What I learned from reading The Richest Man Who Ever Lived: The Life and Times of Jacob Fugger by Greg Steinmetz.

In the days when Columbus sailed the ocean and da Vinci painted the Mona Lisa, a German banker named Jacob Fugger became the richest man in history.

Maybe you've heard of him, but usually his name gets blank stares.

His influence rests on what he did for Austria's Hasburg family dynasty.

When Fugger made his first loan to the Hasburgs, they didn't even have Vienna.

By the time he finished, they had half the known world.

While they got the titles, Fugger got the money.

His biggest client died penniless, and he died with the biggest fortune the world has ever known.

Most people become rich by spotting opportunities, pioneering new technologies, or besting opponents in negotiations.

Fugger did all of that through a mix of gumption and intellect, but he had an extra quality that allowed him to rise even higher, nerve.

In an era when kings had unlimited power, Fugger had the nerve to stare down the heads of state and ask them to pay back their loans with interest.

1 of his sneaky financing schemes provoked an outraged Martin Luther to start the Reformation.

In his biggest contribution to finance, he got the Pope to legalize money lending.

He financed Magellan's circumnavigation of the globe, and he helped defeat the mobs in the first clash between capitalism and communism.

In The Richest Man Who Ever Lived, the author Greg Steinmetz for the first time gives Fugger his due.

That is from the inside cover of the book that I'm going to talk to you about today, which is The Richest Man Who Ever Lived, the life and times of Jacob Fugger and was written by Greg Steinmetz.

Okay, so this book was actually recommended to me by my friend Eric Jorgensen.

Eric is the author of the book that I covered on Founders Number 191.

I think it's key for anybody trying to build a business in the age of infinite leverage.

There's a ton of great ideas in that book.

If you haven't listened to it, obviously read the book, but go ahead and listen to, make sure you go back and listen to episode number 191.

And this is what he said about the book that I'm holding in my hand that got me interested in reading it.

And it just lists some of the innovations that Jacob, I'm going to call him Jacob instead of Fugger.

And you'll see why when I read this message from Eric.

So he said, Jacob invented double entry bookkeeping.

He had a similar fast information network advantage like the Rothschild.

So I'm gonna talk a lot about how Jacob reminded me of what I learned about reading the 2 books on the Rothschild.

And then they called Jacob the German Rockefeller.

And you'll see there's a lot of, he had a lot of things in common with both the Rothschilds and Rockefeller.

So he had a similar fast network advantage just like the Rothschild had.

In fact, he bribes multiple Popes throughout the entire book.

The events that take place in the book happened 500 years ago.

His financing, Jacob's financing was decisive in a number of wars, and he knew it, and he auctioned his influence to essentially win the war.

At his death, his net worth was 2% of the GDP of Europe.

That's why the author makes the case that he's the richest man that ever lived.

There's lots of good nuggets on Germany and European history.

And I was just struck by the amount of violence that's in the book.

He was generous to some degree, but he did create social housing that is actually still in use to this day, which is really remarkable.

And then here's why I want to call him Jacob instead of Fugger.

It's very likely that he was the root cause, the etymology behind the word fucker.

And so the book opens up with the letter that that Jacob is writing to Charles V.

Really, I'm gonna pull a couple highlights here at the very beginning because this is just a very unique time.

They consider Jacob probably the first capitalist, at least the first capitalist that ever did it on the scale that he did it.

And it's really important because he's rather unlikable, at least that's the feeling I had when I finished the book.

But part of this is like it's kind of a struggle to put into context, like the historical context of when he was operating.

So I want to just pull out a couple pieces here, because I think if we do this right at the very beginning, it kind of adds the important historical context that we need to understand his story and maybe why he made some of the decisions that he made.

So it says, Jacob wrote collection letters all the time, but the 1523 letter was remarkable because he addressed it not to a struggling fur trader or a cash-strapped spice importer, but to Charles V, the most powerful man on Earth.

Charles ruled an empire that was the biggest since the days of ancient Rome and would not be matched until the days of Napoleon.

And so this is like his I would say it's Jacob's most infamous letter sits down is like hey Charles I know you're the most powerful man on earth but you owe me money and you owe me interest and you need to pay me now so I read the entire letter it's actually reprinted and later on in the book I think this sentence right here is the 1 that is probably the most the most like Ballsy that he had to do he says it is well known that without me your majesty might not have acquired the Imperial crown You will order that the money which I have paid out with the interest shall be paid without further delay And so why did that require so much nerve?

Because these are people that would just chop your head off and kill you at the slightest little insult.

Nerve was essential because business was never more dangerous than in the 16th century.

Cheats got their hands cut off or a hot poker through their cheek.

Bakers got dragged through the town to the taunt of mobs.

And moneylenders faced their cruelest fate." So Jacob was involved in a number of businesses, but the best way to think of him is as a banker.

And so at this time, he's the 1 that actually gets the law changed.

They considered lending money and then collecting interest on money.

It was something that was frowned upon by God.

To prove that lending money and interest was like a sinful and everything else, the church members dug up graves of suspected money lenders and pointed to the worms, maggots, and beetles that gorge their decaying flesh.

And so there's many examples in the book where Jacob is constantly pushing the pace going further than you would suspect when the consequences of making some certain mistakes at this time in history was death.

Given the consequences of failure it's a wonder that Jacob strove to rise as high as he did.

He could have retired to the country and lived a life of hunting, womanizing, and feasts.

But this I double underline the sentence because this is a really fundamental understanding of who he was as a person.

And in fact, this is what he wanted to put on his gravestone.

But he wanted to see how far he could go, even if it meant risking his freedom and his soul.

Remember, think about Jacob as the German Rockefeller.

He thought that he was blessed with a talent for money-making by God.

And so he couldn't retire, he couldn't live a life of leisure because God told him to make as much money as possible.

And This is what he said, the Lord must have wanted him to make money, otherwise he wouldn't have given him such a talent for it.

Many in the world are hostile to me, Jacob said, but I am rich by God's grace.

That is exactly what Rockefeller believed.

He thought God gave him a talent to making money and that his job was to make as much money as possible and then give as much of it as way as possible.

So Jacob did not give, he's not gonna do that second part though.

So let me go into a little bit about his early life, his personality, his businesses.

Really, this is just more context for the story I think is extremely helpful to try to understand this very difficult person this is the reason I want to read stories like the book that have my hand is because this personality type is still walks the surf and these are people I want to know they exist and then I want to avoid them.

He is reminds me of what Charlie Munger said when he said that wise people want to avoid other people who are just total rat poison.

And you'll see what I mean as we go through this story.

Okay, So Jacob was the first anywhere to consolidate the returns of multiple operations in a single financial statement, a breakthrough that let him survey his financial empire with a single glance and always know where his finances stood.

So it's really important that a lot of the stuff that he innovated on, Like this is just the world that we live in.

There's a blurb on the front of the book that is from the author of this book called The Barbarians at the Gate, which has also been recommended to me and I might read for the podcast.

But he said, Jacob wrote the playbook for everyone who keeps score with money.

This is a must for anyone interested in history and the history of wealth creation.

And so this idea to consolidate all my different businesses, all the different offices I have all over the world into 1 single financial statement that I can just glance and know exactly where I stand financially.

He was the first person in recorded history that did that.

Then he created 1 of the world's first news services that gave him an information edge over his rivals and customers.

It is fair to call Jacob the most influential businessman of all time.

Jacob changed history because he lived in an age when, for the first time, money made all the difference in war and hence politics.

He lived in palaces and owned a collection of castles.

His fortune came to just under 2% of European economic output at the time of his death.

Not even Rockefeller could claim that kind of wealth.

Jacob was the first documented millionaire in history.

He made his fortune in mining and banking, but also sold textiles, spices, jewels, and holy relics such as the bones of martyrs.

He held a monopoly on a Brazilian tree bark that was believed at the time to cure syphilis.

Jacob's father died when he was 10 and if it was not for his strong and resourceful mother he might not have gotten anywhere Jacob was headstrong selfish that's.

I'm gonna read this whole thing I should emphasize everything 1 of these words he was headstrong yes selfish deceitful and sometimes cruel.

But he turned at least 1 of those flaws a tendency to trumpet his own achievements into an asset.

And then this is the sad part this is why again I want to study him if he's got good ideas I'll grab them but most of it's like okay I'm gonna avoid this guy's fate.

He had few friends, only business associates.

While on his deathbed, with no 1 at his other side than paid assistants, his wife was with her lover.

His objective was neither comfort nor happiness.

Before he died, he composed his own epitaph.

It was an unabashed statement of ego, and this is what I meant.

This is what he wrote about himself, and he's writing it in third person.

This is like, this is what I want to be remembered for as I'm dying.

Jacob Fugger was second to none in the acquisition of extraordinary wealth, impurity of life, and in greatness of soul, as he was comparable to none in life, so after death is not to be numbered among the mortal." So that's the end of his own description of himself.

His methods blazed the path for 5 centuries of capitalists.

He was at his core an aggressive businessman doing whatever it took to achieve his ends to understand our financial system and how we got here.

So the author already made a reference of how important his mother was right and the reason is is because they're in German so they're in Germany right she sends him to apprentice at the absolute best place that he could possibly apprentice because he's gonna get a start just like Rockefeller as a bookkeeper okay so he they she sends him to Venice and that is important because Venice puts commerce above religion, and Germany at the time did not.

So it says, Jacob looked up to his brothers and envied them and their adventures on the road.

His own chance for adventure soon came enough, when his mother secured him an apprenticeship in Venice.

Because Venice was the most commercially minded city on earth at the time.

I wonder what's the most commercially minded city on earth today?

Venice was founded on commerce and business.

And this is important because this is where he finds his life trade.

It was during this time that he learned about banking.

Jacob was to become many things in the ensuing years.

He's an industrialist, a trader, and at times a speculator.

Venice also exposed him to the craft of accounting.

Most of the merchants back in Germany were still jotting down numbers on paper scraps that were never organized.

Italians developed double entry bookkeeping.

It was that it would let them understand a complex business in a quick glance by summarizing the highlights and condensing the value of the enterprise to a single figure, which is the net worth of the company, right?

Now this is he took that innovation that they had and he wind up taking it 1 step further.

I'm gonna do this So all of my disparate businesses, my entire financial empire, if you will, is condensed down to a single number.

And then we're going to see another thing he had in common with Rockefeller.

Remember, I think it was the last episode, maybe the episode before that, 248, when I just spent 40 hours rereading Titan and trying to do an entire podcast just about Rockefeller's climb.

And so if you listen to that already, if you read the book, you already know this part.

It was a fact that Jacob as a teenager already understood the importance of bookkeeping and how it gave him an edge says something that says something about his intuitive grasp of business he knew that those who kept sloppy books and overlooked details left money on the table that was something he considered unconscionable That's something Rockefeller also knew at a very early age.

You know, he's 21, 22 at the time, and he's just admonishing Rockefeller that his older businessmen, they're 10, 20 years older than him about how sloppy their books are, how they're go over, They're like, they're too quick to pay the bills.

Even if you could save a couple pennies, he was just absolutely relentless.

And that's also why he was recruited by older businessmen to go in a partnership.

Even though Rockefeller's younger than us, there's nobody else that's as good at bookkeeping and just the overall keeping a handle on the overall financial performance of a business and making sure that we're not wasting a penny than this guy.

So then the author does a great job of explaining like, why would how could a banker become so powerful at this point in history?

So says, but to make sense of his life, it helps to understand how he could exploit this odd creation and why an emperor needed a banker.

So they're going to talk about this later on.

I don't know if I have a highlight or not, but you can think about the role that Jacob plays as an individual is now a role that's played by institutions like governments, central banks, the International Monetary Fund, pensions.

He goes into more detail later on, but at his point in history, it's a dude.

And that's why he's able to make so much money.

And so at this point in European history, the leaders are building wealth through war and conquering.

And so if you're going to wage war and you want to essentially go in and attack other people and steal their property and enslave their people, you need a lot of soldiers and to get soldiers, you need money.

And so that is the role that Jacob's going to play.

And so there's a bunch of characters in European history in here.

Not gonna go into too much detail because I don't want to distract us from the main story of focusing on Jacob, but he's going to team up with his first like noble person, he's gonna like discard them and you'll see how just ruthless he is.

But it says, the emperor received no funding except from his own estates and thus could only field a small army.

So this guy named Frederick decided, hey, I need to raise money, I need to have a large army and that's do that that's conquering I'm going to to produce wealth right so says the great dream of this error was to expand the family power base the winner how do you win that game in other words whoever grabbed the most titles and territories.

Frederick, the guy that is going to team up with Jacob, had the fantastic notion that the imperial crown could make his family the most powerful in Europe.

He believed in it so much that he stamped the initials AEI0U on his tableware.

That stands for all Earth is under Austria.

So that's the size of Frederick's ambition.

He's like I'm going to control the Earth right?

The problem was that Frederick was unable to fund an imperial lifestyle and was broke.

And not only is he broke, but he's stiffed a bunch of other people that have lent him money in the past.

So other merchants would refuse him credit.

He needs, this is where he actually is introduced into the Fugger family.

Because before banking, the Fugger family business was in textiles, so like cloth and fabrics and everything else.

So he's going to wind up meeting Jacob's older brother.

So he says that led Frederick to Ulrich, the oldest of the Fugger brothers, that he needed his help.

His Jacob's older brother gave Frederick silk and wool for his robes and all this fancy stuff that he needs.

And in return, Frederick gives him a royal endorsement.

The royal endorsement was well worth a few cloths from the fugures.

And so essentially what just went down there is like a barter between the Emperor and Jacob's older brother.

And the reason I'm bringing this to your attention is because of the lesson that Jacob learns from this story.

The spectacle of the Emperor begging for help must have startled Jacob.

Any belief he had, he may have had in the Emperor's superhuman qualities could not have survived the fact that mere shopkeepers, which is what they are at this point, right?

Ordinary people that he saw on the street every day had denied credit to the supposedly most powerful figure in Europe.

And so there's more detail in the book, but again, we live in a very different world where the people that have power usually have money to in this time, you might have power and land, you might have power and titles, you might be born into the right family.

But a lot of these people didn't have a lot of money.

And so people like Jacob in the 1500s, the Rothschilds a couple hundred years later, they're the ones that take advantage of the fact that the nobility or the elite or whatever you want to call them of their day were cash poor.

We live in a time where that would be just absolutely ridiculous.

So I'm fast forwarding the story a little bit.

He's like, all right, up until this point, the family had concentrated on buying and selling textiles.

So he's like, hey, a lot of these other elites or nobles are making a lot of money in mining.

And he's like, there's definitely a lot more profits in there.

How can I get into a new business line that had better profit margins?

And so he winds up hooking up with Frederick's cousin.

I've heard of, actually, Dan Carlin of Hardcore History is the 1 that's taught me the most about this.

Because a lot of his, especially his great series on World War I about how many of like European powers were like related to each other.

They'd be like cousins or sometimes like intermarried or whatever the case is.

Sigmund is a terrible leader, very selfish, just essentially takes all the finances, acts as if it's his own personal bank, constantly overextends himself.

And this is the in that Jacob's going to figure out.

He's like, oh, if I borrow, if I lend this guy money, I can actually, it's like a, almost like a side, like a flanking maneuver to get into mining.

Let me read this and make more sense there.

Sigmund only spent on himself when money ran out.

He borrowed against the output of his minds by selling silver to a group of bankers at a discount.

So eventually 1 of those bankers is going to be Jacob.

He gets a discount of like, let's say 50% off from Sigmund and then immediately do geographical arbitrage.

We'll send it to like Venice and other places and sell you know, 100% return or whatever the case is.

I have this thing that essentially just prints money, my silver mine, and I'll just sell it to you at a discount.

Jacob wanted to be 1 of the bankers and remarkably he got in on a deal.

The amount was small but it made him a banker.

The profession that over the next 40 years he would take to New Heights, Jacob worked until the day he died.

He dies, I think he's like 66, 65, something like that, but there is no retirement for this guy he's absolutely obsessed so he gets in when he's 26 but he's having no luck it takes 4 more years before he gets another deal And the reason that's important is because the Venetian bankers had this on lock and they wind up getting into a beef with Sigmund later on.

So now they're not going to loan him any more money.

And this is where Jacob, I'm fast forwarding in the story, obviously, is where Jacob's going to see his opening.

He assumed his bankers would support him, but when he asked for more money, they offered only excuses.

Sigmund tried his bankers 1 more time, but by now Sigmund's years of unchecked spending and mounting debt had caught up with them.

Remember, he's been trying to work with this guy for 4 years.

He's like, you gave me a little bit, Then you left me out into like the wilderness.

And this is where we really see that Jacob just had this like gifted mind for business.

So Jacob combined his family's money with money raised from friends and agreed to loan Sigmund the full amount.

It was more than 10 times the size of his earlier loan.

They couldn't believe that Jacob was willing to give Sigmund anything, let alone a bigger loan than any of them had ever made.

If Sigmund repaid, Jacob would make a fortune.

See all Founders transcripts on Applepodcasts

#250 The Richest Man Who Ever Lived: The Life and Times of Jacob Fugger