Pennsylvania Railroad

Carnegie's spare-time telegraph practice led Tom Scott to hire him. As a teenager Carnegie practiced on the telegraph keys before the operators arrived. A year later he was an operator at $25 a month, and in 1853 Scott hired him as clerk and operator at $35 a month.

The job put him at the center of two fast-growing industries, railroads and telegraphs. He later said: "knowledge is sure to prove useful in one way or another it always tells".

Founders▶ 33:35

Carnegie turned the railroad's first iron bridge into his own business. Working beside Scott, he saw the Pennsylvania's first small iron bridge succeed and concluded wooden bridges were finished. He organized a bridge company and brought Scott in, with each partner putting up $1,250.

Carnegie said the small sum grew like an acorn into an oak. His line was "it would never do to depend further upon wooden bridges". The host's lesson is to copy the how, not the what: Gould spotted telegraph opportunities and Thiel spotted Palantir while working at other jobs.

Founders▶ 39:14

Carnegie cleared bottlenecks by burning stalled cars, and it became standard practice. As superintendent of the Western Division, Carnegie saw that the core job was keeping traffic flowing. He shocked fellow executives by burning stalled cars to clear the lines, and the method soon became standard.

The host reads it as finding the single most important thing in the business and removing the bottleneck despite convention. The quote: "Focus on an objective, then cut brutally through any conventions, competitors, or ordinary people who stood in your way."

Founders▶ 7:51

Rockefeller beat the railroad by pulling his 65% share of its oil traffic. The railroad's subsidiary, Empire Transportation Company, moved into refining. Rockefeller complained to president Thomas Scott, who refused to act, so Rockefeller withdrew all his oil traffic, which was 65% of the railroad's.

The railroad soon offered to end the war if he bought Empire. He did, without taking in its founder.

Founders▶ 47:50

Gould bought the western connections the Pennsylvania's cautious executives were selling. The Pennsylvania was divesting its western connections, and its executives prided themselves on low debt, cautious extension and conserved cash. Gould went after all four western legs at once, reasoning that owning the whole chain gave him far more power.

By 1883 Gould was dominant owner or controlling shareholder of dozens of railroads. The author says the old rules of good management stopped working once railroads became about strategic position. Gould's reasoning: "If I own all of them, I will be in much more powerful position."

Founders▶ 29:39