Tag: John Rockefeller

Samuel Andrews: The Man With the Billion Dollar Ego

We can learn valuable lessons from the life of Samuel Andrews. Haven’t ever heard of him? There’s a reason. He was John D. Rockefeller’s right-hand man, and stood to become one of the world’s richest men. But then something got in the way. 

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There is an important lesson to be learned from the story of Samuel Andrews, as told by biographer Ron Chernow in Titan: The Life of John D. Rockefeller.

John D. Rockefeller learned to clean oil from Sam Andrews. Andrews was the ideal partner for Rockefeller. While he lacked business sense, he had mechanical knowledge that Rockefeller didn’t. The quality of kerosene that Andrews was able to produce, and the efficiency of his process, rendered him indispensable—until something got into the way. But before we get to that, a bit of history.

It was Rockefeller himself who propositioned Andrews to go into business in the first place.

“Sam,” he said, “we are prospering. We have a future before us, a big future. But I don’t like Jim Clark and his habits. He is an immoral man in more ways than one. He gambles in oil. I don’t want this business to be associated with a gambler. Suppose I take them up the next time they threaten a dissolution. Suppose I succeed in buying them out. Will you come in with me?”

Andrews agreed and they shook hands on the deal.

Only a few weeks later Rockefeller quarreled with Clark. “If that’s the way you want to do business we’d better dissolve, and let you run your own affairs to suit yourself,” Clark warned.  Rockefeller moved swiftly.

Rockefeller met with his partners and stated publicly that he wished to dissolve the partnership. The two sides walked away after the meeting with contrasting feelings. The Clarks imagined they had cowed the young whippersnapper, while Rockefeller raced to the office of the Cleveland Leader to place a notice dissolving the partnership.

The next morning the Clarks were stunned to see the notice. The Clarks failed to realize that Rockefeller had Andrews on his side. As per the partnership agreement, the business went up for auction.

Ron Chernow describes the situation thus:

Even as a young man, Rockefeller was extremely composed in a crisis. In this respect, he was a natural leader: the more agitated others became, the calmer he grew. It was an index of his matchless confidence that when the auction occurred, the Clarks brought a lawyer while Rockefeller represented himself. “I thought that I could take care of so simple a transaction,” he boasted. With the Clarks’ lawyer acting as auctioneer, the bidding began at $500 and quickly rose to a few thousand dollars, then inched up slowly to about $50,000—already more than Rockefeller thought the refining business worth.

Since this was such a critical and defining moment in Rockefeller’s career, we can read his own words:

Finally it advanced to $60,000, and by slow stages to $70,000, and I almost feared for my ability to buy the business and have the money to pay for it. At last the other side bid $72,000. Without hesitation I said $72,500. Mr. Clark then said: “I’ll go no higher, John; the business is yours.” “Shall I give you a check for it now?” I suggested. “No,” Mr. Clark said, “I’m glad to trust you for it; settle at your convenience.”

At age 25 he and Sam Andrews controlled Cleveland’s largest refinery. No sooner had the ink dried than they took up a metagame strategy, one of rapid expansion, that he knew was diametrically opposed to how the Clarks would likely respond.

Refinery after refinery came under their control. From the start, Rockefeller used his business sense and relied on Sam Andrews for technical advice. Rockefeller held Andrews in esteem until Ambrose McGregor was named superintendent of the Standard Oil refineries in Cleveland. McGregor demonstrated superior ability. Andrews was shown to be less capable. His ego took a beating.

One day in 1878, Andrews snapped at Rockefeller, “I wish I was out of this business.”

Rockefeller remained calm and called his bluff, replying, “Sam, you don’t seem to have faith in the way this company is operating. What will you take for your holdings?”

“I will take one million dollars,” Andrews shot back.

“Let me have an option on it for twenty-four hours,” said Rockefeller, “and we will discuss it tomorrow.”

“Samuel Andrews was taken into the business as a poor workingman with little or nothing in the early stages when it was difficult to find men to cleanse the oil. … He had too much conceit, too much bull-headed English obstinacy and so little self-control. Was his own worst enemy.”

The next morning when Andrews arrived, Rockefeller had a check made out for one million dollars.

While he appeared confident, Rockefeller was petrified at the thought of Andrew’s holdings hitting the open market and depressing the stock. Andrews thought he had bested Rockefeller. However, when Rockefeller sold the shares to William H. Vanderbilt for a quick $300,000 profit, Andrews changed his mind, voicing his displeasure to Rockefeller.

Rockefeller, feeling some sense of loyalty to the man who had helped him build and empire and quickly fallen out of favor, offered back the stock for the same price at which he had sold it.

Feeling slighted, his ego bruised, Andrews spurned the offer. This decision kept him from becoming one of America’s richest men. The very same stock would have been worth $900 million by the early 1930s.

Later Rockefeller would say of Andrews, “He was ignorant, conceited, lost his head…governed by the same wicked sort of prejudice accompanying the egotism so characteristic of that type of ignorant Englishman.”

There is a little Sam Andrews in all of us. The lesson to walk away with is that temperament matters. A lot.

The ability to keep your head when others are losing theirs is a superpower. The world doesn’t always work the way you want to it. People will slight you. You’ll get fired. You’ll make mistakes. People who are smarter than you will compete for your job. And how you respond to all of this will make all the difference.

Rockefeller gained an advantage by keeping his head while others lost theirs. In fact, the higher the stakes, the cooler he was said to become. Andrews, on the other hand, couldn’t keep his head. As a result, a blow to his ego prevented him from being one of the richest men in the world.

Footnotes
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    Source: Chernow, Ron. Titan: The Life of John D. Rockefeller. New York: Knopf Doubleday, 2007