Thrive: 30 Inspirational Rags-to-Riches Stories

John D. Rockefeller, Sr.

John Davidson Rockefeller, Sr. was born in Richford, New York. His father was a travelling salesman and con artist, commonly known by the locals as "Big Bill" or "Devil Bill," who identified himself as a botanic physician and sold elixirs to his victims. His mother was a homemaker and devout Baptist who struggled to create a sense of stability in the household, largely due to Bill's extended traveling and philandering. John's family moved frequently throughout New York before settling in Strongsville, Cleveland, Ohio.

The second eldest of six children and the eldest son, John did his share of household chores, including raising turkeys, selling potatoes and candy, and lending sums of money to neighbors. Bill instilled in John and his siblings, whenever he was around, to think big and to always get the better part of any deal. His father once bragged, "I cheat my boys every chance I get. I want to make 'em sharp." John developed a sense of frugality from his mother, who often purchased goods via a credit line at the local store, due to Bill's extended travelling. John was also advised by his pastor to make as much money as he could, so he could contribute to his church and to charities.

At sixteen years old, John searched for his first real job in Cleveland. Always neatly dressed in a dark suit and black tie, John visited the same businesses three times before landing an assistant bookkeeper position with Hewlett & Tuttle, commission merchants and produce shippers. John immersed himself in the position, working long hours and learning all of the methods and systems of the office. He impressed his employers with his seriousness and diligence. He went to great lengths to collect overdue accounts. Although he was not well-paid for this job, whatever money he earned, John gave to his church and to local charities.

At twenty years old, John set out on his own. After raising $4,000 from investors, John started a produce commission business, Clark & Rockefeller, with his business partner and neighbor, Maurice Clark. In 1860, at the end of their first year in business, the company grossed $450,000, with a profit of $4,400. The following year, the company earned $17,000 in profit. John heavily borrowed money from banks to expand the business. However, John realized that the commission market business in Cleveland was going to be limited. He became convinced that railroads would be the primary transportation for agricultural commodities. He also believed the future of Cleveland would lay in the collection and shipment of raw industrial materials, not agricultural commodities.

On August 27, 1859, Edwin Drake struck oil near Titusville, Pennsylvania, which started a frenzied oil boom. Although the technology Drake used was not new, the idea of pumping oil out of the ground, like with water, was. John investigated the feasibility of entering the oil refining business in 1862, and the firm Andrews, Clark & Company was formed in 1863. John believed the key to success was a strong attention to detail and ironing out all of the inefficiencies for every business. At twenty-four years old, John bought out the Clark Brothers share for $72,500 and gained complete control over the business. He heavily borrowed money from the banks and invested all of the profits back into the business to expand his empire.

In 1866, John brought his brother, William Rockefeller, into the business, and they built another refinery in Cleveland named Standard Works. They opened a New York City office, with William in charge of the company's exporting business. In 1867, Henry M. Flager, whom John worked with in the commission market business, was added to the partnership, and Rockefeller, Andrews & Flager was formed. Flager's wife's uncle became a silent partner and made substantial investments into the partnership.

John realized that the only way to make money consistently was to make the business as large as possible and to fully utilize all of its waste products. He cut efficiencies down to the smallest detail. The partnership built high-quality refineries using the best materials and owned their own cooperage (barrel-making) plant, which cut the cost of a barrel from $3.00 to less than $1.50. The partnership also owned tanks, warehouses, boats, and their own drayage service to transport their oil. On January 10, 1870, The Standard Oil Company of Ohio was formed by John D. Rockefeller (30%), William Rockefeller (13.34%), Henry Flagler (16.67%), Samuel Andrews (16.67%), Stephen Harkness (13.34%), and O. B. Jennings (brother-in-law of William Rockefeller) (10%). At the time of its formation, the company held a 10 percent market share in the oil business and expanded by acquisition. By 1872, the company had quietly absorbed most of the oil refineries in Cleveland. The company also built its own pipeline system to more cheaply and efficiently distribute their oil.

In response to state laws limiting the scale of companies, John and his associates created innovative ways to manage their fast-growing enterprise. On January 2, 1882, they combined their disparate companies, spread across dozens of states, under a single group of trustees, entitled The Standard Oil Trust. By 1904, the trust had installed a nationwide distribution system that served 80 percent of all American homes and businesses. At its peak, John's company held a 90 percent market share of the oil industry. The Standard Oil Trust was eventually dissolved in 1911, under the Sherman Antitrust Act, and split into thirty-four individual, independent companies. ExxonMobil, Chevron, ARCO, Marathon Petroleum, and Imperial Oil are all direct descendants.

John D. Rockefeller, Sr. is widely considered to have been the richest man in history. Until his death in 1937, John's assets equaled 1.5 percent of America's total economic output, the equivalent of $340 billion today.