#283 Andrew Carnegie

In his autobiography, Andrew Carnegie recounts his journey from a poor Scottish boy to a steel magnate and philanthropist who established the enduring "gospel of wealth." The speaker, revisiting Carnegie's life and his partnership with Henry Clay Frick, highlights their shared obsession with cost-cutting and efficiency, as well as Carnegie's strategic focus on bookkeeping and technology adoption. Carnegie's approach to business, characterized by a relentless pursuit of low costs and technological innovation, is exemplified by his hiring of chemists at blast furnaces—a move initially mocked by competitors but ultimately crucial to his success. His philosophy of concentrating investments in one's own business and his dedication to philanthropy, particularly through building libraries, are also underscored. The summary of Carnegie's principles and experiences offers valuable insights into the mindset and strategies that propelled him to extraordinary wealth and influence.

• Andrew Carnegie's life journey from a poor Scottish immigrant to a leading industrialist and philanthropist is chronicled in his autobiography.
• Carnegie's "Gospel of Wealth" sets a standard for philanthropy that influences future millionaires.
• His partnership with Henry Clay Frick and their shared business philosophies were pivotal in building a successful industry.
• Carnegie's obsession with cost control and efficiency was a common trait among successful entrepreneurs like Jay Gould, John D. Rockefeller, and himself.

"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 steelmaster, 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."

This quote encapsulates Carnegie's remarkable life trajectory and his dedication to philanthropy after achieving great industrial success.

• Carnegie and his contemporaries believed bookkeeping to be the language of business.
• They were dedicated to having the lowest cost structure in their industries.
• The mantra "cut the prices, scoop the market, watch the costs, and the profits will take care of themselves" guided their business strategy.

"Cut the prices, scoop the market, watch the costs, and the profits will take care of themselves."

This mantra reflects the business strategy that prioritized aggressive pricing, market dominance, and meticulous cost management to ensure profitability.

• Carnegie valued Frick's comprehensive knowledge of his business and his rise from humble beginnings.
• Frick's business acumen and cost management in the coke industry complemented Carnegie's own practices in rail and steel.
• The partnership between Carnegie and Frick was rooted in shared values and business strategies.

"Frick knows his business down to the ground."

Carnegie admired Frick's deep understanding of his industry, which was a key factor in their successful partnership.

• Carnegie sold his steel company to J.P. Morgan for $480 million, which contributed to the creation of the world's first billion-dollar corporation, U.S. Steel.
• Carnegie's wealth was partly due to his early adoption of the Bessemer process, which revolutionized steel production.

"Andrew sells his company, his steel company, to J.P. Morgan for $480,000,000."

The sale of Carnegie's company to J.P. Morgan marked a significant moment in industrial history, leading to the formation of a massive corporate entity.

• Carnegie was inspired to write his autobiography by Judge Mellon's own autobiography.
• Judge Mellon, in turn, was inspired by Benjamin Franklin's life story and his ascent from poverty to prominence.
• The autobiographies of Mellon and Franklin highlight the power of personal narratives to inspire future generations.

"A book of this kind, written years ago by my friend Judge Mellon, gave me so much pleasure."

Carnegie's decision to write his own autobiography was motivated by the enjoyment and inspiration he received from reading Judge Mellon's life story.

• Carnegie's early exposure to poverty due to technological changes in the linen industry shaped his determination to succeed.
• He resolved to overcome poverty and became proactive in adapting to technological advancements.
• His father's failure to adapt to the steam loom weaving revolution was a cautionary tale for Carnegie.

"The change from hand loom weaving to steam loom weaving was disastrous to our family."

This quote highlights the impact of technological change on Carnegie's family and the importance of adaptation, a lesson that influenced Carnegie's business approach.

• Carnegie believed in maintaining an optimistic outlook and the importance of self-evaluation.
• He adhered to the principle of fearing only one's own reproach, which guided his actions throughout life.
• The "judge within" concept was a cornerstone of Carnegie's personal philosophy.

"Your own reproach alone do fear."

Carnegie's motto emphasizes the importance of self-judgment and personal accountability over external validation.

• Carnegie's business success was attributed to his responsiveness to technological innovations.
• He invested in technology to gain a competitive edge and ensure profitability.
• His approach to business was likened to treating manufacturing processes as parts of a machine that needed constant retooling.

"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."

This strategy highlights Carnegie's belief in the compounding benefits of technological investment and its critical role in outpacing competitors.

• Carnegie's first business venture involved outsourcing tasks to peers and learning the value of delegation.
• He recognized the importance of hiring knowledgeable people and understanding human nature for business success.
• Carnegie's approach to business organization involved optimizing both human and mechanical components.

"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."

This early experience taught Carnegie about incentivizing others and the basics of business management, setting the stage for his future endeavors.

• Andrew Carnegie reflects on his childhood experience of organizing other children to forage for his pigeons and rabbits, which he considers the beginning of his ability to organize and delegate.
• He attributes his success not to his own knowledge, but to his ability to recognize and choose people who knew more than him.
• Carnegie admits to not understanding the technical aspects of his businesses, like steam machinery, but instead focused on understanding people and how the different parts of his operations worked together.

"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." This quote highlights Carnegie's realization that his early experiences with organization and delegation were foundational to his later success in business.

"I did not understand steam machinery, but I tried to understand that much more complicated piece of mechanism, man." Carnegie compares the complexity of understanding machinery to the complexity of understanding people, emphasizing his focus on the latter as a key to his success.

• Carnegie's family faced financial hardship, having to auction their belongings and borrow money to emigrate to America.
• The family's ages are given at the time of emigration, with Carnegie himself being only 13 years old.
• The urgency and necessity to work and contribute to the family's income is emphasized, with Carnegie determined to make and save enough money to produce $300 a year to prevent dependence on others.

"The proceeds of the sale were most disappointing...20 pounds more were needed to enable the family to pay passage for America." This quote describes the financial difficulties faced by Carnegie's family and their limited means as they prepared to emigrate.

"The great question now was what could be found for me to do?" This quote expresses the young Carnegie's eagerness to find work and support his family in their new life in America.

• At 13, Carnegie becomes a bobbin boy in a cotton factory, helping with various tasks and earning $1.20 a week.
• Despite the grueling work hours, Carnegie takes pride in contributing to his family's income and remains optimistic about the future.
• His first earnings gave him a sense of happiness and responsibility, which he valued more than the millions he would later make.

"It was a hard life...I was now a helper of the family, a breadwinner, and no longer a total charge upon my parent." Carnegie reflects on the tough working conditions and the satisfaction he felt from being able to support his family financially.

"My hopes were high, and I looked every day for some change to take place." This quote captures Carnegie's relentless optimism and belief that his hard work would eventually lead to better opportunities.

• Carnegie's hero during his youth was the Scottish hero William Wallace, whose example of never giving up inspired him.
• He believed in doing the best with the job in front of him, trusting that it would lead to unforeseen opportunities.
• His optimistic and determined mindset is seen as a recurring theme in his life and a lesson for others to follow.

"I was not beyond asking myself what Wallace would have done and what a Scotsman ought to do." Carnegie uses the example of his hero to guide his actions and maintain his determination.

"Do the best you possibly can with the job that's right in front of you." This quote encapsulates Carnegie's philosophy of focusing on the present task to the best of one's ability as a means to future success.

• Carnegie transitions from factory work to office work, where he learns bookkeeping and attends night school to advance his skills.
• He demonstrates a willingness to seize opportunities quickly, emphasizing the importance of not delaying action when chances arise.
• His first significant break comes when he is hired as a messenger at a telegraph office, a position that allows him to interact with successful businessmen and learn from them.

"I never succeeded in overcoming the nausea produced by the smell of oil...the allotted work was done." This quote illustrates Carnegie's determination to complete his work despite discomfort, highlighting his work ethic.

"The interview was successful...I proposed to stay there if I could." Carnegie's eagerness to seize the opportunity and his proactive approach to securing his position at the telegraph office are evident in this quote.

• Access to Colonel James Anderson's personal library was a turning point for Carnegie, providing him with educational resources that were otherwise unavailable.
• Carnegie and his circle of ambitious friends used the library to further their knowledge and avoid negative influences.
• This experience profoundly influenced Carnegie, leading him to dedicate a significant portion of his wealth to building public libraries.

"The windows were open in the walls of my dungeon, through which the light of knowledge streamed in." Carnegie metaphorically describes the transformative effect of gaining access to books and knowledge on his life.

"To Colonel James Anderson...one of those 'working boys' to whom were thus opened the precious treasures of knowledge and imagination through which youth may ascend." This inscription by Carnegie on a monument to Colonel Anderson acknowledges the profound impact that access to a library had on his life and success.

• Carnegie credits his and his friends' avoidance of "low fellowship and bad habits" to their commitment to working, reading, and self-improvement.
• The group's dedication to building successful careers and a base of knowledge is contrasted with the activities of other boys their age.
• Carnegie's philanthropic efforts in building libraries are seen as a way to repay the kindness shown to him and to provide similar opportunities for self-improvement to others.

"Nothing contributed so much to keep my companions and myself clear of lope, fellowship and bad habits as the generosity of the good colonel." Carnegie acknowledges the positive influence of Colonel Anderson's library on his and his friends' personal development and avoidance of negative influences.

"I owe a taste for literature which I would not exchange for all the millions that were ever amassed by man." This quote reveals Carnegie's deep appreciation for literature and knowledge, which he values more than his considerable wealth.

• The accessibility of books has greatly increased from the past to the present, with digital versions being readily available.
• Libraries provide a fundamental advantage by requiring individuals to actively seek knowledge, as they give "nothing for nothing."
• The process of learning from books or other resources is active and demands effort, such as reading, note-taking, and reviewing.

"The fundamental advantage of a library is that it gives nothing for nothing. Use must acquire knowledge themselves. There is no escape from this."

This quote emphasizes the proactive nature of learning and the importance of personal effort in acquiring knowledge from resources like libraries.

• The speaker mentions Bill Gurley's talk "Running down a dream" as an exemplary resource for founders and individuals chasing their dreams.
• The talk demonstrates the lengths people go to in order to achieve their ambitions and underscores that success is not limited to those with genius-level intellect but also to those who relentlessly gather information.

"Every single person covered in that video knows the fundamental advantage and using a library or any kind of learning, right?"

The quote highlights that successful individuals in the video understand the value of self-driven learning and the use of resources to gain knowledge.

• Libraries are not just for reading books but also for conducting research and acquiring knowledge in various professional fields.
• The speaker stresses the importance of watching Bill Gurley's talk repeatedly as it holds individuals to high standards and encourages continuous learning.

"And a lot of them were readers. The fundamental advantage of a library."

This quote connects the success of individuals featured in the talk to their habit of reading and utilizing libraries for learning, reinforcing the theme of self-education.

• The speaker believes that access to free information on the Internet removes excuses for not pursuing knowledge.
• Bill Gurley's message is that individuals have the tools to educate themselves and that most people won't take even the initial step to do so.

"The information is free on the Internet. You just have to go out and collect it."

This quote underlines the abundance of free information available online and the necessity for individuals to actively seek and collect it for their benefit.

• Andrew Carnegie's story is used as an example of someone who, despite difficult circumstances, was determined to improve his and his family's situation through hard work and learning.
• At a young age, Carnegie was responsible for keeping track of family finances, which later influenced his business acumen.

"Every penny that I could save, I knew was needed at home."

This quote reflects Carnegie's early understanding of financial responsibility and the importance of saving and managing money, which would be foundational for his future success.

• Carnegie and his brother Tom shared a vision for the future, discussing business plans and aspiring to provide a better life for their family.
• The concept of "riding in a carriage" symbolized the level of wealth and success they aimed to achieve through hard work.

"We talked over the future."

This quote illustrates the early conversations between Carnegie and his brother about their ambitions and plans, highlighting the importance of vision and partnership in business.

• Carnegie's story demonstrates the significance of incremental progress in one's career and the profound impact of recognition and promotion on motivation and self-worth.
• The pride of his parents upon his first promotion was a pivotal moment for Carnegie, showcasing the emotional reward of achieving success through one's efforts.

"No subsequent success or recognition of any kind ever thrilled me as much as this did."

This quote captures the deep emotional impact of Carnegie's early career success on him, emphasizing the lasting value of recognition and personal achievement.

• Charlie Munger's concept of being a "learning machine" is highlighted as a key trait for success.
• Carnegie's willingness to learn and adapt, such as learning to operate the telegraph, exemplifies the benefits of continuously acquiring new skills.

"I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines."

This quote from Charlie Munger complements the theme by stressing the advantage of being committed to lifelong learning, regardless of one's innate intelligence or diligence.

• Carnegie's initiative to learn telegraphy led to new opportunities, such as a job with the Pennsylvania Railroad and a mentorship with Thomas Scott.
• The narrative shows how acquiring a new skill, like telegraphy, can lead to significant career advancements and increased earnings.

"Whenever one learns to do anything, he has never to wait long for an opportunity of putting his knowledge to use."

This quote from the transcript reinforces the idea that learning new skills can quickly lead to practical applications and opportunities in one's career.

• Carnegie's relationship with Thomas Scott illustrates the impact of mentorship on career progression.
• Scott's guidance on investment opportunities led to Carnegie's first experience with passive income, which he greatly valued.

"I shall 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."

Carnegie's reflection on receiving his first investment return underscores the significance of earning through investment and the influence of mentorship in understanding and leveraging financial opportunities.

• Carnegie's work during the Civil War brought him into contact with President Abraham Lincoln, whose character and intellect left a strong impression on him.
• Lincoln's ability to connect with people of all ranks, including the youngest boy in the office, exemplified his exceptional leadership qualities.

"His manners were perfect and he had a kind word for everybody, even the youngest boy in the office."

This quote conveys Lincoln's approachable and kind nature, which Carnegie admired, highlighting the importance of character in leadership.

• Carnegie recognized the potential of technological advancements in the railroad and telegraph industries and used this knowledge to start a business in rail making.
• Jeff Bezos's advice on using trends as tailwinds is paralleled with Carnegie's strategic business decisions.

"The railway lines of America were fast becoming dangerous for want of new rails."

The quote reflects the context in which Carnegie identified a business opportunity, demonstrating the importance of recognizing and acting on technological and industry trends.

• Carnegie believed in the power of helping others, especially those who demonstrate a willingness to help themselves.
• He advocated for young individuals to seek opportunities to work with high officials and to go beyond their expected duties to gain recognition and advancement.

"The battle of life is already half won by the young man who is brought personally in contact with high officials."

This quote highlights Carnegie's belief in the advantage of networking with influential people and the importance of initiative in one's career development.

• Andrew Carnegie recognized the potential of iron bridges while working with the Pennsylvania Railroad.
• Carnegie's observation that wooden bridges were problematic led him to invest in an iron bridge building company.
• He partnered with his mentor, Mr. Scott, and others, each contributing $1,250 for a one-fifth interest in the venture.
• Carnegie's philosophy was not to copy the "what" but the "how" of spotting opportunities, similar to others like Jay Gould and Peter Thiel.

"I saw that it would never do to depend further upon wooden bridges... I would organize a company to build iron bridges."

This quote emphasizes Carnegie's foresight in recognizing the superiority of iron over wood for bridge construction, leading to his decision to start a bridge building company.

• Carnegie believed that the best foundation for a business was the quality of its product.
• Keystone Bridge Works was a source of pride for Carnegie due to its unmatched safety record.
• Carnegie's focus on using the best materials and ensuring enough of them was key to his success.
• Vertical integration was a strategy Carnegie employed early on to control all aspects of his business.

"The surest foundation of a business is on the quality of its product."

Carnegie's conviction that product quality is the most reliable basis for a successful business is encapsulated in this quote.

• Carnegie introduced cost accounting to manufacturing to understand the cost of each process and the performance of each worker.
• He faced resistance from managers but eventually succeeded in implementing an accurate system.
• This system allowed for precise tracking of departmental and individual performance.
• Carnegie's approach to technology investment was to gain an advantage over competitors.

"We were our own severest inspectors and we would build a safe structure, or none at all."

Carnegie's commitment to safety and quality is highlighted by his insistence on strict self-inspection and refusal to compromise on standards.

• Carnegie advocated for concentrating on one business and investing all capital into it.
• He sold off all outside stocks to focus solely on his steel company.
• Carnegie's strategy was to avoid distractions and ensure sound judgment in decision-making.
• He believed that scattering resources was counterproductive to achieving preeminence.

"I would concentrate upon the manufacturer of iron and steel and be a master in that."

This quote reflects Carnegie's strategic decision to focus exclusively on the iron and steel industry, which he believed was key to his success.

• Carnegie hired chemists to reduce waste in the steel manufacturing process, a move considered extravagant by others.
• His competitors underestimated the value of employing a chemist, which gave Carnegie a significant advantage.
• The Lucy furnace became the most profitable due to its monopoly on scientific management.
• Carnegie's philosophy was to always embrace superior technology and methods.

"What fools we had been... We were the first to employ a chemist at blast furnaces."

Carnegie's realization of the importance of chemistry in manufacturing underscores his innovative approach to improving efficiency and profitability.

• After achieving immense profits, Carnegie sold his company and turned to philanthropy.
• He wrote "The Gospel of Wealth" and became involved in politics.
• Carnegie's autobiography ends abruptly, leaving readers to explore other sources for more on his life.
• The narrative of Carnegie's life and partnership with Henry Frick is explored in the book "Meet You in Hell."

"Nothing is impossible to genius."

Carnegie's final recorded words in his manuscript reflect his belief in the power of human ingenuity and determination.