Transcript for:
Lessons from Andrew Carnegie's Autobiography

nothing stranger ever came out of the story of this poor Scotch boy who came to America and step by step through many trials and triumphs became the great steel Master Built up a colossal industry amassed an enormous fortune and then deliberately and systematically gave away the whole of it for the Enlightenment and betterment of mankind not only that he established a gospel of wealth that can be neither ignored nor forgotten and set a pace in distribution that succeeding millionaires have followed as a precedent that is an excerpt from the book that I'm going to talk to you about today which is written over 100 years ago which is the autobiography of Andrew Carnegie this is my second time reading the autobiography of Andrew Carnegie a few years ago I did a three-part series on Andrew Carnegie and his partner Henry Clay fck if you're interested in diving deeper into that it's episode 73 74 and 75 to prepare for this podcast not only did I reread Andrew carneg autobiography but I reread all my notes and highlights from that fantastic book which I did on episode 7 which is called meet you in hell Andrew Carnegie Henry Clay frck and the bitter partnership that transformed America and so it occurred to me last night as I was rereading my highlights from meun Hell there's a handful of highlights that I think I should tell you first before we jump into Carnegie's autobiography that I think will give you context in how he approached building his businesses and what he had in common with some of other History's Greatest entrepreneurs Henry Clay Frick obviously being one of them which is his partner but also Jay gold and John D Rockefeller and it's this idea that they started out learning bookkeeping because they thought that was the language of business and what these guys all had in common is they were hellbent on knowing their business down to the last scent they were obsessed with having the lowest cost structure out of anybody in their industry and so here's a few highlights from meu and Hell the first one is this Mantra that Carnegie and Henry Clay frck would repeat they said cut the prices scoop the market watch the costs and the profits will take care of themselves and this autobiography does not go into nearly the detail that I think is required to understand the success of Cary and how important his partnership with Henry Clay frick was so I'll be rereading meu and Hell next few weeks and making another podcast on it because it's just there's so many lessons in the book and it's just an absolutely fantastic written book but one thing that Carnegie that attracted uh Carnegie to frick was two things here's the first um here's the first highlight says Frick knows his business down to the ground and then the second is the fact that Carnegie believed in some form of like social Darwinism and that if you were born in abject poverty like he was like Henry Kay frick was and you were able to figure out a way to rise to the top and to build wealth that was a signal for some kind of form of intelligence and so it said Frick's rise from humble beginnings was obviously intriguing to him meaning to Carnegie it signaled to Carnegie that frick was another of the fellow quote fittest and those were the individuals with whom Carnegie sought to align himself and then two more highlights about this very I can't like I can't repeat enough it is so important to understand I think this is the one common Advantage where whether it's Sam Walton Johny Rockefeller Carnegie Frick uh Henry Ford the managers of all the birkshire businesses they are obsessed with keeping their costs low here's the first highlight Carnegie would repeat the Mantra time and time again profits and prices were cyclical subject to any number of transient forces on the marketplace costs however would be strictly controlled and in Carnegie's view any savings achieved in the cost of goods were permanent second highlight on this issue the two men were of one mine Frick had made his way in coch that is the uh the business that Frick monopolized and that Carnegie winds up buying and folding into his steel Empire uh so it says Frick had made his way in Coke by the same Reckoning that Carnegie had in Rail and steel if you knew your cost down to the penny You Were Always On firm ground and then one more thing before we jump into the autobiography of Andrew Carnegie just this is unbelievable the amount of financial success that Andrew had Andrew sells his company his Steel company to JP Morgan for $480 million JP Morgan combines that with us steel and it becomes the the world's first billion dollar Corporation okay so Carnegie starts the book talking about his parents and childhood but then he the first thing he says one of the first things he says is like why he decided to write an autobiography this I love how all this connects together so he is going to tell us that how the autobiography of Judge melon so he calls him judge melon that is Thomas melon Thomas melon is the founder of the melon family Dynasty I have a ton I have like three books on melon and his sons I just haven't got around to to reading them yet but they're one of the most important family dynasties in American Business history and so Carnegie is saying hey I enjoyed judge melon's autobiography so much it made me realize that I should write my own and then I'm going to tell you how all this ties together it's fantastic and so Carnegie says a book of this kind written years ago he he means an autobiography A book of this kind written years ago by my friend judge melon gave me so much pleasure the story which the judge told has proved a source of infinite satisfaction to his friends and must continue to influence succeeding generations of his family to live well in like manner I intend to tell my story and I thought that was really interesting because when I reread that I thought of what melon said so Carnegie is influenced by melon melon and term was influenced by the autobiography of Ben Franklin this is a quote a highlight I have from Ben uh from the biography of benjam Franklin written by Walter Isaacson and it said Thomas melon erected a statue of Franklin in his Banks headquarters he declared that Franklin had inspired him to leave his family farm and go into business and this is what melon said this is exact person that that Carnegie had just read the autobiography of I regard the reading of Franklin's autobiography as a turning point in my life here was Franklin poorer than myself who by industry Thrift and frugality had become learned and wise and elevated to wealth and faint I read the book again and again and wondered if I might not do something in the same line by similar means and so the reason re I and so the reason I'm glad that Carnegie put that at the beginning of the book because this book is only 330 Pages it is actually incredibly difficult to read it's not to me it's not 330 Pages it's like double that because you have to at least I had to reread many pages twice to actually understand what he's saying but it also jumps around a lot so I would think of what you and I are going to go over today is more of like random thoughts and ideas that he found valuable throughout his life and the first of those ideas that I think is really valuable is default optimism as a grand rule for life and he says I think my optimistic nature my ability to sh shed trouble and to laugh through life must have been inherited from my grandfather whose name I'm proud to Bear a sunny disposition is worth more than Fortune young people should know that it can be cultivated and that the mind like the body can be moved from the shade Into Sunshine let us move it then laugh trouble away if possible and one usually can and then he goes right into another idea that I think is fantastic you and I have talked about this this is something we learned from Warren Buffett on episode 100 it's this idea of inner scorecard that's the the most important judge of your life story is actually yourself and so Carnegie turns that into a motto that he uses for his entire life he calls it the judge within the judge within sits in the Supreme Court and can never be cheated hence the grand rule of Life your own reproach alone do fear this motto adopted early in my life has has meant more to me than all of the sermons I ever heard and so I want to jump right into the life circumstances that motivated Carnegie to build wealth and at this point in his life he's a young boy living in Scotland and a change in technology is actually going to send his family into poverty because they did not react his father did not react fast enough his father manufactured linen but he did it by hand and it says the change from handloom weaving to steam Loom weaving was disastrous to our family my father did not recognized the impending Revolution and was struggling under the old system his looms sank greatly in value and it became necessary for my mother to step forward and Endeavor to repair the family fortune so she opened a small shop I remembered that shortly after this I began to learn what poverty meant and this is his reaction to this and then and there came the resolve that I would cure that when I got to be a man this is an unbelievably important story to understand Andrew Carnegie and his approach to building his business he was the opposite of his father his father was run over by technological revolutions Andrew Carnegie built his wealth as a result of responding to and being ah head of technological revolutions this reminded me of all the way back on Founders number 242 I read the Fantastic biography of Francis Ford Copa and there's a fantastic line in that book that I think describ something that repeats throughout human history and like says you can always understand the son by the story of his father the story of the father is embedded in the Sun that is exactly true for Andrew Carnegie in C's case he was spent with like his dad was uh frustrated often unemployed uh he hated anybody who was successful and uh Francis took like his own father's family and directed into this like insane work ethic and drive to be successful and so Carnegie is a child I think he's like eight maybe 10 years old maybe 11 years old at this point in the story and he's realizing oh wait a minute if you don't take advantage of the increase in technology in your industry you could be thrown into a life of abject poverty so one of the main lessons that I learned you know three or four years ago from this book probably the main lesson is my interpretation of what how Andrew Carnegie built his business and it's something I've repeated dozens of times on theast and it says invest in technology the savings compound it gives you an advantage over slower moving competitors and can be the difference between a profit and loss we are very far away from there's a bunch of businesses that Carnegie is going to be engaged in before he finds the steel business which is where he made all of his wealth right he's he's a rich man before he get you know in relative terms a rich person before he starts working in steel and he becomes one of the richest people in the world right and what was fascinating that he was an early adopter of this thing called the besser process right and he's in America at the time the besser process is being developed in England and the besser process was a new way of actually refining steel from this from molten pig iron right so it was uh it was a process that made production of Steel cheap efficient and resulted in the mass production of Steel on a scale that had never SE been seen before think about what uh what we learned with Henry Ford his slow invention of the mass production of cars resulted in the production of the Model T on a level that we had never that human history had never seen before right Carnegie was able to produce Steel on a scale that was never seen before and so remember these points for later we'll get into it we're still in his early life I just thought it was really interesting how this all fits together so talks about uh school he says school was a perfect Delight to me and if anything occurred which prevented my attendance I was unhappy this happened every now and then because my morning Duty was to bring water from the well so a main theme of him and everybody in the family constantly having to help each other out uh all of them are going to work all of them are going to pull their resources even at a young age age I meant I mentioned uh Carnegie's obsession with cost he's I think like 13 years old and he's going to know every single dollar of expense that his family's it's almost like the family bookkeeper in a sense so he says I earned a reputation of being an awful latty even when he was in school uh I developed a strain of argumentativeness and combativeness uh which has always remained with me so that's no surprise to you and I Founders are much higher on the disagreeableness scale than you know people that are not FS so he's talking about hey I had to get the Well from the water before school then I go to school again he's maybe 10 years old at this time then at the end after school he has to help his mom I had often the shop errands to run after school but in looking back upon my life I have the satisfaction of feeling that I became useful to my parents even at the early age of 10 and this is what I meant about an early introduction to business and bookkeeping soon after the accounts of various people who dealt with the shop were entrusted to my keeping so that I had become acquainted with business Affairs even in childhood and so then he talks about the first business that he starts his first tiny business that he starts starts as a young kid in Scotland the takeaway here is that hire people that know more than you and then study human nature later in life carne said his success came not from what he knew but his fact that he could organization he could excuse me he could organize people that knew more than he and understand how each individual fit into his entire system and the overall objective of his businesses in fact there is a quote from meet you in hell that I forgot to read to that I think describes his approach he says Carnegie's approach may seem ruthless but the idea of treat the complex process of manufacturing like a giant machine with parts that must be constantly retooled seemed to him completely natural and he did that with both man and machine and so I'm going to read the section to you I got to change some words here because this is some weird language it's going to be hard to follow but he says my first business venture was securing my companion services for a season as an employer the compensation being that the young rabbits should be named after them so he is put in charge of keeping pigeons and rabbits and he's got to feed them and so Gathering food are actually forging food actually he finds a way to Outsource to other kids with no compensation he just says hey if you help me collect like danin and clover and all the food for the rabbits and the pigeons I can you can name or I will name the rabbits after you and so he's got all these like workers these young kid workers going out to the field doing all foraging bringing the food back so he could feed the pigeons and rabbits this is his takeaway I treasure this remembrance I treasure the remembrance of this plan as the earliest evidence of organizing power upon the development of which my material success in life has hung a success not to be attributed to what I have known or done myself but to the faculty of knowing and choosing others who did know better than myself and so his point that he's about to make here in the second part of the paragraph is's like even when I was building these giant factories I didn't know actually understand how they ran I just found people that understood that individual uh part of this overall machine and I understood how the how all these working parts interacted for the for the goal of the entire machine uh pre knowledge this for any man to possess I did not understand steam Machinery but I tried to understand that much more complicated piece of mechanism man so then he talks about this is the very end of his dad's business they have to sell all the Looms and the furniture uh by auction the problem is these are meager assets they're outdated technology he says the proceeds of the sale were most disappointing the Looms brought hardly anything and the result was that 20 pounds more were needed to enable the family to pay passage for America so they are flat broke they have to even borrow money for the passage the Transportation on ship to actually get to America where they feel there's a better opportunity waiting for the family and this is the state of his family my father was then 43 my mother 33 I was 13 and my brother was five and he says once he got on the boat I had left school forever so not even a high school education I would just ask you to put yourself in his father's shoes for a minute and how devastating this would have to be picture yourself 43 years old you're married you have two two small children to support you have to leave the only country you've everever known and you don't have a dollar to your name I think that fear of failure the fear of being in that position is can is unbelievably motivating and so he talks about how terrifying this part of his life was he's like I need to be able to help out the great question now was what could be found for me to do I wanted to get to work so that I might help the family to start in my in our new land the prospect of want had become to me a fright Nightmare and so he says my thoughts of this period centered in the determination that we should make and save enough money to produce $300 a year $25 a month which I figured was the sum required to keep the family without being dependent upon others so Andrew and his dad get jobs at The Cotton Factory again Andrew's 13 years old he says in this Factory my dad also obtained for me a position as a bobin boy so there's like a young boys that are like running errands for the people working in sometimes you have to fix Machinery it's like kind of like a help kind of person uh and my first work uh was done there at $120 per week so he's getting paid a120 a week what does he have to do for that and again this is he's so happy at the opportunity to to be able to do this because he's contributing almost $5 to that goal of hey let's just make $25 a month and we won't be you know in in poverty anymore uh it was a hard life uh we had to rise before breakfast in the darkness reach the factory before it was Daylight and work until after dark so he's working from sunrise to sunset for a120 a week and he is a static this job gave me the feeling that I was doing something for my world which is our family I may I have made Millions since but none of those Millions gave me such happiness as my first weeks earnings I was now a helper of the family a breadwinner and no longer a total charge upon my parents and we see his Relentless default optimism here even when he's making a120 a week having to work you know from rise to sunet my hopes were high and I looked every day for some change to take place what the change was to be I didn't know but I felt certain if I kept on it would happen and when Carnegie was a young boy one of his Heroes uh was the Scottish hero uh William Wallace and so at this point this is he's like oh I'll just ask myself what would William Wallace do and he says uh at that point in my life I was not Beyond asking myself what Wallace would have done and what a Scotsman ought to do one thing I was for sure he ought never to give up and so the note like myself when I read this the first time was manic levels of optimism this is another theme in Andrew Carnegie's life I think a main lesson of his life story is do the best you possibly can with the job that's right in front of you if you do the best possible uh as you can with the opportunities right in front of you it's going to unlock opportunities you can't possibly foresee he's constantly taking like an entry-level job doing a really good job then getting promoted then he gets promoted again and again and so this happens at the factory and it says it now became my duty to bathe the newly made spools in Vats of oil I never succeeded in overcoming the nausea produced by the smell of oil but but if I had to lose breakfast or dinner I had all the better appetite for supper and the allotted work was done so I know that's funny writing but think about what he's saying there the smell of oil made me sick and it made me vomit oh well I'll have more room in my stomach for dinner So eventually he's going to move from the factory into the office this is what I meant about being skilled in bookkeeping uh his supervisor is named Mr Haye Mr Haye kept his books in single entry and I was able to handle them for him but hearing that all the great firms kept their books in double but we kept hearing that all the great firms kept their books in Double Entry so he's got like a small group of uh super motivated like considering like other fellow ambitious uh friends that are in you know similar position where he is in life but they're not satisfied they want to rise together uh so he's got a small group it's like four or five four or five other boys says we all determine uh to attend night school during the winter and learn double entry bookkeeping and so what Andrew will do is he's constantly willing to jump from job to job if the opportunity is better there's a guy so the main the two main at this point in American history the two main main technological revolutions that are taking place are the railroad industry and the telegraph industry and so he's going to play Carnegie is going to play a role in both by working for both Telegraph companies and railroad companies that lead him to starting his own businesses later on he's going to build Bridges then build help build Rail lines he does that with iron first he realizes wait Steel's way better than iron I should jump into steel before every everybody else realizes his opportunity so there's a guy named David Brooks who was a manager of telegraph office just happened to ask uh Carnegie uh Uncle if he knew any like a a young boy that would act as a messenger and Carnegie does something incredibly intelligent here and then know I left myself is do not delay do it now one of the most important ideas in the book uh the interview was successful I took care to explain that I did not know Pittsburg that perhaps I would not do and I would not be strong enough but all I wanted was a trial he asked me how soon I could come and I said I could stay now if wanted and looking back over the circumstance I think that answer might well be pondered by young men it is a great mistake not to seize the opportunity the position meaning the job was offered to me something might occur some other boy might be sent for having got myself in I proposed to stay there if I could and he feels this is his biggest his one big break in life and that is how in in 1850 I got my first real start in life from the dark seller running a steam engine so out of the factory into the office so way you think about this running a steam engine at $2 a week uh being covered with dirt I was lifted into Paradise yes Heaven as it seemed to me with newspapers pens pencils and sunshine about me there was not a minute in which I could not learn something or find out how much there was to learn and how little I knew this is a fantastic line I felt that my foot was upon the ladder and that I was about to climb and so then he repeats this idea it's like listen you have to focus on whatever job is in front of you at this very moment and just do the best you can because you never know what opportunities that will unlock in the future and so as a messenger boy in these days he's running messages to a bunch of really successful businessmen older smarter more successful businessmen that are looking for young hardworking people to help and to give a chance to and so he says a messenger boy in those days had many Pleasures he met with very kind men to whom he looked up with respect they spoke to him a pleasant word and complimented him on his promptness and asked him to deliver a message on the way back to the office and so this is what I mean about the writing is a little weird I do he's talking about himself here I do not know a situation which a boy is more apt to attract attention which is all a really clever boy requires in order to rise wise men are always looking out for clever boys and so just like every other job he has at this point he's working incredibly long hours but he's really still thankful and optimistic one of the greatest philanthropic gifts that Andrew Carnegie gave to the world is the fact that he built all these libraries he was obsessed with building libraries now why because he had he benefited greatly from the kindness of an older person that had a person Library Andrew did not have extra money for books didn't have time to go to school and so a library served served as a form of self-education for a driven young person obsessed with trying to build wealth and be successful in life that was true in his day in the 1850s it's still true to now now it's just way easier for us to obtain this information with all their Pleasures the messenger boys were hard worked every other evening they required to be on duty until the office closed on these nights it was seldom that I reached home before 11:00 this did not leave much time for self-improvement nor did the wants of the family leave any money for books there came however like a blessing from above a means by which the treasures of literature were unfolded to me so this guy named colel Colonel James Anderson and he says I bless his name as I write this announced that he would open his library of 400 volumes to books so that any young man could take out each Saturday afternoon a book which could be exchanged for another on the succeeding Saturday now this is incredible like this is some of the nice this book is not well written in my op opinion but this language is fantastic this is the Miracle on reading right in this way so the fact that he now had free access he could read a book A Week for free he could pick one out of 400 volumes right in this way the windows were open in the walls of my dungeon through which the light of knowledge streamed in everyday's toil and even the long hours of night service were enlightened by the book which I carried about with me and read in the intervals that could be snatched from Duty and the future was made bright by the thought that when Saturday came a new volume could be obtained and so Andrew pays this back when he's older I mentioned I'm going to skip over the names it's like this little crew he's got a young group of fellow workers they're all hungry from knowledge it's really what you and I are doing here we do it through podcasting and reading books right they're doing it because they're meeting at the library themselves but it's exact same idea behind it I'm going to skip the names so it says all these members of our Circle share with me the invaluable privilege of the use of Colonel Anderson's library books which it would have been impossible for me to obtain elsewhere were by his wise generosity placed within my reach and to him I owe a taste for literature which I would not exchange for all the millions that were ever amassed by man life would be quite intolerable without it and I'm going to interrupt this paragraph because this is a really interesting idea spending time working reading and on self-improvement it keeps you away from crappy people he calls it low Fellowship like you know low quality people and bad habits nothing remember this is all reinforced because he's got a group of other people that they're not out there doing what a lot of boys young boys at his age are doing they're not getting drunk they're not committing crimes they're trying to build successful careers and a base of knowledge that'll serve that goal of building a successful career it's absolutely fantastic I love this part the next part actually made me tear up I'll get there in one second life would be quite intolerant without it nothing contributed so much to my to to keep my companions and myself clear of low fellowship and bad habits as the generosity of the good colonel later when Fortune smiled upon me one of my first duties was the erection of a monument to my benefactor think about that he made a statue it was so important to it's how we started the podcast it's like books are magic the the the impact that can have on your life like I get goosebumps thinking about it you have Thomas melon saying hey your book Ben Franklin was so important to me that later in life when I'm a rich man because you motivated me to build wealth to take risk right I'm GNA put a a statue of you in my bank you have Carnegie doing the same thing it's like do you understand what you did for my life Colonel James Anderson I had no idea how little I knew you open up the world of collective knowledge for me for free so and it it made such a difference in my life that I put a statue now in front of a hall in library in Diamond square and then on that statue Carnegie writes the following inscription this gives this has made me tear up to Colonel James Anderson founder of free Li libraries in Western Pennsylvania he opened his library to working boys and upon Saturday afternoons acted as a librarian thus dedicating not only his books but himself to the noble work this Monument is erected in grateful remembrance by Andrew Carnegie one of those quote working boys to whom were thus opened the precious Treasures of knowledge and Imagination through which youth May Ascend this is where Andrew decides I'm going to spend a large chunk of my wealth building free public libraries the Treasures of the world which books contain were open to me at the right moment the fundamental advantage of a library is that it gives nothing for nothing youths must acquire knowledge themselves There Is No Escape from this and if you think about how even crazy like how difficult it was to get a book in his age R the book I'm reading now uh you can read for free it is freely available online you could buy the Kindle version and read it on your phone for 99 but I like the port the book is going to make you work for it is not an easy to read book but there's a lot of ideas that'll be helpful in your career it's should you have the drive to want to do so right because he's saying the same thing the the fundamental advantage of a library is that it gives nothing for nothing youth must acquire knowledge themselves There Is No Escape from this and I've told you about this before I think you combine this idea right that a library will give you nothing for nothing you have to actually pick it up you have to actually do the work you have to actually read the word you have to think about what they're meaning you have to take notes you have to review this you have to do all these things right makes me think of I I combine that idea to what I consider is the best talk on YouTube for founder it's called I've told you this a million times Running Down a Dream by Bill Gurley I will leave a link in the show notes if you haven't seen it you can just type in YouTube it is a crime that that video has less than 100,000 views but by watching that video you'll see the Great Lengths that so many people go to to actually chase their dreams and make their dreams a reality every single person covered in that video knows the fundamental advantage and using a library or any kind of learning right and a lot of them were readers uh the fundamental advantage of a library also be a professional like doing research on your own doesn't have to read books but it's like it gives you nothing for nothing you have to acquire the knowledge yourselves and the reason I I recommend that um that talk so much and to watch it over and over again and so many people have have reached out to me and send me messages about being influenced by that talk is because it holds you to such a high standard it says in that he's like you don't have to be the smartest most brilliant person I will never be like genius level intellect like an ed Thorp or Henry Singleton or Da Vinci but I can just go about and collect more information and constantly expose my that's what Bill's main message it's like man it just you have no excuses the information is free on the internet you just have to go out and collect it and implied in that it's like most people won't even do that step so when I read about like this young kid who's distraught had left his family home his father's in abject you know poverty his mom's having to work you know night and day his son or his brother's five so he's going to start working soon too and it's just like you see it's like he was so hungry any kind of information that would get him out of the situation he's in Imagine working from from morning till night and not going home and you know laying about but reading but searching but pushing I love this part of the story and then uh another note I forgot to read too that I thought was funny uh about the section books don't read themselves okay so he's working inside of a telegraph office at this point this is something I mentioned earlier that he's kind of like the bookkeeper of his family um they clearly put a lot of responsibility on him they saw that you know he was young and gifted uh so he said I did not spend any of my extra dimes every penny that I could save I knew was needed at home my parents were wise and nothing was withheld from me I knew every week the receipts of each of the three who were working my father my mother myself and I knew all the expenditures he's doing the exact same thing at 13 as he says later on in life if you know your cost down to the penny you're always on firm ground and so now this is a few years later talks about the fact that him and his brother share a room they have to sleep in the attic and they spent stay up at night Whispering talking talking about the great businesses that they're going to build they're wind up being Partners so it says Tom was just 9 years old um we slept in the Attic together and after we were safely in bed I whispered the secret to my dear little brother even at his early age he knew what it meant and we talked over the future so if he's nine I think Andrew is around 17 at this point it was then for the first time a sketch to him how we would go into business together that the firm of Carnegie brothers would be a great one and that father and mother should yet ride in their Carriage he goes into more detail of why he used the word riding in the carriage he didn't understand how like the different levels of wealth he thought like the highest uh level of wealth that he had you know per personally personally seen at this point was people that were able to ride in a carriage so he's like okay we're going to work hard and we're going to give father and mother so we're going to make so much money that they can ride in their in a carriage and so there's just this like slow linear progression in the amount of money that he starts you know working at 13 now he's 17 he's now getting a raise he gets a raise a $225 month a raise remember he like we just got to make 25 bucks a month he's now making $13 .50 so he's halfway there by himself and the reason this is etched in his life life uh even many many years later you know he's writing this book maybe 50 years later whatever the case is it's because the how proud his parents were I produced the extra $2 and a quarter the surprise was great and it took some moments for them to grasp the situation but it soon Dawn upon them then father's glance of loving pride and mother's blazing eyes soon wet with tears told their feeling it was their boy's first Triumph meaning himself and proof positive that he was worthy of promotion no subsequent success or recognition of any kind ever thrilled me as much as this did and then we're going to see a demonstration of a lifelong trait that Andrew had it was especially pronounced when he was a young man on the rise this one of my favorite quotes of Charlie Monger talks about the importance of being a learning machine I've said multiple times on the podcast it pops out it's like learning machines who refuse to quit are ex incredibly hard to beat Charlie Monger says I constantly see people who rise in life who are not the smartest sometimes not even the most diligent but they are learning machines they go to bed every night a little wiser than they were when they got up and boy does that help particularly when you have a long run ahead of you that perfectly describes where we are in Andrew Carnegie's life he's still a teenager having to sweep out the operating room in the morning the boys had an opportunity of practicing upon the telegraph instruments before the operators arrived it's like being able to uh learn how to program one of the first computers like that's the way you could think about this uh this was a new chance I soon to began to play with the key and to talk with the boys who were at the other stations who had like purposes to my own whenever one learns to do anything he has never to wait long for an opportunity of putting his knowledge to use this is important because he's going to meet this guy named Thomas Scott who works for Pennsylvania Railroad who's going to be like a mentor to him who event this eventually leads so this new skill that he's learning puts him to working with Thomas Scott and the Pennsylvania Railroad which eventually leads him to decide to manufacture if steel will be his main focus that there's no way he could have predicted that opportunity as a 17-year-old saying hey I should learn this new machine uh these these Telegraph lines are being put in every city I see them constantly maybe I should actually use my time and why does he say you never have to wait long to learn a skill because a year later he begins as a telegraph operator it's like getting a job at Google in 2004 why is that because now it doubles his salary I began as a telegraph operator at the tremendous salary of $25 per month which I thought was a fortune five years ago he's making a120 a week and he's in a factory as a bobin boy and maybe later on he's working $2 making $2 and he's putting all these spools and Vats of oil throwing up and like okay that's cool I'm going to have more room for dinner and here's the punchline knowledge is sure to prove useful in one way or another it always tells and so I'd mentioned the fact that him in his spare time learning the skill gets an increase in salary then Thomas Scott actually asks he this is before he works for Thomas Scott Thomas Scott plays a huge role in his life later on Andrew Carnegie considers he says that Thomas Scott was a genius and so Carnegie is friends with one of Scott's assistants and it says uh I was was surprised One Day by one of his assistants to whom I was acquainted telling me that Mr Scott had asked him whether he thought that I could be obtained as his Clerk and Telegraph operator and his friend told Tom Scott he's like no I don't think he's interested and then he and then Carnegie says but when I heard this I said it once not so fast he can have me I want to get out of air office life please go and tell him so now this is crazy the result was that I was engaged hired uh in 1853 at a salary of $35 a month as Mr Scott's Clerk and operator this is literally a life-changing job because he's now at the center remember he's at the center of two rapidly growing Industries we're still right before the um uh the Civil War okay so he's at the center of two rapidly growing Industries which is RA telegraphs and it says it was not long after this that the railroad company constructed its own Telegraph line we had to supply with operators most of most of these operators were taught in our offices the telegraph business continue to increase with startling rapidity we could scarcely provide facilities fast enough so I think they make it up I don't remember if it in this book or the the the book I read on Jay gold but they make the difference in the increase in technology it's like okay the difference of getting your messages in a week as opposed to getting them in an hour and so he goes back to this idea that wise successful older people are always looking to help younger people would drive Andrew does not have a lot of money right now but he has a desire to learn and he's willing to work really hard and so Andrew gives this advice for future Generations the Battle of life is already half won by the young man who is brought personally in contact with high officials and the great aim of every boy should be do to do something beyond the Spear of his duties meaning going the extra step something which attracts the attention of those over him there's stories in this book where there's like three or four maybe five other similar aged people working in the same in the office as him and he distinguishes himself he rises faster than they do because he just does more than they they willing to do and so now many pages later but this is something he repeats over and over again he's like listen I had so much help when I was a young person if you get yourself in that position please help other people progress in their careers when you have the opportunity to do so he says I'm a firm believer in the doctrine that people deserving necessary assistance at critical periods in their career usually receive it there are many Splendid Natures in the world men and women who are not only willing but anxious to stretch forth a helping hand to those they know to be worthy you have to work for it right it's not it does not come for free as a rule those who show willingness to help themselves need not fear about obtaining the help of others so up until this point every dollar that he's ever made has come through like his own physical toil and Mr Scott is clearly in a mentoring relationship with him teaches him about investing Carnegie doesn't know what the hell that is and so this is way before there's like insider trading rules but Mr Scott says hey you should do you have $500 you if you have $500 you should really make this investment it would be worth it uh Mr Scott asked me if I had $500 if so he said he wished to make an investment for me 500 cents was much near my Capital I certainly had not $50 save for investment but I was not going to miss the chance of becoming financially connected with my leader and great man so I said boldly that I thought I could manage that sum what's crazy is how much Faith his mom had in Andrew she's willing to mortgage the family home they mortgage the family home to get $500 to make this investment so he hands this over to Mr Scott he gets 10 shares in return that was my first investment in those good old days monthly dividends were more plentiful than now one morning a white envelope was lying upon my desk I opened the envelope all it contained was a check for $10 I should remember that check as long as I live it gave me the first penny of revenue from Capital something that had not worked for with the sweat of my brow Eureka I cried here is the goo the goose that lays the golden eggs so let's go back to this idea he's working in that office took time his spare time he learned the telegraph how to operate a telegraph comes a telegraph operator does a good job with that gets recruited to Mr to work for Mr Scott now this is many years later Mr Scott works for pennslvania railroad but now during the Civil War he is the ass I think he's the assistant secretary of War if I'm not mistaken and as a result of this he brings Andrew much younger person helping him uh to Washington to help with uh his work as a result of that Andrew Carnegie gets to meet Abraham Lincoln and this is what Carnegie thought of Lincoln uh Lincoln would occasionally come into an office and sit at the desk awaiting replies to telegrams he was certainly one of the most homely men I ever saw but when excited or telling a story intellect Shone through his eyes and illuminated his face to a degree which I have seldom or never seen in any other his manners were perfect and he had a kind word for everybody even the youngest boy in the office and so so far he's mastered of telegraph he's learning a lot about the railroad industry he winds up getting uh telling them about a new way to make Railway cars but also railway lines he gets a small interest in this business and this reminded me of Jeff Bezos writing in his shareholder letters last week that you have to use Trends and Technology to your advantage that you you need to use them as a Tailwind instead of ignoring them and then wind up being a headwind to your career and so it's through this work that he realizes he can start a business to build Bridges so it says the railway lines of America were fast becoming dangerous for want of new rails and this State of Affair Affairs led me to organize a rail making concern in Pittsburgh and so while he's doing this work he says when I was at work with this I had seen in the Pennsylvania rail companies works the first small Bridge built of iron it proved a success I saw that it would never do to depend further upon wooden bridges and so again direct officer response that his father would have he's like wait a minute I have a like a front row seat at this because I'm working with the pennslvania railroad they're replacing like they had all this problem with wooden bridges they figured out a way to build railroad Bridges with iron it was so Superior I realized right then and there no one's going to build wooden bridges anymore this is going to be the future I should start a Bridge Building Company Building Bridges out of iron and so he says I would organize a company to build iron Bridges I asked my friend Mr Scott that's his mentor uh of the Pennsylvania Ro to go in with us in the Venture which he did each of us paid for 1th interest at a cost of $1,250 looking back at it now the sum seemed very small but Tall Oaks from Little acorns grow and so this goes back to this idea that you and I talk about all the time you're not supposed to copy the what you copy the how he spots the opportunity for iron Bridges while working at with the Pennsylvania R right Jay gold spotted the opportunity for telegraph uh to to building Telegraph companies during his work on the roil roads Peter teal spotted the opportunity for palente here based on solving payment fraud at PayPal keep your eyes open you never know when these insights that you're just happen to notice are going to turn into giant companies and so he goes into one of his main lessons that he learned from his bridge building business that the shest foundation of a business is on the quality of its product the Keystone Bridge Works has always been a source of satisfaction to me almost every concern that had undertaken to erect iron bridges in America had failed many of the structures themselves had fallen and some of the worst Railway disasters in America had been caused in that way some of the bridges had had given way under wind pressure but nothing has ever happened to a keystone bridge and so he says there's been no luck about this we only use we only use the best material and enough of it making our own our own Iron and later our own steel I'm going to interrupt that um that paragraph something that's a main theme of Carnegie you've seeing this now in his career where we are in his career now it's going to be even more pronounced later in his career he prioritized vertical integration to make sure that he controlled companies of all aspects of his steel business we see that doing the same thing in his beginning to do the same thing in his bridge building business he wanted control if you were supplying if your company supplying something a business process that Carnegie needed he's going to find a way to buy to either buy your business or take you over or partner with you so he can control the process that's how he winds up partnering with Henry Clay Frick maybe a decade maybe a decade and a half from where we're on the story right uh so back to this paragraph We were our own severest inspectors and we would build a safe structure or none at all when asked to build a bridge which we knew to be insufficient of insufficient strength or unscientific design we absolutely declined and he says this policy is a true secret of success uphill work it will be and it's through the Bridge Building Company he decides hey I got to manufacture my own Iron and this is where he realizes oh your mediocrity is my opportunity as it became that he's essentially introducing cost accounting to manufacturing gentleman watch your cost is something that uh I think that might be Frick I can't remember either carneg or Frick would repeat that over and over again watch your cost gentleman watch your cost watch your cost watch your cost as I became acquainted with the UFA of iron I was greatly surprised to find that the cost of each of the various processes was unknown it was a lump business and until stock was taken and the books balanc at the end of the year the manufacturers were in total ignorance of results I heard of men who thought their business at the end of the year would show a loss and had and had found a profit and vice versa I felt as if we were moles buring in the dark and to me this was intolerable I insisted upon such a system of weighing and accounting being introduced throughout our works as would enable us to know what our cost was for each process and especially what each man who was working for them was doing who saved material who wasted it and who produced the best results and he says he ran into human nature they didn't want to change every single manager in the Mills was against his new system and he said it took years before he was able to actually install an accurate system but this was the end result eventually we began to know not only what every Department was doing but what each one of the many men working at the furnaces were doing and thus to compare one with another one of the chief sources of success in manufacturing is the introduction and strict maintenance of a perfect system of accounting that's a main theme how many times have you repeated this in the book so far so that responsibility for money and materials can be brought home to every man owners who in the office would not trust a clerk with $5 without having a check upon him without having to check upon him were supplying tons of material daily to men in the Mills without exacting an account of their stewardship by weighing what each returned in the finished form and this is the part I jumped at that jumped out I've never forgotten the the the idea that you need to invest in technology the savings compound it gives you an advantage over slower moving competitors and can be a difference between a profit and a loss the exact opposite approach that his father took and the older heads of Pittsburgh manufacturers would make fun of him because he's investing in all these new machines technolog is just a better way to do something right I well remember the criticisms made by the older heads among the Pittsburgh manufacturers about the extravagant expenditures we were making upon these new fangled furnaces but in the heating of great masses of material almost half the waste could sometimes be saved by using the new furnaces the expenditure would have been Justified even if it had been doubled yet it was many years before we were followed in this new departure and by the time they C by the time they they copy him it's too late right and in some of those years the margin of profit was so small that most of what was made up most of it most of the profit was made from the savings derived from the adoption of the improved furnaces our strict and this is how it all relates together our strict system of accounting enabled us to detect the great waste possible in heating large masses of iron Andrew is famous for his dedication to the idea that put all your eggs in one basket and watch that basket he also understood that how valuable your attention is that the fact is the most expensive way to pay for anything is with time and so he knows he's like I found what I want to do in life and so I'm only going to focus on that and so he took this to extreme where he's like I'm I'm even going to sell off any stocks I have of outside of my business because I don't want any of my mental processing power directed anything other than my Steel company which this wind up being a genius level move most of which most people just do the exact opposite especially in today's modern age they're completely distracted where all your attention should go into your business uh they included some stocks and securities that were quoted on the New York Stock Exchange and I found that when I opened my paper in the morning I was tempted to look first at the quotations of the stock market when you wake up in the morning what Andrew is telling us you should be focused on your business and improving that not on your Investments as I determined to sell my interest in every outside business and concentrate my attention upon my manufacturing I further resolved not to even own any stocks and he's saying this was such a good idea for me for my career most people don't do it and this is why he feels it a good idea such a course should be commended itself to every man in the manufacturing business and to all professional men for the manufacturing man especially his mind must be kept calm and free if he's decide wisely the problems which are continually coming before him this is something that Jeff Bezos talked about last week nothing tells in the long run like good judgment and no sound judgment can remain with the man whose mind is disturbed by the material changes of the stock market his mind is upon the stocks and not upon the points that require calm thought and so he picks up the same idea later on quotes that quote I just said he said I had become interested in you know building railroads in the western states that seemed like a giant opportunity but he realized the greatest opportunity he first of all he can't do multiple things right so he's like the greatest opportunities in steal I got to get out of everything and so he says I gradually Drew from all such Enterprise prizes and made up my mind to put all of one's eggs in one basket I determined that the proper policy was to put all good eggs in one basket and watch that basket I believe that the true Road of preeminent success in any line is to make yourself master in that line I have no faith in the policy of scattering one's resources and in my experience I have rarely if ever met a man who achieved preeminence in moneymaking who was interested in many concerns so he's saying the wealth is built from one great business the men who have succeeded are men who have chosen one line and stuck to it it is surprising how few men appreciate the enormous dividends derivable from investment in their own business and yet most businessmen who I have known invest in Bank shares and farway Enterprises while the true Gold Mine lies right in their own factories my advice to young men would be not only to concentrate their whole time and attention on the on the one business in life in which they engage but to put every dollar of their Capital into it as for for myself my decision was taken early I would concentrate upon the manufacturer of Iron and Steel and be a master in that so the method they're using to produce steel is relatively new technology there's way more unknown unknowns than there are knowns and so they have the idea Carnegie and his Partners have the idea it's like hey what if we hire somebody not just manufacturers but actually chemists because Carnegie suspected there was still a ton of waste in the process and he made this decision and all his competitors actually thought he was just being like he was this a ridiculous like expenditure and Carnegie had a secret for a while because he was the only one doing this that chemist actually make the difference between waste and profit he says what fools we had been but then there was this consolation we were not as great as fools as our competitors it was years after we had taken chemistry to guide us that it was said by the Proprietors of some other furnaces that they could not afford to employ a chemist had they known the truth they would have known that they could not afford to be without one looking back it seems pardonable to record we were the first to employ a chemist at blast furnaces something our competitors pronounced extravagant and so he says the Lucy furnace became the most profitable branch of our business because we had almost the entire Monopoly of Scientific Management then as a result of being profitable your competitors are losing you can actually expand faster having discovered the secret it was not long before we decided to erect an additional furnace and so he makes the point from the very beginning repeated throughout the book you should really embrace technology you should be jumping to what you feel is the superior method not waiting for competitors to say it's Superior method but using your own judgment talks about the idea is like hey everybody's using iron we used iron in our Bridge works but it was very clear that steel was Superior and it says King Iron was about to be deposed by the new king steel and it's because of the work that they were doing on bridges that they said this this rapid substitution of Steel for iron became very obvious to them a few pages later it says steel had ascended the throne and was driving away all other inferior material material so he gets in early vertically integrates watches cost more than anybody else and continually reinvests in technology and the result is our profits had reached $40 million per year and the prospect of increased earnings before us was amazing our successors when he sold to United States Steel Corporation soon after our purchase netted 60 million in one year there's a great story in if you've ever read the house of Morgan the biography of the Morgan Family Dynasty I covered it all the way back on Founders number one 39 but there's a hilarious story in that book where after Morgan pays 480 million for Andrew's company uh it says Andrew Carnegie celebrated too quickly he later admitted to Morgan that he sold out too cheap by 100 million Morgan replied very likely Andrew and after that he goes into philanthropy writes the gospel of wealth and then most of the book is actually I would just skip over most of the book because it's has to do with politics and then it's a weird autobiography because it just ends he was supposed to continue writing and then he never did so the end of the book it says says he ends on a great line says nothing is impossible to genius here the manuscript ends abruptly and so that is where I'll leave it I'll leave a link below if you want to buy the book you can read the full story you can also get it for free online if you want to as well but my personal recommendation if you want to learn more about Andrew Carnegie I think the narrative structure in the book meet you in hell Andrew Carnegie Henry kick and the bitter partnership to change of America is absolutely fantastic you might find interesting that the same author of meet you in hell is also the author of the biography of Henry Flagler that I read for episode 247 both of those books are very fascinating both meu HS about two very formidable individuals Henry Flagler biography Henry Flagler one of you know history's most formidable individuals no way you could be the partner of Johnny Rockefeller and not be a formidable individual and like I said earlier I will reread that I already have like the next 12 so that's what like three months of books planned out it's unbelievable the quality of Founders that you and I are about to study but I will include the meet you and Hell book in there because I think it's it's absolutely fantastic so that is 283 books down 1,000 to go and I'll talk to you again soon