John D. Rockefeller didn’t go to college, but that didn’t stop him from opening up his first produce-shipping business at just 19 years old. When I was 19, I was just trying to find where the dining hall was on campus.
Rockefeller was a complex man, but the major key to his success was simple: Control supply, everywhere.
In 1873, just three years after creating the Standard Oil Company of Ohio with his brother, Rockefeller owned 80 percent of the refining capacity in Cleveland. By 1879, he controlled 95 percent of oil refining capacity in the United States.
He was able to do this because of the stock market crash of 1873.
After the financial fallout, he started buying up refineries at a surprising rate. While he absorbed these refineries, he also built up his transportation system. He purchased plants, railroad cars, wagon fleets, pipelines, and a variety of other facilities to support his growing logistical web.
His plan? Control horizontal and vertical business operations. More specifically, he wanted to control both upstream and downstream operations.
He was so obsessed with controlling every aspect of the business, such as refining and transportation, that he purchased his own woodlands for lumber to make barrels. Nobody could undercut him with higher transportation prices because there was nobody out there to do the undercutting! He controlled everything.
He called all of this “cooperation,” but it later came to be known as a monopoly. In the end, his competitors didn’t like him, but his customers did because of the lower prices.