#237 Julio Lobo Cubas Last Sugar Tycoon



In the episode, the host delves into the life of Julio Lobo, once Cuba's wealthiest sugar magnate, whose fortune and influence peaked during the pre-revolutionary era. Lobo's rags-to-riches story is a microcosm of Cuba's tumultuous history, spanning from the island's independence in 1898 to his exile following Castro's communist revolution. Known as the "King of Sugar," Lobo's estimated $200 million fortune (equivalent to $5 billion today) and his remarkable life, including surviving assassination attempts and duels, are chronicled in John Paul Rathbone's book "The Sugar King of Havana: The Rise and Fall of Julio Lobo, Cuba's Last Tycoon." The host reflects on Lobo's legacy, drawing parallels with other historical figures and the cautionary tale of his ultimate financial ruin, emphasizing the fleeting nature of speculative success and the importance of understanding the human cost of political upheaval.

Summary Notes

Historical Wealth in Cuba

  • Cuba's history is marked by the presence of wealthy individuals since the introduction of sugarcane by Christopher Columbus.
  • Thomas Terry, a notable sugar planner, amassed a significant fortune in the colonial era, leaving $25 million upon his death in 1886.
  • Comparatively, William Aster, the richest man in the world at the time, left a fortune of $50 million.

"Cuba has known many rich men since Christopher Columbus first introduced sugarcane to the island. Thomas Terry, the most successful sugar planner of Cuba's colonial years, left $25 million on his death in 1886."

This quote highlights the historical presence of wealth in Cuba, particularly through the sugar industry, and sets a precedent for the fortunes made in the country before the 20th century.

Julio Lobo: Cuba's Last Tycoon

  • Julio Lobo was the wealthiest man in Cuba before the revolution led by Fidel Castro, which ended the era of extreme personal wealth in the country.
  • Lobo's life spanned the duration of the prerevolutionary Cuban Republic, from its independence in 1898 to his departure in 1962.
  • Known as the "King of Sugar," Lobo's personal fortune was estimated at $200 million, which would be approximately $5 billion today.
  • Despite his capitalist background, Lobo was approached by the communist government of Castro to lend his financial expertise.

"Today, to have crisislike wealth is referred to be as rich as Julio Lobo. Julio Lobo was the richest man in Cuba before Castro's revolution did away with such men."

This quote introduces Julio Lobo as a benchmark for wealth in Cuba, illustrating his prominence before the revolution and setting the stage for the exploration of his life and impact.

The Sugar King of Havana: Book Discussion

  • The book "The Sugar King of Havana: The Rise and Fall of Julio Lobo, Cuba's Last Tycoon" by John Paul Rathbone is the focus of the podcast.
  • Rathbone's personal connection to the story through his mother, a friend of Lobo's daughter, adds depth to the narrative.
  • Lobo's extravagant wealth is demonstrated through anecdotes, such as filling a swimming pool with perfume for Hollywood starlet Esther Williams.

"That is an excerpt from the book that I'm going to talk to you about today, which is the sugar king of Havana. The rise and Fall of Julio Lobo, Cuba's last tycoon."

This quote introduces the main subject of the podcast, the book that delves into the life of Julio Lobo and his impact on Cuban history.

Lobo's Empire and Its Demise

  • Lobo's empire included control of half of Cuba's sugar production, numerous sugar mills, vast landholdings, and various business interests.
  • The Cuban revolution and subsequent reforms, such as land ownership limits, posed a direct threat to Lobo's holdings and wealth.
  • Lobo's opposition to the previous dictator, Batista, and initial support for Castro's rebels, illustrates the unpredictability of political shifts and their impact on business empires.

"Lobo was then the most important force in the world sugar market. 62 years old, he was known as an authoritarian empire builder who handled about half the 6 million tons of sugar that Cuba produced annually."

This quote summarizes the extent of Lobo's control over the Cuban sugar industry and his significant role in the global market, emphasizing the scale of his empire before its fall.

The Meeting with Che Guevara

  • A pivotal moment in Lobo's life was a meeting with Che Guevara, then president of the Cuban central bank, where his future in post-revolutionary Cuba was discussed.
  • Lobo's expertise in sugar was acknowledged, but the revolutionary government's terms were not in his favor, offering a modest salary and retention of only one home.
  • The meeting exemplified the drastic changes occurring in Cuba and the dangers of navigating the new political landscape.

"Che Guevara summoned the sugar magnet Julio Lobo to his office at the cuban central bank in Havana. It would be a midnight meeting."

This quote sets the scene for a critical encounter between Lobo and a key figure of the revolutionary government, highlighting the tension between Lobo's capitalist success and the communist agenda.

Reflections on Castro's Cuba

  • The podcast host expresses a personal connection to Cuba and a strong opposition to Castro's regime, informed by stories of Cuban exiles and the hardships they faced.
  • The host acknowledges a lack of neutrality on the subject due to the emotional impact of the Cuban experience on their life.
  • The host criticizes the romanticization of Castro's Cuba, pointing to the struggles of the Cuban people under the regime.

"You're talking about hundreds. The estimates is something like hundreds of thousands of people that did this. The low end estimate is 16,000 Cubans died at sea trying to escape this brutal dictator. On the high end, that estimate is 100,000 people, many of these people being children."

This quote conveys the host's personal perspective on the Castro regime, emphasizing the human cost of the dictatorship and challenging narratives that portray the regime in a positive light.

Human Inability to Predict the Future

  • Humans often struggle with accurately predicting future events and consequences.
  • Lobo, a wealthy businessman, failed to foresee the loss of his empire due to political changes in Cuba.
  • Despite his wealth, Lobo died in poverty, which could have been avoided had he acted sooner.

"Lobo simply couldn't conceive that his empire was gone."

This quote emphasizes Lobo's lack of foresight and the inability to accept the reality of his empire's downfall.

Impact of Castro's Takeover on Businessmen

  • Castro's rise to power in Cuba led to significant changes for businessmen, including Lobo.
  • Some businessmen, like the Gutierrez family, preemptively moved their assets out of Cuba.
  • Lobo continued to invest in Cuba until the end, which was a fatal financial decision.

"Other rich businessmen wind up figuring out ways to get. They saw the writing on the wall, right?"

This quote highlights the contrast between Lobo's decisions and those businessmen who anticipated the political shift and took action to secure their assets.

Personal Anecdote of Escape from Cuba

  • The speaker reflects on their grandfather, a non-wealthy individual, who successfully fled Cuba.
  • The decision to leave Cuba, despite not being rich or skilled, changed the trajectory of the speaker's family.
  • This personal story challenges the narrative that only the rich could flee Cuba.

"My grandfather was not rich. He worked as a butcher, and then he worked in a factory that produced socks."

The speaker uses their grandfather's story to illustrate that foresight and decisive action were not exclusive to the wealthy in Cuba during Castro's rise.

Lobo's Continued Investment Mistakes

  • Lobo made a series of poor investment decisions, including buying sugar factories on the eve of Castro's takeover.
  • His investment in sugar commodities in New York led to financial losses and bankruptcy.
  • Lobo's belief in controlling the situation or relying on American intervention was misguided.

"Lobo had continued to invest in Cuba to the last."

This quote underlines Lobo's persistent but ill-fated investments in Cuba, which ultimately led to his financial ruin.

Lobo's Misjudgment and Exile

  • Lobo's decision to have a letter of credit remitted to Havana instead of New York was a critical mistake.
  • He was stripped of his wealth and power upon returning to his office in Havana.
  • Lobo's exile to New York marked a new beginning, albeit at an advanced age when most consider retirement.

"Now it was clear that the government would take it all anyway."

The speaker comments on Lobo's realization that his efforts to protect his assets were futile as the government would seize everything regardless.

Lobo's Family Background and Ambition

  • Lobo's father had a significant influence on his life, rising from a bank clerk to a director and eventually running the bank.
  • Lobo inherited ambition and humor from his father and a sharp temper from his mother.
  • His mother's act of revenge against Castro, the Venezuelan dictator, is a testament to the family's fiery nature.

"From his father, Lobo inherited ambition and humor."

This quote shows the familial traits that shaped Lobo's character and possibly contributed to his business decisions.

Early Life and Career of Lobo

  • Lobo was determined and focused from a young age, with a clear objective to succeed in the sugar industry.
  • His father's advice to control passions and dominate them was a recurring theme in their correspondence.
  • Despite his father's warnings, Lobo's speculative nature led to financial volatility in his career.

"Lobo was both a loner and an adventurer."

The speaker describes Lobo's personality traits, which were evident in both his personal life and his business ventures.

Speculation vs. Building a Business

  • The speaker questions the appeal of speculation over building a sustainable business.
  • Lobo's experience with the boom and bust of the sugar market serves as a cautionary tale against speculation.
  • The speaker advocates for creating value through a product or service rather than quick wealth through speculation.

"I just don't think your stated goal actually is more likely achieved through speculation than it is through just building a business that you own and control and you can actually influence the outcome of."

This quote reflects the speaker's belief in the superior stability and control offered by building a business compared to the uncertain nature of speculation.

Lobo's Response to Business Failures

  • Lobo experienced a humbling moment after a disastrous financial period, asking to be relieved of management duties.
  • His father's strategy of accelerating Lobo's responsibilities was meant to allow him to learn from mistakes while guidance was still available.
  • Lobo's career was marked by a continuous cycle of risk-taking and learning from the consequences.

"Lobo wrote to his father of the disastrous results suffered by our house over the past four years, due solely and exclusively to me."

This quote reveals Lobo's acknowledgment of his responsibility for the financial losses and his willingness to step down from a leadership role.

Machado's Violent Departure and Aftermath

  • Machado's regime in Cuba was characterized by extreme violence.
  • Following his deposition, Machado fled Cuba, leaving the island in chaos.
  • The violence that erupted post-Machado was unprecedented in Cuban history.
  • Witnesses, including a New York Times correspondent, observed brutal impromptu executions of Machado's supporters.

"Throughout the island, gunshots and shouts summon witnesses to impromptu executions." "A huge stone smashed against the side of his head. A bullet struck him in the breast."

These quotes describe the chaotic and violent atmosphere in Cuba following Machado's departure, highlighting the brutal treatment of his former supporters.

Lobo's Arrest and Near Execution

  • Lobo was arrested and almost executed due to his criticism of various Cuban governments and their sugar policies.
  • He was blindfolded and put against the wall to be shot but protested his innocence.
  • Lobo was released upon realization of the mistake by authorities.

"The soldiers told Lobo that he was to be shot the next day for plotting against the government, which he never did." "He protested his innocence and was released when the authorities realized they had made a mistake."

These quotes detail the mistaken arrest and near execution of Lobo, emphasizing the perilous environment for those critical of the government and the arbitrary nature of the justice system at the time.

Lobo's Market Manipulation and Speculation

  • Lobo attempted to corner the sugar market multiple times.
  • He succeeded in December 1934, with what he claimed was the "only perfect squeeze" ever pulled off.
  • Despite his success, Lobo never fully disclosed his methods.

"Lobo never commented on how he cornered the New York sugar market that December." "It was, he would merely say later, the only perfect squeeze that was ever pulled off."

These quotes reflect on Lobo's secretive and successful manipulation of the sugar market, highlighting his ambition and strategic silence on his methods.

Cuban Entrepreneurship and Speculation

  • The author reflects on the entrepreneurial spirit of Cubans and their inclination towards speculative ventures.
  • Despite a history of gambling and betting, many Cubans remained impoverished, suggesting a disconnect between speculative activities and long-term success.

"Cubans also have a particular fondness for speculative wages." "But none of you guys are wealthy. In fact, most of you are pretty poor."

The quotes illustrate the contradiction between the Cuban penchant for speculation and the lack of widespread financial success, questioning the value of such activities.

Warren Buffett on Speculation

  • Warren Buffett's quote distinguishes between investing and speculating.
  • Buffett admits his inability to speculate successfully and is skeptical of those who claim sustained success in speculation.
  • Lobo's life is an example of the pitfalls of continuous speculation.

"If you instead focus on the prospective price change of a contemplated purchase, you are speculating." "There is nobody alive that would pick that path in advance."

Buffett's quotes serve as a caution against speculation, using Lobo's fluctuating fortunes as a case study for the inherent risks of such activities.

Lobo's Work Ethic and Business Practices

  • Lobo was known for his legendary work ethic, starting his day at dawn and responding to hundreds of messages.
  • His control over a significant portion of sugar sales gave him a competitive edge but also raised concerns about market manipulation.
  • Lobo viewed business as an intellectual competition and enjoyed the challenge of defeating his opponents.

"Lobo would respond to 600 messages a day, and he would eat lunch at his desk." "No one man can control a commodity as big as this."

These quotes underscore Lobo's dedication to his work and his perspective on business competition, while also addressing the skepticism about his influence on the sugar market.

Lobo's Personal Life and Legacy

  • Lobo's aggressive business tactics resulted in him having more enemies than friends.
  • Charlie Munger's advice contrasts with Lobo's life, emphasizing the importance of positive relationships and a good reputation.
  • Lobo's funeral was sparsely attended, reflecting the loneliness of his later years.

"He winds up collecting way more enemies than friends during his life." "Think about the type of funeral you want."

The quotes highlight the personal costs of Lobo's business approach and Munger's advice on considering the legacy one leaves behind, suggesting a life well-lived involves more than just financial success.

Lobo's Reading Habits and Downfall

  • Lobo had a passion for reading and learning, which he continued even after his business collapsed.
  • His speculative bet on sugar during the onset of World War II led to near insolvency.
  • A fortuitous deal with the French government saved him temporarily, but he eventually died impoverished.

"For the rest of his life, after he destroys his business, he just reads and studies and stuff like that." "Thanks to good fortune, the grace of God, everything ended well."

These quotes reflect on Lobo's intellectual pursuits and the role of luck in his temporary financial recovery, ultimately presenting a cautionary tale about the dangers of speculation.

Management Philosophy of Julio Lobo

  • Julio Lobo believed in hands-on management, frequently visiting his mills unannounced.
  • He prioritized personal interaction with workers, knowing many by name.
  • His approach contrasted with absentee owner managers and aligned with other successful entrepreneurs like Sam Walton and Ingvar Kamprad.
  • Lobo's philosophy was to be physically present where the business happens, emphasizing direct oversight and involvement.

"One of the things that I learned is that you can't manage a mill by remote control."

This quote highlights Lobo's belief that effective management requires physical presence and direct interaction, which cannot be achieved remotely.

Lobo's Personal Disputes and Arrogance

  • Lobo had a history of intense personal disputes, including a near-duel with a co-investor named Nunez.
  • His arrogance was evident in his underestimation of threats from known dangerous individuals.
  • Lobo's nonchalant attitude towards threats led to an assassination attempt, which he narrowly survived.

"Imagine having to settle your business disputes with a machete."

This quote illustrates the extreme measures that were considered to resolve business conflicts in Lobo's time, emphasizing the intensity of his personal and business disputes.

Lobo's Encounter with Violence and Political Turmoil

  • Lobo received a warning about an impending kidnapping attempt by political militias turned thugs.
  • Despite the warning, Lobo remained unphased, leading to an assassination attempt that left him severely injured.
  • The incident was part of a larger pattern of violence targeting wealthy individuals in Cuba.

"What are you still doing in your office so late?... I want to warn you that they are going to kidnap you."

This quote demonstrates the danger Lobo faced from political militias and his casual reaction to a serious threat, which foreshadowed the subsequent assassination attempt.

Lobo's Reflections and Regrets

  • Following his near-death experience, Lobo reflected on his life choices and expressed regret over his obsession with work.
  • He recognized the negative impact of his pursuit of wealth on his personal happiness and relationships.
  • Lobo had moments of self-awareness, acknowledging the importance of using money for good and helping others.

"Money not only does not bring happiness, sometimes it destroys it."

This quote captures Lobo's realization that wealth can be detrimental to personal fulfillment and that true happiness comes from actions that benefit others.

Lobo's Downfall and Loss

  • Lobo's fortunes declined due to a combination of personal tragedies, business failures, and political upheaval.
  • He experienced a series of losses, including his mother's and father's deaths, his brother's suicide, and his own health issues.
  • Lobo's relentless work ethic persisted despite these setbacks, but ultimately led to his financial ruin.

"The life I'd been living could hardly be called life."

This quote reflects Lobo's introspection and regret about his life's focus and the realization that his work-centric lifestyle was not truly fulfilling.

Lobo's Final Years and Legacy

  • Lobo attempted to rebuild his empire in the United States but was overwhelmed by debt and market fluctuations.
  • He declared bankruptcy and was unable to fulfill his financial obligations, a stark contrast to his previous success.
  • Lobo's story serves as a cautionary tale about the risks of speculation and the impermanence of wealth.

"My creative years are over, Lobo said."

This quote signifies the end of Lobo's career and influence, marking a poignant conclusion to the story of a once-powerful figure who had to rely on his daughter for support in his final years.

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