John D. Rockefeller was the single wealthiest individual in the history of the United States and, by some measures, the single wealthiest individual in the history of the world.
At the time of his death in 1937, Rockefeller’s fortune accounted for 1.5% of the entire economy of the United States, the equivalent of $390 billion in 2015 dollars. This would dwarf the fortunes of Bill Gates, Carlos Slim, and Warren Buffet today.
What is the one piece of wisdom we would-be 21st-century billionaires can glean from John D. Rockefeller’s experience?
Ruthlessness, without breaking the law, can make marketing plans unstoppable.
Early life of an oil tycoon
Future Standard Oil tycoon John Davison Rockefeller was born in 1839 in the small upstate-New York town of Richford. His mother, Eliza, was a devout Baptist, a homemaker, and the mother of six children, of whom John was second born. His father, William, was a Baptist preacher, a traveling evangelist, a traveling doctor, a seller of non-existent real estate, a literal snake oil salesman, and a con artist.
Away from the family for months at a time, Rockefeller’s father married other women and had other families. At least one of the many moves the family made during John’s boyhood was necessitated by the elder Rockefeller being charged with rape.
Eliza did her best to keep the family going in the absence of her philandering husband. She often told her children “Willful waste makes woeful want.” At his mother’s urging, the young John began working at an early age, raising turkeys, selling sweet potatoes, and even earning interest by lending small sums of money to the neighbors.
In September of 1855, John Rockefeller’s father William abandoned the family completely, taking the name William Livingstone, traveling from frontier town to frontier town as a “surgeon.” The elder Rockefeller became infamous for selling bottles of crude oil labeled “Nujol” for $25 (two month’s wages at the time) as a cancer cure, leaving each town where he made sales before the fraud could be uncovered.
This post is part of a 125-page eBook, 24 Marketing Lessons from 24 Business Leaders. Get your free copy by just entering your email below!
[contact-form-7 id=”7875″ title=”Simple email lead magnet”]
Rockefeller goes into business
The sixteen-year-old John Rockefeller took a job as a bookkeeper for a produce company, earning 50 cents a day. At the age of 20, Rockefeller and a friend raised $4,000 to start their own produce company. A few years later, in 1863, the twenty-four-year-old Rockefeller built an oil refinery.
One of the products of Rockefeller’s Cleveland, Ohio-based oil refinery was a new petroleum product that came to be known as gasoline. With three partners, who also became titans of industry of nineteenth century America, Rockefeller obtained a near monopoly over the petroleum industry in the United States and later in Mexico. Their wealth grew to fantastic sums by the early 1870’s.
Rockefeller the philanthropist
In the early 1900’s, already an old man, Rockefeller turned his attention to charity.
Even though Rockefeller was a staunch Northern Baptist, he became a philanthropist on the urging of a Hindu guru named Swami Vikekananda, who had introduced yoga to the Western world. While seeking spiritual fulfillment in giving away billions Rockefeller also sought to help create institutions that he felt “should” exist.
He turned a small Baptist Bible college into the now-secular University of Chicago. A staunch abolitionist, Rockefeller also gave millions to establish Spelman University in Atlanta, to educate the children of freed slaves.
Rockefeller endowed the Central University of the Philippines as a missionary effort, and also founded Rockefeller University, whose medical school has since produced 23 Nobel laureates in medicine. Rockefeller gave millions to the school of public health at Johns Hopkins, and funded medical research that eradicated yellow fever and hookworm.
Even when he was giving away hundreds of millions of dollars, Rockefeller never forgot his mother’s teaching. To encourage thrift, Rockefeller made a habit of giving nickels and dimes to people everywhere he went, including, the story goes to rubber tire mogul Harvey Firestone.
Rockefeller’s ruthless streak
As generous as Rockefeller was to his church and to educational institutions, he could also be ruthless.
Rockefeller amassed the wealth to build a refinery by selling whiskey to Union troops in the Civil War at extremely high prices. By 1870, Rockefeller controlled enough of the oil industry in Ohio, where oil production was concentrated at that time, that he could cut prices to drive his competitors out of business.
As Rockefeller gained control over more and more of the oil industry he used his power to buy in large quantities to drive suppliers out of business if they refused to sell to him at severe discounts. Standard Oil, when it was finally broken up into 34 smaller companies in 1914, controlled 70% of all oil and gas sales in the US, despite having only 14% of the country’s oil and gas wells. Those who would not sell to Rockefeller could not sell to anyone.
Rockefeller amassed so much power and wealth that he and his descendants are the subjects of various conspiracy theories of varying factuality today. But what can his legacy tell us about successful marketing in the twenty-first century?
Lessons from Rockefeller’s legacy
- Size matters
If you are going to be ruthless with your suppliers and your competitors, you need to big. Rockefeller was able to take over an entire industry, but he was only able to do this after he had already accumulated considerable wealth in the produce business and as a whiskey distributor.
- Be ruthless, but don’t turn people off
Making nice doesn’t wipe out a record of unfair business practices. Even though the Rockefellers have donated billions to medical research, to universities, and to entire governments, including the UN, they are not necessarily a beloved American institution.
- Take care of the pennies and the dollars will take care of themselves
Small sales accumulate to riches if each sale is kept profitable. Ultimately, sales of a few gallons of gasoline at a time to individual consumers, at less than 10 cents a gallon (the price at Rockefeller’s death in 1937), accumulated to billions in revenues.
- Cut expenses to a minimum
When you are making your fortune a few pennies or a few dollars at a time, close attention to the tiny expenses of making those sales is critical to profitability and future success. Ruthlessly keeping costs in line makes all the difference to the bottom line in many business ventures.