I'm reading The Box (Marc Levinson), a book about the history of containerised shipping. Some of the early chapters focus on Malcom McLean, often credited (inaccurately but not without reason) with inventing containerised shipping.
Something that stuck out to me were the eerie parallels with certain lonE skuM who have been in the news a lot lately. McLean was:
- A businessman, not an engineer or inventor
- Much wealthier/more propped up by family influence and the resultant opportunities than his later attempts at spinning a personal history would suggest
- Kind of an asshole, reading between the lines
- Known for doing the unexpected -- his insight, such that it was, was in rethinking what shipping companies did (as the book points out, they were generally thought of as being in the business of operating ships rather than moving cargo, and the mindset shift was significant)
- Interested doing very sketchy things to circumvent troublesome government regulation
- The bar-setter for how leveraged buy-outs happen today
Some of it is quite uncanny.
Thoughts on this:
- This has given me (vomit) slightly more appreciation for Musk. Specifically in the context of the valid criticism that's often thrown at him: he hasn't really invented anything. Which is true! It's wrong to present him as some visionary engineer or inventor! But also, McLean did still do something significant without 'inventing' anything in the sense we mean.
- (That comparison dies pretty quickly on the lips, though. The best thing I can really say for Musk, even through this lens, is that he's brought a bunch of smart people together at SpaceX and, in spite of his horrible management style and general lack of competence exhibited these past weeks, managed to not get in the way too much. I do wonder, though, what a less horrendeous person with access to the same resources might have enabled to happen. Though, I suppose you don't get those resources without being a horrendous person.)
- Unlike Musk (and this is where you can breathe a sigh of relief as I reveal I haven't had a brain transplant), McLean seems to have actually known what he was doing and been moderately smart and savvy as a businessman. He was obsessed with cost-cutting and finding ways of eking economies out of a legacy business. And he was good at it. Box feels like it's trying not to be hagiographic about McLean, but there is a certain element of these stories at a remove that still do make them feel quirky and inevitable, and thus the man feel like more of a visionary, whether or not that was actually true. We basically write these myths about Musk now*, though, but at least people seem to be wise to his general incompetence as well.
- And the leveraged buyout thing, I mean come on:
National City's headquarters on wall street, wits-ton advised that McLean himself would have to convince the bank's top loan executives to approve the loan. The bankers told McLean that the loan was too risky and Wriston too inexperienced. "He's just a trainee," one of them said. "He may just be a trainee, but he's going to be the boss of both of you pretty soon," McLean shot back. As McLean remembered later, "They said, 'Maybe we'll take another look."
The loan was approved. But the deal was still not done, and a competing buyer, also financed by National City, had grown interested in Waterman. To avoid any chance of a slipup, the lawyers decided that the entire transaction needed to be completed simultaneously. On May 6, Waterman's board and McLean's bankers and lawyers convened in a Mobile boardroom only to realize that the board lacked a quorum. One of the Wall Street lawyers quickly took the elevator downstairs, stopped a passerby, and asked whether he wanted to earn a quick fifty dollars. The man was promptly elected a Waterman director, making a quorum. The Waterman board members then resigned one at a time, with each being replaced by a McLean nominee. The new board immediately voted to pay a $25 million dividend to McLean Industries, and with a phone call the money was wired to National City. As the meeting broke up, lawyers for the opposing bidder served the board with legal papers to prevent the transfer of the dividend, but the bank already had its money and McLean had Waterman. Typical of McLean's financial acumen, he laid out only $10,000 of his own cash to gain control of one of the country's largest ship lines through what later became known as a leveraged buyout. "In a sense, Waterman was the first LBO," Wriston recalled
McLean's prize was a formerly debt-free company whose bank loans and ship mortgages soared to $22.6 million at the end of 1955, nearly ten times its $2.3 million of after-tax income.
—The Box, Marc Levinson, p.61