Annotations (13)
“I'll take it, and supply this capital myself. If the expenditure turns out to be profitable the company can repay me; and, if it goes wrong, I'll stand the loss. That was the argument that touched him. All his reserve disappeared and the matter was settled when he said: If that's the way you feel about it, we'll go it together. I guess I can take the risk if you can.”— John D. Rockefeller
Chapter I: Some Old Friends · p. 9
Strategy & Decision Making · Psychology & Behavior
DUR_ENDURING
Assumed all risk to break partner impasse
“In working with so many partners, the conservative ones are apt to be in the majority, and this is no doubt a desirable thing when the mere momentum of a large concern is certain to carry it forward. The men who have been very successful are correspondingly conservative, since they have much to lose in case of disaster. But fortunately there are also the aggressive and more daring ones, and they are usually the youngest in the company, perhaps few in number, but impetuous and convincing.”
Chapter I: Some Old Friends · p. 6
Leadership & Management · Psychology & Behavior · Strategy & Decision Making
DUR_ENDURING
Success breeds conservatism; youth brings aggression
“I drove from bank to bank, asking each president or cashier, whomever I could find first, to get ready for me all the funds he could possibly lay hands on. I told them I would be back to get the money later. I rounded up all of our banks in the city, and made a second journey to get the money, and kept going until I secured the necessary amount.”— John D. Rockefeller
Chapter II: The Difficult Art of Getting · p. 49
Operations & Execution · Strategy & Decision Making
DUR_ENDURING
Pre-committed all banks before collecting funds
“As I look back upon this term of business apprenticeship, I can see that its influence was vitally important in its relations to what came after. To begin with, my work was done in the office of the firm itself. I was almost always present when they talked of their affairs, laid out their plans, and decided upon a course of action. I thus had an advantage over other boys of my age, who were quicker and who could figure and write better than I.”
Chapter II: The Difficult Art of Getting · p. 37
Leadership & Management · Business & Entrepreneurship
DUR_ENDURING
Access to strategy beats technical skill
“I first knew Mr. Flagler as a young man who consigned produce to Clark & Rockefeller. He was a bright and active young fellow full of vim and push. When the oil business was developing and we needed more help, I at once thought of Mr. Flagler as a possible partner. This offer he accepted, and so began that life-long friendship which has never had a moment's interruption. It was a friendship founded on business, which Mr.”
Chapter I: Some Old Friends · p. 12
Business & Entrepreneurship · Leadership & Management
DUR_ENDURING
Friendship from business beats business from friendship
“It's a pity to get a man into a place in an argument where he is defending a position instead of considering the evidence. His calm judgment is apt to leave him, and his mind is for the time being closed, and only obstinacy remains.”
Chapter I: Some Old Friends · p. 8
Psychology & Behavior · Leadership & Management
DUR_ENDURING
Defending position kills judgment
“I was accustomed to argue that money was worth what it would bring; no one would pay 10 per cent., or 5 per cent., or 8 per cent. unless the borrower believed that at this rate it was profitable to employ it.”
Chapter II: The Difficult Art of Getting · p. 48
Economics & Markets · Philosophy & Reasoning
DUR_ENDURING
Capital worth what borrower can productively earn
“From early boyhood I kept a little book which I remember I called Ledger A, and this little volume is still preserved, containing my receipts and expenditures as well as an account of the small sums that I was taught to give away regularly.”— John D. Rockefeller
Chapter II: The Difficult Art of Getting · p. 33
Business & Entrepreneurship · Philosophy & Reasoning
DUR_ENDURING
Systematic accounting habits from age seven
“I had trained myself to the point of view doubtless held by many young men in business to-day, that my check on a bill was the executive act which released my employer's money from the till and was attended with more responsibility than the spending of my own funds.”
Chapter II: The Difficult Art of Getting · p. 39
Leadership & Management · Psychology & Behavior
DUR_ENDURING
Others' money more sacred than own
“It has always been our policy to hear patiently and discuss frankly until the last shred of evidence is on the table, before trying to reach a conclusion and to decide finally upon a course of action.”
Chapter I: Some Old Friends · p. 6
Leadership & Management · Strategy & Decision Making
DUR_ENDURING
All evidence on table before deciding
“I was in a fever of anxiety lest I should lose this one opportunity that I had unearthed. When finally at what seemed to me the time, I presented myself to my would-be employer: 'We will give you a chance,' he said, but not a word passed between us about pay. This was September 26, 1855. I joyfully went to work.”— John D. Rockefeller
Chapter II: The Difficult Art of Getting · p. 36
Leadership & Management · Psychology & Behavior
DUR_ENDURING
Accepted first job without discussing pay
“As each member came by I buttonholed him, and got him to promise to give something toward the extinguishing of that debt. I pleaded and urged, and almost threatened. As each one promised, I put his name and the amount down in my little book, and continued to solicit from every possible subscriber.”— John D. Rockefeller
Chapter II: The Difficult Art of Getting · p. 51
Business & Entrepreneurship · Leadership & Management
DUR_ENDURING
Record commitments immediately in little book
“I confess that this little discipline should have done me good, and perhaps did, but while I concealed it from him, the truth is I was not particularly pleased with his application of tests to discover if my financial ability was equal to such shocks.”
Chapter II: The Difficult Art of Getting · p. 47
Psychology & Behavior · Leadership & Management
DUR_ENDURING
Father tested his readiness by demanding repayment
Frameworks (3)
Two-Pass Capital Mobilization
Rapid fundraising under time pressure
When facing a tight deadline for capital raising, separate commitment from collection: first pass secures verbal commitments from all sources; second pass collects the committed funds. This prevents any single source from seeing total demand before committing.
Components
- Map all capital sources
- First pass: secure commitments only
- Second pass: collect committed funds
Prerequisites
- Pre-existing banking relationships
- Personal credibility with lenders
Success Indicators
- All sources commit before any collect
- Total raised exceeds what any single source knew was needed
Failure Modes
- Sequential approach allows sources to decline after seeing others decline
- Revealing total need allows sources to calculate whether they're being asked for disproportionate share
Full-Evidence Decision Protocol
Achieving consensus in multi-partner organizations
When making decisions with partners who have divergent interests, defer conclusion until all evidence is on the table. Discuss frankly and patiently, allowing the conservative majority and aggressive minority both to be heard. Work toward unanimous vote through exhaustive consideration rather than simple majority rule.
Components
- Gather all evidence before discussion
- Present evidence to all parties simultaneously
- Hear conservative and aggressive views fully
- Work toward unanimous decision
Prerequisites
- Partners with mutual respect
- Willingness to delay decision for better outcome
Success Indicators
- Decisions are unanimous
- No partner feels steamrolled
- Implementation is smooth because all bought in
Failure Modes
- Conservative partners block all progress
- Aggressive partners force votes before readiness
- Evidence is incomplete or biased
Personal Risk Assumption to Break Deadlock
Unlocking group decisions through individual risk-bearing
When a partner or group is deadlocked on a decision, offer to assume all downside risk personally. If the investment succeeds, the company repays you; if it fails, you absorb the loss. This removes the risk from the hesitant party and demonstrates your confidence level, often causing them to reverse position and share the risk.
Components
- Exhaust logical arguments first
- Offer to assume all downside personally
- Allow partner to reconsider without pressure
Prerequisites
- Personal capital sufficient to absorb stated loss
- Genuine belief in the investment
- Relationship where gesture will be understood as confidence, not manipulation
Success Indicators
- Partner reverses position and offers to share risk
- Decision is made and implemented swiftly
- Relationship is strengthened, not damaged
Failure Modes
- Offer is seen as manipulation rather than confidence
- You cannot actually afford the loss
- Investment does fail and you absorb large loss
Mental Models (3)
Seizing Asymmetric Opportunity
Decision MakingWhen facing a low-probability opportunity with high upside and manageable downside, act immediately without full information. Rockefeller accepted his first job without discussing pay because the downside (low initial wage) was bounded and the upside (entry into business career) was unbounded.
In Practice: Describing his first job at Hewitt & Tuttle, accepted without discussing compensation
Demonstrated by Leg-jdr-001
Market-Clearing Price for Capital
EconomicsThe interest rate on capital is determined by the borrower's expected return, not by moral considerations about fairness. If a borrower can profitably employ capital at 10 percent, he will pay 10 percent. The rate is set by supply, demand, and opportunity cost, not by sentiment.
In Practice: Defending the 10 percent interest rates common in the 1850s-1870s
Demonstrated by Leg-jdr-001
Defending Position vs. Seeking Truth
PsychologyOnce a person publicly commits to a position, their mind shifts from evidence-seeking to position-defending.
In Practice: Reflecting on how to negotiate with partners who have taken a public stance
Demonstrated by Leg-jdr-001
Connective Tissue (4)
Like the master chess player who studies the board for hours before moving a piece, Rockefeller and his partners insisted on exhaustive study of every strategic move, gathering all evidence before reaching conclusion.
The parallel between chess mastery and business strategy: both require seeing the whole board, considering all evidence, and avoiding premature commitment to a course of action. Rockefeller's insistence on discussing until 'the last shred of evidence is on the table' mirrors the chess master's refusal to move until all implications are calculated.
Describing partnership decision-making process
The Venetian Arsenal's system of moving the ship past stationary craftsmen who each performed one task anticipated Ford's assembly line by 400 years. Both systems solved the same constraint: skilled labor was the bottleneck, so they decomposed complex work into simple, repeatable steps.
This historical precedent for assembly-line production shows that the principle of work-flow design is ancient. The Venetian Arsenal (1104 AD onward) had galley construction stations where craftsmen stood in place and the hull moved past them, exactly as Ford would later do with automobiles. Both recognized that moving work TO the worker, rather than worker TO the work, eliminated the largest time sink.
Rockefeller discussing flagler's florida railroad and hotel project
Rockefeller's systematic buttonholing of church members, recording each commitment immediately in his 'little book,' parallels modern political campaign fundraising: the ask is made face-to-face, commitment is recorded immediately, and follow-up is systematic.
The mechanics of fundraising have not changed since Rockefeller's church campaign in the 1850s: identify prospects, make personal ask, record commitment immediately, follow up systematically. Modern political campaigns use the same structure, only with digital tools instead of a little notebook.
Describing his first fundraising campaign at age 17-18
The Roman practice of self-insurance through distributed assets, where no single fire could destroy the empire's infrastructure because it was geographically dispersed, mirrors Rockefeller's self-insurance system: with refineries scattered nationwide, no single disaster could ruin Standard Oil.
Ancient Roman infrastructure strategy: distribute critical assets geographically so no single event can destroy the system. Rockefeller applied this principle to Standard Oil's refineries: by having plants distributed across the country, the risk of total loss from fire was minimized, and the company could self-insure. This turned insurance from an expense into a profit center.
Explaining Standard Oil's self-insurance system
Key Figures (1)
Henry M. Flagler
18 mentionsCo-founder and early partner, Standard Oil Company
Flagler was Rockefeller's most important early partner in both the commission business and Standard Oil. They walked to work together daily, shared an office, and made decisions jointly. Flagler drew all contracts for the early Standard Oil Company and later built the Florida East Coast Railway and hotel empire.
- A friendship founded on business is a good deal better than a business founded on friendship.
- Flagler insisted on building substantial, permanent refineries when others built cheap shacks, betting the oil trade would last despite widespread belief it would soon fail.
- He drew contracts that were fair to both sides, expressing intent so clearly that misunderstanding was impossible.
Glossary (1)
buttonhole
VOCABULARYTo detain in conversation, especially to persuade or solicit
“As each member came by I buttonholed him, and got him to promise to give something toward the extinguishing of that debt.”
Synthesis
Synthesis
Migrated from Scholia