“Sam’s defining characteristic was his belief in his own agency, his refusal to despair. No story is without the possibility of redemption; with cleverness and hustle, the worst can be overcome. I can’t help but feel, after all the talk of America’s decline, that we would do well by emulating Sam Zemurray—not the brutality or the conquest, but the righteous anger that sent the striver into the boardroom of laughing elites, waving his proxies, shouting, “You gentlemen have been fucking up this business long enough. I’m going to straighten it out.””
The Fish That Ate the Whale by Rich Cohen is a biography of Samuel Zemurray. A Russian immigrant who built an empire in the banana trade.
Zemurray started as an immigrant hustler. He worked lot’s of jobs in his youth and learned how to sell. Eventually, he saw an opportunity that he could capitalize on and took it. He invested all his money in buying ripe banana’s and betting that he could sell them before they went bad. He was right.
He didn’t build a banana empire with focus groups or angel investors. He was simply always aware of opportunities that he could capitalize on and bet on himself. He took it one step (or banana) at a time.
This book also gives you fascinating insight into the story of how a few entrepreneurs turned the banana from an exotic fruit at the start of the 20th century into a low-cost staple food only a few decades later.
Below are some of my highlighted quotes and thoughts from reading:
“He was looking for different work and would try anything, if only for experience. His early life was a series of adventures, with odd job leading to odd job.”
“A series of jobs followed, tried on and thrown off like thrift-store suits. He was a housecleaner and a delivery boy. He turned a lathe for a carpenter. By eighteen, he had saved enough to send for his brothers and sisters, half a dozen pale young Jews who turned up in Alabama in the last years of the nineteenth century.”
After immigrating to the US at 14 Sam worked a series of jobs and had no formal education. From a very young age, he learned how to work hard and how to sell. His experience gave the capabilities to take advantage of the opportunity with bananas.
“Sam grew fixated on ripes, recognizing a product where others had seen only trash. It was the worldview of the immigrant: understanding how so-called garbage might be valued under a different name, seeing nutrition where others saw only waste. He was the son of a Russian farmer, for whom food had once been scarce enough to make even a freckled banana seem precious.”
Banana’s that would become ripe before reaching major markets were discarded. Sam recognized that there was an opportunity there and made a bet on his ability to get those ripe bananas to customers. He invested all of his savings to buy a load of banana’s and loaded them on a train back to Selma, LA. On the way, he realized that the train was going too slow and he wasn’t going to make it back, so he decided to call ahead to train stops and sell bananas along the way. It worked and this became the first iteration of his banana business.
“As far as he was concerned, ripes were considered trash only because Boston Fruit and similar 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.“
Early on in his entrepreneurial journey, he made a very large bet on himself. He almost lost that bet, but it paid off. As he got more experience and gained more capabilities he continued to take advantage of new opportunities. He was never so focused on the far future to become paralyzed, but he also was never so focused on the status quo that he plateaued.
“Now and then, if business was slow, he took a job. He worked on a ship as part of a cleaning crew, scrubbing decks. He worked in a warehouse as a watchman. I’m not sure where he lived. In a cheap rental in the old part of the city, perhaps; in a boardinghouse by the harbor. He had soon made his name as a uniquely resourceful trader: the crazy Russian who bought the freckled bananas.”
“Because Zemurray discovered a patch of fertile ground previously untilled, his business grew by leaps and bounds. In 1899, he sold 20,000 bananas. In 1903, he sold 574,000. Within a decade, he would be selling more than a million bananas a year.”
“By his twenty-first birthday, he had a hundred thousand dollars in the bank. In today’s terms, he would have been a millionaire. If he had stopped there, his would have been a great success story.”
Zemurray started as a weird outsider, buying a selling the discarded product of the big players. No one took him seriously at first, no one recognized that the business he was building was more about logistics than ripe bananas and that he would soon be their competition.
“In setting a price for the property, Zemurray took advantage of the local landowners. He had superior information, understood something important lost on the Hondurans. To the peasants, the land was swamp and disease, nothing that will still be nothing in a hundred years. Sam knew better. Because he was raised on a farm, he realized the meaning of all that black soil beneath the weeds. Because he worked as a jobber, he realized the worth of the fruit that would thrive in that soil.”
Eventually, Zemurray realized that he would need to own his own banana farms to secure his supply and his business. He recognized that in Honduras (and other parts of Central America) there was a ton of land thought worthless by locals that would be great for growing bananas.
Cohen tries to make Zemurray a crook for buying the land at market value when he knew it would be so valuable to him. But, the land would not be valuable without Zemurray. It is his skill, expertise, and knowledge about banana’s that make the land valuable. He paid a fair price for the land and then made the land more valuable.
“Unlike most of his competitors, he understood every part of the business, from the executive suite where the stock was manipulated to the ripening room where the green fruit turned yellow. He was contemptuous of banana men who spent their lives in the North, far from the plantations.”
“He believed in staying close to the action—in the fields with the workers, in the dives with the banana cowboys. You drink with a man, you learn what he knows. (“There is no problem you can’t solve if you understand your business from A to Z,” he said later.)”
““I realized that the greatest mistake the United Fruit management had made was to assume it could run its activities in many tropical countries from an office on the 10th floor of a Boston office building,””- Zemurray
To do any job very well you have to have a narrow focus on your key responsibilities, but also a broad view of the business as a whole. When you start a new job your focus is necessarily narrow. You must become efficient at your key responsibilities, before devoting your limited attention to the broad view of the company. But most people never move past learning the narrow focus. As a result, they plateau and eventually become irrelevant as the business evolves.
The companies that Sam started would lose this connection to the roots of the business. They filled up with college educated manager types from good families who only associated with executives and didn’t know the basics of growing bananas in Central America. They were concerned with the narrow responsibilities of being an executive and lost sight that they were there to grow and sell bananas.
“He had taken ownership of a nation, whether he realized it or not. As Kinzer explained, “No American businessman ever held a foreign nation’s destiny so completely in his hands.” Over time, Zemurray would become more powerful than even the government of Honduras. When that happened, the people would begin to look to him to supply the sort of services usually supplied by the state: water, health, security, etc., things it would prove impossible to deliver. Every great victory carries the seed of ultimate defeat.”
Zemurray financed and organized the overthrowing of the Honduran government. He then used his influences to take benefits from the new government he put in power. “Every great victory carries the seed of ultimate defeat.” I look at it more like: Every benefit received by unjust means (re: government power) will eventually be paid back with interest). In Zemurray’s case. He set the stage for the socialist takeover of Central America and the seizure of his land.
Zemurrary started out as an entrepreneur and a capitalist, but eventually, he reached a level of power that allowed him to manipulate state power to his advantage. He became a corporatist, this came with short-term benefits but significant long-term costs.
“By 1940, the company owned 50 percent of all private land in Honduras, but cultivated less than 10 percent of what it owned. The company became a symbol of concentrated wealth in these years, more powerful, in many countries, than the government itself. In its endless quest for disease-free land, United Fruit would become too big for its own good.”
“It was, in fact, hard to distinguish United Fruit from the CIA in those years. The organizations shared personnel as well as equipment and intelligence. Throughout the Guatemala affair, the CIA used United Fruit ships to smuggle money, men, and guns. When the CIA’s funding fell short of its budget, U.F. made up the difference.”
When Zemurray took over United Fruit he continued to make sure it was deeply embedded with the U.S. government. They hired executives based on political connections as much as actual skill and used state violence as a way to secure their investments.
“Sam had one of those seemingly endless careers that span eras: in the beginning, it was the Wild West of banana cowboys and mercenaries raising hell on the isthmus, the America of Owen Wister and Bret Harte; in the end, it was the CIA and the triumph of the corporation and the air-conditioned nightmare, the America of Clive Cussler and Tom Clancy. He did not just live through this change, which is the rise of America told another way—he helped make it happen.”