The Fish That Ate the Whale: The Life and Times of America’s Banana King is the biography of Sam Zemurray, known in the early days as Sam the Banana Man. He was an Russian Immigrant turned American Banana Tycoon.
Sam’s philosophy was ” get up first, work harder, get your hands in the dirt and the blood in your eyes.” He had an exceptional ability ability to think abstractly and to translate ideas into actions.
Here are a few highlights from his bio:
1)He built his empire by starting with bananas that were too ripe, and therefore discarded by his larger competitors:
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”
He later expanded beyond this strategy, which resembled deep value “cigar butt” investing, to build a massive fruit empire. This is one of several reasons that the Investor Field Guide compared him to Warren Buffett.
2) He was resourceful and tenacious. He once built a long dock when he couldn’t get permit for a bridge:
When Zemurray realized he would never get permission to bridge the Utila, he did what he’d always done: innovated, building surreally long docks on both sides of the river, then having his engineers design a temporary bridge, though no one was allowed to call it that. The inflatable device could be thrown from extended dock to extended dock in no time, completing the railroad that ended on one pier and began again on the other. According to Life, “The whole contraption could be taken up or down in three hours.” When United Fruit complained to Honduran officials, saying Cuyamel had built a bridge without a permit, Zemurray smiled and said, “Why, that’s no bridge. It’s just a couple of little old wharfs.””
3) Sam sold out to a larger competitor at the peak of the market, right before the great depression . Alas, the bureaucrats ran the business into the ground, and he had to come out of retirement to take over the larger business that had once acquired his(hence “The Fish that Ate the Whale”). This led to perhaps one of the greatest moments in the history of shareholder activism:
Wing welcomed Zemurray without looking up, greeting him, as Thomas McCann characterized it, “frostily at best.” Zemurray waited as the board went through its tasks. When it was finally his turn to speak, he chose each word carefully, explaining his ideas in the thick Russian accent that he never could shed. It was the accent of neither the Russian bourgeois nor the peasant; neither the voice of Tolstoy nor the voice of Khrushchev. It was the voice of the Jewish Pale of Settlement, the Yiddish-inflected voice of our grandparents, the fruit peddler, the street haggler, the Yid. When Zemurray finished, Wing smiled and said, “Unfortunately, Mr. Zemurray, I can’t understand a word of what you say.” The men at the table started to laugh. Zemurray’s pupils narrowed to pinpricks, his hands turned into fists. He muttered, then stormed out. Perhaps the board members believed Zemurray had been chased away, was fleeing back to New Orleans. In truth, he had only gone to retrieve his bag of proxies. Returning to the boardroom, he slapped them on the table and said, “You’re fired! Can you understand that, Mr. Chairman?” What followed was the sort of graveyard silence in which each board member recalculated his own prospects. “You gentlemen have been fucking up this business long enough,” Zemurray told them. “I’m going to straighten it out.” Much later, analysts pointed out the flaw in the noncompete clause Zemurray signed at the time of the merger: it barred Zemurray from working for a rival or starting a new fruit company, but it did not foresee the outlandish possibility of Zemurray taking over United Fruit itself. “[I didn’t want to watch] the greatest company in the world go to hell in a hand bucket,” Zemurray explained.
4) Sam learned the details of banana business better than anyone. When Sam was looking to acquire land in a country, he traveled across it on a mule “because he wanted to know the terrain, get his hands in the black soil”. In contrast, his competitors often made their decisions relying on second or thirdhand hearsay, managing tropical operations from an office in Boston. In order to get an informational edge, he would go to bars where the rank and file workers drank.
5) Sam was an innovator, and his rise also exemplifies the advantages of being nimble, and nonbureacratic:
Cuyamel was superior to United Fruit in a dozen ways that did not show up on a balance sheet. U.F. was a conglomerate, a collection of firms bought up and slapped together. There was a lot of redundancy, duplication of tasks, divisions working against divisions, rivalries, confusing chains of command. Cuyamel Fruit was the Green Bay Packers by comparison. Every decision was made with confidence and authority. Zemurray could move without waiting for permission or a committee report. He could take risks without fear of losing his job. He could hire or fire with surety because he actually lived in Honduras and knew the situation on the ground. It was a contrast of styles: the executives who ran United Fruit had taken over from the founders and were less interested in risking than in preserving. Zemurray was the founder, forever on the attack, at work, in progress, growing by trial and error, ready to gamble it all. The difference was best seen on the plantations, where Zemurray was constantly inventing. Most people, looking at a banana, see a delicious fruit. When Zemurray looked at a banana, he saw room for improvement. He innovated banana farming, which had not changed since the first days of the trade…
His politics got weird later in his life as he expanded his empire, leading to the term “Banana Republic.” But the key lessons of his metoric rise from banana scraps to tycoon remain. If you read one business biography this week, read
The Fish That Ate the Whale: The Life and Times of America’s Banana King.