Samuel Insull

Treat workers generously and humanely for sound economic reasons, not sentimentality. Discontent breeds stoppages, and stoppages are inefficient, irrational, and costly.

Insull pioneered welfare programs years before most businesses took significant steps in this direction. He treated workers well not from emotional benevolence but because he understood that labor unrest disrupted operations and increased costs. This approach reduced friction and kept his plants operating efficiently during periods when competitors faced constant labor problems.

Use financial instruments creatively to overcome resistance to capital requests. Reframe proposals to make large asks seem smaller and less threatening.

When the board refused Insull's request for $100 million in bonds, an advisor suggested he ask for an open-ended mortgage with no specified limit instead. This reframing made the request seem more conservative, and the board approved it. Over time, Insull issued half a billion dollars in bonds under this structure, five times the original request they had rejected.

Understand that leverage is addictive. Once you profit from leverage, few people retreat to more conservative practices. Excessive leverage can destroy brilliant careers when credit conditions change.

Insull began his career using leverage modestly to finance expansion. His early borrowing proved profitable and he expanded more aggressively. By the late 1920s, he had become addicted to leverage, borrowing $200 million in 1930 alone during the Great Depression. When banks could no longer refinance his debt, his entire empire collapsed, turning a $150 million personal fortune into bankruptcy and indebtedness.

Never pay cash when you can give a note. Use leverage to accelerate growth and expansion when you have confidence in future cash flows and expansion.

Insull made borrowing a deep-rooted habit early in his career. When Edison asked him what salary he wanted, Insull said, 'Pay me whatever.' He was more focused on proving his worth than extracting maximum immediate compensation. This borrowing habit allowed him to expand aggressively, but it also became the fatal flaw that destroyed his empire when credit conditions tightened.

“Never pay cash when you can give a note.”

Focus on your core industry and resist diversification if you have superior understanding of your market. Deeper knowledge of one industry compounds advantages far more than spreading attention across many.

While competitors diversified into unrelated businesses, Insull remained focused on electricity for 53 years. He understood the electricity market's potential far better than competitors. His most optimistic competitors estimated a maximum of 25,000 customers in Chicago, while Insull correctly anticipated a market of millions. He vertically integrated within electricity (buying equipment manufacturers and traction companies) but never pursued unrelated businesses.

Build a position by acquiring valuable assets (equipment, customers, talent) that strengthen your competitive moat. New properties can be more valuable than cash for acquiring executives and infrastructure.

When Insull acquired competitors, he wasn't just buying equipment and customers. He was acquiring talented people who could help him operate and expand. New properties became the most prolific producers of executives within his organization. This approach, similar to Rockefeller's strategy, turned acquisitions into leadership pipelines.

Service first builds relationships with powerful people. Rather than asking for favors, work excessively hard to provide value and gradually earn access to influential networks.

Insull gained proximity to Thomas G. Bowles, editor of Vanity Fair, by volunteering to work as his nighttime stenographer without pay. He would work his full-time day job, then transcribe Bowles' notes at night, sleep four hours, and deliver materials to printers before his next job. This service-first approach eventually connected him to Edison's chief engineer and led to his role as Edison's private secretary.

Educate your customers about the value and complexity of your product. Most customers cannot judge service and rates when they know nothing about the details involved in delivery.

Insull established a public relations department and published Electric City magazine, distributed free to tens of thousands. He made public appearances constantly to educate customers about the electricity business. He understood that customers who understood the complexity of generating and distributing electricity would value the service more highly and support favorable regulation.

“Unless you conduct your business as to get the goodwill of the community in which you are working, you might as well just shut up shop and move away.”

Create visibility through rate cuts and operational improvements. Customers and the press will provide free advertising when you deliver tangible value like lower prices.

The most effective public relations tool Insull employed was not advertising but voluntary rate cuts. When he reduced prices, newspapers covered the story extensively, creating publicity he couldn't have purchased. This mirrored Henry Ford's strategy: instead of paying for ads, constantly improve operations and reduce prices, letting the market provide free publicity.

The moment of applause is the moment for action. When you have public goodwill and support, use it immediately to advance your strategic agenda before sentiment shifts.

Insull understood public relations deeply. When he was popular with the public due to falling electricity rates, he initiated the movement for utility regulation in the United States. He recognized that public goodwill was a temporary asset to be used strategically. He pushed regulatory frameworks during his moment of highest popularity, securing favorable structures before attitudes could change.

“The moment of applause was the moment for action.”

Absorb information systematically and commit it to memory. Develop the ability to read through large volumes of material quickly, identify key assumptions and generalizations, and assimilate important details.

Insull had a gifted deductive mind that allowed him to race through large quantities of reading material, perceive important assumptions, and thoroughly assimilate salient details. He would systematically go through every scrap of paper in the office about Edison's business and commit it to memory. When Edison's chief engineer arrived from America, Insull knew more about Edison's European business affairs than the manager did.

Opportunity handled well leads to more opportunity. Excel at your current task, no matter how small, because demonstrated competence creates the foundation for advancement.

Insull became an expert stenographer, which caught the attention of his employer's connections and led to work with Thomas Bowles. This small success led to work with Edison's chief engineer, which eventually landed him a position as Edison's private secretary at age 21.

“Opportunity handled well leads to more opportunity.”

Completely lack the sense of caution that doubt brings. Doubting yourself is dangerous and can prevent you from attempting things that might otherwise succeed.

Insull had a trait that was absolutely unable to imagine the possibility of his own failure. He entirely lacked the sense of caution of those who doubt themselves. His family and friends warned him not to leave England for America without knowing his job or salary, but his conviction was absolute. This confidence enabled his early successes but also contributed to his failure to take precautions against the Great Depression.

“He was absolutely unable to imagine the possibility of his own failure.”

Do everything and you will win. Master every skill available to you, even small ones, because mastery of current tasks opens doors to bigger opportunities.

As a teenage office boy, Insull didn't just file papers. He became an expert stenographer by practicing nights and weekends. He then taught himself bookkeeping by purchasing courses and keeping imaginary double-entry books to practice. Each skill he mastered made him more valuable and attracted better opportunities.

“Do everything and you will win.”

Develop the ability to concentrate on a single subject and completely shut out everything else, no matter how pressing. Focus is increasingly rare and powerful.

Insull learned to concentrate completely on whatever task was in front of him, filtering out distractions. Combined with his demonic energy and work ethic, this focus made him extraordinarily productive. He would systematically go through documents and internalize them completely, or work through a problem until it was solved, regardless of competing demands.

Systematize and render efficient whatever you deal with. Build systems that improve operations and reduce waste in every aspect of your business.

Insull was brought into Edison's company to systematize the business around the inventor. He learned to systematize and render efficient whatever he dealt with. Later, people would bring him into other companies knowing he could build systems to make every operation more efficient without needing to manage Edison's creative process directly.

Spread fixed costs as thinly as possible through diversification and vertical integration of related operations. Keep plants busy by expanding into complementary businesses that use the same infrastructure.

Insull bought equipment manufacturing companies that his generating stations needed to purchase from. He acquired electric traction companies (trolleys) that used electricity. This vertical integration wasn't about diversification for diversification's sake. It was about filling unused capacity in his plants and distribution network, effectively spreading his massive fixed costs across more revenue-generating activities.

Beware the trap of past success. If you have survived multiple financial crises with profitability intact, you may incorrectly assume future crises will be similar. Each downturn can be fundamentally different.

Insull had weathered multiple financial panics (1893-1894, 1907, etc.) and had prospered during some of them. When the Great Depression began, he called to the White House with other businessmen and was told to conduct business as usual. Believing this crisis was like previous ones, he continued heavy borrowing and expansion when he should have contracted. This wrong lesson from history proved fatal.

Acquire competitors strategically, prioritizing the largest and most threatening. This creates market leadership and eliminates the strongest competition quickly rather than gradually.

In his first year as Chicago Edison's president, Insull bought the second-largest competitor. Three months later, he bought the first-largest competitor. This followed the strategy of John D. Rockefeller in oil: knock out the top competitors quickly rather than gradually acquiring smaller rivals. This created a dominant position that made subsequent acquisitions easier.

Turn a luxury product into a necessity by making it universally cheap and abundant. This requires scale, low prices, and a business model that spreads fixed costs across the largest possible customer base.

Insull's fundamental insight was that electricity should not be a luxury product for the rich but a necessity for everyone. He famously said, 'We will make electric lights so cheap that only the rich will be able to burn candles.' He achieved this by building monopolies that allowed him to invest in large generating plants and spread fixed costs across millions of customers, enabling him to cut prices constantly.

“We will make electric lights so cheap that only the rich will be able to burn candles.”

Use money to turn enemies into neutral parties. Pay defeated competitors more than their assets are worth to prevent them from becoming adversaries.

When smaller electric stations in Chicago failed during financial difficulties, Insull paid them more for their plants than they were worth. This was not benevolence but calculated strategy. He recognized that while money may not buy friends, it prevents people from becoming enemies. Competitors who were treated generously in defeat were less likely to create problems for his growing monopoly.

“Money may not buy friends, but it will keep many a man from becoming an enemy.”

Sell products at prices so low that they create volume to justify the investment in infrastructure and scale. This requires deep confidence in your ability to reduce unit costs through volume.

Insull sold electricity at rates so low that they appalled other utility operators. He believed that lower prices would bring greater volumes, which would lower unit costs and yield greater profits. He proved this belief correct by constantly cutting rates as his scale increased, making electricity so abundant and cheap that it became a necessity rather than a luxury.

“Sell electricity at rates so low that they appalled other Central Station men.”