in, he's looking for long-term partners, right?
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He's not just like, oh, here's money, and then see you later. He's trying to find like the rarest of the rare people.
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03:41
And then he'll go to great lengths constantly to just help these people as much as he possibly can. It's incredible. Like just not only the ideas that he gives me, the people he's introduced me to, I mean he's just relentless with this.
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And I definitely don't feel like I deserve that.
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03:57
And to me the approach he's taking, again it's going to be very similar to this podcast you're about to listen to where Henry Ford was just obsessed with serving other people. And I think, I really think, especially I just spent 48 hours with him, so does House for God's sake. I really think Sam's obsessed with helping people win over the extremely long term.
Speaker 1
04:15
And I think if you read 87 capital.com, there's also some fantastic podcasts he did. There's 2 fantastic podcasts that
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he did that I listened to over and over again, they're on invest like the best, you'll get a good idea of who Sam is and how he thinks if I was raising money, I would go to Sam first. So if you're 1 of these like kind of alien level 10 people, and you're looking for a long term partner, go to 87 Capital and get in touch with Sam. And finally 1 more thing before we get into today's episode I had the craziest week so I've been doing this podcast non-stop like every day for like 4 years I started at 6 years ago but full-time I've went full-time 4 times 4 years ago right I went on so I just joined founders is now part of the Colossus family of podcasts, so the Colossus Podcast Network.
Speaker 2
04:55
There's 2 episodes from other shows in the network that I want you to listen to, or I would recommend, you don't have to do anything, obviously, I was on Invest Like the Best.
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It is episode 292 of Invest Like
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the Best. Make sure you're following that show in your podcast player. I don't know what the hell happened, but that show went viral
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and people have gone fucking nuts. Like the spike in growth of founders downloads the amount of messages I have no idea what had took place when me and Patrick talked all I know is people seem to really like it and I Am both extremely happy that that happened and I was completely unprepared. So listen to it I think If you
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listen to Founders for a while, you'll see it's like a lot of review of the ideas that you and I talk about. And then there's another show that I think is fantastic. It's called Business Breakdowns.
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And they did an episode on the company Rolex. It's episode
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65
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of Business Breakdowns. I listened to it twice.
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I had to listen to it the second time with my wife. She was so fascinating. It's 1 of
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the best episodes I've ever heard because Rolex is a super secretive business and The other person on the show. I think his name's Ben. He's the founder of Hodin key He got to tour parts of Rolex then Very few if I think maybe nobody else in media has ever and you're going to note immediately notice that the founder of Rolex is just like the people that you and I study.
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In fact, I've been searching everywhere for a biography on him. I can't find anything. If you come across something, please let me know. Okay, that's it.
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Let's jump into the book. Let's jump into the book.
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An able man is a man who can do things, and his ability to do things is dependent on what he has in him. What he has in him depends on what he started with and what he has done to increase and discipline it. An educated man is not 1 whose memory is trained to carry a few dates in history.
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He is 1 who can accomplish things. A man who cannot think is not an educated man however many college degrees he may have acquired. Thinking is the hardest work anyone can do, which is probably the reason why we have so few thinkers. There are 2 extremes to be avoided.
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1 is the attitude of contempt towards education. The other is the tragic snobbery of assuming that marching through an education system is a sure cure for ignorance and mediocrity. You cannot learn in any school what the world is going to do next year, But
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you can learn some of
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the things which the world has tried to do in former years and where it failed and where it succeeded. If education consisted in warning the young student away from some of the false theories on which men have tried to build so that he may be saved the loss of the time in finding out by his own bitter experience, it's good would be unquestioned. A man's real education begins after he has left school.
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07:45
The true education is gained through the discipline of life. That is an excerpt from the book that I'm gonna talk to you about today, which was published 100 years ago.
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07:55
And it's My Life and Work, the autobiography of Henry Ford. So back on episode 263 in that biography of Edwin Land called Land's Polaroid, a company and the man
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who invented it, in chapter 3 it goes through all the different heroes and people that Edwin Land was studying, like the great people that came before him that influenced his approach to building all of his work, really his scientific work and the building of Polaroid. And so it's like people, there'll be like 1 or 2 paragraphs, maybe like a page or 2 on the people that he was studying as
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like a young person. He's like 17 or maybe 19 at the time. And it's like people like Michael Faraday, Thomas Edison, Alexander Graham Bell, Henry Ford is 1 of the people, which I'll get to in a minute why I'm rereading his autobiography and George Eastman.
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And so
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what I've been trying to do the last few weeks is like set up, okay, if you had to ask, who's the most influential entrepreneurs
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of the last hundred years? And I think the top 2 are blatantly obvious. And it's Steve Jobs and Henry Ford.
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And you and I are living in the world that jobs change. So I don't have to tell you what the introduction of smartphone change, you just live through it. But I think a lot of people miss how fundamentally innovative the Model T was.
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09:01
Henry Ford's Model T was the first mass-produced car in history. Before that, humans were getting around on foot, horse, maybe horse-driven carriage, or maybe a bicycle. Henry Ford was the first person in history to figure out how to produce a car at a price that everybody could buy 1.
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But I like this idea of studying the 2 most important entrepreneurs of
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the last hundred years, Steve Jobs and Henry Ford back to back. So with that, let's jump into the book. Now, this is technically called an autobiography, but that's not really the way it's set up.
Speaker 1
09:29
So when he, The reason I opened the podcast that way, where it says, hey, you know, true education is actually gained through the discipline of life. I think that's how Henry Ford thought about this book as well. We'll learn like a little bit about his early life, but mostly, it is like, reading this book is like having a one-sided conversation
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where 1 of
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the greatest entrepreneurs ever lived, just speaks directly to you and tells you, hey, this is my philosophy on company building. And so let's go to the first chapter and it just opens up in a very odd way for an autobiography to open up. He just gets right into the main point.
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09:58
Power and machinery, money and goods are useful only as they set us free to live. They are buddy means to an end the fact that the 4 that the commercial success of the Ford Motor Company has been most unusual is important only because it serves to demonstrate That the theory in other words history to date is right. I'm gonna pause right there. He publishes this book in 1922 in 1919 he has he has bought out all of his Investors he owns the Ford Motor Company He owns a hundred percent of the Ford Motor Company.
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And this is at a time in history when he is making like half, I think something like half of all cars in the world. A rough analogy of what that would be
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like today is if you own like, let's say a 10 or 20 billion, something like that, 10 or $20 billion company, a hundred percent. And so he opens up. He's like, listen, I
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have a lot of criticisms about the way other businesses are built, and I think my criticisms are valid and there are more people will be more open to hearing them because I have benefited immensely financially from the system as is, and I still want
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to change it. So that is what he's talking about in these 2 paragraphs. Considered solely in the light, I can criticize the prevailing system of industry and the organization of money and society from the standpoint of 1 who has not been beaten by them.
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11:11
There, and something's gonna be apparent, Henry Ford had a giant ego. And this is like a key thing to think about because it's why it's so important for founders to learn from other founders because a lot of this a lot of the assets to a successful founder and a lot of the things they do are almost in direct opposition of what polite society would tell you to do. And so far after reading about 100, 000 pages of these biographies of entrepreneurs or less for years, something jumps out like small egos don't build giant companies. The only difference is some of the founders are better at hiding it, which was the advice Sam Walton had.
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11:42
He's like, listen, I knew you have an ego, hide it, don't use it to drive you, but don't let people see it. It's an internal driven thing not an extra not something to like strut about externally
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But that is just the first line and there's gonna be several them today where he's just like okay I can criticize this most time people criticizing the way Businesses are built and how money shapes society. They're usually the ones that have been beaten by
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it And he's like listen I can criticize because I'm have not been beaten by them at the time this is being written He is 1 of
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the richest people on the planet So he continues as things are now organized I could were I thinking only selfishly ask for no change If I merely want money the present system is alright It gives money in plenty to me. But I'm thinking of service. The present system does not permit of the best service because it encourages every kind of waste.
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12:29
It keeps many men from getting the full return from service. And I wanted to bring that up right at the beginning because I'm going to give you an opportunity to jump out. I don't know how long you and I are going to talk right now, maybe an hour, maybe 2 hours depends on how long it takes me to get through this. I'm essentially just going to repeat his main thing.
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12:44
His main idea is that business exists for 1 reason and 1 reason only and that is to provide service for other people. The note I left myself when I reread that paragraph is everything I do is serving my true end which is to make a product that makes other people's lives better. I have both the paperback version and the Kindle version of this book. He uses the word service 129
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times. And then he's going to echo an idea from his hero. So I just went through the fact that at the beginning, Edwin Land was setting all these other people, a lot of so Henry Ford, Edwin Land, Steve Jobs, they share a
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lot of heroes, which is interesting. And so Henry Ford idolizes Thomas Edison Thomas Edison's like a few maybe like a generation older than Henry Ford they want to becoming really good friends like Henry Ford considered Edison like his maybe even his best friend, But what he's about to say here is very Edisonian. Ideas are themselves extraordinarily valuable, but an idea is just an idea.
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13:42
Almost anyone can think up an idea. The thing that counts is developing in it into a practical product. So Edison was famous for saying hey, I make a lot of inventions I'm only interested in venting things that people want to buy because a sale is a proof of Utility and then Ford says hey These are the ideas I used to build 1 of the most valuable companies in the world. That company just happens to produce our mass-manufactured cars.
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14:05
But these ideas can be used in any business. And later on, he gets so frustrated with the inefficiency of a railroad that he winds up buying it and showing. He's like, listen, that playbook I just ran on the Ford Motor Company, I'm gonna run on this railroad, and I'm gonna demonstrate that the principles, they actually work.
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And he says, I am now most interested in fully demonstrating that the ideas we have put into practice are capable of the largest application,
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that they have nothing particularly to do with motor cars. And so there's a maxim that you and I have talked about over and over and over again. The way I would compress that idea so you
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can always remember and take it with you is
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that you don't copy the what you copy the how. In addition to his main theme of service, Henry Ford detests lazy people. And he's going to bring this up over and over again.
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Humans are made to work the way I'm going to read this to
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you first and then I'll tell you what I wrote down right
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after I read it. So he says, the natural thing to do is work, to recognize that prosperity and happiness can be obtained only through honest effort. Human ills flow Largely from attempting to escape from this natural course so the way I think about that is humans are made to work the sense of accomplishment from overcoming difficulty is satisfying in a way that a life of leisure and ease will never be and Then he's gonna compare and contrast his philosophy
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15:16
which which he sees like the prevailing philosophy of his day. And then I'll have a way to summarize this and break it down a little bit more because he goes on for quite a bit here. He says, monopoly is bad for business.
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Profiteering is bad for business. The lack of necessity
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to hustle is bad for business. Business is never as healthy as when, like a chicken, it must do a certain amount of scratching for what it gets. Keep in
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mind, he grew up on a farm, so that's why
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he talks the way he does. Business is never as healthy as when, like a chicken, it must do a certain amount of scratching for what it gets or what it eats, right? Things were coming too easily.
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15:50
There was a letdown of the principle that an honest relation ought to be attained between value and prices. The public no longer had to be catered to. There was even a public be damned attitude in many places. So he's saying a public be damned attitude by business owners.
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16:06
Henry Ford, like Jeff Bezos, was extremely customer obsessed. At the same time I was reading this book, I listened
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to an episode of Invest Like the Best podcast with this guy named Ravi Gupta. And he said something
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that was really interesting, and so interesting that I took a note and saved it in my phone, and he says, I think Amazon's culture is largely based on 1 thing. It is not based on 14. It is based on customer obsession.
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16:30
That is what Bezos would die on the hill for. And I think this this almost maniacal obsession and dedication to providing customers the best service at the lowest cost is a way to think about Henry Ford. Because to me, it's like every single once you once you really put it into your brain every single decision he's gonna make
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in the building companies all gonna flow for that 1 thing
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and if he sees a business that doesn't this is like the big eagle part if he does if he sees a business that doesn't have a thing like he's gonna talk shit about it And so that's exactly what he's doing here. The public no longer had to be catered to. He's always going to try to cater to them.
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17:04
There was even a public be damned attitude in many places. It was immensely bad for business. Some men called this abnormal condition prosperity. So he's coming right off of like this big financial boom.
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17:13
It was not prosperity. It was just needless money chase. Money chasing is not business. And so this is what he thinks business should be it is the function of business to produce for consumption and not for money or speculation Producing for consumption to the consumer right implies that the quality of the article, I need
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to pause there. Anytime you read books in like this age from like 19 hundreds, 19 10/19/2019 30, for some bizarre reason. And I've read a ton
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of them, obviously, for this podcast. They use the word article when he says the word article. It's not
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how we think of the word article today, like something like
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a newspaper or something like that. He's saying product. So when you hear article, I will try to, before I even say
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it to you, I'll try
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to change it into product, but in case I don't, if you hear Henry Ford say, the article produced, he's not talking about writing something, He's talking about his product, the Model T. So let me start this sentence over again. Producing for consumption implies that the quality of the article, the quality of the product produced will be high and that the price will be low.
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18:14
That the article, there I go again, that the product be 1 which serves the people and not merely the producer.
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18:22
And so I have the Kindle version up right now. I just realized something. I told you that the word service appears in this book 129 times.
Speaker 2
18:29
That word serve or serves is another 55. He's just gonna repeat this over and over and over again for 200 pages. So let me wrap up this section I'll tell you how to think about Henry Ford's philosophy and like something that fits into like a tweet size like maybe a paragraph size. Okay the producer depends for his prosperity upon serving the people.
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I hope you don't get annoyed at me, I promise. It's very interesting. This book is, I think, a must-read for any entrepreneur.
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18:54
And you can read it
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really fast. But it's just funny that he just pounds on this thing over and over again.
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18:58
The producer depends for his prosperity upon serving the people. He may get by for a while serving himself, but if he does, it will be purely accidental. And when the people wake up to the fact that they are not being served, the end of that producer is in sight.
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19:12
So I probably read that paragraph, you know, maybe I don't know, 5 times in the preparation to talk
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to you today. It didn't just hit me till just now. So I'm reading that, I'm like, oh, wait a minute.
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19:21
There is like some weird thought that just popped into my mind that I forgot. It's gonna come from Jeff Bezos. That is episode 179 of Founders, if you wanna listen to that.
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19:31
But what brought that to mind, that brought that book to mind, and I'm gonna read an excerpt to you from
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19:35
it in a minute, is where Henry Ford's like, you're gonna focus on serving yourself over your customers, that's fine, you might temporarily have success, but 1 day you're gonna wake up, 1 day the customers are gonna wake up
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19:44
and realize there's a better option out there. So, this was called all hands in the early days of Amazon. And he said, listen, it's because they were worried that Barnes and Nobles
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19:54
at the time in Amazon history, Barnes and Nobles, they're only selling books. Barnes and Nobles is opening an online store. And this is what Bezos told his team, look, you should wake up worried, terrified every morning, but don't be worried about our competitors because they're never gonna send us any money anyway.
Speaker 1
20:08
Let's be worried about our customers and stay head down focused. And so that's the main theme of Bezos, he's like this, you need to be focused on your customers over your competitors, And as long as you're serving them, don't give them a reason to go anywhere else. And if you do that, they won't go anywhere else. So this, everything I'm reading to, comes across like several different pages.
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20:25
I kind of put it all together. And then this is the note I was really thinking is like, how can I, I need to like,
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you know, take this like 500 words or whatever this is I need this I need to compress this so I can actually take this With me and so I wrote like okay, how can I distill what I is my understanding of Henry Ford's philosophy? So it's get rid of
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20:41
waste increase efficiency through thinking and technology Drop your prices and make more money with less profit per car. Watch your cost religiously. When needed, bring that business process in-house and always stay focused on service.
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20:58
Fast forward a few pages. He's back at it again. Being greedy for money is the surest way to not get it But when 1 serves for the sake of service for the satisfaction of doing that which 1 believes to be right then money Abundantly takes care of itself this next sentence. I think is my favorite.
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21:15
He's got a lot of good quotes. This is my favorite Henry Ford quote. Money comes naturally as a result of service. Money comes naturally as a result of service.
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21:27
I've probably repeated that in conversation like a
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hundred times. It's just a fantastic way to think about what we're doing. Money comes naturally as
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a result of service." So then he gets back into this fact that he detests lazy people and he says, in my mind nothing is more abhorrent than a life of ease. None of us has any right to ease. There is no place in civilization for the either.
Speaker 1
21:48
So when I had re-read this now, the second time, I read a bunch of it now since the first time I read this book, and now, you
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21:55
know, I've probably read, I don't know, like 200 books, whatever it is. And I read 2 of them on Winston Churchill. I remember reading this book, This Biography of Churchill,
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22:02
and like almost spitting out the water that I was drinking when I got to this part of the book is he's writing a letter, Churchill's writing a letter to his son. When I got to this part, I was like, oh, this reminded me of what Churchill said to his son, and Churchill writing to his son, he says, your idle and lazy life is very offensive to me. You appear to be leading a perfectly useless existence."
Speaker 2
22:21
And then the author says, Churchill loved his son, but over time he liked him less and less. Another main idea from Henry Ford's philosophy, he wants to make simple products and he wants to make them at scale. My effort is in the direction of simplicity.
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22:35
People in general have so little and it costs so much to buy even the barest necessities, because nearly everything that we make is much more complex than
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22:43
it needs to be. Real Simplicity means that which gives the very best service and is the most convenient in use. Start with a product that suits and then study to find some way of eliminating the entirely useless parts, which is, if
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22:58
you think about it, is exactly what
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23:00
he did. He's giving us advice. He's like, hey, if you wanna build a business, you wanna build a product, start with a product that already exists, study it, and just find a way to get rid of the useless parts.
Speaker 1
23:08
Well, that's, I mean, he starts out building like $6, 000 luxury cars for other people at a time
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23:14
when like the average worker was making like 2 or $3 a day.
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23:17
And he realized like we have all this stuff in the car That's just not needed and so
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you can think about Ford's career is like, okay That's the state of cars now and so for the next 15 to 20 years
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23:26
I'm gonna find a way how to keep making this simple keep making it lighter and then the more simple I make something the more the more of them I can make the more of them I can make the lower the price gets and so There there you go. He's just changed the entire literally changed our physical world with his 1 idea He literally Henry Ford had 1 idea. So back on founders number 120 121 and 122 I did a three-part series on Billy Durant and Alfred Stones.
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23:49
Billy Durant is, everybody knows the company General Motors. Nobody knows who Billy Durant is. He's the founder. Outside of Henry Ford, Billy Durant is by far the most important other founder for the creation, the very foundation of the American automobile industry.
Speaker 1
24:04
It's remarkable how few entrepreneurs actually know who he is. So there's just 1 paragraph in 1 of these books it is from founders number 121 and it gives you this idea because I think this is more it is really important to know up front when you're studying Henry Ford that he literally had 1 idea his entire career and it was completely different from every other automobile manufacturer.
Speaker 2
24:23
And it says he was determined to concentrate on the low end of the market where he believed that high volume would drive costs down and at
Speaker 1
24:30
the same time feed even more demand for the product. It was a fundamental difference in philosophy. So why did I bring that up to you now?
Speaker 1
24:38
Because when he's telling you and I at this part of the book, hey, find a product that already exists, study it, and then eliminate the useless parts. He's telling you that, and he's telling me that because that's what he did and then he talks about this sounds simple But it takes a long time because you
Speaker 2
24:51
got to do it knowledge It not only the product but every single part in the construction and manufacturing of the product I'm he goes in
Speaker 1
24:57
a lot of detail I'm gonna pull out 1 because this is important So at the point at this time, there's like a good amount of wood that is being put into these cars. And so he says, take wood, for example, for certain purposes, wood is now the best substance we know. But wood is extremely wasteful.
Speaker 1
25:12
The wood in a Ford car contains 30 pounds of water. There and then is very basic. It's like simple, but not easy. Like his approach to building a business is simple, but not easy.
Speaker 1
25:24
Right. So it's like, OK, well, this is just 1 material in 1 part of
Speaker 2
25:28
a car that has hundreds, maybe thousands of different pieces to it.
Speaker 1
25:32
And so he's like, OK, well, this seems to be very wasteful. The wouldn't afford car contains 30 pounds of water. And this thought process is fantastic.
Speaker 1
25:38
So he goes, there must be some way of doing it better than that. There must be some method by which we can gain the same strength and elasticity without having to lug around useless weight. And this is the punchline. This is so important
Speaker 2
25:52
and why I'm reading to you and so through a thousand processes. His point is like I didn't just think about this for what in the car. I thought about it for every single part of my product, every single part of my business.
Speaker 2
26:06
That line of thinking takes time because you have to do it a thousand times to different areas of your business.
Speaker 1
26:11
But if you are willing to invest that time, by the time he starts mass producing, by the time the first model T comes off of the assembly line. He has been experimenting and using this kind of thought process for 20 years. Right.
Speaker 1
26:26
So they think, OK, and why is that important? Because by the time that process starts, the game is already over. Game set match, because now he can make a product in 12 minutes that takes his competitor 2 days and so
Speaker 2
26:40
he talks about and kind of like a weird on hard to understand way that you know basically I only had 1 idea I wanted to make the car for the everyman. I was only interested in trying to get that car at the price as low as possible and so what he's about to say here is like really like you start with the product and The product that he wanted to make was the inexpensive car for the everyday man And then you try to work backwards on how to do that Over many many decades the place to start manufacturing is with the product the factory the organization and the selling and the financial plans Will shoot themselves to the product
Speaker 1
27:09
and that process is extremely long He says I spent 12 years before I had a Model T that suited me We did not attempt to go into real production until we had a real product.
Speaker 2
27:20
So he had made a bunch, I think he made like 8 or 9 different versions of Ford cars before the Model T. So that's what he's talking about. It's like, start with something big and expensive, Even if it was cheaper than what my competitors were giving but it's still not the 1 idea I had in my mind what I saw what I was going for It took me 12 years of trying to figure out how to get to the point where I can mass-produce and actually make that car for the everyday man And
Speaker 1
27:42
then I want to point out something here like the great thing about this book is just he's very straightforward I don't think the writing is great It's like sometimes you have to hard understand like he doesn't bury the
Speaker 2
27:51
lead It's like this is just what
Speaker 1
27:52
I think and then he'll give you example why he thinks so he says the essence of my idea Then is that waste and greed block the delivery of true service both waste and greed are unnecessary waste is due largely This is so important waste is due largely to not understanding what 1 does or being careless in doing it. And the only way to truly understand what you're doing, right, is to do it for a long time and focus on it and think about it. At this point, he's writing this.
Speaker 1
28:18
He's been trying to build cars for 30 years. There's no shortcut. You have to put in the time. There's a fantastic quote by Mickey Mantle that I think kind of like echoes what like what we're talking about.
Speaker 1
28:29
You're not talking about right now. It's like it's unbelievable how much you don't know about the game that you've been playing all your life and so he's saying hey other entrepreneur your waste is largely due to not understanding what 1 does or being careless and in the doing of it greed is merely nearsightedness I have striven towards manufacturing with a minimum of waste both of materials and of human effort and then towards distribution at
Speaker 2
28:53
a minimum of profit. I mean profit per per car not he's not trying to artificially suppress the amount of money makes. He just doesn't want to make a lot per car, depending for the total profit upon the volume of distribution.
Speaker 2
29:04
So there you go. I kind of ran over his point there. And then he has this four-part philosophy of service. I'm going to save that for the end, because he repeats that in the last chapter as well.
Speaker 1
29:13
So I'm going to skip to he's going to actually give us. Oh, my goodness. So we've been talking about his philosophy and his autobiography, now we actually hear a little bit about his life.
Speaker 1
29:21
And he says on May 31st, 1921, the Ford Motor Company turned out car number 5000000. And he's about to tell us, hey,
Speaker 2
29:27
I've been at this a long time, I'm happy I just made my 5 millionth car, and the Model T alone, he's gonna sell 15 million just of the Model T. So he's talking about number 5000000 of any Ford car. That's not include like Model T alone is 15 million.
Speaker 2
29:41
But that's going to happen over the next decade and a half
Speaker 1
29:43
from where we're in the story. But the reason I'm bringing this to your attention is because, like he said, he built a gasoline buggy, which is like kind of like the first primitive car 30 years before he produced his 5 millionth car and why is he bringing this up because it's a car number 5000000 he's like he says it's simpler than my first car but almost every point in it may also be found in the first car. This is why I keep saying like he literally had 1 idea and in every single book that I've read on Henry Ford, like it just jumps out.
Speaker 1
30:12
He's just like, I had 1 idea, had no idea how I was going to do it, But I just kept working at
Speaker 2
30:15
it until I got to it, just having to take a long time. And then once he figured it out, it's like, okay, well, the game's over. No one's gonna be able to produce as fast as possible.
Speaker 2
30:22
And what's fascinating is the fact that he focused on, I don't wanna be too complicated because I don't wanna direct your attention away from what we're talking about, But there is something interesting in studying the early days of the automobile industry that I think applies universally to other industries. Like Ford took the lead, was the dominant player, had over 50% market share. But that's how good his 1 idea was. But that 1 idea led to the giant gap.
Speaker 2
30:47
Because Billy Duran of GM's like, I'm not gonna just make 1 car I'm gonna make like a conglomerate I'm gonna have like a
Speaker 1
30:52
cheap car a medium car a luxury car I'm not gonna do all this I'm
Speaker 2
30:55
gonna go out and
Speaker 1
30:56
what he did is like I'm gonna go out
Speaker 2
30:57
and buy all these other existing he bought like Buick and Cadillac and I think he started Chevrolet. I don't know if he bought it,
Speaker 1
31:03
I can't remember. But the point being is it's like, eventually people got tired of just having the 1 black Model T and once they started, then cars became like, hey, your car says something about you
Speaker 2
31:13
and there's all this other things. The entire time that Henry Ford was having success Billy Durant and then really Alfred Sloan because Billy Durant lost control of his company and Alfred Sloan was 1 that brought GM's Billy essentially Alfred Sloan was the 1 that brought Billy Durant's ideas to fruition in the marketplace and because GM had better product offerings once the Model T tapered out that's when GM had this huge rise and I think by like 19... I want to say like 1950 maybe?
Speaker 2
31:43
I don't know the numbers but like let's say 1950, 1960 GM's like 1 of the largest Companies on the planet and really take away there. It's like okay 1 industry you have 2 legendary founders They both have completely different philosophies and sometimes the philosophies Work depending on the time Like think about Microsoft and Apple's like a kind of a
Speaker 1
32:02
good parallel to that. So anyways, didn't mean to go
Speaker 2
32:04
on that tangent. He's saying, listen, that first car, it's like a
Speaker 1
32:08
lot worse, but it's very similar to
Speaker 2
32:09
this 5000000 car. He says the changes have been brought through experience in the making and not through any change in the basic principle. Essentially, hey, I had 1 idea.
Speaker 2
32:16
I'm not changing that. I'm just getting better actually expressing that idea in a physical car Which I take to be important fact demonstrating that given a good idea to start with it is better to concentrate on perfecting it than to hunt around for a new idea 1 idea at a time is about as much as anyone can handle. And now he gets into, okay, why the hell are you building a car in 1893 anyways? It was life on the farm that drove me into devising ways and means of better transportation.
Speaker 2
32:42
For even when I was very young, I suspected that much might somehow be done in a better way. He always says, it's like a man should never do something that a machine can do better. Like that should be our main focus. And he starts out thinking about, it's like, how can I get myself out
Speaker 1
32:56
of the physical labor through like building motors on a farm? That is what took me into mechanics, although my mother always said that I was born a mechanic. I had a kind of workshop with odds and ends of metal for tools before I
Speaker 2
33:07
had anything else. My toys were all tools and they still are. That's a fantastic sentence.
Speaker 1
33:15
The biggest event of my early life was meeting with a road engine about 8 miles out of Detroit 1 day when we were driving into town. So he's driving into town by horse. There is no cars when he's saying driving, right?
Speaker 1
33:26
I was 12 years old. I remember that engine as though I'd seen it only yesterday for it was the first vehicle other than horse-drawn, it was the first vehicle that wasn't horse-drawn that I had ever seen. And so he continues talking about the impact that just this 1 experience had on him, right? From the time I saw that road engine as a boy of 12, right forward to today, My great interest has been in making a machine that would travel the roads
Speaker 2
33:49
And so that's why he has
Speaker 1
33:50
a love of mechanics and he could consider himself a mechanic There is an immense amount to be learned simply by tinkering with things Machines are to a mechanic what books are to a writer? He gets ideas from them and if he has any brains, he will apply those ideas. And then he's going to give advice, especially for young people, but it applies really to everybody that, hey, you can't live the life, like your life, the way other people want you to, even your family.
Speaker 1
34:15
Sometimes you got to say, hey, shut up, mom and dad. My father was not entirely sympathetic with my bent towards mechanics. He thought that I should be a farmer. When I left school at 17 and became an apprentice in a machine shop, I was all but given up for lost by his father.
Speaker 1
34:29
And so now he's apprenticing in a machine shop, And there's just 1 sentence, and I think you already know this, I wanted to make something in quantity. He repeats this a lot. I don't want to make 5 cars a week or 5 cars
Speaker 2
34:41
a day. I would like to make 5 cars every 2 minutes.
Speaker 1
34:45
And then this paragraph is,
Speaker 2
34:46
I think I was trying to explain this to you earlier I don't know how like I'll have to listen to it back if I did a
Speaker 1
34:51
good job or not But I was trying to make this point like listen The reason Henry Ford is so worthy of study is because his product literally changed the world Like the geography like the physical world where we live and what it looks like. That's insane to think about. And he says, 1 of the most remarkable features of the automobile on the farm is the way it has broadened the farmer's life.
Speaker 1
35:12
We simply took for granted that unless the errand was urgent, We would not go into town. And I think we rarely made a trip into town more than once a week. And so what's interesting is again, at this point in history, humans are getting around mainly by horse. So even 1 of the early criticisms
Speaker 2
35:30
of the early automobiles you'd hear from people, which is consistent with human nature, history doesn't repeat, human nature does, is that why do
Speaker 1
35:36
we need a car? We have a horse. And Ford is like, I felt perfectly certain that horses, considering all the bother of attending to them and the expense of feeding them and cleaning up after them, did not earn their keep.
Speaker 1
35:48
And the point is, is like, Picking up horse shit used to be a job in Main cities like there was people all they did was pick up horse shit off of roads And so Henry Ford's point is like what if I just made a product that You know never it couldn't travel it traveled just as far and just as fast as a horse Just the fact that somebody doesn't follow it around with a shovel means my product is better So now he's talking about the like the entrepreneur environment in Uh michigan at this time. Let's say this
Speaker 2
36:14
is like the late 1800s if you were mechanically inclined there's a lot of people wanted to build cars a lot of people were experimenting and so I've brought this up on several pockets in the past But a lot of people surprised I like the the main engines that they were trying to build cars before the internal combustion engine Was steam and electric electricity?
Speaker 1
36:33
There's only 8 people that know there's electric cars in late 1800s, but his whole point here is that he repeats over and he's very suspicious of experts and he feels that
Speaker 2
36:40
if you could actually fill up your competitors company with experts that you're that Like it's a nefarious way to get an unfair advantage.
Speaker 1
36:48
So it says the idea of gas engines was by no means new. But this is the first time that a real serious effort had been made to put them on the market. They were received with interest rather than enthusiasm.
Speaker 1
36:57
And I do not recall anyone who thought that the internal combustion engine would ever have more than just limited use. This is his idea because he wants his cars to travel far and steam, first thing, that was super dangerous because
Speaker 2
37:08
it would explode and electrical cars couldn't go very far. So he's like, okay, well, I'll try to use internal combustion engine. And other people were telling him,
Speaker 1
37:15
he was like, no, you can't do that. It's just gonna be like a tiny little thing. All the wise people demonstrated conclusively that the engine could not compete with steam.
Speaker 1
37:22
They never thought that it might carve out a career for itself. That is the way with wise people. They are so wise and practical that they always know to a dot Just why something cannot be done. They always know the limitations That is why I never employ an expert in full bloom if I ever wanted to kill opposition by unfair means I would endow the Opposition with experts they would have so much good advice that I could be sure that they would do very little work Henry Ford is very blunt actually makes readings autobiography Rather refreshing.
Speaker 1
37:53
I like this the simple way
Speaker 2
37:54
he communicates He's just like this is what I believe I don't care if you agree with me or not kind
Speaker 1
37:58
of thing. What's fascinating is he's doing all these experiments on the internal combustion engine. Here's a I'm about to run over my own point He was doing this while he was working for an electric company.
Speaker 1
38:10
He was offered a job He's like at this point.
Speaker 2
38:12
I was offered a job with the Detroit electric company as an engineer and machinist So he's working at an electrical company during
Speaker 1
38:17
the day and he says, every night and all of Sunday night, I worked on my motor. I cannot say that it
Speaker 2
38:24
was hard work. No work with interest is ever hard. And really the way you think about it.
Speaker 2
38:30
Okay, so he's got a full-time job, he's got
Speaker 1
38:32
a wife. Every night and on Saturdays, right, he's working on this dream of his, this dream of
Speaker 2
38:37
this internal combustion engine every day around him, saying, this is a stupid idea, right? And the way I think about this
Speaker 1
38:42
is like, think about the
Speaker 2
38:42
amount of work ethic put in.
Speaker 1
38:43
He's been told, he's already told us like, what, 5, 4 or 5 times up until this point that he hates lazy people who thinks to idleness and so when I read this section I thought of What I wrote down is like if you can't handle the workload Someone else will and the
Speaker 2
38:56
fact that he not only endured the workload, but he enjoyed it
Speaker 1
38:59
He just said I can't say it was hard work. No work without interest ever heard. He was fascinated by what he was doing.
Speaker 1
39:03
So what's the result? In 1892, I completed my first motor car. Why is that important? Because the public praises people for what they practice in private.
Speaker 1
39:12
He has already been experimenting for years and we're still decades away from the Model T. This is what he called his first car. He said, my gasoline buggy was the first and for a long time, the only automobile in Detroit. This line is hilarious.
Speaker 1
39:27
I had to get a special permit from the mayor and thus for a time enjoyed the distinction of being the only licensed chauffeur in America. I built 3 cars in my home shop, and all of them ran for years in Detroit. So check this out, though. He's selling these cars.
Speaker 1
39:44
Obviously, if there's only 1 car, people are like, what is this thing? Who made it? His boss at the electric company tries to
Speaker 2
39:50
get him to give up his experiments during all this time
Speaker 1
39:52
I kept my position with the electric company and gradually advanced to chief engineer I was making 125 a month but my gas experiments were no more popular with the president of the company than my first mechanical leanings were with my father. It was not that my employer objected to experiments, only to experiments with a gas engine. I can still hear him saying, electricity, yes, that is the coming thing, but gas, no.
Speaker 1
40:15
And this is Ford's point,
Speaker 2
40:17
I remember in 1892, maybe 1893 at
Speaker 1
40:19
this point, No 1 had the remotest notion of the future of the internal combustion engine While we were just on the edge of the great electrical development so everything like all The energy the attention the money the entrepreneurial energy and spirit is going into electricity and yet Ford was able to ignore that distraction and with great independence of mind like no I'm gonna I'm gonna focus on this thing because I'm I like it. I'm interested in it I think it has a future that is so that's easy to say oh yeah think for yourself It is almost impossible to actually do especially when everybody around you is focused on something else And this is where Henry Ford at every there's always like a fork in the road in an entrepreneur founders life, right? It's like at some point none of this is going to work if you don't bet on yourself
Speaker 2
41:04
and usually you're not in the best position when you have to make this decision which is why so few people do it the Edison company offered me the general superintendency of the company but on a condition that it would give up my gas engine and devote myself to something useful. That's their words. I had to choose between my job and my automobile and I chose my automobile.
Speaker 2
41:26
This is a crazy thing, right? This is a calculation based on arrogance. There was really nothing in the way of choice for already. I knew that the car was bound to be a success.
Speaker 2
41:40
I quit my job on August 15th 1899 and went into the automobile business. Why did I say that is a calculation based on arrogance? At this point, there is no such thing as a commercially successful car company. And he's saying, I already knew it was bound to be a success.
Speaker 2
42:00
It
Speaker 1
42:00
gets even more unbelievable. I had no personal money. What money was left over from living was all used in experimenting.
Speaker 1
42:08
But my wife agreed that the automobile could not be given up and that we had to make or break. There was, and this is so important, he's talking about the fact that at the beginning there is no demand like he's essentially describing the creation of a new industry and how humans are likely to react to a change he says there was no demand for automobiles there is never demand for new product at first the horseless carriage not even call an automobile right the horseless carriage was considered merely a freak notion and many wise people explained why it could never be more than a toy no man of money even thought of it as a commercial possibility in the beginning there was hardly anyone who sensed that the automobile could be a large factor in industry. The most optimistic people at this time hoped for a development that was akin to the bicycle. So his first car company fails, it's really important to know because their idea, he still has this idea.
Speaker 1
43:03
It's like, I want it to be available to everybody. At this point, the few people that
Speaker 2
43:06
are making cars, they're extremely expensive. I referenced earlier, so I'm just going to give 1 paragraph till we jump into where he starts the company that's successful the Detroit automobile company is the 1 that he's organized I was a chief engineer and held a small amount of
Speaker 1
43:19
the stock for 3 years. We continued making cars more or less on the model of my first car. We sold very few of them.
Speaker 1
43:24
I could get no support at all toward making better cars to
Speaker 2
43:27
be sold to the public at large.
Speaker 1
43:29
Don't want to make a luxury car like everybody else. I want to make a car for the everyman. The whole thought was to make it was to make the car to order and to get the largest price possible for each car.
Speaker 1
43:39
He finds that idea repulsive. So he leaves and he's
Speaker 2
43:44
like, I'm going to start trying to do this on my own. He rents a shop. It's like a really like a one-story shed and he continues his experiments to find out like what the automobile business Like really is like what
Speaker 1
43:55
is it at this point? What can I do? And so 1 of the first things he builds are race cars And he does that because he viewed racing as
Speaker 2
44:02
a means to an end It's probably racing is the greatest marketing invention of the automobile industry. It's funny that they're using this in like 1899 I actually know I think this is in 1902 actually So they're using this in 1902 you and I know because I've done 3 episodes on Enzo Ferrari Like that's that's laid the foundation obviously ends are for was just maniacally obsessed, like 1 of history's greatest obsessives. He worked 7 days a week, 12 to 16 hours a day for 60 years on Ferrari, because he's an absolutely insane person.
Speaker 2
44:30
Maybe history's greatest obsessive in terms of like, he only thought about that 1 thing. But my point being is like, he used that same idea. The fact that Ferrari is winning all those races in the
Speaker 1
44:40
50s and 60s, maybe even in
Speaker 2
44:42
the 40s, is what built like the demand. They're like, okay, Ferrari means winning. I want some of that winning, I'll buy that car.
Speaker 1
44:49
So anyways, Ford's doing the
Speaker 2
44:50
same thing. He says, we met at the racetrack in Detroit and I beat him. So it's essentially like, it's a spectacle that the press can cover and that's like that's how he's getting his initial traction is the way you think about it His initial traction for these cars he's making.
Speaker 2
45:04
So he says I met about the gross point track and I beat him. That was my very first race and it brought advertising of the only kind that people cared to read. The public thought nothing of a car unless it made speed and unless it beat other racing cars. My ambition to build
Speaker 1
45:16
the fastest car in the world led me
Speaker 2
45:18
to plan a four-cylinder motor." And I feel it's been
Speaker 1
45:20
a few minutes since he's uttered the word service, but don't worry, he's going to say right here,
Speaker 2
45:24
the most surprising feature of business as it was conducted in then, and really he would argue now, outside of the Ford Motor Company, was the large attention given to finance and the small attention given to service. That seemed to me be reversing the very natural process, which is that money should come as a result of work and not before the work. The second feature was the general indifference to better methods of manufacturing as long as whatever was done got by and took the money.
Speaker 2
45:49
So they're like, Hey, we're making money selling 5 and $6, 000 cars, right? The other competitors are in some cases like $10, 000 race cars.
Speaker 1
45:56
It's like, well, what seems to be the problem? Like, we don't have to fix anything. This is great.
Speaker 1
45:59
And Henry Ford's like, no, this is just the very beginning. In other words, a product apparently was not built with reference to how greatly could serve the public
Speaker 2
46:06
but with reference solely on how much money could be had for it and that without any particular care whether the customer was satisfied to sell the customer was enough and when I read this part I said this is what I wrote down this is why Henry Ford is 1 of my favorite entrepreneurs and I mean his approach to work as a person is a creep I cover that on other podcasts and when I read like another biography of him a little more detail but that is obviously absent in
Speaker 1
46:33
this book. But the reason he's 1 of my favorite entrepreneurs is because think of it from the other side, right? We're customers, like you and I, we're all building products, right, for other people to use.
Speaker 1
46:43
But we are customers to way many more businesses than, like, we get to make 1 product, but we have to, 1 product or service, but we buy, you know, what, thousands, like an incalculable number of products and services from other businesses all over our life right so like we have 1 company yeah we are customers of an incalculable number of businesses. Of course you'd want the businesses that you give money to, to have Ford's philosophy. Service to the
Speaker 2
47:11
customer over everything.
Speaker 1
47:15
And yet you know, I mean, go think about the last dozen businesses that you've given money to. How many of them had truly great service? How many were making decisions based on what was best for
Speaker 2
47:24
their customer and not what was best for them? And then we get back to this idea of he detests laziness. There's a great Kobe Bryant quote on this.
Speaker 2
47:31
I can't relate to lazy people. We don't speak the same language. I don't understand you and I don't want to understand you.
Speaker 1
47:36
And so this is Henry Ford's version of that. I noticed the tendency among many men in business to feel that their lot was hard. They worked against the day when they might retire and live off an income.
Speaker 1
47:45
Get out of the strife. Life to them was a battle to be ended as soon as possible. That was another point that I could not understand. For as I reason, life is not a battle except with our own tendency to sag with the downpull of getting settled.
Speaker 1
47:59
If to petrify is success, all 1 has to do is humor the lazy side of the mind but if to grow is to success then 1 must wake up anew every morning and keep awake all day life as I see it is not a location but a journey And
Speaker 2
48:16
the way I personally think about this is I love the climb. I don't care where the summit is
Speaker 1
48:20
and So anything that Henry Ford sets his mind to he's going to be really good at he starts winning races builds more race cars And like just builds faster and better ones. This 1 was hilarious So it's like he made 1 In some cases he would race him right, but he's like this 1 scares the hell out
Speaker 2
48:33
of me I'm not gonna race it We got to find somebody else that does and so they find a guy and this is
Speaker 1
48:38
a description of him The man did not know what fear was So the beginning of
Speaker 2
48:42
the race they have to crank these cars, right? There's no electric starters yet And so our self starters, I guess what they were called at
Speaker 1
48:48
this point in history. And so Henry Ford's the race about to start Henry Ford is like cranking it and listen to what this guy says. Well, I was cranking the car for the start.
Speaker 1
48:56
He remarked cheerily. Well, this chariot may kill me, but they will say afterward that I was going like hell when she took me over the bank and then Ford talks about he's pretty sure that the race car driver never even used the brakes ever he just went like hell like he said he was about half a mile ahead of the next man at the end of the race And so he uses the publicity of the 999, which is the race car that he's talking about here.
Speaker 2
49:21
And it says this 999 advertised the fact that I could build a fast motor car. And so a week after the race, I formed the Ford Motor Company. He makes a mistake at the beginning because he was short on funds and he owned like, I don't know, like 20 percent or maybe 30 percent of the company.
Speaker 2
49:34
So he's working on it for a year or 2. But we get an insight into his personality says listen I very short shortly found that I have to have control and therefore in 1906 with funds that I had earned in the company I brought enough stock to bring my holdings up to 51% of the company so really good think of
Speaker 1
49:47
in the early days of the Ford Motor Company like they're like assemblers, but not even really manufacturers. They're buying the parts from all of all of other companies. They ship them to their like, it's more like
Speaker 2
49:57
a warehouse and a factory,
Speaker 1
49:58
and then they just put it together. But even from that, he's like, okay, he was determined, He's like obsessed with taking weight out and like simplifying
Speaker 2
50:06
the product He's already mentioned a bunch of times and it says the most beat
Speaker 1
50:08
and this is why the most beautiful things in the world are Those from which all excess weight has been eliminated and I would argue same for companies, too They said the best expression of this idea, you know, it pops up over and over again I read the music producers biography. Recruitment writers upset 245 and 1 of my favorite things Rick Rupert said Rick Rubin said is like you know they were described as a producer he's like I'm not a producer I'm a reducer like I take your music
Speaker 2
50:35
and I take away everything that is not the music the most beautiful things in the world are those from which all excess weight has been eliminated that's true for a song a car and a company And then this is funny whenever anyone suggests to me that I might increase weight or add a part to my car I look into decreasing weight and eliminating a part
Speaker 1
50:54
So he just knows human nature. We like to make simple things more complex So somebody's trying to get you to do something complex just fighting the like react vigorously and go in the other direction. It's like, okay, yeah, we're gonna add a part.
Speaker 1
51:05
You want me to add a part or increase weight? Actually, I'm gonna find out a way to decrease the weight
Speaker 2
51:08
I already have. So not only am I
Speaker 1
51:09
not adding to it, I'm making it lighter and more simpler. In other words, sir, I reject your advice.
Speaker 2
51:16
A little bit about his mindset. In the early days of his company argue. I would argue he maintained this mindset his entire life.
Speaker 2
51:23
We did not meaning our company did not make the pleasure appeal our ads or when we teach people about our products.
Speaker 1
51:28
It's not like, oh, it's a pleasure mobile. It's big luxurious, right? He's like, I'm not making he's just like I build what is Steve Jobs said Steve Jobs said I build tools Henry Ford thought the exact same way we did not make the pleasure appeal We never have in its first advertising.
Speaker 1
51:42
We showed that a motor car was a utility He just mentioned the need for control. Why is he talk about the need for control? Why eventually does he have no partners? My associates were not convinced that
Speaker 2
51:53
it was possible to restrict our cars to a single model.
Speaker 1
51:56
So this point I think they like 3 different ones. But his whole thing is like I got 1 idea. And when I figure out how to get that 1 idea, when they do the Model T, they don't sell anything else.
Speaker 1
52:05
And so when I got to this 0.1
Speaker 2
52:06
of my favorite things that I ever read in any of the books I've covered for the podcast came from Charles de Gaulle. And he
Speaker 1
52:12
says intransigence is my only weapon.
Speaker 2
52:15
This is the first of many disagreements with other people that Henry Ford has to overcome to remain true to his 1 dream. And so when his associates convince him to build other cars, this is how he describes it. We scattered our energy among 3 models.
Speaker 2
52:31
He does not like that.
Speaker 1
52:33
And so he goes into detail about what they're making, how much it costs, how many they're selling, all this other stuff. I'm just gonna give you the highlights here. So 1905, 1906, they're selling models, and some of the models are $2, 000 and $1, 000 each.
Speaker 1
52:44
And he's like, it's cheaper than a $6, 000 car or
Speaker 2
52:47
a $4, 000 car that was common at
Speaker 1
52:48
the time But he's like it's still too expensive And so he's like at $2, 000 and a thousand we only sold 1, 500 cars And so he eventually goes like this continuous improvement This is still way before the Model T but keep in mind, but he gets the price down instead of 3000 it's 750 and 600 and this is where he's like oh I'm right and everybody else is wrong because once he got the price low enough they goes from selling 1500 cars to almost 8500 so it's fascinating is like even though they're selling thousands and thousands of cars, he's getting closer to his original idea. He's not there yet. His other people, like the shareholders and other people in the business are like, okay, like this is good enough.
Speaker 1
53:27
But again, Henry Ford's like, no, I just have 1 idea. I'm glad of the progress I'm making towards it. I think I'm getting closer but I'm still not there yet. And so it says we were a prosperous company.
Speaker 1
53:35
We might have easily sat down and said now we've arrived let us hold on to what we got. Indeed there was some disposition to take this stand. Some of our stockholders were seriously alarmed when our production reached a hundred cars a day. They wanted to do something to stop me from ruining the company.
Speaker 1
53:51
And when I replied to the effect that 100 cars a day was only a trifle and that I hoped long before to make a thousand a day, they were shocked." And he says, "...the temptation to stop and hang on to which to what 1 has is quite natural I can entirely sympathize with the desire to quit a life of activity and retire to a life of ease I have never felt the urge myself. So again, there's like a little bit of a ego there. I was like, yeah, they thought 100 cars a day was fine. They thought a thousand cars a day was crazy.
Speaker 1
54:23
He's like, I understand. It's very natural. You don't mess up what you have. You know, I sympathize your desire to kind of take it easy.
Speaker 1
54:29
But That's not why I'm here. I have never felt the urge myself. And he continues, it was however no part of my plan to do anything of that sort. I regarded our progress merely as an invitation to do more.
Speaker 1
54:44
And why is that? Because he says, I had been planning every day through these years Towards a universal car and we are not there yet. So therefore we are not stopping And so now we get to his like Henry Ford's iPhone so you can think of it I designed 8 models before the Model T. I made the following announcement.
Speaker 1
55:04
I will build, this is him quoting himself, I will build a motor car for the great multitude. It will be large enough for a family, but small enough for the individual to run and care for. It will be constructed of the best materials by the best men to be hired after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own 1.
Speaker 1
55:26
That is Henry Ford's 1 single idea. It will be so low in price that no man making a good salary would be unable to own 1. He has to the important part is like it's easy to say, oh, just make my product cheaper. But he's like,
Speaker 2
55:40
I don't want to make a low quality cheap product. I want to make a high quality cheap product.
Speaker 1
55:45
And so for there, he's literally got to invent the ability to mass-produce cars, which did not exist before Henry Ford. So he makes this statement, they runs this ad, and it says the question was already being asked. How soon will Ford blow up?
Speaker 1
55:59
Nobody knows how many thousand times it has been asked since it is asked only because of the failure to grasp that a principal rather than individual is at work and that the principle is so simple that it seems mysterious. And so then he goes into all I mean there's a million different decisions he
Speaker 2
56:17
has to make and a
Speaker 1
56:17
million different processes that he has to examine and just continuously improve over and over again and you do that for a decade after decade and you get to be able to build a high-quality product at a price nobody can match but the way he his brain works is very similar to
Speaker 2
56:30
the way Rockefeller's brain works and so for example he said he's talking about the layout of the factory in the workflow.
Speaker 1
56:36
And he says, Hey, if we can save 10 steps a day for each of the 12000 employees that I have, you will save 50 miles of wasted motion and misspent energy every day. So that's his idea is like Ford's focus on the continuous improvement as his company scaled right room it's gonna remind you of when I just reread Titan it's episode 248 and Henry Ford and Rockefeller understood it's like these little things make a big difference because our organizations are going to be gigantic. And so Rockefeller's watching a machine that would like solder caps to cans and he's like how many drops of solder do you use on each can and the guy's like we use 40 and he's like have you have you tried 38 Rockefeller asked and the guy's like no but I will And so he tries 38 drops and a small percentage of the cans leaked.
Speaker 1
57:22
So that doesn't work. But then they try 39 instead of 40 and none of them leaked. And so at 39 drops of solder became the new standard at Standard Oil at all the Standard Oil refineries. And why is that important?
Speaker 1
57:36
Rockefeller is
Speaker 2
57:37
going to tell us right now that 1 drop of solder and I'm most likely pronouncing that word incorrectly,
Speaker 1
57:41
by the way, that 1 drop saved $2, 500 the first year. But that export business kept on increasing after that and doubled and then quadrupled and then became immensely greater than what it was and the savings has steadily gone along 1 drop on each can and now has amounted since to many hundreds of thousand dollars every year 1 drop. On 1 process on 1 tiny part of a gigantic enterprise.
Speaker 2
58:08
That is how Rockefeller and Ford thought. Then we go back to this idea because he repeats it over and over again. He says, like, if
Speaker 1
58:16
you actually know what you're doing you would never consider yourself an expert. None of our men are experts. We have most unfortunately found it necessary to get rid of a man as soon as he thinks that he's an expert.
Speaker 1
58:25
Because no, this is such a good line, check this out. No 1 ever considers himself an expert if he really knows his job. A man who knows a job sees so much more to be done than he has done, that he is always pressing forward and never gives up an instant of thought to how good and how efficient he is. Thinking always ahead, thinking always of trying to do more brings a state of mind in which nothing is impossible.
Speaker 1
58:51
The moment 1 gets into an expert state of mind, a great number
Speaker 2
58:55
of things become impossible. Summarize that no 1 is an expert if he truly knows his job. This is another, I just love his like unapologetic level of optimism that he
Speaker 1
59:06
has and probably for mostly for his own like skill set and thoughts, especially when you hear the way he talks about other people but this is 1 of my favorite Henry Ford quotes. I refuse to recognize that there are impossibilities. I cannot discover that anyone knows enough about anything on this earth definitively to say what is and what is not possible.
Speaker 1
59:27
And so of course, if you believe that you're always focused on this continuous improvement in every little aspect of your business, right? Not a single operation is ever considered as being done in the best or cheapest way in our company. What is that? What is he saying?
Speaker 1
59:39
Things can always be done better. He just says it with more words that he needs to. Not a single operation is ever considered as being done in the best or cheapest way in our company. Things can always be done better.
Speaker 1
59:50
That is the idea behind that sentence. And so main theme in history of entrepreneurship is that repetition is persuasive. I've now moved like 20 pages ahead of where we just were and he's still at it. We are never satisfied with the way that everything is done in any part of the organization.
Speaker 1
01:00:04
We always think it ought to be done better and that eventually it will be done better. And why? 1 cent saved on each part would amount to millions a year. Therefore, in comparing savings, the calculations are carried out to the thousandth part of a cent.
Speaker 1
01:00:18
That is how far he thinks he takes things. My improvements may be so minuscule that I cannot even calculate them unless I take out my calculations to the thousandth part of a cent. Imagine trying to compete with this guy. Then he has
Speaker 2
01:00:32
a bunch of one-liners and maxims spread throughout the entire book. This 1 I love, because essentially when you're studying history, that's what you're doing. It's like, I don't care what we think human nature is or
Speaker 1
01:00:41
it ought to be. It's like, what is it? Well, just read it.
Speaker 1
01:00:44
Like if you're reading these books, It's like you're watching tape. It's like the same thing, the same way a basketball player watches tape, a
Speaker 2
01:00:48
game tape or any kind
Speaker 1
01:00:49
of athlete watches game tape. That's a reading biographies. We're just watching game tape of some of the greatest people in history, like how they did life, right?
Speaker 1
01:00:57
And he says there are far too many assumptions about what human nature ought to
Speaker 2
01:01:00
be and not enough research into what it is. Another one-liner, the habit of acting short-sightedly is a hard habit to break.
Speaker 1
01:01:08
Another one-liner, there will never be a system invented which will do away with the necessity of work. Idle hands and minds were never intended for any 1 of us. Work is our sanity, our self-respect, and our salvation.
Speaker 1
01:01:23
Then he takes the same idea and
Speaker 2
01:01:24
he applies it to a different domain.
Speaker 1
01:01:25
He's like, listen, if you the reason that I'm preaching continuous improvement and I'm kind of like maniacally obsessed with this stuff because his whole point is like, listen, continuous improvement makes your business likely to survive economic downturns. There is no use waiting around for business to improve in a, like an economic slump. If a manufacturer wants to perform his function, he must get his price down to what people will pay.
Speaker 1
01:01:45
There is always, no matter what the condition, a price that people can and will pay for a necessity. And always, if the will is there, the price can be met. It cannot be met by lowering quality. It has to be met by lowering price.
Speaker 1
01:02:00
And the way he lowers prices is because he eliminates waste. And so all these ideas, it's kind of like a snake eating its tail. Continuous improvement means less waste. Less waste means lower prices.
Speaker 1
01:02:11
Lower prices means that your business is more likely to survive economic downturns.
Speaker 2
01:02:16
And then once I got to this part for the second time, I wrote to myself, this is when I realized that this book is less of an autobiography and more of a manifesto. There are short-sighted men who cannot see that business is bigger than any 1 man's interests. Business is a process of give and take, live and let live.
Speaker 2
01:02:33
It is a cooperation among many forces and interests. Whenever you find a man who believes that business is a river whose beneficial flow ought to stop as soon as he reaches him, you find a man who thinks he can keep business alive by stopping its circulation. And what is the circulation of business to Henry Ford? Service to others.
Speaker 1
01:02:51
Let's go back to this idea we told us earlier. Hey, start with the product and everything that the business needs, that that product needs, right, that in other words that we call business, will appear around it. And it also clarifies your thinking.
Speaker 1
01:03:04
He says, you will notice that the reduction of price comes first. We have never considered any cost as fixed. Therefore, we will first reduce the price to a point where we believe more sales will result. Then we go ahead and try to make that price so really what is he saying at this point in the book if we had to sell the model T for only $300 and right now it costs $400 and $490 how would we be able to do it well 1 way to force our ways ourselves to figure that out I say the price is now 300 how do we make that happen a large part of the book is the fact that he feels a lot of people confuse finance and business he does not feel business he does not feel finances business is business there's a lot of These opinions where he's like you need so much financing because your business sucks It's basically what he says we have demonstrated that we did not need need any money And why is he saying that at this point because he's like my business is throwing off Oodles of cash.
Speaker 2
01:03:56
I don't even know what to
Speaker 1
01:03:57
do with it And so he's gonna elaborate on his philosophy says money is only a tool in business. It is just a part of the machinery. You might as well borrow 100, 000 lathes as $100, 000
Speaker 2
01:04:09
if there's trouble inside your business. So lathe is just a machine for like shaping wood or metal or something else you would need in the manufacturing process. So he's like, OK, you might as
Speaker 1
01:04:18
well borrow 100, 000 lathes as $100, 000 if the trouble is inside your business. More lathes will not cure it. Neither will more money.
Speaker 1
01:04:25
So his point is he's analyzing the way that a lot of
Speaker 2
01:04:28
financing has been done. He also talks about this is a big problem in the railroad industry
Speaker 1
01:04:32
and why he bought a railroad at 1 point is because like
Speaker 2
01:04:34
they have a crappy business that's mismanaged and wasteful and they throw more money at it. And that's not
Speaker 1
01:04:39
what you do. His opinion is like you solve the problem first and usually the financing that you need is in the elimination of the waste. Right?
Speaker 1
01:04:46
So it says more weights will not cure it. Neither will more money. Only heavier doses of brains and thought and wise courage can cure. A business that misuses what it has will continue to misuse what it can get.
Speaker 1
01:05:00
The point is, cure the misuse. When that is done, the business will begin to make its own money. He continues that, hey, this environment, this easy money environment is not helping any. Barring may easily become an excuse for not boring into the trouble within your business.
Speaker 1
01:05:16
And his point is like, okay, your business is going through difficult financial times, good. Problems are just opportunities and work clothes. And many a businessman should thank his stars for the pinch, the economic pinch, which showed him that his best capital was in his own brains and not in bank loans. And so there's this idea that all
Speaker 2
01:05:36
a business is is a problem solving machine. This came from, I did this book, who knows, 5, 4 years ago. It's Danny Meyer's fantastic autobiography.
Speaker 2
01:05:43
It's called Setting the Table. And he's at like a dinner with the guy from state this guy named Stanley Marcus from Neiman Marcus and he's much older gentleman if I remember correctly and Danny's like, you know just like down and out about a problem and so I'm gonna read from that book right now
Speaker 1
01:05:58
And he says opening this new restaurant I said might be the worst mistake I've ever made. Stanley set his martini down, looked me in the eye, and said, so you made a mistake. You need to understand something important and listen to me carefully.
Speaker 1
01:06:08
The road to success is paved with mistakes well handled. His words remain with me through the night. I repeated them over and over to myself and it led to a turning point in the way I approached my business. Stanley's lesson reminded me of something my grandfather had told me.
Speaker 1
01:06:24
The definition of a business is problems. Business is problems. His philosophy came down to a simple fact of business life. Success lies not in the elimination of problems, but in the art of creative problem, excuse me, in the art of creative, profitable problem solving.
Speaker 1
01:06:41
The best companies are those that distinguish themselves by solving problems most effectively. The way I think about this idea is business is problems and successful companies are just effective problem solving machines. And that is a point that Henry Ford is making. You should thank your stars for the problem that you're having, because once you solve it, you will now have better problem solving abilities.
Speaker 1
01:07:03
And therefore, it's likely over time that your company becomes more successful as a result of you being forced into this very difficult position to actually grow and acquire these new skills because business is problems. And the reason that Ford is so fanatically obsessed with continuous improvement and continuous problem-solving is because his view is completely counter to anybody else in business at this point and he talks about this old-time business went
Speaker 2
01:07:28
on the doctrine that prices should
Speaker 1
01:07:29
always be kept to the highest point at which people will buy. My business has taken the opposite view. And so what I wrote here is Ford would not agree with Warren Buffett.
Speaker 1
01:07:38
Ford would say, just because you can raise prices on See's Candy and it doesn't like sales don't go down and more people buy doesn't mean that you should.
Speaker 2
01:07:49
Ford and Buffett are playing different games. Another main point of Ford. So listen, I want low prices and high wages and this
Speaker 1
01:07:55
is why this is fantastic. There's something sacred about wages. They represent homes and families and domestic destinies.
Speaker 1
01:08:02
People ought to tread very carefully when approaching wages. On the cost sheet, wages are mere numbers. They're mere figures. Out in the world, wages are bread boxes and coal bins, babies cradles and children's education, family comforts and contentment.
Speaker 1
01:08:18
What he's really telling you and I here is never forget the people behind the wages you pay. Wages aren't the same as your other expenses. There is a ruthlessness that Henry Ford definitely has though. And his point is everything and everybody must produce or get out.
Speaker 2
01:08:37
What is he talking about there? In a company that's dedicated to service, there's no room for waste. And he has an entire paragraph dedicated to 1 of my favorite lines.
Speaker 2
01:08:45
I read George Lucas's fantastic biography. It's called George Lucas Life. The writer is Brian J. Jones.
Speaker 2
01:08:51
I think it's Founders Number 35. But there's a line in that book I never forgot. He says, George Lucas unapologetically invested in what he believed in most, himself. It is possible to even overemphasize the saving habit.
Speaker 2
01:09:01
It is proper and desirable that everyone have a margin, margin of safety, have some money in
Speaker 1
01:09:05
the bank, right? It is really wasteful not to have 1, if you can have 1, but it can be overdone. We teach children to save their money as an attempt to counteract thoughtlessness and selfish expenditure.
Speaker 1
01:09:14
That makes sense, right? But that has a value, but it's not always positive. It does not lead the child out into the safe and useful adventures of self-expression or self-expenditure. To teach a child to invest and use is better than to teach them to save.
Speaker 1
01:09:28
Most men who are laboriously saving a few dollars would do better to invest those few dollars first in themselves and then in some useful work eventually they would have more money to save as a result young men ought to invest rather than safe they ought to invest in themselves and then create creative value ok then I'm going
Speaker 2
01:09:48
to spend some time in this section it's chapter called the railroads and it talks about hey this is a his perfect illustration of the idea of like, you need to copy the how and not the what. And the fact that he needs certain railroads to transport his products all around the country and they're so efficient it's become such a large problem at this point in his career that he's going to
Speaker 1
01:10:08
buy 1. And this is where he really compares and contrasts. He's like, this is why I'm writing the book, this is my philosophy on how to build a business, and this is why, because how most businesses are poorly run.
Speaker 1
01:10:17
I'm entirely without any disposition to pose as a railroad authority. There may be railroad authorities, but if the service as rendered by the American railroad today is the result of the accumulated railroad knowledge, then I cannot say that my respect for the usefulness of that knowledge is all is all that profound. Let me pause right in there. What is he saying?
Speaker 1
01:10:35
I see no evidence of
Speaker 2
01:10:36
this knowledge because it's not manifested in service.
Speaker 1
01:10:39
I have not the slightest doubt in the world that the active managers of the railways, the men who actually do the work, are entirely capable of conducting the railway of the country to the satisfaction of everyone. The men who know railroading have not been allowed to manage railroads. So that's his way of saying, hey, got no problem with the actual workers doing the job.
Speaker 1
01:10:58
It's the management and the administrators that are greedy and wasteful. And 1 thing he notices as soon as he buys the railroad is that they don't even actually reinvest. They just take the money as dividends put
Speaker 2
01:11:07
in their pocket, right? A very small fraction of the money earned by the railways has gone back into the rehabilitation of their properties.
Speaker 1
01:11:13
And so then he's examining like, where's all this money going? And this goes back to the fact that Ford is very profound er and worker. He just despises anything that is not work directed at service.
Speaker 1
01:11:24
So he talks a lot of shit about bankers and lawyers and administrators and all that stuff. The natural ally of the banker is the lawyer. Such games as have been played on the railroads have needed expert legal advice. Lawyers like bankers know absolutely nothing about business.
Speaker 1
01:11:41
In our experience with the Detroit, the name of the railroad is irrelevant. In our experience with our railroad, we bought the railroad because it's right away interfered with some of our improvements on the River Rouge, this giant plant that he's making. We did not buy it as an investment or because of its strategic position. We literally bought it because you're interfering with what we need to get done.
Speaker 1
01:12:02
And if you can't get the job done, then we'll just buy it and we'll do it ourselves." So it says, since we bought the railroad because it interfered with our plans, we have to do something with it. The only thing to do is to run it as a productive enterprise, applying to it the exact same principles as applied to every department in our business. And when we think about what he's saying there, it's like, listen, since I own this thing, it needs to be an asset and not a liability. And so I'm just going to use the same principles that I use for building cars as building the railroad.
Speaker 1
01:12:27
This is why, again, I'd pick up the whole book and just read this entire chapter. It's fascinating. It is true that applying the rule of maximum service at minimum cost, which he's always doing, right? That's a really great way.
Speaker 1
01:12:36
What is Henry Ford distilled down to 5 words? Maximum service
Speaker 2
01:12:40
at a minimum cost. Maximum service at minimum cost. It's 5 words.
Speaker 2
01:12:44
5 word summary of Henry Ford for you.
Speaker 1
01:12:45
Maximum service at minimum cost has caused the income of the road to exceed the outgo. Meaning it was losing money. Now it's turning a profit, which for that road represents a most unusual condition.
Speaker 1
01:12:54
See, he also kind of low key funny because I kind of like talking shit there. It has been represented that the chain, because it's like for this road, that's an unusual condition. How dare they make more? How is, how do they have more revenue than expenses what's happening here it has been represented at the changes we have made and remember that they've been made simply as part of the day's work are peculiar oh
Speaker 2
01:13:14
it says oh I need to back up here
Speaker 1
01:13:16
they're saying hey this is like revolutionary like this is how is this happening and Ford's like these are not revolutionary And they could actually
Speaker 2
01:13:24
be applied to railroad management in general. And then
Speaker 1
01:13:27
he just has like a very common sense way of breaking down what needs to be fixed. He takes the inventory, okay, this is the business I own now, these are the assets, these are the people working there, like let's just go through and do a thorough, like is everything being done as good as it could do? And in other words, like what's about to happen is like the railroad was being run in the exact opposite way that Henry Ford would run a business.
Speaker 1
01:13:46
All of the rolling stock was in extremely bad condition and a good part of it would not run at all. All the buildings were dirty, unpainted, and generally run down. The roadbed was something more than a streak of rust and something less than a railway. The repair shops were overmanned and under-machined.
Speaker 1
01:14:00
Practically everything connected with the operation was conducted with a maximum of waste. There was, however, an exceedingly ample executive and administrative department and of course a legal department. So this is what we're saying. Where are they investing the money in their trains?
Speaker 1
01:14:14
No. Are they investing the money in the track? Nope. Are they investing the money into the latest technology so that they can actually have more machines doing work instead of the men doing it?
Speaker 2
01:14:23
No, they're not doing that. Where are they putting the money? There was an ample executive and administrative department, and of course, a legal department.
Speaker 2
01:14:30
So he's like, oh, we're
Speaker 1
01:14:31
not going to do this. There had been an executive office in Detroit and we closed that up and then we put that administration in charge of 1 man. And so he goes through some of the numbers here.
Speaker 2
01:14:39
It's like, oh, there's
Speaker 1
01:14:39
25 administrators. Okay, see ya. We're gonna have 1 dude.
Speaker 1
01:14:43
1 dude is gonna do all that. And he just goes through and does this line by line. All these unnecessary accounting and red tape are thrown out and the payroll of the road was reduced from 2, 700 people down to 1, 650. And he goes on for quite a bit.
Speaker 1
01:14:56
I'm not
Speaker 2
01:14:56
going to read all that. I'm just going to give you what was my interpretation of what's taking place. Most businesses are overstaffed.
Speaker 2
01:15:02
The people running them are just not skillful operators. And so then he's like, okay, well you can, there's also a
Speaker 1
01:15:08
way to increase money is that you can actually reduce time. We are not pouring in great amount of money. Everything is being done out of the earnings from the railroad.
Speaker 1
01:15:16
That is our policy. The time of our freight movements have been cut down about 2 thirds. And so he does that idea, the idea behind what he, that sentence right there, he does that a lot. By increasing speed, he actually creates money.
Speaker 1
01:15:30
And there's very similar where Apple, that's 1 of the best things Tim Cook did at the very beginning when when Steve Jobs came back to Apple and Apple actually did this because they increased inventory turnover when Steve came back and it was like I Forgot how much money saved but it was a good amount. It was like tens of millions It might even been like 200 million. It was a good amount of money. Just like making things go faster.
Speaker 1
01:15:49
We are routing as much as we can around our own business over the road, but only because on this road we get the best service. For years past, we have been trying to send freight over this road that I now own, that I previously didn't is what he's telling us, right? Because it was conveniently located. But we've never been able to use it to any extent because of the delayed deliveries.
Speaker 1
01:16:07
And another way to think about that is like we like the he made the risk in buying this railroad was actually really tiny to Henry Ford because he knew as trying to be a customer of the business, he knew it was a poorly run business. So it's like, there's obvious room for improvement here, they're just not doing it. So just increasing the obvious things makes this risk in buying the asset. I think he only paid like 5000000.
Speaker 1
01:16:30
He paid 5000000 for the road and I think he winds up selling it for like $30 million. Those numbers might be wrong, but it's a very small investment. The risk is very tiny because from the outside, it's like, oh, these guys just don't know what they're doing. And his point was, it's like, wait, I actually fixed what was wrong with the road.
Speaker 1
01:16:43
Everybody previously just kept raising more money. So he says, will a billion dollars solve this sort of trouble? No, a billion dollars only makes the difficulty 1000000000 dollars worse. The purpose of the billion is simply to continue the present methods of railroad management and it is because of the present methods that we had any railroad difficulties to begin with.
Speaker 1
01:17:00
So what is he saying? You're just throwing more money at incompetent people.
Speaker 2
01:17:05
Okay, and then we'll end where we began. This is Henry Ford summarizing his philosophy.
Speaker 1
01:17:11
It has been thought that business existed for profit. That is wrong. Business exists for service.
Speaker 1
01:17:18
If I did not think so, I would not keep working, for the money that I make is inconsequential. Business must always give more to the community than it takes away. In the first chapter was set forth my creed. Let me repeat it, for it is at the basis of all of our work.
Speaker 1
01:17:35
Number 1, an absence of fear of the future or a veneration for the past. 1 who fears the future, who fears failure, limits his activities. Failure is only the opportunity more intelligently to begin again. There is no disgrace in honest failure.
Speaker 1
01:17:52
There is disgrace in fearing to fail. What is past is useful only as it suggests ways and means for progress. Number 2, a disregard of competition. Whoever does a thing best ought to be the 1 to do it.
Speaker 1
01:18:09
Number 3, the putting of service before profit. Without a profit Business cannot extend. There is nothing inherently wrong about making a profit. Well conducted business enterprises cannot fail to return a profit.
Speaker 1
01:18:24
But profit must and inevitably will come as a result of good service. It cannot be the basis. It must be the result of service. Number 4, manufacturing is not buying low and selling high.
Speaker 1
01:18:39
It is the process of buying materials fairly and with the smallest possible addition of cost, transforming those materials into a consumable product and distributing it to the customer. There is always something to be done in this world and only ourselves to do it. Every advance begins in a small way and with the individual. And that is where I'll leave it for the full story.
Speaker 1
01:19:06
Highly recommend buying 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. As you're buying more books and reading more books, Make sure you get the Readwise app. Readwise is where I store all of my notes and all of my highlights for every single book that I read.
Speaker 1
01:19:23
I've done this for years, and it's
Speaker 2
01:19:24
1 of the main benefits of listening to this podcast, because not only have I read over 100, 000 pages in
Speaker 1
01:19:29
the history of entrepreneurship, But the way I don't forget these things is because I put them in readwise and I read them over and over and over again. It is by far the best app
Speaker 2
01:19:36
I pay for and I could not make the podcast without it. So founders tend to read a ton. And if
Speaker 1
01:19:42
you're going to read, you might
Speaker 2
01:19:43
as well remember what you read. And so
Speaker 1
01:19:45
if you go to I think it's I'll leave the I should know the link by now. She's the only the link in the show. That's because I'm wrong.
Speaker 1
01:19:50
But I think it's read wise dot IO for such founders and you get 60 days free. It's fantastic. That is 266 books down. 1000 to go.
Speaker 1
01:20:00
And I'll talk to
Speaker 2
01:20:01
you again soon. Okay, so I want to use like these ends of the episodes as a way to give you like more context around like the founder mentality that the founders of these companies that are advertising on the podcast have. And so I spent 48 hours in California with Sam Hinckley at his invitation And at the beginning of this podcast, I said, hey, you should really go to 87capital.com and read his website because it's unlike any other like venture capitalist website that I've seen.
Speaker 2
01:20:28
And on the website, he talks about the fact that, you know, he has founders over to his house and the context of the weekend was like listen you're going to go on Patrick's show on invest like the best
Speaker 1
01:20:36
and it'd be interesting just to talk about what you see is the future of founders and so I show up I think it was I think Friday pretty sure it's Friday I'm so disoriented this last week has been so insane. But I started talking to him, I was like, I just cannot absolutely believe what the hell is happening in these last few days. Like it's been totally insane and in a fantastic way.
Speaker 1
01:20:55
And so we talked
Speaker 2
01:20:55
a lot about like, okay, what is like, where do you think founders is going? Is there anything that you could build around it that you think is interesting. Essentially, you focus on the personalities of the founders as they build companies on your podcast, as you're reading in the books, what is that for you?
Speaker 2
01:21:10
And a lot of that comes from, and my response to a lot of this is rather simple. It's like, I found something I truly love to do, I think I'm really good at it. I'm completely obsessed with it. I think about it 7 days a week.
Speaker 2
01:21:20
And to get me to stop, they're gonna have to pry the microphone out of my cold, dead hand.
Speaker 1
01:21:25
And just like in the podcast that you listen to, the reason I think Henry Ford's 1 of
Speaker 2
01:21:29
my favorite entrepreneurs is because of this dedication to service and I'm like hyper hyper like the way I think about it is okay every before for every 1 hour of audio that I make for on Founders Podcast I've spent about 20 hours researching And I do that because I am like paranoid, like psychotically paranoid about wasting anybody's time.
Speaker 1
01:21:52
And so therefore I'm willing to not only do a ton of research before I record
Speaker 2
01:21:56
the episode, but after, like after I'm reading, then I reread my highlights, I go over my notes, I listen to past podcasts.
Speaker 1
01:22:02
And so we spent this weekend thinking about, okay, is there anything else that
Speaker 2
01:22:05
we can build on top of founders that actually makes like my kind of like mission, my service mission, even better, like it enhances it for the listener.
Speaker 1
01:22:13
And what I was telling him is I really think about it like Phil Knight thought about Nike, where he's just like, in the book, Shoe Dog, he's like, hey, why can't I try to sell encyclopedias or mutual funds? He's tried to sell 2 different things.
Speaker 2
01:22:25
I couldn't remember what it was. 1 is, I think it was definitely mutual funds. I don't remember if it
Speaker 1
01:22:28
was encyclopedias or not, but he didn't have much success. Then he starts having this idea, it's like, hey, I'm gonna import these Japanese running shoes, I'm gonna put them
Speaker 2
01:22:34
in the trunk of my car, and I'm gonna drive around to all the track and field meets in Oregon. And he like sells everything out. And he's just like, what the hell's different?
Speaker 2
01:22:41
Like, why am I having so much success now that I didn't have previously? And he realizes like, because belief is irresistible. He's just like, I'm not selling a product, I'm selling a belief. And so his thing is like, I genuinely believe, the foundation of Nike was, hey, I genuinely believe if people get out and run a few miles every day, which there was no jogging industry.
Speaker 2
01:23:01
He said people in that book, they thought running just for fun was weird. People would throw stuff at you on the side of the road, if I remember correctly. And So his whole thing is like I really genuinely believe that the world would be a better place if people got out and ran a Few miles every day and I've my version is like I think the world be a better place and I think founders would be better at their jobs if they just read biographies. You don't have to read hundreds of them, but you can read 1 a month.
Speaker 2
01:23:23
I think if you do that over a long period of time, undoubtedly, your life and your career will be better. Then Sam did exactly what we're doing on the podcast. He started talking about all the
Speaker 1
01:23:31
other founders, how they think about different things. And he also introduced me to extremely impressive people, I
Speaker 2
01:23:37
can't say who they are, but it was refreshing to be able to sit down face to face with other people and be like, oh, the same way that person thinks about whatever it is they're doing, I feel the exact same way. And that happened multiple times.
Speaker 1
01:23:48
And unique thing is, is like this relationship with Sam is not transactional. He even said, listen, there is a chance that we never do any kind
Speaker 2
01:23:54
of business together. And even if we're not linked up financially, I'm never gonna stop trying to
Speaker 1
01:23:58
help you. And obviously this is a two-way street. I send him interesting stuff all the time.
Speaker 2
01:24:01
I send him either texts or emails like dude check out
Speaker 1
01:24:04
this book Oh watch this video. This was really cool. You might find this valuable And so really that's all I'm trying to do is like I like all this stuff that happened this week like I'm extremely grateful for but It's Part of me is uncomfortable in the sense of like people try to
Speaker 2
01:24:17
make me more than I am and at the fundamental core is like I'm just a dude that likes to read and Talk about what he read and as long as I focus on that and only keep thinking about myself like that and do it over a Long period of time I'll get everything I want out life And I really do think it's fascinating where it's just like, man, if I'm gonna filter through all this information, I would like to be able to break it down in pieces and let other people benefit from it. Whether it's a tweet, an Instagram post, or a long form podcast, it's all the same shit. And the magic of doing this as a podcast is I get to meet other people like Sam that Do that does the same thing
Speaker 1
01:24:51
we were walking around Stanford's campus and I told him
Speaker 2
01:24:54
my idea that I'm working on it's kind of secret Okay, I'm not gonna say yet I
Speaker 1
01:24:59
was like man this just seems like no 1 else is doing this. This is such
Speaker 2
01:25:01
a good idea. And then, now this is what, I don't know, 3, 4 days,
Speaker 1
01:25:04
I don't even know what day it is. It's crazy. 3 or
Speaker 2
01:25:06
4 days later, and what I thought was like science fiction is very, looks like it's, like basically I could do what I wanted to. Basically what I thought my idea was, it was like maybe a few years away, it looks like it's available now and I should jump on it and he sent it to me. So when I switched over, so I'm telling you all this because when I switched over to an ad-based product, away from a subscription-based product, Just like I want the podcast to be educational and entertaining, I want these ads.
Speaker 2
01:25:37
This doesn't feel like an ad because technically I guess it is an ad. I'm gonna say, hey if you want to raise money and you want a partner like Sam, go to his website 87 Capital, right? But more than that, it's just like I think listening to them even if you have no desire to do that you'll get something out of it I don't want anything I do just to be like gimme gimme gimme you know I really I think giving giving giving there's this great idea as a matter of fact that I got from this rapper Russ
Speaker 1
01:26:00
who I've taken a bunch of ideas from. If you've listened to this podcast a bunch,
Speaker 2
01:26:04
you know I reference him because he's like this independent rapper that came in his own way and now, you know, has built up a, his business is worth over $100 million. He actually just had somebody try to buy it for over 100 million and he turned it down because he feels like, you know, this is just the beginning. Like he can build out all kinds of things, all kind of businesses around him.
Speaker 2
01:26:22
But he has this idea of being instead of a go-getter, being a go-giver. And that he feels a lot of the stuff that's happening in his life is just because he's constantly giving out and trying to help people in the forms of like free music, free ideas, whatever the case is. And I just like that idea, like be a go-giver. And I think as long as, that's clearly, that's clearly even if Sam wouldn't articulate it that way, like to me, that's what he's doing.
Speaker 2
01:26:42
And that's exactly what I'm trying to do. It's like, okay, let me just take this extremely serious, like what Charlie Munger said, find what you're best in the world at or find what you're best at and just Pound away at it forever. I think is the term he used and I'm like, okay Well, I think I'm pretty good at this let me just keep doing it and the more I do it the more benefit I put out into the world for other people and I'll automatically get a small percentage of the value I create and I think that's cool. So that's really it When you listen to these I hope you stick around to the very end because there's gonna be like these streams of consciousness They're gonna tie in all these different weird ideas Not only like the experiences that I'm having my life, but that are in the books as well.
Speaker 2
01:27:17
And at the end of the day, I really, really appreciate the fact that I have, that you deem my work worthy of your attention. I don't take that lightly at all. So thank you very much for listening. I gotta stop talking.
Speaker 2
01:27:28
I've been not on this podcast, but I've been on a bunch of other interviews this week and my voice is shot so I think I'm not going to talk for 24 hours. I'll talk to you later.
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