The Difference Between a CEO and a Founding CEO

What I learned from reading The Fish That Ate the Whale: The Life and Times of America's Banana King by Rich Cohen.

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When he arrived in America in 1891 at age fourteen, Zemurray was tall, gangly, and penniless. When he died in the grandest house in New Orleans sixty-nine years later, he was among the richest, most powerful men in the world. In between he worked as a fruit peddler, a banana hauler, a dockside hustler, and the owner of plantations on the Central American isthmus. He batted and conquered United Fruit, which was one of the first truly global corporations. [0:01]

Zemurray’s life is a parable of the American dream. It told me that the life of the nation was not written only by speech-making grandees in funny hats but also by street-corner boys, immigrant strivers, crazed and driven, some with one good idea, some with thousands, willing to go to the ends of the earth to make their vision real. [0:31]

How Sam Zemurray started: He’d arrived on the docks at the start of the last century with nothing. In the early years, he’d had to make his way in the lowest precincts of the fruit business, peddling ripes, bananas other traders dumped into the sea. He worked like a dog and defied the most powerful people in the country. [2:26] 

He was driven by the same raw energy that has always attracted the most ambitious to America. You did not need to be a Rockefeller to know the basics of the dream: Start at the bottom, fight your way to the top. [3:35] 

He believed in staying close to the action—in the fields with the workers, in the dives with the banana cowboys. You drink with a man, you learn what he knows. There is no problem you can’t solve if you understand your business from A to Z. [4:33] 

His real life began when he saw that first banana. He devised a plan soon after: he would travel to where the fruit boats arrived from Central America, purchase a supply of his own, carry them back to Selma, and go into business. [6:24]

See opportunity where others see nothing: The bananas that did not make the cut were designated “ripes” and heaped in a sad pile. These bananas, though still good to eat, would never make it to market in time. As far as the merchants were concerned, they were trash. Sam grew fixated on ripes, recognizing a product where others had seen only trash. [6:54] 

As far as he was concerned, ripes were considered trash only because Boston Fruit were too slow-footed to cover ground. It was a calculation based on arrogance. I can be fast where others have been slow. I can hustle where others have been satisfied with the easy pickings of the trade. Zemurray stumbled upon a niche: overlooked at the bottom of the trade. [8:08]

His business grows rapidly: Because Zemurray discovered a patch of fertile ground previously untilled, his business grew by leaps and bounds. In 1899, he sold 20,000 bananas. Within a decade he would be selling more than a million bananas a year. [9:30]

An interesting story about Why was Zemurray’s company so profitable so quickly? Hint: No expenses. [13:47]

Was there a precursor? Of course there was. The world is a mere succession of fortunes made and lost, lessons learned and forgotten and learned again. [17:59] 

If you looked into his eyes you would see the machinery turning. Part of him is always figuring. You listen to a man like that. He knows something that can’t be taught. [20:19]

Study those that came before you. Avoid their fate: He paid special attention to the old-timers who had been in the trade since the days of wind power. They were former big timers now just trying to survive. [20:40] 

Zemurray goes deep into debt to buy as much land as possible: There are times when certain cards sit unclaimed in the common pile, when certain properties become available that will never be available again. A good businessman feels these moments like a fall in the barometric pressure. A great businessman is dumb enough to act on them when he cannot afford to. [23:13] 

He believed in the transcendent power of physical labor—that a man can free his soul only by exhausting his body. [26:07] 

Unlike most of his competitors, he understood every part of the business. He was contemptuous of banana men who spent their lives in the North, far from the plantations. Those schmucks, what do they know? They’re there, we’re here! [26:21] 

These banana companies were so powerful that they overthrew presidents. Multiple times. [27:47] 

Pretend you are Sam Zemurray. You’ve been summoned to Washington, called to account by the Secretary of State, warned. What do you do? Put your head down, shut up? Sit in a corner? No Sam Zemurray. [29:57] 

He disdained bureaucracy, hated paperwork. He ran his entire business in his head. He will telephone division managers in half a dozen countries, correlate their reports in his head and reach his decision without touching a pencil. [34:06]

He was respected because he understood the trade. By the time he was 40 he had served in every position. He had worked on the docks, on the ships and railroads, in the fields and warehouses. He had ridden the mules. He had managed the fruit and money, the mercenaries and government men. He understood the meaning of every change in the weather, the significance of every date on the calendar. There was not a job he could not do, nor a task he could not accomplish. He considered it a secret to his success. He refrained from anything that took him away from his work. [37:46] 

Manager vs Maker Schedule [39:43] 

He began to visit boatyards. He wanted to build a fleet so he would never again be dependent on other companies to haul his product. He wanted control. In everything. [40:32] 

It was a contrast of styles: the executives who ran United Fruit had taken over from the founders and were less interested in risking than in persevering. Zemurray was the founder, forever on the attack, at work, in progress, growing by trial and error, ready to gamble it all. [42:53] 

Here was a self-made man, filled with the most dangerous kind of confidence: he had done it before and believed he could do it again. This gave him the air of a berserker, who says, if you’re going to fight me, you better kill me. If you’ve ever known such a person, you will recognize the type at once. If he does not say much, it’s because he considers small talk a weakness. Wars are not won by running your mouth. I’m describing a once essential American type that has largely vanished. Men who channeled all their love and fear into the business, the factory, the plantation, the shop. [46:42] 

Two different approaches to buying land. One entrepreneurial, one the opposite: United Fruit did what big bureaucracy-heavy companies always do, hired lawyers and investigators to find the identity of the true owner. This took months. In the meantime, Zemurray simply bought the land from them both. He bought it twice—paid a little more, yes, but if you factor in the cost of all those lawyers, probably still spent less than United Fruit and came away with the prize. [47:50]

Why the book is called The Fish That Ate The Whale [49:46] 

The greatness of Zemurray lies in the fact that he never lost faith in his ability to salvage a situation. Bad things happened to him as bad things happen to everyone, but unlike so many he was never tempted by failure. He never felt powerless or trapped. He was an optimist. He stood in constant defiance. For every move there is a countermove. For every disaster, there is a recovery. He never lost faith in his own agency. [51:45]

You gentlemen have been fucking up this business long enough. I’m going to straighten it out. [58:07]

Sam’s defining characteristic was his belief in his own agency, his refusal to despair. No story is without the possibility of redemption; with cleverness and hustle, the worst can be overcome. I can’t help but feel that we would do well by emulating Sam Zemurray. [1:04:05] 

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