Leon hes could recite the margins of every gasoline station on the East Coast John Mackey the founder of Whole Foods could do the same for every Whole Foods store I actually spent a few days with John Mackey and he told me one of the craziest things that anyone has ever said about the podcast he had listened to over 100 episodes before we met and he told me that if Founders existed when he was younger Whole Foods would still
be an independent company that since the podcast and all of history great entrepreneurs constantly emphasize the importance of controlling expenses he would have put more of a priority on it especially during good times during boom
times it's very natural for a company and for human nature to just not watch your cost as closely because everything is going so well this is something that History's Greatest Founders would warn gu in fact Andrew Carnegie would repeat
this Mantra time and time again he would say profits and prices were cyclical subject to any number of transient forces of the marketplace costs however could be strictly controlled and any savings achieved in cost were permanent this is something that I was talking about with my friend Eric who's the co-founder and CEO of ramp ramp is now the presenting sponsor of this podcast I've gotten to know all the co-founders
of ramp I've spent a bunch of time with them over the last year or two they all listen to the podcast and they've all picked up on the fact that the main theme from the podcast is on the importance of watching your cost and
controlling your spend and how doing so can give you a massive competitive advantage that is a main theme for ramp the reason that ramp exists is to give you everything you need to control your spend ramp gives you everything you need
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website is incredible make history entrepreneurs Proud by going to ramp.com to learn how they can help your business control costs that is ramp.com one more tool that I want to tell you about is vesto a lot of my friends are using vesto to see all of their Company accounts in one view vesto helps you connect and control all of your business bank accounts from One dashboard I know the founder Ben we spent a bunch of time
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that we say no to over 90% of the software that we are pitched and yet a week later I hear back from my friend and he says Ben and vesto are great and that they signed up so I ask my friend I go can you ask your team to explain the
benefit they get from vesto in their own words so I'm going to read you this text message exchange this is the response back this is his team explaining the benefit they get from besto in their own words it provides us the ability to view all all of our bank accounts and Loan accounts on one platform with a single sign on it makes it much easier to Grant access to users in one place as opposed to 20 different banks I text back what
did they do before vesto we have 20 plus different bank logins across like five accountants we literally use 21 Banks so every bank has an account and a loan that multiple people need access and Views to just to log in and see everything would take hours and be in different tabs so if you have multiple accounts and multiple businesses go to vesto and schedule a demo with the founder Ben tell him David sent you that
is vesto with a V so vest.com the link will also be down in the show notes I hope you enjoyed this episode Leon hes was a remarkable person who led a remarkable Life the book that I want to talk to you about today is called Hess
the last oil Baron and is written by Tina Davis and Jessica Resnik alt I actually want to start at the very end of the book the end of the book The Two authors actually talk about why they decided they spend so much time studying
the life of Leon Hess and why they thought writing the book was really important he said we think this extraordinary man lived an extraordinary life the reason we call hes the last oil baren is that we believe him to be the
last of his kind the last man who could create a multi-billion dollar multinational vertically integrated energy Behemoth that could do everything from finding oil and far-flung Fields of the coast of Indonesia to selling you a
tank of gas and a pack of gum at the local station on the corner 16 years after his death Leon's Legacy is starting to be erased from popular memory this book is an attempt to capture his life the company he created the man he was in the ways in which his life and Industry changed the nation he should not disappear from public view after reading the book after spending the last several days rereading all of my notes and all of my highlights and
really just thinking about the outline and the conversation I wanted to have with you I couldn't agree more he should not disappear from public view I want to start the story of Leon Hess I think the best way to start the story of Leon hes is actually talking about his father and really the failures of his fathers or of his father that led to in in large part that led to the success of his son I always think of this Maxim that repeats
throughout the history of Entrepreneurship that you can always understand the son by the story of his father the story of the father is embedded in the son so Leon's dad was a failed entrepreneur said Leon's dad dabbled in many things but never had great success at any of them he had strong entrepreneu energy and he tried his handle a lot of things he tried to sell produce and he opened a bunch of butcher shops and he tried in real
estate and finally he tried to deliver coal so Leon's dad begins a small coal distribution business in New Jersey this is very important without his dad doing this and then Leon realizing that they were in the wrong business there would no be no Hess Oil Corporation so during the Great Depression Leon's dad actually goes bankrupt and as a result of this Leon's family is unable to send him to college he's the youngest son the three
older children all get to go to school so even though Leon never went to college he later succeeds in a Cutthroat and highly technical business despite lacking a quote unquote formal education there's a series of odd jobs that Leon
does and Leon's Brothers do to try to help the family survive the the Great Depression one of them is they would go down to the the Jersey Shore and actually dig up clams and then sell the clams to local restaurants so they would
work all day and they'd be lucky to make 50 to 75 cents a day from digging up clams one of the benefits that Leon gets from being a kid and working for his father in a coal yard delivering coal is that he got used he was accustomed to
handling a large workload it says the hard labor at the coard helped shape Leon's ethic of working long hours he worked every weekend you'll see even when he has this giant you know vertically integrated Oil Company he
would still work tirelessly all the time there's stories of you know him popping up at plants at 2: in the morning to check on things to make sure everything's going well now there's something that's I think this is one of
the most important parts of the book is he's he's going to start this company at 19 years old right he's going to get into the fuel delivery business so the reason I think this is one of the most important parts of Leon's life story is
because Leon realizes that his dad picked the wrong business this also shows how shrewd and smart Leon was from a young age because he's like wait the coal business is a dead end we're hauling these 100 PB bags of coal and
the profit margin is Tiny and with what might be one of the most important ideas Leon ever has arguably the most important idea ever has he decides he's going to uh switch from delivering coal to delivering fuel oil so I get to this
part of this book Leon reminded me of Sam bromfman so Sam bromfman and Leon h both started multi-billion dollar family dynasties and both started by fixing the mistakes of their father so I did not know who Sam bronen was I didn't know about the bronen family many many years ago I'm actually reading this is all the way back on episode 53 I was reading Mike oit's excellent autobiography which is called who is Mike Ovitz and in that
book it talks about Mike is Mike oit's brokering a deal uh between Seagram which is the bronfman's family company uh buys MCA Universal for $5.7 billion and so that led me to start researching the bronen family I find out
the patriarch of the Broman familyes this guy named Sam bomman I find his biography I read it and then I'd make an episode this is uh episode 116 six seven years ago and in that episode is the very first time that he used the phrase
generational inflection point which is this idea that a single individual can change the trajectory of his entire family for generations to come Sam bronin was that from the bronen family Dynasty Leon hes is that for the Le is for the hes family so in that the the reason I thought of this when I I was reading about Leon H and I got to this section of the book is because Sam's a young kid working in the family business
he and he realizes that his dad is doing it wrong his dad has the wrong idea so Sam's dad sold horses and every time and Sam's like a little kid when this is happening and so and Sam's you know following his dad around and working the family business very similar to what Leon's trying to do with his F uh father when he was really young and so every time Sam's dad would sell a horse he would take the customer to a bar for a
celebratory drink and young Sam realizes hey Dad we're on the wrong side of this transaction we're in the wrong business that the guy selling us the drink is making more money than the guy selling the horse and that observation that
single observation that single idea that the young Sam Brahman has changes the bronin family forever Sam proceeds to create uh goes on and creates you know the world's largest liquor distilling firm they they Branch out into all kinds
of different businesses to this day the family you know 100 150 years later 120 years later however long it's been is still you know one of the wealthiest families in the world so Leon realizes Dad we're in the wrong business and
proceeds to switch the product to so Leon sees an opportunity and he's like I'm going to bet on oil specifically fuel oil instead of coal as a more econom IAL way to get energy so in his own words later on there's only a few
quotes from Leon he's very quiet person uh he says he started a quote unquote little oil company so he starts his little Oil Company in 1933 Leon is 19 years old and as Leon describes this you couldn't start from more humble beginnings his his entire Oil Company his fuel company's fuel delivery service he says I bought a secondhand truck and I started selling heating oil and I built this company up over a number of years so 1933 19 years
old one used truck that is going to be the beginning of the hes family Dynasty so he is going to find buyers for residual oil that refiners didn't want what is residual oil that refiners didn't want this is going to remind you or reminded me at least of Sam zuray in the book the fish that ate the wh you could think of the same business the same way that Sam Z Murray built his business is the same way that Leon hes
built his business in the sense that they discovered opportunity hiding in plain sight literally the product that both of both Sam Murray and Leon H are going to sell was just being thrown away this is one of the most important parts
of the book and of lon's life so Leon realizes that he could sell what was called number six fuel oil it's called residual oil it's called black oil essentially it's this heavy almost like molasses uh thick oil that other
refiners are just throwing away so Leon's plan is hey I'm going to take this seven-year-old secondhand use truck right it's it holds 615 gallons of oil I'm going to go collect this fuel that you're throwing away anyway so he gets a good deal on it from area refineries in New Jersey and then repurpose it as a cleaner alternative to Coal so what he realizes is that they call it light refining it's really like essentially
boiling just boiling this black oil this fuel oil you could actually then go and resell it so he s s it to businesses and manufacturers use it to as heating oil so he sells it to for large ships can use it power plants so a lot of like
early electricity uh plants would use it and then if you have like a giant Factory that you need to heat in the winter it would uh if you could use fuel oil for industrial heating as well and so when I got to this section of the
book I went and pulled out my notes and highlights for the book on Sams Murray which is called the fish that eat the wh it's episode 255 if you haven't listen to it yet the parallels rine Sam and Leon are remarkable because they're both 19 at this exact same time when they find what what will turn out to be their Life's greatest opportunity so I want to read some quotes here that sounds exactly like what's happening in Leon
hessa's life Sam spotted an opportunity where others saw nothing Le the other refiners are literally throwing this in the trash is exactly what Sam Z Murray did when he got when he started in the banana uh trade he he started with this
thing these things called ripes where they would come uh into the port and they just throw them away cuz they're like hey these things you have to eat them in like the next 2 or 3 days we can't deliver to the End customer fast
enough so let's just throw it away so there's a quote from the fish at the world that describes this opportunity that was hiding in plain sight it says as far as he was concerned ripes were considered trash only because Boston fruit and other large firms 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 and I would say Not only was a calculation based on AR but in both of Leon's case and Sam Z's case it was a calculation based on desperation they had no other option but to succeed where others had
failed so 5 years later okay now we're in 1938 leyon now has a fleet of about 10 trucks that are buying you know this this previously disposed fuel oil from other refiners doing this light boiling this light refining and then
transferring it and delivering it to other customers throughout the East Coast he eventually is buying so much of this fuel oil that he has to buy a piece of land and he purchases some secondhand oil storage tanks and he starts an oil
storage terminal on this River in New Jersey now keep in mind there's one of the fascinating things about this part of the book Leon's 24 years old at this point and he's still living with his parents and his dad is now working for
Lon helping him in fact Leon provides a job for his dad all the way until his dad was in his 90s and so for the first few years of his Oil Business this is what his business could consists of it says Leon cut his teeth on residual oil from refiners and built his business in the logistics around transporting oil to refineries as efficiently as possible and distributing the freshly produced fuel effectively now he is very unusual
uh Leon is very unusual for most of the Oil Barons that you might read about because essentially he works backwards to the source a lot of people you know they write a ton of books about the people that actually discovering oil
right he actually Leon comes into the industry incrementally so he starts with the sale of the end product before working his way backwards into fuel storage refining and then finally oil exploration and actually Discovery so as
a young Leon Hess is trying to build his Oil Business World War II breaks out this winds up becoming excessively important because he's going to go to Europe Leon actually serves as the fuel supply officer for General pattent this experience helps Leon develop a talent for Logistics and moving fuel effici Rec L they create this thing called the red ball Express the red ball Express was a vital Allied Logistics operation during
World War II it was established to rapidly transport supplies from Normandy to advancing troops following the D-Day invasion so if you've ever studied Journal patent and I have a few books on them including his autobiography which
I'll probably do an episode on eventually his one of his main things was that he's just going to move faster than everybody else he thought speed was one of the best weapons in fact uh he's got this great if you haven't listened
to Patton's speech to the third Army it's one of the most famous speeches ever given I've listened to it a bunch of times but there's a couple lines in that kind of give you what was important to patent and so when he says when a man is lying in a shell hole if he just stays there all day a German will get to him eventually to hell with that my men don't dig foxholes foxholes only slow up and offensive keep moving later in the
speech he says I don't want to get any messages saying I'm holding my position we're not holding a goddamn thing we're advancing constantly and patton wouldn't have been able to advance constantly you know he was a tanker without this this the way to transport fuel rapidly and to follow him as such as he just marches through France and the way that he was able to have uned supplies was the red ball Express which a young Leon hes was
working on so the red ball Express was a Marvel of logistics and helped ensure the Germans crumpled under the onsl onslaught of a quick moving opposition said the Germans were still heavily relying on moving things through by
horses moving Fuel and supplies by horses which blew my mind uh the red ball Express lasted for 81 days in its 81 days it created a blueprint for how to move much needed supplies across the field of War at its peak 6,000 trucks
were in operation Man by 23,000 people including drivers and mechanics red ball trucks transported over 412 wow 412,000 tons of supplies in total in 81 days so then we get to the part where post World War II he comes back to America
and he's going to have this massive explosion uh in the size and success of his business and so anytime there's an idea I assume that you have Port the book Pak um if not I'd order it immediately and I would go to the index
of that book and I would read about poor about Charlie munger's surfing model and so what what uh what Munger does is essentially you can reverse engineer like why somebody would was successful and so in that book he there's a there's a a few pages where Munger is analyzing the outside success of leab and Monger says anytime you have extreme success it's usually you know this laa paloa effect it's these multiple factors
working together to create these exceptional results and so he analyzes what were the multiple factors that were contributing to Les Schwab's success he's like riding the Japanese Tire wave he had this Brazil brilliant incentive systems where he would share profits with uh 50% of the profits with each of the employees who worked in each store uh he was a you know talented fanatic he was a gifted marketer and Advertiser he
had this very systematic approach uh and how he executed and how he wanted all of his stores operating and so over a few pages you know Monger is just analyzing this for us and so I thought of this when I came back because there's I feel
the same exact thing is happening in Leon hess's life where there's Leon's postor war2 wave there's a series of events that were outside of his control that he surfed that that first of all interacted with each other to produce a
l of paloa effect but also he surfed magnificently so first of all he comes home and he comes back to New Jersey and he's just like well I just got essentially worldclass education in logistics how to use trucks to M to move fuel that just so happens to be the best thing that could have happened to me considering that is my business okay so at this time again it goes back to he's still moving fuel oil this is that you
know that has a consistency of molasses it uh other oil men would call it the bottom of the barrel because it was so heavy it was the heaviest of all the refined products okay why is that important and why at one point I think
they said that I think the book says that leyon has something like 80% of the market uh market share for Fu oil why because to move fuel oil successfully right you were required to move quickly and you have to have a Mastery of
logistics because if it's not kept at the right first of all it's not delivered fast enough and if it's not kept warm enough it will transform from liquid into like it cools and it hardens so the first part of Leon's post World war2 wave is the fact that now he is maybe has maybe the most advanced Logistics training for any of his competitors and he's able to transport this faster and more efficiently than anybody else so number one he's just
able to get the job done number two fuel oil is now going to have a massive increase in demand demand for fuel oil search to un unprecedented levels as it's used for power generation electricity plants used it uh and in shipping expanded hes called fuel oil the Workhorse fuel of industrial America for its uses in utility boilers Factory machinery and heating large buildings number three you have this massive explosion in demand of driving the
industry grew to serve a burgeoning US middle class that wanted and needed to drive more and H metamorphosized from a small dealer into one of the largest gasoline retailers on the East Coast this is part of hess's constant march to
go to the source remember he starts with fuel delivery then storage then refineries then retail gas stations and then finally oil drilling and exploration number four S this is a massive increase this is wild to me the
expansion of the industry that Hess is operating in in 45 years okay so let's start the the the dawn of the 20 Century when Rockefeller was at his Peak right production was 174,000 barrels a day even at that size that can make Rockefeller probably the richest person on the planet right you fast forward 45 years where we are in the story where Le young Leon hes is building his Oil Company the production is now 4.6
million barrels a day and then number five Leon starts building relationships and contacts which are going to lead to Greater sources of capital so if you really think about what what the the Leon's post war war II wave number one
he's got the logistics expertise right person right set of skills right time number two the demand for fuel oil is exploding number three the US economy expands Dr drastically increasing the purchasing power of the middle class and
as a result demand for gasoline skyrockets number four America's insatiable appetite for all types of oil and then number five he finally unlocks relationships in capital including going public which I'll talk about in a minute but I need to talk about what one of maybe the most important relationship that he ever builds is this relationship with this guy named David willins David is almost like essentially it's his it's
going to wind up being his father-in-law but I would think of him as almost like the father that Leon chose so David is actually the Attorney General of New Jersey and the book says that L's connection to David was critical in
helping shape his success David would become his friend his adviser ultimately his father-in-law and helped support Leon's transformation from Cole H Haller to oil Baron leyon met David before the war in fact while he was fighting in the
war David oversaw Lyon's business so he comes back from the war his business has growing demand but he's in dire need of money and so actually David helps Leon build a relationship with Chase Manhattan bank that bank at the time is being run by David Rockefeller which is an interesting connection here and one of the most important traits for Leon was loyalty he expected loyalty and he gave it in return and so because he says
he gave all of his business to chase because of the effort they put into building the relationship with him he says they were the only ones who ever paid any attention to me the rest of the banks never took me seriously David saw
a lot of potential in Leon in fact David is the one that introduced his daughter Norma to Leon they're going to be married for the rest of their lives at this at the time where he does this Leon doesn't have a lot of money all the
money is going back into the business so he actually has to borrow money to buy a suit for their first date the contrast between their classes was obvious this ISS the daughter of the Attorney General who had grown up with a great deal of privilege was in a different class from the owner of a fledgling fuel business and yet David and leyon continued to share a deep connection until David died in 1988 and after David died someone
else's described David's View and relationship with leyon says David didn't mind rich people he liked them but the ones he really liked started out poor like his son-in-law Leon whom he loved and is also from David where Leon
learned you have to balance work and family so it says hes was fully established as Leon's first child before he met Norma and he spent long evenings and weekends dedicated to the company's birth and early upbringing but just as
David had balanced a demanding career with dinner at home each evening Leon did the same sometimes having to return to the office for long hours at night after spending time with his wife and children so then Leon continues his march to getting closer and closer to the actual Source at this point he's buying and selling and storing fuels and lean wasn't going to be content with just buying oil from refineries he's
going to start his own refineries so he actually builds his first refinery in New Jersey in 1957 so now as a result the company would no longer just be a middleman between refiners and their customers it can now make its own
product at its own facility and then he starts adding other refineries builds one in Texas but eventually the reason I want to read this part to you this entire section which this actually blew my mind because again speaks to the size
and the scope of his ambition you know he starts out as this 19-year-old kid used truck I'm just going to try to make my own way in this world now f for three decades later he winds up building the largest refinery in the Western Hemisphere and he does so in the US Virgin Islands why why US Virgin Islands because US Virgin Islands hold a key Advantage so the location that he chooses for this Refinery allowed Leon to take advantage of federal tax
benefits this may be the only place in the world that he could have done this so the refiner is able to secure foreign refiner status which allows it to circumvent Federal rules that requir the use of higher cost us flaged vessels
when shipping oil to the east coast while simultaneously at the same time also receiving subsidies from the United States Department of energy as a domestic Refinery there is a line I read in the biography the autobiography of
Trader Joe the guy that started you know the grocery store that I think about over and over again and he says as I learned time and time again success in business often rests on a minute reading of the regulations that impact your business it's exactly what Leon H did here he picked the one place on the planet we had this combination of unfair and I don't mean it's legal because it's completely legal of unfair advantages
and I want to Stack another unfair advantage on top of this or Leon stacked another unfair advantage on the top of this it was going to be a local Monopoly there was only going to be one company allowed to build a Refinery on the
island Leon had to win this in fact there's a funny interview with the governor of the Virgin Islands uh talking about how he negotiated with how how Leon hes negotiated says from the day Leon hes entered my office he did
not leave the Virgin Islands and until the deal was consummated and then Leon also negotiated for another series of benefits so he also gets uh 16 years taxfree in St Croy partial government reimbursement for dredging a channel and free use of that channel for 16 years now this this minute reading of regulations it's not like this is a oneoff this is not something that Leon did one time he he found another loophole and another like regulatory
Advantage Leon figured out ways to make laws work to his advantage in one instance he found that oil would not be considered an import and thus therefore taxed right as one if he bought it from St Lucia to St Croy by bars so he took
apart his large ships had the engine propulsion cut in two and the bulkheads wielded welded on each side and then Pinn them back together the pins were huge so technically the drive portion could be disconnected from the cargo
portion well it may not appear so to the untrained eye legally these boats qualify as barges so the massive quantities of oil They Carried were Exempted from the taxes that would otherwise be levied so now he has the largest refinery in the Western Hemisphere it's perfectly located because he's able to refine oil coming from the Middle East and South America he refines it in the US Virgin Islands and then ships that fuel to customers on
the east coast of America now there is an idea in here where if you're looking to do something in your business I bet you if you study other Industries or other companies in your same industry they attempted something in the past that was similar and yet forgotten he's building it this in I think 1960s he wasn't the first to look in the Caribbean he wasn't the first oil Baron to build a refinery in the Caribbean Shell built one in 1918 in
cural and standard oil had built a refinery in Aruba in 1929 and so there's all these stories in the book about how important this one refiner was to his business and you see this with his actions the refiner was incredibly
important to Leon so he would fly in every Friday to inspect his Refinery to review its operations finances and crude State across the refining industry stories of Leon's persistence at the plant became Legend Leon would show up
and check units at 2 a.m. to make sure they were running properly at the same time he's building his refineries he's also starting to expand into gas stations he opens his first gas station in 1960 in New Jersey by the end of the decade they had gas stations in 16 states there was an interesting line here that I didn't realize he purposely did the opposite and simplified what his gas station did compared to the existing
competitors unlike his competitors the head station attendants didn't change your oil they didn't carry batteries tires or windshield wipers or have car mechanics on site and for a long time they wouldn't even take credit cards because Leon felt that slowed the refueling process down and so two separate times Hess merges with another company this is very important so the first time it reads to me that he merges with this company just to take hes
public so in 1962 hes merges with this company called clear track Corporation they used to be a Cleveland based farm equipment maker okay but they just sold off most of its equipment business the year before so I'm not at all it's not
all obvious like what the company's actually doing but this is what the book says what Leon was getting with the purchase was a seat on the New York Stock Exchange H would finally become a publicly traded company and becoming a
publicly traded company opened new sources of financing to Leon 6 years later there's this oil exploration company uh called amida the name comes from combining America and Canada together so in December 1968 Hess merges with amerid this is by far the biggest deal in hess's history so it takes you know company that originated as this smalltime distributor of residual oil now with the combination of amer's business looks like a miniature version
of Exxon so the deal makes Hess into a vertically integrated Eng company with its hands in every single stage of oil's Journey from Discovery to gas tank Leon had joined the board 11 months before the merger was announced to get that seat he had to make a massive investment so hes made a big investment two years earlier they spent $100 million to buy 99.7% stake in the company and so this is another example of Leon getting
closer to the source to the actual discovery of oil right and having more control over his business because after he drastically expands his refining capability which I just told you about he's buying having to buy more and more
oil in fact he is Shell's biggest single customer and one thing that Leon was worried about he's like he didn't want his company to be held captive to producers anymore and the reason the combination of of Hess and amida was
actually interesting so hes was an oil refining and marketing company with no significant production facil and amera was an oil producing company with no refining or marketing facilities at all look how close they were to like the the each other's production so the year of the merger in 1968 hes was refining an average of a quarter million barrels of crude oil a day and amerid is producing about 290,000 barrels a day
and there's a lot of stories of just how Wild the oil business is in the book there's a great line it says the oil business is not all be year in Skittles uh I was on my back last week uh I had bronchitis I was like super six for
almost a week and so I went up uh watching a bunch of things that I normally wouldn't have time to do and I actually binge watched the first season of this this show called landman which I thought was actually pretty good and
there's a great line in landman where he said you know it's it's a it's a show about the oil business in Texas and there's a great line from you know the billionaire uh head of the oil company the one of the main characters in
landman he says describing the oil business which I thought was great he says our business is a constant state of Crisis interrupted by periods of immense success I thought that was a great way to put it uh one of the craziest stories
uh in the book is Leon's talking about you know he's going all over the world to Source more oil and in some cases you know these are these are dictators and so he's actually having to negotiate with like a representative of Gaddafi in Libya and right in the middle of a negotiation the guy just pulls out a gun and puts his pistol on on the T on the table between them I guess as some kind of like bargaining chip or just saying
hey realize who you're dealing with here um but there's one thing that admired about Leon was he's he's got a he's got a bit of like an old school East Coast like gangster to him and I don't mean that as perjorative I mean like he believed in like a handshake handshake agreement between gentlemen he thought it was your duty to keep your mouth shut he would talk about don't write anything down even when he was like bribing
people he did it in an honorable way uh so he writes a a letter to shareholders remember this is a publicly traded company and he has to write uh letter to shareholders because the the regulations in the oil industry are changing so I
just want to read some excerpts from this letter to the shareholders he goes in the hope of obtaining a benefit for our Corporation I made a series of payments substantial in the aggregate to a foreign government official the
bribery was unsuccessful he told shareholders the payments were made in the hope of promoting a project which never materialized and the company received nothing as a result of the payments the bribery money was his it did not come from the company's coffers and had and he hadn't sought any reimbursement and no deductions were taken from the payments so again even when he's even when he's bribing uh you know he's he's doing it in an honorable
way it's like I did it with my own money I didn't do like I didn't ask to be it didn't come from the company I didn't ask for any reimbursements but the reason he brought this up is because less than a year later the payments that leyon was writing about would be illegal because Congress enacted a new source of Regulation and it's called the Foreign Corrupt Practices Act to make overseas bribery and political contributions a
crime in the United States there's actually a pretty funny line in the book that came right after this you know kind of talked about Essen she says a practice as old as crossb trade itself was now under scrutiny and I think it just speaks to how Wild the oil business is like you know he's he in some cases he's negotiating with people and they're like essentially one family runs the entire country it's like okay yeah it's
not just oh you can buy our oil and here's the money it's like here's the price for oil by the way you have to use this company and my my cousin happens to run that company and you have to use uh if you need to build roads then you have
to use this road construction company oh yeah that happens to be my brother-in-law it's just there's this just just a wild life and Industry that this guy uh that Leon you know built this this massive company in but I I did
think it was very fascinating that even though the company was publicly traded like he really Ram it ran it like a family business and one of the things I most admired about Leon was how close he was to not only his son but his entire
his entire family he ran essentially this was like a family Venture for 80 years it just happened to be one of I think it was like the 14th most valuable Oil Company in the world and I think this really speaks to this where his son
John who takes over as a CR role after Leon does at John's wedding you know Lon was the best man and so the book talks about the family business at length it says the hess's were a close-knit family they spent time together not out of obligation but out of General affinity and they were fiercely loyal to one another for Leon his life's Ventures were centered on the family so there's a bunch of interviews and quotes from his
daughters uh says he was an extraordinary father and role model this is his daughter Marlene hes his standards for himself and our family were high he couldn't tolerate dead beats or Liars he was a man of his word so we had to be too he expected the best of himself and also all of us he worked hard and so did we he cared deeply for his fellow man and instilled that in us too his other daughter Constance made a list of other lessons that she
remembered from her father this is after he her father passed away treasure a good name treasure a good name is something he'd repeat over and over again hold your cards close to your chest love is unconditional and this is
this is really funny if you have to talk to the Press make sure that you're not the story and so as a young girl in the 1950s his daughter Marlene said she would remember wearing her pajamas and her slippers and returning to Lyon's
office with him after dinner so at this time the company's headquarters were still a set of trailers this part actually reminded me of Walt Disney I read the 700 Page biography of Walt Disney multiple times and there's a great excerpt from that biography about Walt Disney and the way he was with his daughters that reminded me of the way Leon Hess was with his daughters says uh Walt Disney would chase the girls around the house
cackling like the witch from Snow White or he would TR them endlessly by their heels for hours and hours Diane would say that's one of Walt's daughters or he would stand in the swimming pool and let them climb onto his shoulders I thought that my father was the strongest man in the world and the most fun Dan recalled at night he would read to them and on the weekends he would take them either to Griffin Park or to ride the merry G
around or to the studio where they would follow him as he snooped about and pedal their bikes around the empty grounds while he worked this is what w said they used to go they used to love to go with me in those days and that was some of the happiest days of my life they were in love with their dad if you did not listen to that episode that is episode 346 it's called how how Walt Disney built himself it's one of the most
incredible books you can read about one of the most incredible entrepreneurs to ever live um outside of the office Leon was there for his children while still running an increasingly major company uh during the summer his son would
participate in swim meets he would arrive just in time to see John swim and then get back into his car where a driver was waiting to whisk him away back to the office something that the hes family had in common with a lot of
the people you and I been discussing the past few weeks if you look at the Wallenberg or Hedy green they train them in business both the Green family the Wallenberg family and now the hess's at a very very young age it's really smart
something Este lauder's family did something the Walton family did this just this idea just reappears over again says the hess's social life largely spun around Leon's growing business Network as they entertain bankers and colleagues
at home in indoctrinating their children especially JN in the corporation's culture and preparing Jon to run the rapidly expanding business from the age of seven johon was being groomed to take over hes Jon spent time in the trenches
this is just like the Wallenberg and the greens again Jon spent time in the trenches learning the business by pumping gas at a station New Jersey doing accounting for a Refinery or taking part in operations in St Croy in
the oil fields in Oklahoma in college John studied Arabic and farsy preparing for a career leading a multinational Oil Company after getting his undergraduate degree at Harvard JN attended business school striking up connections that would help him guide the company Leon would tell his son and his daughters treasure a good name he wanted the H name to be recognized and respected and so throughout the book his kids are
talking about the way he ran his company the people that working inside of the H company for multiple decades talked about this so I made a list of really just things that reappear over and over again Leon was extremely focused on
details and appearances details details details over and over again he was obsessed with the details of delivery at budget meetings he would quiz the head of the company's Trucking division on the amount of life left in the tires
there's several quotes throughout the book on the importance of cleanliness he was obsessed with things being clean says the first thing I look in an oil tanker is the engine room Bill Clean villes denote Good Housekeeping he said that in 1987 remember he starts this company in 1933 he dies in 1999 he was obsessed with cleanliness in 1933 he was still obsessed with cleanliness in 198 7 right from the start he made sure his
trucks were kept clean and employees learned that working at a h facility meant painting and repainting to make everything look like new whether it was a huge storage tank or the white curb at the hes gas stations again the importance of cleanliness and order is repeated Leon realized early on that having the cleanest safest seeming gas stations was not only aesthetically pleasing it could also provide a business Advantage as the family car and
cart tress were becoming more prevalent Hess would be the easy choice for those looking for quick service and clean bathrooms giving him a potential leg up on Rivals who did not P put as much emphasis on appearances as a manager
Leon had been described as tough but fair he had an exacting eye for detail but he impos the same standards on himself as he did on others work hard know everything you could about your business and if you made a mistake learn
from it and move on he is often described as fatherly and no one at either the hes company or the New York Jets he owns the New York jets for like three decades which I'll get to in a minute uh wanted to disappoint him this is something his players talked about people in the coach's staff people that the executives and even people working in refineries for has talked about they they did not they admired him so much
they worked hard and they didn't want to disappoint him uh he wasn't prone to emotional outbursts he came from a school in which a handshake was sufficient for a deal Leon was a gambler at heart he wasn't afraid of risk Leon
ran his company with the ambition of a Major Oil Company combined with the mindset of a startup and one thing that he would do he felt the fact that he was always on the road he was a he was a tireless traveler that he was able to
seek out opportunity where other larger uh oil companies were kind of a little lazier and they wanted opportunities to come to him uh come to them Leon traveled a lot for his job and he encourag those who work for him to travel as well to find new opportunities as an entrepreneur Leon had the opposite mindset of some of the major oil companies that let opportunities find them he was always hungry for new prospects he was never averse to taking
risks he loved new negotiating he was unpredictable and he used that unpredictability to his Advantage he would take a lot of trouble to get to know his counterparties and their families he built very strong relationships he had great connections all over the world this is very similar to the Wallenberg if you listen to the last episode I just did Leon knew each employee by name he put effort to know everyone he worked with he even knew the
name of the guy who fixed the air conditioning in his office he had both an exacting attention to detail on the type of outgoing engaging personality that made him stop Executives and Industry acquaintances who were too
eager to get into business talk at the start of a phone call instead he wanted to hear about their wives their children and their lives outside of the office this is something that's repeated over and over again in the book this was the
type of family-owned business touch that Lon favored he also ran a more efficient business than his competitors one competitor told how Leon showed them how to do more with less he ran a facility with 400 people where other companies would have used twice as many workers there's a great line in the book how to make a few billion dollars by Brad Jacobs that I covered all the way up on episode 335 uh about this he says Brad wrote I
find that slightly understaffed teams are more focused and spend less time doing redundant busy work be deliberately understaffed is a really interesting idea the personal attention that Leon showed to his employees is something that's repeated over and over again as well every night this is at one of the refineries every night he'd make a point of sitting down and eating dinner with the guys he would walk around the room and Shake everybody's
hand that kind of recognition brought loyalty from many employees many of whom would describe themselves as being very devoted to him back to Leon's impressive attention to detail he could recite the margin of every gasoline station on the East Coast so actually spent seven hours over two days uh with John Mackey the founder of Whole Foods John Mackey can do the exact same thing he he could pass a Whole Foods and he could tell you what
their revenue number was what their operating income was what their margins were he had this like incy opedic knowledge of the financial performance and all the numbers of all the Whole Foods and sounds exactly what what Leon
Hess had in his head for all of his gas stations uh Leon hes would also do things that other competitors were not doing uh like I remember this when I was a kid it was Leon's idea so you remember the h toy trucks I actually had these
toy trucks when I was a kid and the idea to make them actually emerge from a conversation that Leon had with a friend who was also a toy manufacturer at a football game in the 1960s so the idea initially was to create models of all the working H vehicles and what I found Most Fascinating is Leon was personally involved again goes speaks to his attention to detail Liam was personally involved in designing each toy so these
toy trucks start out as a idea the idea original idea was like well these are great marketing tools and they wind up becoming collector's items the people to this day they they still collect them and the some of the prices are
incredible I would have to imagine that took Leon by surprise I'm sure he didn't think hey I'm going to make a marketing tool I'm going to start man I'm an oil company manufacturing toys and it's going to wind up becoming a collector's
item and you know something that people cherish and reminds them of you know the holiday season decades later another thing that I know for a fact had to take him by surprise is how successful his investment in the in the New York Jets was so Leon actually acquires a 20% stake in the New York Jets they weren't even call the New York Jets yet in 1963 uh for which he paid 2 $50,000 and he said I was one of five Partners the name of the team at the
time was the New York Titans they were in bankruptcy and we changed the name to New York Jets before the purchase the Titans were the worst managed most unprofessional professional team of the modern era there were bounce checks
player strikes coach shuffling questionable player choices it was hardly a sure investment so as the years pass Leon slowly over many years bu out the four other owners and eventually becomes the sole owner this again speaks
to how important family was to Leon hes he says for a man who didn't have hobbies Sunday football was something he could share with his family there's a hilarious uh story I really I think speaks to to Leon's personality as well the famous coach Bill Parcels tells a story of calling Leon one day to inform him of yet another expensive player contract I don't give a Leon told him if you run out of money come over here to the oil company
now we'll get you some more money this afternoon so Leon actually owns the team until he dies in 1999 now this might surprise you he insisted that the Jets be sold after he died the speculation is that he insisted on this because he did not want his family to be distracted from running the oil company says Leon insisted that no member of the hes family would be part of the purchasing Syndicate in any way any family member that did try to own a
part of the team after his death would lose a third thir of their inheritance Woody Johnson of the Johnson Johnson family fortune bought the team for $635 million in 1999 the Jets sold for almost as much as Leon's personal stake in Hess was worth at the time or about 10 times less than what the Jets would reportedly sell for today as for the hes Corporation 90 years after Leon hes starts in his own words a little Oil Company would just
one used truck when he was just 19 years old Chevron announced that it would acquire Hess in an all stock deal for $53 billion and that is where I'll leave it for the full story highly recommend buying the book if you buy the book using the link that's in the show notes in your podcast player are available Founders podcast.com you'll be supporting the podcast at the same time that is 378 books down 1,000 to go and I'll talk
to you again soon okay so I want to give you a big update to Founders notes so I'm eight years into this podcast at the end of the year I will have read over 400 biographies and what I'm trying to do is I want to organize and distill the collective knowledge of History's Greatest Founders and I want to do that better than anybody else on the planet which is why I work on the podcast 7even days a week so as you can imagine but
you know 360 380 biographies read or whatever I'm at right now it's nearly impossible for me to remember and recall everything that I've read so I built a tool that allows me to tap in to the ideas from History's Greatest Founders
on demand when I need it so I use this tool every day I've told you about it in the past for the past year it's called Founders notes you can subscribe and access the tool that I built and I use what you see is the exact version that I
use I don't have a different version literally the tool that you can subscribe to is the one that I use every day so the update that I have for you is I've been working with the team at readwise which is the company and the
founders that have helped me build this tool and so for the past few months we've been working on a major redesign for Founders notes that redesign is done it's available now the prehistory of this is that for the first six years of
the podcast I've been using this app that called readwise to store all my notes and highlights for every book that I've read for the podcast right it allows it's just like giant database I could search it and pull up information anytime I need it so I partnered with readwise over a year ago because a bunch of people listen to the podcast say hey I'd love to be able to access and read all of your notes and highlights so we
built this tool called Founders notes that allows you to do that you can still do that you can still read all my notes my highlights and I keep adding to them every week and will always do so because I can't make the podcast without this
tool but over time we started adding other features and what I realized is the AI assistant that we called sage that sits inside of Founders notes is the most valuable feature by far so um a few weeks ago if you listen to the
episode I did with on uh Jensen Wong in that book Jensen says that in the future right now really uh people will have a virtual assistant almost like a brilliant intern with near Perfect Memory capable of instantly recalling any piece of knowledge stored on any computer and when I got to that section the not off myself was that Sage is going to be this but for the collective knowledge of History's Greatest entrepreneurs so when I ask Sage a
question it reads all of my notes all of my highlights all of my transcri transcripts and provides a concise summary and answer to the information I'm looking for and the reason I would heavily uh recommend that you subscribe
and get access to this is because I think you should be using Sage to supplement the decisions that you make in your work so it is spooky how when I ask Sage a question it sounds like me except with a much better memory and so
another cool thing that we added is when you log in you can see all these like suggested questions things that you could ask Sage all of those suggested questions are things that I have asked sage and so now as I'm continuing to ask more and to use to use it uh to to ask more to to prompt Sage stage more I continually to add add to this suggested uh prompts or suggested questions list so even when you don't have a question of your own you can
actually read and learn from what I'm asking Sage so the way I would use the tool though the primary uh value is I think any question you have in your business you should be asking Sage because what happens is becomes like you can prompt all of history great entrepreneurs to help solve the problem or to supplement your own thinking that you're dealing with inside of your business so if you have not already subscribed to Founders notes I heavily
recommend doing so if you want to tap into the collective knowledge of History great entrepreneurs on demand and use this as a supplement to the decisions that you're making in your work highly recommend you go to Founders notes.com that is Founders with an S just like the podcast Founders notes.com and sign up today thank you very much for the extra support thank you for listening and I'll talk to you again soon