#66 Henry Kaiser Founder of 100 companies

In "Henry J. Kaiser, Builder in the Modern American West" by Mark S. Foster, the remarkable life of Henry J. Kaiser, an influential entrepreneur and industrialist, is detailed. Kaiser, who began his career in the early 20th century with modest road paving ventures, leveraged opportunities to build an industrial empire that included cement, aluminum, steel, and healthcare. His innovative management style, which emphasized speed, technology, and a hands-off approach, allowed him to complete projects like the Hoover Dam and produce ships at unprecedented rates during WWII. Kaiser's legacy includes the founding of Kaiser Permanente, now a leading healthcare organization, and Kaiser Aluminum, which became his most profitable venture. Despite starting many of his over 100 companies later in life, Kaiser's success exemplifies the power of perseverance, adaptability, and seizing market demands.

• Henry J. Kaiser was a well-known entrepreneur in the 1940s, comparable to modern figures like Warren Buffett and Donald Trump.
• He built a diverse empire, including construction, manufacturing, healthcare, and tourism.
• Kaiser's companies were instrumental in building significant American infrastructure and contributed to the war effort during World War II.
• Mark S. Foster's biography, "Henry J. Kaiser, Builder in the Modern American West," provides an in-depth look at Kaiser's life and work.

"In the 1940s, Henry J. Kaiser was a household name, as familiar then as Warren Buffett and Donald Trump are now."

The quote establishes Henry J. Kaiser's significance and fame during the 1940s, likening his notoriety to that of modern business magnates.

• Kaiser's companies built iconic structures like the Hoover Dam and the San Francisco-Oakland Bridge.
• During WWII, Kaiser's shipyards constructed 1,490 ships using assembly line production.
• By the time of his death, Kaiser had founded over 100 companies, many named simply with his last name followed by the industry (e.g., Kaiser Aluminum, Kaiser Permanente).

"Henry Kaiser organized construction companies to build the Hoover Dam, Grand Cooley, and Bonneville dams, as well as the San Francisco-Oakland Bridge."

The quote highlights some of the massive infrastructure projects Kaiser's companies were responsible for, showcasing his impact on American development.

• Kaiser created one of the most complex organizational structures seen among entrepreneurs.
• His naming convention for companies was straightforward, reflecting the simplicity amidst complexity.
• Kaiser sold the Hawaiian Village resort to Hilton Corporation for $21 million.

"He probably created one of the most complex organization structures I've ever seen for any of the entrepreneurs that I've covered on the podcast so far."

This quote emphasizes the intricate and expansive nature of Kaiser's business empire, which the speaker finds remarkable among entrepreneurs.

• Kaiser was known as the "miracle man" for his unprecedented achievements and bold business practices.
• He was a polarizing figure, with some viewing his work as innovative and others as ethically questionable.
• Kaiser's first enterprises were photography studios, but he eventually controlled a large multinational organization.

"Just who was Henry J. Kaiser, this economic public figure who achieved prominence so suddenly and dramatically that reporters dubbed him the miracle man?"

The quote introduces the central question of Kaiser's biography, framing him as a significant and enigmatic figure in American economic history.

• Kaiser's notoriety increased through a joint venture with Howard Hughes, one of the most famous Americans at the time.
• Kaiser's enthusiasm and perseverance were key in persuading Hughes to collaborate on building large airplanes during WWII.
• Kaiser's ability to dominate influential men was a notable aspect of his personality.

"Kaiser demonstrated these qualities by working his magic on Howard Hughes."

The quote illustrates Kaiser's persuasive abilities and his influence over other powerful figures, in this case, Howard Hughes.

• Kaiser believed in producing more for mankind and was never content with focusing on a single business.
• He attributed his success to hiring intelligent individuals and providing them with growth opportunities.
• Kaiser saw problems as opportunities and promoted a positive perspective on challenges.

"He repeatedly stated that he would best serve mankind by producing more things for more people."

This quote encapsulates Kaiser's business philosophy, which was centered around mass production and widespread distribution for the benefit of society.

• Kaiser's parents were German immigrants who sought to recreate their former lives in the U.S.
• Despite his father's lack of business success, Kaiser was driven by ambition and a fascination with technology.
• Kaiser dropped out of school at 13, determined to make his mark on the world.

"His parents were German immigrants who arrived in central New York a century after pioneers settled the region."

The quote provides context for Kaiser's family background, which played a role in shaping his ambition and work ethic.

• Kaiser's first job was at J.B. Wells dry goods store, where he learned valuable lessons in salesmanship and orderliness.
• He was promoted to sales clerk and took a correspondence course to improve his skills.
• Kaiser's persistence and eagerness to learn were evident early in his career.

"More than 50 years later, Kaiser remembered an early business lesson from the owner, Ed Wells."

This quote shows the lasting impact of Kaiser's early work experiences and the formative business lessons he learned from his employer, Ed Wells.

• At 16, Kaiser pursued his passion for photography, eventually becoming an entrepreneur in the field.
• He was innovative and resourceful, expanding his operations and aligning with the Eastman Kodak brand.
• Kaiser's relentless drive and resourcefulness were hallmarks of his early career.

"By 1899, Henry was deeply involved in what he then believed would be his life's work."

The quote marks the beginning of Kaiser's entrepreneurial journey, demonstrating his early commitment and passion for the photography business.

• Henry J. Kaiser's dedication to hard work and unique ideas helped him drum up business in his early photography career.
• Facing the challenge of meeting his future father-in-law's conditions for marriage, Kaiser decided to leave photography and pursue wealth in the west.
• Kaiser's move to Spokane, Washington, was motivated by a desire for entrepreneurship and wealth.
• He experienced significant initial struggles, including being rejected by over 100 businesses before finally focusing his efforts on one target, McGowan Brothers hardware.
• Kaiser's persistence paid off, and after salvaging damaged hardware, he was hired as a clerk, quickly moving up the ranks due to his memorization of item prices and impressive work ethic.

"Prospects looked as bleak as possible. One day I stood on a street corner and I decided to pick one fellow I most wanted to work for and concentrate on him."

This quote emphasizes Kaiser's shift from a scattergun job search approach to a focused strategy, which ultimately led to his employment and success.

• Kaiser's work ethic and ability to identify opportunities allowed him to transition from hardware to the construction industry.
• His first significant opportunity came from salvaging a hardware order for a large school building project, which led to his introduction to the construction trade.
• Kaiser's strategic moves from McGowan hardware to Hawkeye and then to JF Hill Company allowed him to gain valuable experience in construction.
• Kaiser's time with JF Hill Company was critical for learning about the challenges and opportunities in general contracting, setting the stage for his future success.

"Kaiser's years with Hill provided critical learning experience."

This quote summarizes Kaiser's period at JF Hill Company as a time of significant growth and skill development in the construction industry.

• The collapse of Hill Company due to internal management conflicts presented Kaiser with the opportunity to start his own construction company in Vancouver.
• Kaiser's entrepreneurial spirit and ability to see opportunity in adversity led to the establishment of his construction company during World War I.
• Over the next three decades, Kaiser's company undertook various construction projects, including dams, pipelines, and roads, which laid the foundation for his industrial empire.

"The year 1914 marked the outbreak of World War I. That same year, in Vancouver, British Columbia, Henry Kaiser launched a career in general construction that profoundly changed the Pacific coast region."

This quote marks the beginning of Kaiser's influential career in construction, coinciding with the start of World War I.

• Kaiser's perseverance through financial challenges during and after World War I exemplified his commitment to his team and long-term vision.
• Despite low earnings and rampant inflation, Kaiser retained key associates, demonstrating loyalty and foresight.
• Kaiser's belief in his ability to overcome adversity and his willingness to invest in his workforce laid the groundwork for future success.

"For five years I made no money."

This quote from Kaiser illustrates the financial hardships he endured while maintaining his business and workforce during difficult times.

• Kaiser's ability to convey his enthusiasm and passion played a crucial role in securing the financing needed to accept construction contracts.
• His successful meeting with a bank president, where he secured a $25,000 loan based on his vision and determination, was a turning point in his business.
• Kaiser's personal traits, such as enthusiasm and passion, proved to be valuable assets in his entrepreneurial journey.

"Honor Henry J. Kaiser's signature for $25,000."

This note from the bank president to the head cashier represents the trust and confidence placed in Kaiser's potential, enabling him to establish his business.

• Kaiser's reputation for quality work was bolstered by his proactive approach to seeking feedback from city council members on his projects.
• His search for new methods and tireless efforts to trim costs demonstrated his technological acumen and business savvy.
• Kaiser's frugality and focus on cost-saving innovations were key factors in his company's success.

"Kaiser was fascinated with new methods and searched tirelessly for ways to trim costs."

This quote highlights Kaiser's commitment to innovation and efficiency in his construction work.

• Mark Andreessen asserts that the market is the most crucial factor for entrepreneurial success.
• In a strong market, demand pulls the product from the startup.
• The first viable product to fulfill market needs will succeed.

"I'll assert that market is the most important. In a great market, the market pulls product out of the startup, the market needs to be fulfilled, and the market will be fulfilled by the first viable product that comes along."

This quote emphasizes the significance of market demand in entrepreneurial success, suggesting that a strong market will naturally draw out successful products.

• Kaiser was relentless and resourceful, traveling across the country to win bids.
• An anecdote describes Kaiser and Ord jumping off a moving train to reach a destination and win a paving bid.
• Resourcefulness is seen as a lever to utilize technological advantages.

"So Kaiser decided that they jump off the train, which is still moving, about 30 miles an hour. Kaiser leaped off, became a human bowling ball, and wound up under another clump of trees."

This quote illustrates Kaiser's determination and resourcefulness, which were key to his entrepreneurial success.

• Kaiser was fascinated with new technology and its potential to improve efficiency.
• He made simple but effective changes, such as adding rubber tires to wheelbarrows.
• Kaiser embraced caterpillar tractors because they increased productivity by fivefold.

"He equipped wheelbarrows with rubber tires and used ball bearings to lessen friction between the wheel and axle."

This quote showcases Kaiser's innovative mindset, as he sought ways to make work less physically demanding and more efficient.

• Kaiser's perseverance led to exponential opportunities, compounding future success.
• His experience over 13 years resulted in a contract worth nearly double his total previous work.
• Kaiser was 45 years old at the time, highlighting the long-term nature of entrepreneurial success.

"Don't quit because future opportunities compound."

This quote underlines the value of perseverance in business, as past efforts can lead to significant future opportunities.

• Kaiser's company faced challenges during the Great Depression, with construction firms being early economic casualties.
• Government projects like the Hoover Dam provided opportunities during economic downturns.
• Kaiser's thorough preparation and knowledge of the Hoover Dam project exemplified his dedication.

"The United States does all these huge infrastructure projects, and one of them being the Hoover dam."

This quote connects the impact of the Great Depression on construction firms to the opportunities that large government projects provided, which Kaiser capitalized on.

• Kaiser became adept at navigating political and bureaucratic landscapes.
• He understood the importance of framing arguments to appeal to Congress, such as emphasizing job loss over business losses.
• His political savvy allowed him to secure funding and contracts that were critical to his ventures.

"Kaiser claimed that if the $7 million was not immediately forthcoming, six companies would lose $6 million by failing to meet deadlines."

This quote demonstrates Kaiser's strategic approach to influencing government decisions, which was crucial for the continuation of his projects.

• Grand Cooley Dam was a significant project that led to key developments within Kaiser's organization.
• The Kaiser health plan originated here, which later evolved into Kaiser Permanente.
• Kaiser's experience with labor unions and competitive strategies during this project was valuable in later ventures.

"Perhaps the most significant was experimentation with what became the Kaiser health plan under Dr. Sidney Garfield."

This quote points to the inception of what would become Kaiser Permanente, showing how significant projects can lead to lasting organizational innovations.

• Kaiser and his men targeted larger projects, understanding that bigger challenges often meant less competition.
• They recognized the value of pursuing difficult projects that others could not or would not undertake.
• This strategy led to success in securing more lucrative contracts.

"The harder something is, the less competition you have for it."

This quote captures the strategic advantage of pursuing challenging projects, which can result in greater rewards due to reduced competition.

• Frustrated by dependencies on suppliers, Kaiser moved into manufacturing, specifically the cement business.
• This shift was indicative of Kaiser's desire for control and self-reliance in his operations.
• His entry into manufacturing marked a significant pivot in his career.

"Kaiser had considered entering the cement business."

This quote highlights Kaiser's strategic decision to diversify into manufacturing, aiming to reduce reliance on external suppliers.

• Kaiser's shipbuilding ventures began with no prior experience in the industry.
• He identified opportunities in shipbuilding during a time when demand was high due to war efforts.
• Kaiser's shipbuilding achievements were marked by rapid production and scale.

"Kaiser replied, no, I had never even seen a ship launched."

This quote underscores Kaiser's willingness to enter and succeed in industries where he initially had no experience, driven by the recognition of market opportunities.

• Kaiser revolutionized shipbuilding by using welding instead of rivets, which was faster and easier for unskilled laborers, including women whose husbands were drafted during World War II.
• Welding was simpler to teach than riveting, allowing for quicker production of ships.
• Kaiser's shipyards produced over 15 million deadweight tons of shipping at a cost of just over $4 billion, a significant achievement for the time.

"They were built with rivets. He pioneered the technology of using welding instead. And the reason he did that is, one, it was faster, and two, you had thousands, thousands of unskilled labors."

This quote emphasizes Kaiser's innovative approach to shipbuilding that allowed for speed and the utilization of unskilled labor, which was crucial during the labor shortages of World War II.

• Riley and Kaiser had different visions and approaches to shipbuilding, with Riley adhering to traditional methods and Kaiser challenging conventional practices.
• Kaiser's contempt for traditional methods led to new shipbuilding techniques that improved efficiency and productivity.
• The partnership between Kaiser and Riley was marked by Kaiser's misfit status and Riley's conventional stance within an established company.

"The Kaiser yards turned out over 15 million deadweight tons of shipping at a cost of just over $4 billion... In some ways, Riley's vision matched Kaiser's... But the men approached their tasks from different perspectives."

This quote highlights the differences in approach between Kaiser and Riley, with Kaiser's innovative methods leading to significant production achievements.

• Kaiser's experience in dam and road construction influenced his shipbuilding practices, such as prefabricating sections of ships.
• Kaiser faced challenges with steel supply shortages and circumvented bureaucratic regulations to obtain necessary materials.
• His confrontational and direct approach with big steel companies and government officials showcased his determination and business acumen.

"Kaiser experienced continued frustration. From the start of shipbuilding. He almost never had enough steel plate and other important supplies to keep vessels rolling down the ramps."

The quote reflects the obstacles Kaiser faced in securing materials for shipbuilding, which he overcame through innovative procurement strategies.

• Kaiser's frustrations with steel supply shortages led him to enter the steel industry.
• He used the precedent set by the sale of the Geneva plant to US Steel to secure a similar deal for his Fontana plant.
• Kaiser's strategy involved portraying big steel as limiting supplies and maintaining high prices, positioning himself as an industrial populist.

"Kaiser Steel becomes this massive company... He invested in expensive equipment to lighten tasks for blue-collar employees... You find your key men by piling work on them."

This quote captures Kaiser's philosophy of building a robust organization by empowering employees with responsibility and the necessary tools to succeed.

• Kaiser Permanente began as a prepaid healthcare system for workers in dangerous conditions.
• The program's success was due to its focus on safety and preventative care, which was financially beneficial for both the healthcare provider and the workers.
• Kaiser Permanente grew significantly after Kaiser's death, tripling its membership and becoming the largest HMO in the United States.

"Toward the end of his life, Kaiser claimed repeatedly that the Kaiser Permanente medical care program... would stand as his most significant achievement."

This quote underscores Kaiser's belief in the lasting impact of Kaiser Permanente, which has proven true with its continued growth and success.

• Kaiser recognized an opportunity in the aluminum industry and successfully overcame challenges related to raw materials, energy requirements, and market creation.
• Kaiser Aluminum became a financial success, netting significant profits within its first year and continuing to grow over the following decades.
• Entering the aluminum industry was one of Kaiser's most brilliant decisions, resulting in a major source of income for his business empire.

"Aluminum was the organization's largest moneymaker by a wide margin dwarfing product profits of other companies... Entering the field after World War II had been one of his most brilliant decisions."

The quote reflects the strategic foresight Kaiser had in diversifying into the aluminum industry, which paid off with substantial profits and business growth.