Titan

"“Titan” by Chernow is one of the most surprising books I’ve read in a long time. From Rockefeller’s personal life (he was super religious and his dad was a bigamist?!) to Standard Oil business practices (the board made decisions only by consensus?!) and Rockefeller’s far-reaching impact on philanthropy (he pioneered rigorous philanthropy and created UChicago, Rockefeller University, Spelman, AND ELIMINATED HOOKWORM IN THE US SOUTH?!), Titan was a revelation.<br/><br/>Chernow does a fantastic job of tracing Rockefeller’s rise, the controversies and successes of Standard Oil, his family life and philanthropy, and the breakup of Standard Oil and the ruin of many of his heirs. The pacing of the story is excellent. Though long, it’s a riveting read.<br/><br/>Chernow does come across as a bit of a Rockefeller apologist. A big theme in the book is that unfettered competition would have destroyed the refining industry because of various competitive dynamics (for example, it was often economically rational to run a refinery at a loss for a while). So Chernow claims Rockefeller saved the industry by consolidating it and rationalizing production.<br/><br/>Rockefeller’s biography is particularly relevant in our current day. The railroad rebate scandal seems oddly reminiscent of the current net-neutrality debate. The Gilded Age of Rockefeller and the dominance of mega-corporations seems strangely familiar in our era of Walmart, P&G, and Exxon (a Standard Oil descendant). At the same time - Rockefeller blazed the philanthropic path that the great philanthropists of our age (Gates, Buffet, etc) seem to be following. Is it fair to compare Gates to Rockefeller?<br/><br/>One of the key questions that Chernow sets up is whether Rockefeller ended up in Heaven or Hell. It’s a fascination question and provided lots of good discussion from our book club. Rockefeller straight up perjured himself by lying under oath and certainly presided over many ruthless business deals (while maintaining plausible deniability, of course). At the same time, he had an enormous positive impact through his philanthropy and his work certainly helped speed industrialization and catapult the US to great power status. And I certainly couldn’t help feeling a bit sorry for Rockefeller in the section on his children… despite his best efforts, hardly any of them had happy lives.<br/><br/>Favorite quotes below<br/><br/>######################<br/><br/>Despite his slow, ponderous style, once he had thoroughly mulled over his plan of action, he had the power of quick decision.<br/> <br/>Rockefeller was fantastically charitable from boyhood. During his first year on the job, the young clerk donated about 6 percent of his wages to charity, some weeks much more.<br/><br/>Henry Ward Beecher, calling poverty the fault of the poor, proclaimed in a sermon that “generally the proposition is true, that where you find the most religion you find the most worldly prosperity.”<br/><br/>John D. Rockefeller was the Protestant work ethic in its purest form, leading a life so consistent with Weber’s classic essay that it reads like his spiritual biography.<br/><br/>While he was still in his twenties, the Civil War had converted Rockefeller into a wealthy man, giving him the funds to capitalize on a new industry then flowering in the northwest corner of Pennsylvania<br/><br/>The petroleum industry was hatched in a very modern symbiosis of business acumen and scientific ingenuity... In his landmark 1855 report, Silliman vindicated Bissell’s hunch that this oil could be distilled to produce a fine illuminant, plus a host of other useful products.<br/> <br/>It took nearly three years for Bissell’s company (which soon evolved into the Seneca Oil Company) to dispatch someone to Pennsylvania to hunt for large, marketable pools of oil. To this end, an investor in the project, a New Haven banker named Townsend, enlisted a boarder in his rooming house, Edwin Drake, to travel to Titusville in December 1857<br/><br/>Able to ship by water or over land, Rockefeller gained the critical leverage he needed to secure preferential rates on transportation—which was why he agonized over plant locations throughout his career.<br/><br/>Despite the unceasing vicissitudes of the oil industry, prone to cataclysmic booms and busts, he would never experience a single year of loss.<br/><br/>Rockefeller’s overwhelming influence on the oil industry stemmed from the conflict between his overmastering need for order and the turbulent, unruly nature of the infant industry.<br/><br/>Searching for oil was wildly unpredictable, whereas refining seemed safe and methodical by comparison. Before too long, he realized that refining was the critical point where he could exert maximum leverage over the industry.<br/><br/>Daring in design, cautious in execution—it was a formula he made his own throughout his career.<br/><br/>Having discarded several older partners, the young man had no real business mentors, heroes, or role models and was beholden to no one. John D. Rockefeller was not only self-made but self-invented and already had unyielding faith in his own judgment.<br/><br/>It is impossible to comprehend Rockefeller’s breathtaking ascent without realizing that he always moved into battle backed by abundant cash. Whether riding out downturns or coasting on booms, he kept plentiful reserves and won many bidding contests simply because his war chest was deeper.<br/><br/>The most compelling argument against rebates was that railroads received state charters and therefore had the right of eminent domain—that is, the right to claim private property in order to lay down tracks—investing their activities with a public character.<br/><br/>Unlike his philandering father, John D. Rockefeller remained firmly, almost prudishly, anchored in domestic life. Much like Jay Gould—who didn’t drink, smoke, or gallivant with women—Rockefeller’s harsh business tactics were counterbalanced by exemplary behavior at home where he was a sweet, respectful Victorian husband. To borrow a line from Flaubert, to be fiercely revolutionary in business, he needed to be utterly conventional at home.<br/><br/>A surprisingly flexible, egalitarian father, Rockefeller never shrank from child care.<br/><br/>Thus, in 1869, one year after his stellar railroad coup, Rockefeller feared that his wealth might be snatched away from him. As someone who tended toward optimism, “seeing opportunity in every disaster,” he studied the situation exhaustively instead of bemoaning his bad luck. He saw that his individual success as a refiner was now menaced by industrywide failure and that it therefore demanded a systemic solution. This was a momentous insight, pregnant with consequences. Instead of just tending to his own business, he began to conceive of the industry as a gigantic, interrelated mechanism and thought in terms of strategic alliances and long-term planning. Rockefeller cited the years 1869 and 1870 as the start of his campaign to replace competition with cooperation in the industry.<br/><br/>Rockefeller’s supreme insight was that he could solve the oil industry’s problems by solving the railroads’ problems at the same time, creating a double cartel in oil and rails. One of Rockefeller’s strengths in bargaining situations was that he figured out what he wanted and what the other party wanted and then crafted mutually advantageous terms.<br/><br/>It is interesting to note that Rockefeller perjured himself in an affidavit he submitted for the lawsuit brought jointly by William S. Scofield and Hanna, Baslington. Not only did he state that “but few persons who were stockholders in the Standard Oil Co. of Cleveland, Ohio were subscribers to stock in the South Improvement Company,” but he added that “P. H. Watson, Pres. of the South Improvement Co.… was not a stockholder in nor was he in any way connected with the Standard Oil Company.”80 As mentioned, Standard Oil executives controlled almost 50 percent of the SIC shares and issued five hundred shares of Standard to Watson sub rosa in the January 1872 recapitalization. Although Rockefeller professed that he never lied under oath, the claim doesn’t bear up under close examination.<br/><br/>During his career, Rockefeller cut the unit costs of refined oil almost in half, and he never deviated from this gospel of industrial efficiency.<br/><br/>Where Rockefeller differed most from his fellow moguls was that he wanted to be both rich and virtuous and claim divine sanction for his actions. Perhaps no other businessman in American history has felt so firmly on the side of the angels.<br/><br/>From the outset, Standard Oil was permeated by an us-versus-them attitude that emanated from the top. At moments, Rockefeller made it sound as if he and his colleagues were a band of early Christians, misunderstood by the pagans.<br/><br/>The creation of Standard Oil was often less a matter of stamping out competitors than of seducing them into cooperation.<br/><br/>Had oil been found in scattered places after the Civil War, it’s unlikely that even Standard Oil could have mustered the resources to control it so thoroughly. It was the confinement of oil to a desolate corner of northwest Pennsylvania that made it susceptible to monopoly control, especially with the emergence of pipelines.<br/><br/>Extremely punctual for all appointments, he said, “A man has no right to occupy another man’s time unnecessarily.”<br/><br/>Rockefeller equated silence with strength: Weak men had loose tongues and blabbed to reporters, while prudent businessmen kept their own counsel. Two of his most cherished maxims were “Success comes from keeping the ears open and the mouth closed” and “A man of words and not of deeds is like a garden full of weeds.”<br/><br/>Frequently, he stared out the window, motionless as an idol, gazing at the sky for fifteen minutes at a stretch. He once asked rhetorically, “Do not many of us who fail to achieve big things … fail because we lack concentration—the art of concentrating the mind on the thing to be done at the proper time and to the exclusion of everything else?”<br/><br/>Everybody noted the man’s preternatural calm. Though he had honed his will into a perfect instrument, he was even-tempered by nature. As he remarked, “You could do or say the most outrageous thing at this moment and I would not show the least sign of excitement.” He was always proud of the fact that he had an abnormally low pulse of fifty-two. Many employees said he never lost his temper, raised his voice, uttered a profane or slang word, or acted discourteously. He defied many stereotypes of the overbearing tycoon and generally received excellent reviews from employees who regarded him as fair and benevolent, free of petty temper and dictatorial airs.<br/><br/>Rockefeller even hesitated to punish serious offenses and instead of prosecuting the occasional embezzler simply dismissed him.<br/><br/>Taking for granted the growth of his empire, he hired talented people as found, not as needed.<br/><br/>Far more than a technocrat, Rockefeller was an inspirational leader who exerted a magnetic power over workers and especially prized executives with social skills. “The ability to deal with people is as purchasable a commodity as sugar or coffee,” he once said, “and I pay more for that ability than for any other under the sun.”<br/><br/>At first, he tested them exhaustively, yet once he trusted them, he bestowed enormous power upon them and didn’t intrude unless something radically misfired. “Often the best way to develop workers—when you are sure they have character and think they have ability—is to take them to a deep place, throw them in and make them sink or swim,” he observed, recalling a method that Big Bill had used with his sons on Owasco Lake. “They will not fail.”<br/><br/>To orchestrate such a gigantic operation, he had to delegate authority, and part of the Standard Oil gospel was to train your subordinate to do your job. As Rockefeller instructed a recruit, “Has anyone given you the law of these offices? No? It is this: nobody does anything if he can get anybody else to do it.… As soon as you can, get some one whom you can rely on, train him in the work, sit down, cock up your heels, and think out some way for the Standard Oil to make some money.” True to this policy, Rockefeller tried to extricate himself from the intricate web of administrative details and dedicate more of his time to broad policy decisions.<br/><br/>While Rockefeller was responsible for policy questions and formulated the theoretical underpinnings of the trust, he didn’t introduce many technical innovations associated with Standard Oil. Rather, he was a matchless executive, an unerring monitor of the stream of proposals channeled to him daily. He had an extraordinary reactive ability, a first-rate power of judgment when presented with options. Perhaps for this reason, he resembles modern chief executives more than he does his domineering industrial contemporaries.<br/><br/>Numbers gave Rockefeller an objective yardstick to compare his far-flung operations, enabling him to cut through the false claims of subordinates. It was the way that he extended rationality from the top of his organization down to the lowest rung: Every cost in the Standard Oil universe was computed to several decimal places.<br/><br/>He downplayed the significance of technical knowledge in business. “I never felt the need of scientific knowledge, have never felt it. A young man who wants to succeed in business does not require chemistry or physics. He can always hire scientists.”<br/><br/>But Standard Oil spiked all such reform efforts through the liberal application of backdoor payments to legislators.<br/><br/>Because all ideas had to meet the supreme test of unanimous approval among strong-minded men, Standard Oil made few major missteps. As Rockefeller said, “We made sure that we were right and had planned for every contingency before we went ahead.”<br/><br/>With employees receiving huge capital gains and dividends, they converted Standard Oil into a holy crusade. Rockefeller hoped the trust would serve as a model for a new populist capitalism, marked by employee share ownership. “I would have every man a capitalist, every man, woman and child,” he said. “I would have everyone save his earnings, not squander it; own the industries, own the railroads, own the telegraph lines.”<br/><br/>Rockefeller was a unique hybrid in American business: both the instinctive, first-generation entrepreneur who founds a company and the analytic second-generation manager who extends and develops it. He wasn’t the sort of rugged, self-made mogul who quickly becomes irrelevant to his own organization. For that reason, his career anticipates the managerial capitalism of the twentieth century. Since he never owned more than a third of his company, he needed the cooperation of other people. <br/> <br/>By the mid-1880s, another powerful force appeared on the world oil scene. The Paris Rothschilds, led by Baron Alphonse de Rothschild, had built refineries at Rijeka and Trieste on the Adriatic Sea. In organizing the Caspian and Black Sea Petroleum Company—better known by its Russian initials, Bnito—they stood to reap a fortune from inexpensive Russian oil. No sooner had the Rothschilds entered the business than reports filtered back to Rockefeller that the Nobels, who were heavily in debt to the Rothschilds, could not meet their payments and might be forced to make common cause with the French bankers. For many years, the Rothschilds, the Nobels, and Standard Oil circled around each other, each trying to forge links with a second party to isolate the third.<br/><br/>As the philosopher Alfred North Whitehead said, “The greatest invention of the nineteenth century was the invention of the method of invention.”<br/><br/>Despite its many shareholders, the Standard Oil trust was always controlled by a small clique of powerful families. “I think it is true that the Pratt family, the Payne-Whitney family (which were one, as all the stock came from Colonel Payne), the Harkness-Flagler family (which came into the Company together) and the Rockefeller family controlled a majority of the stock during all the history of the Company up to the present time,” Rockefeller commented in 1910. Because the Harkness and Payne families were sociable and intermarried with the Vanderbilts and Whitneys, they spread a great deal of Standard Oil bounty through America’s social aristocracy.<br/><br/>Choate soon discovered that he didn’t need to worry about his client. Like many businessmen of his era, Rockefeller prided himself on his obfuscatory powers and excelled at fuzzy answers. Under oath, he turned into a vague and forgetful fellow, pleasant but slightly muddled, who wandered lost in the stupendous maze of Standard Oil.<br/><br/>Even though Rockefeller was the Prospero who single-handedly conjured the University of Chicago into being, he didn’t allow any campus building to bear his name, and the Rockefeller Memorial Chapel was christened only after his death.<br/><br/>It was one of Rockefeller’s proudest boasts that unlike other trusts, he had not needed a J. P. Morgan to forge his combine. Standard Oil anticipated a major feature of the twentieth-century economy: the tendency of sophisticated, cash-rich corporations to outgrow their traditional bankers and become financial-service giants in their own rights. <br/><br/>The automobile would make John D. Rockefeller far richer in retirement than at work. When he stepped down from Standard Oil, he was probably worth about $200 million—$3.5 billion today—whereas, thanks to the internal-combustion engine, his fortune soared to $1 billion by 1913—surely history’s most lucrative retirement, and one that must have softened the sting of press vituperation.<br/><br/>If the descendants of William Rockefeller were identified with National City, the progeny of John D. were always associated with Chase.<br/><br/>Each Christmas, they perfunctorily exchanged gifts, Rockefeller giving Carnegie a paper vest, while Carnegie sent the teetotaler excellent whiskey.<br/><br/>He was also insistent that his massive philanthropy paled in importance beside the good he had done in creating jobs and furnishing affordable kerosene at Standard Oil.<br/><br/>In his memoirs, Rockefeller said that he had sought progress in six areas of life, and the choices are notable for their general, noncontroversial nature: “(1) material comforts (2) government and law (3) language and literature (4) science and philosophy (5) art and refinement (6) morality and religion.”<br/><br/>Rockefeller reiterated his faith that cooperation, not competition, advanced the general welfare. “Probably the greatest single obstacle to the progress and happiness of the American people,” he intoned, “lies in the willingness of so many men to invest their time and money in multiplying competitive industries instead of opening up new fields, and putting their money into lines of industry and development that are needed.”<br/><br/>It is an enduring tribute to Rockefeller that so many Standard Oil companies prospered during the remainder of the century, controlling a significant fraction of both the American and world oil industry. Rockefeller’s stepchildren would be everywhere: Standard Oil of New Jersey (Exxon), Standard Oil of New York (Mobil), Standard Oil of Indiana (Amoco), Standard Oil of California (Chevron), Atlantic Refining (ARCO and eventually Sun), Continental Oil (Conoco), today a unit of DuPont, and Chesebrough-Ponds, which had begun by processing petroleum jelly. Three offspring—Exxon, Mobil, and Chevron—would belong to the Seven Sisters group that would dominate the world oil industry in the twentieth century; a fourth sister, British Petroleum, later took over Standard Oil of Ohio, then known as Sohio. It was certainly not their intention, but the trustbusters helped to preserve Rockefeller’s legacy for posterity and unquestionably made him the world’s richest man."

"I still cannot believe that Tamilnadu Government owns 26% of this extremely profitable fashion/watch/jewelry juggernaut, Titan Company. <br/><br/>I got interested in Titan because of my paltry investment as a newbie in the stock market. But I was hooked on the book because it was very well written and a story nicely told. <br/><br/>Birth of Titan and the role played by the polymath-civil-servant Iravatham Mahadevan is a legendary story. <br/><br/>The rest of the book tells this: How TIDCO came to sponsor this project? Why did they choose Hosur and how they strategically acquired talent from HMT in Bangalore? How a watch-making company built a jewelry brand like Tanishq? How they reinvented with Fastrack and eyewear?<br/><br/>If you like to learn about Indian corporate lore or get a peek into how a Tata company runs or if you want to know how some big brands/companies are built this is a very good read."

"It took me a while to get through it, but definitely an interesting read. "