Welcome back to another edition of Will’s book reviews.

This week we’re covering The Fish That Ate The Whale, the story of Samuel Zemurray, aka the “Banana King”. In it, we see classic themes such as the American dream, lean startups vs. bloated corporations, and corporate colonialism, set against a backdrop of explosive growth in Banana consumption in the USA.

It hadn’t occurred to me that demand and supply curves apply to food products broadly. Recently, Quinoa got super hot. My mom’s from Bolivia, one of the top Quinoa producing countries. I wonder if there’s a Quinoa Qing out there somewhere, sitting on a mountain of money watching San Francisco parents shovel his wares into their children’s mouthes….who knows? It is a high quality carbohydrate, relative to most.

ANYWAY-let’s talk about the Banana King. Sam is a Russian jewish immigrant, who comes to the USA and settles in New Orleans. Ever the hustler, he is hardened in his teens by difficult life in the early 1900’s. One thing I admire most about Sam, evident in his first banana business as a teen, is his willingness to bet the house. He spent his entire life savings for 1 shipment of undervalued bananas, and sat with them in the train on the way from Central America —> New Orleans, intending to flip them. Luckily, he sold them for a tidy profit. He was right. Now granted, he did his homework. He talked to people on the docks, day after day. He talked to all the merchants, the corporate guys, the vagabonds, everyone. He built conviction, then he went all-in.

What does this tell us about him?

  1. He was not afraid to fail

  2. He embraced due diligence

  3. Small victories didn’t get him excited

I think I’m there on 2 & 3. But I have failed a few times in business, and I think it’s shrunk my risk appetite. When’s the last time you went ALL-IN on something? So many people spend a lifetime considering a risky opportunity. Bump that. Find a skillset that’s anti-fragile and you can fall back on, then go all-in. I’m thinking about this a lot heading toward my 30th birthday next year.

Our Banana King’s business grew and grew, while United Fruit – the dominant conglomerate of the era, stagnated. Sam innovated many banana farming techniques, based on his experiences. In contrast, the UF team based in Boston, attended shareholder’s meetings. Sam lived in Central America, he sweated in the fields, swung a machete, and ate god knows how many Big Mikes, a now defunct banana species, the trademark of his company, Cuyamel Fruit. The lesson is: stay in the weeds.

To me, the not so obvious lesson is documenting the magic – what is our competitive advantage today? In a year, ask the same question – is the answer the same? Are we losing a grip on what we previously had? That’s ok, as long as you have a new competitive advantage, and know how to use it. It seemed almost too easy for Sam to outpace United Fruit, even though they ultimately bought his company. I really liked one passage from the book that talked about the lifecycle of a corporation as the lifecycle of a man, that it rarely lasts beyond one generation. Perhaps the lesson is to study any company that’s lasted longer, like one I visited today, Tillamook Dairy. 100+ years old, makes cheese, yogurt, ice cream, not that sexy. But there’s something to these multi-generation companies that I will learn from.

As Sam got big enough, his business greased the wheels of Central American politics. He negotiated with whoever was in power, gave them kickbacks, and they helped him avoid taxes. Avoiding taxes meant that he could compete with United Fruit’s prices. Surely I think, his willingness to live like a Central American made a big difference in these negotiations. They called him El Gringo, but affectionately. United Fruit didn’t appear to make an effort to get their own cool nickname. As he won the war of public opinion, he won the war of bananas. However, Honduras – his principal place of business – eventually had to impose tariffs because they owed the British a lot of money. These tariffs would go straight to Britain, to help pay off this debt. Problem is, tariffs as low as one penny per bunch of bananas rendered Cuyamel unable to compete with United Fruit’s prices.

What is a businessman to do when global politics impact the bottom line? THAT is one of the biggest questions of the book. You have shareholders – you should protect them. Countries have citizens, they want to protect them. Cuyamel got 100% of their supply from Central America, land it had purchased “legally”, it hired local workers, it gave them autonomy. The region was key to their business, and a leader who threatened that, was not a leader they could tolerate. Of all things, Sam was quite ruthless. I don’t think I have the gall that he does, but we live in different times now.

First, he tried diplomacy, he talked to Secretary of State Philander Knox. Knox wouldn’t have any of it, and denied him. What is an iron willed immigrant to do? Steal away in the dead of night, organize a military coup, and institute a leader that is friendly to Cuyamel Fruit? Yup, he did exactly that, making Manuel Bonilla the leader of Honduras. It seems ridiculous that this happened, but it happens again later in the book, and this time, the United States government orchestrates it. Under the blanket of anti-communist sentiment, the US has done this a few times. It is what it is.

I won’t say it’s the right thing to do, but I love that Sam had the gall to do it. I like to say this about controversial figures – there’s always something to admire. Ignore the bad, take the good, Bruce Lee style. Take Trump – I admire how good he is at riling people up. All-time great! I can admire that about him, while not agreeing with everything he says or does. Sam Zemurray has insane levels of agency – he changed things most would consider unchangeable. That’s a lesson for all of us to learn.

Eventually, United Fruit buys him out – mostly to keep him on the sidelines. But he won’t tolerate incompetence, and as his payout in UF shares of stock dwindles in value, he gets pissed off. Again, what would a normal person do? Sell their shares! Take the cash – start something else. Become an advisor to other transnational companies. No – Sam collects proxies from other shareholders, and stages a corporate coup, firing the United Fruit management and assuming control himself.

I can’t say he’s the first, but definitely one of the first men who represented his company as much as the company represented him. Just like Apple, whose magic came from Steve Jobs, the Cuyamel / United Fruit company needed Sam. Once he took over, the share price spiked. He then tripled it in just a few years. He led it for 25 years, to new heights of prosperity. There’s good to this, and bad to this. He tried to retire a few times, unsuccessfully. Things didn’t go right without him. Maybe he could have done a better job creating a system documenting what made him great – ala the E-myth we’ve explored before. Maybe he was just such a personality that no system could contain him. I can’t say.

What I can say is that I deeply admire his work ethic, his self belief, and the agency he demonstrated for good or bad. He moved mountains, changed governments, and toppled industry giants in the pursuit of being in the history books. I’ll chalk those up as W’s.

Thanks for reading!


Book Review 7: The Fish That Ate The Whale