(Transcript) Peter Kaufman Speech at the Redlands Forum

If you’ve visited my compilations page, you’ll know that Peter Kaufman is one of the people responsible for my compilations. He encouraged me to take copious notes, organize them, and write them up. He doesn’t write/speak publicly often, but when he does, you’d be wise to listen.

For those who don’t know him, Peter is the longtime chairman and CEO of Glen-air, a multi-billion-dollar aerospace company that creates and distributes mission-critical interconnect solutions. He is also the editor of Poor Charlie’s Almanack (which I have based many of my compilations on), one of the greatest books of all time, and recommended by people such as Warren Buffett, Lu Li, Bill Gurley, Bill Gates, Naval Ravikant, and Josh Wolfe.

This is a transcription of the speech given by Peter at the Redlands Forum on 1/16/2020.

A transcript of the Q&A can be found here.

*Transcribed 7/10/2020
**Lightly edited; any errors should be attributed to me

And if you want more from me, you can follow me on Twitter @kevg1412, or subscribe to my substack A Letter a Day, where I share some notes on one of the letters from my compilations each day.

An Unsung Hero

This is our unsung hero by the way [holding up a booklet with a picture of man on its cover], and the mystery is: who is this man? Because I’m going to argue that this man has had more of an impact on all of our lives here tonight than almost anybody else we can think of. and yet, unless some of you are very astute historians, my guess is you’ve never heard of this man.

Now, to properly frame this talk, I have an apple. There’s this beautiful Zen line that I really love. it says that anyone can count the number of seeds in an apple, but very few can count the number of apples in a seed. Isn’t that beautiful? Okay? So the first half, counting the seeds in an apple, that’s a finite life. The second half, counting the number of apples in a seed, is an infinite life, additive sum. And this man I’m going to talk about tonight, boy did he ever nail the infinite life, did he ever leave the world a better place than he found it.

By the way, as you leave tonight, you [can] all take home a copy of the story, okay?

From 1880 to 1888, these are ages 27 to [34] of our unsung hero. He was the uncommonly honest, pious, and hard-working pastor of the lowly Central Baptist Church in Minneapolis, Minnesota. He was not without a sense of humor, saying his church was mainly populated by those made to feel unwelcome at the fancy First Baptist Church of Minneapolis. He was born on July 2, 1853 in Broome County, New York. Graduated from the University of Rochester in 1877, and from the Rochester Theological Seminary in 1880. He was obsessed with living a life completely aligned with strict religious beliefs, and in his first stint as a pastor he was working himself to exhaustion. But this extreme ethic – work ethic and piousness was noticed around town. And one day [as] he’s working in his office, there’s a knock on the door. And he looks over to see who’s coming in, and he is shocked, absolutely shocked, to see it is George Pillsbury. The leading citizen of Minneapolis, the flour baron. Now, George Pillsbury was not one of his congregants. Where do you think George Pillsbury went to church? Exactly right. Jack, Laura, this is a very astute audience you have here tonight.

An account survives of this meeting in our young pastors own hand. The effects that still unfold from this meeting, 132 years ago, [continues] to profoundly affect all of our lives here tonight, and all those in America. In fact, I would argue, that such effects are among the most impactful and transformative in American history. Now you are probably thinking, Peter’s setting the bar way too high here, okay. How in the world is going to live up to this intro? But we’re going to clear that bar. Now if you’ll bear with me for a minute, I’m going to do a little side bar. Before I recount the events of that historic meeting, I want to take a short detour, and I think it’ll be worth it. It’s the why.

Just why was this man able to do all the amazing things that I’m going to tell you about tonight? I say the answer comes from simple chemistry. A chemistry model that perhaps offers the greatest potential for self-improvement for any human being. And I hope after you hear this chemistry model, I hope you share it. With your children, your grandchildren, with everyone you know. Because I think this is the best pathway to self-improvement that’s available to any of us.

Now, in chemistry there’s a scale of hardness called the Mohs’ scale. M-O-H-S.

Diamond is the hardest substance, it’s a 10, and baby powder is the weakest, it’s a 1. Now on the Mohs’ scale of hardness, tin, which I just happen to have, some tin here, is only a 1.5 on the Mohs’ scale of hardness, it’s very weak. I’m going walk all the way over here, as far away as I can get. I’m going to put the tin there, and while I’m walking all the way over here, I’m going to talk about copper. Copper on the Mohs’ scale is only a three. If we have a 1.5 over there and a three over here. why am I separating these two like this? Because in nature, for whatever reason, tin and copper are not generally found in the geographic proximity of one another. And as I will ultimately connect up, that’s the beauty of this model. they’re not generally found in the geographic proximity of one another.

Now, somewhere all along the line in history, somebody had a very bright idea: I wonder what would happen if I went way over here and got some tin, and then went way over here, reached way across, to something not generally found in the geographic proximity of tin, namely copper, and I blended them together. Now arithmetically, what should we get? 1.5 plus 3 is 4.5, divided by 2 to get the average, we should get 2.25. Do we get 2.25? No. I wouldn’t be telling this story, would I, if you have 2.25.

Does anybody know what you get when you blend tin and copper to get – not Dave Sorensen. Dave Sorensen is an expert in metals. Brass is close, but not – bronze – who said bronze? You see me afterwards. I have a prize for you.

You get bronze. Now, does anybody know what bronze is on the Mohs’ scale of hardness? We know it’s not 2.25. I’ll give you a hint – who said 6? You see me afterwards as well.

It’s a 6. Iron is 5.5. Can you imagine taking two independent characteristics, neither of which is all that powerful, and putting them together in just the right way, and getting a 6? Now, in physics, they have a name for this. It’s called a leaping emergent effect. Now, what if in your own life you could put together some characteristics and become bronze yourself? Become a 6? What would you need to do? Well, you need to identify what kind of a person am I? Am I tin? Am I copper? What would I need to reach across and blend into myself? Okay?

Now, in terms our unsung hero, I’m going to argue that the reason he was able to accomplish what he did, and the reason you’ve never heard of him, is because what he blended in together was something you almost never see. He understood the world from the bottom up, and he understood the world from the top down. In the military, we see NCOs. they understand the world from the bottom up. We see generals, they understand the world from the top down, okay. They’re fighting with each other all the time, aren’t they? And every once in a while, you get a George Marshall. What was George Marshall? He was bronze, wasn’t he?

He understood it from the bottom up, he understood it from the top down. And our unsung hero’s one of the best in history at blending bottom up understanding and top down understanding. but that’s also why you’ve never heard of him. Because the people who blend these two characteristics together, are they ever a self-promoter? No they’re not, are they?

This auditorium that we’re in tonight, this building that we’re in tonight, who were they built by? This couple over here. They have that rare combination, don’t they? They understand everything from the bottom up, they understand everything from the top down. Are they self-promoters? No. This is a beautiful combination. I wish the world was full – I wish our country was full of bronze leaders, but it isn’t.

We’ll go back to our story now.

I’ve told this story 50 times, and every time I tell it, it surprises me again. I said this is impossible, one human being could not do this. Okay, here’s what happened when George Pillsbury comes in. These are the words of our unsung hero, from his memoirs, word-for-word.

Mr. Pillsbury said he wished to have a little conversation with me, which he would be glad if I were to regard as confidential. While to outward appearance he was hale and hearty, such he said was not the fact. His physicians had warned him of an insidious and incurable disease that must in no long time terminate his life. In other words, he’s dying. He said he had made in his will a bequest of $200,000 towards a Baptist Academy, an educational project. But, he said, I’m concerned my gift will be neglected, and I’m contemplating a change in my will. I don’t trust these people. I don’t want to leave them $200,000. I don’t trust these people.

Okay? Why is he talking to our young guy? Because I trust our young guy. I’ve watched our young guy. There’s nothing not to trust about our young guy, who’s 34 years old.

He said he had come to me for any counsel I might give him, or were his doubts justified? if so, could I suggest a way of correcting the situation as to render it more assuring. I asked him to give me a little time for reflection on his problem.

Okay, now this is me talking. I have a deep, deep background in development work. I’ve chaired several capital campaigns and advised many others. But I am aware of no story that approaches the one you’re about to hear when it comes to sheer top-down bottom-up genius in development work. Like a first domino, the way our pastor responds to Pillsbury’s problem sets into motion a series of effects that forever change the young man’s life, and in turn the whole world.

Remember, he’s only 34 years old, but already the George Pillsburys of the world are noticing the unusual combination of factors present in this young man and seeking him out for counsel. So what does our pastor do? He goes to work on his assignment. he embarks on a due diligence tour to understand every last nook and cranny of what the educational structure should optimally look like in the Minnesota area. His tour brings him into contact with every Baptist of note in the state.

From this huge bottom-up dataset he amasses, he develops a sound top-down big-picture plan and submits it back to George Pillsbury. Here in his own words is the four-part plan he submits. Not just for any Baptist Academy, no. For the optimal Baptist Academy.

Such an academy must be well endowed and equipped. A much better school than the ordinary high school. It should be modeled on such great Eastern schools as the Phillips Exeter Academy. Similarly, with hundreds of thousands in endowment. To convince Minnesota Baptists of the value to them and their children of a well-endowed Academy, a series of popular addresses can be given from influential pulpits.
Success for such an Academy will only be assured if local Baptists themselves contribute a considerable sum. where your treasure is, there will your heart be also.
Instead of your $200,000 pledge, Mr. Pillsbury, you should offer conditionally to give say, $50,000 to the Academy, provided the Baptists of the state first contribute an equal sum. funds that I will go out and raise myself.
Of the hundred thousand thus raised, half should go into a needed new building and the other half into endowment. With proper safeguards in place that all this proves successful, with confidence, you can then safely leave the remaining $150,000 in your will.

This is awesome. Just awesome. Superb top-down and superb bottom-up. In the history of large-scale development, has anyone ever turned down a major gift in exchange for the privilege of going out and raising a big chunk of money themselves, only then to be matched and then propose contingencies for the remaining estate gift?

Needless to say, George Pillsbury is bowled over. Our young pastor gets the green light. He forms the committee. He heads it up. He speaks everywhere to talk up the plan. From bottom to top, he raises the money, inspiring and energizing the community. These instincts as we will see, for informed engaged top-down bottom-up interaction, will go on to benefit him enormously.

The project succeeds. Magnificently.

His work comes to the attention of a group of Chicago-area Baptists, including Dr. William Rainey Harper, who have been trying for years to interest New Yorker John. D. Rockefeller, the richest Baptist in the world, in founding a Midwestern Baptist University – one to rival the Ivy League schools of the East.

But they have been singularly unsuccessful in such asks to the oil titan. In fact, they have been so clumsy, Rockefeller has banned them from ever calling on him again. But in watching the awesome development skills of this 34 year old pastor, Harper and his group think they may have a second chance.

Young pastor, they ask, will you go see Mr. Rockefeller on our behalf?

Armed with a formal letter of introduction from Dr. Harper to Mr. Rockefeller, our unsung hero agrees to travel to New York to take a shot. But Rockefeller won’t meet with him. Refuses. I’ve been through this before. Not going through it again. However, he says, I’ve been watching you at a distance. I’m very impressed with you. if you want to write me a letter, you can write me a letter.

Our pastor writes him a letter. It’s the perfect letter. He just nails it. In previous asks, Rockefeller has been repulsed by the haste advocated by Harper and others. too big, too fast. Not respecting the details. in stark contrast, our pastor’s letter suggests a methodical, bottom-up, incremental step-by-step approach. an exact match for Rockefellers lifelong temperament.

He says, Mr. Rockefellers ideas happen to coincide with my own. Happen to coincide? It was no coincidence. our hero is a natural. How many 35 – he’s 35 by now. How many 35 year olds have a blend of top-down, bottom-up thinking in perfect harmony with that of the richest man in the world? A financial titan who made his fortune combining these very traits himself? You can see why Rockefeller was so impressed with this letter. There’s a letter from a 35 year old – he goes: I could have written this letter myself.

Time does not allow the reading of the full masterpiece of a letter, but it survives to this day. here is the money paragraph that so resonated with Rockefeller:

“All things come to him that waits. Our best and greatest schools have developed broadly and hardly step-by-step in this way. holding the possible scope of the institution and abeyance for a few years will cost nothing, while time will of itself solved the question easily and with certainty.”

The letter is such a home run with Rockefeller it results in an invitation to go visit him in person in New York. Our young pastor makes the ask face-to-face, and the rest is history. Rockefeller becomes the funding founder of what becomes – anyone? The University of Chicago!

Our kid is all of 35 years old! He’s responsible for the existence of the University of Chicago. Would not exist without his ask. Wouldn’t have existed without the George Pillsbury exercise that came before. If our story ended here it would be worth a big fuss. Imagine a 35 year old pastor being responsible for the very existence of the University of Chicago and it’s over 100 Nobel Prizes.

But the story doesn’t end here. It only gets more and more incredible. For Rockefeller is so taken with the bronze-level talents of this young man, he requested my early removal to New York, especially to help him with his benevolences. Meaning all the people that are pestering him, asking him for money all the time. when it came to philanthropic solicitations, the tycoon was constantly hunted, stalked, and hounded, almost like a wild animal.

He relocates to New York City and is put in charge of all of Rockefellers philanthropy. Using what he calls wholesale scientific giving, he begins to steer donations towards large-scale, focused philanthropy for the betterment of humanity. More on this later – much more.

No surprise, his performance is so good – everything he gives this this kid. Rockefeller decides to put even more on his plate. Will you on your travels, Rockefeller says to him, take a quick look at some of my non-Standard Oil investment properties throughout the country?

Yes, he says. He responds by visiting three of Rockefeller’s principal non-Standard Oil investments: an iron furnace in Alabama, a mortgage on a steel mill in Wisconsin, and various mining properties in Colorado. Like a great detective, he seeks validation of the legitimacy of each property. He verifies recorded documents and county record offices. he interviews objective third party of experts. He even chats up miners on a Colorado train.

He finds most of Rockefellers investments are worthless scams pawned off on Rockefeller by seemingly upstanding Eastern individuals and investment banks. Our kid’s the only one who figured out these are scams. Now, in this thing you’re going to take home later, is the whole chapter from this man’s memoirs where he tells you how he did this. It’s incredible. It’s like reading a detective story.

Extricating Rockefeller from these messes, he turns instead to an investment area his investigations deem is legitimate: the Mesabi Range of the Great Lakes region – which Jack you and I were just talking about this this morning. Taking amazing advantage of the aftermath of the panic of 1893, one of the worst financial plunges the US has ever suffered, he commits $33.5MM of Rockefellers fortune, amassing oil resources, mines, railroads, docks and building an [oar?]-carrying fleet of sixty vessels.

In 1901, he sells the properties to JP Morgan and US Steel for $88.5MM. That’s a $55MM profit in eight years. You know what that is in 2020 dollars? It’s roughly $1.5B that this Baptist preacher with no educational background in business, no business experience to speak of, makes his employer $1.5B in eight years. And John D. Rockefeller never set foot on any of those properties.

In an era of no income taxes, he makes Rockefeller 55MM large. Such performance led Rockefeller to later say, he was the greatest businessman I ever encountered in my life. Better even than Henry Ford and Andrew Carnegie. Well this is, this is impossible, isn’t it?

This kid is responsible for the University of Chicago, he makes what’s the equivalent today of a $1.5B in eight years all by himself? Yet this is just kid stuff. In 1897, our unsung hero prepares a memo for Mr. Rockefeller, and our show really gets rolling.

The story unfolds like this: when he first went into the employ of Mr. Rockefeller, he wrote to himself: medicine, as his generally taught and practiced in the United States is practically futile. He wrote that to himself. Does he have a background in medicine? No. But he does he care about humanity? Yes.

We’ll let him tell the rest of the story.

On a whim, four years later in summer 1897, with his family in the Catskills on vacation, he revisits the subject of medicine, having brought along for leisure reading, William Osler is 1,000-page textbook: Principles and Practice of Medicine. I’m sure that we all, when we go on summer vacations with our family, take along William Osler’s 1000-page textbook.

Now we’ll let him tell the rest of the story.

I saw clearly from the work of this able and honest man, perhaps the ablest physician of his time, that medicine had in fact, with only four or five exceptions, no cures or disease. Medicine could hardly hope to become a science until medicine was endowed, and qualified men were enabled to give themselves to uninterrupted study on ample salary entirely independent of practice. To this end it seemed to me an institute of medical research ought to be established in the United States on the general lines of the work of Koch in Berlin and the Pasteur Institute in Paris. And here was an opportunity for Mr. Rockefeller to do an immense service to his country and perhaps the world.

This idea took possession of me, he says. Mr. Rockefeller entertained my suggestion hospitably, as indeed I encouraged further and further detailed inquiry. It was in this way that my name became associated with the origin of the great Institute of Medical Research subsequently founded and so munificently endowed and equipped by Mr. Rockefeller. Anybody know the name of this institution? Rockefeller Institute. It’s now Rockefeller University. New York City. 27 Nobel prizes in medical research. It was the first Medical Research Institute founded in the United States exclusively devoted to figure out what? – how to cure diseases.

We’re almost done.

In 1905, seeing firsthand the impact that Rockefeller’s immense fortune was having towards humanitarian work on a great scale, our unsung hero pursues an entirely new vision: the establishment of the first permanent private foundation.

There were no foundations back then. We’re all familiar today with the Gates Foundation and the Walton Foundation – all these big – they didn’t exist. It was his idea – there should be a permanent foundation.

Why?

He says, it was not until 1905 that I ventured with many misgivings to approach Mr. Rockefeller with the question of the use and disposition to be made of his fortune. It might be argued that I was trespassing on a domain in which I had no proper business. But to myself it was very intimately my business, for I had come clearly to see that unless Mr. Rockefeller were to make some such disposition of his fortune, for a great part of it my life was doing more harm than good.

Rockefeller’s fortune was rolling up so fast that his heirs would dissipate their inheritance or become intoxicated with power unless we set up a permanent corporate philanthropy for the good of mankind. So at last I broke my silence. I wrote a letter. It is dated June 3,1905. This of course becomes the Rockefeller Foundation, which due to its highly complex nature was not officially chartered until 1913 – actually making it technically second in establishment to the Russell Sage Foundation. However, it appears Rockefeller’s idea was first.

In any event, over the rest of his professional association with Rockefeller, as he headed up this Foundation, he oversaw the distribution, Personally, of $500MM in philanthropy to benefit mankind, exceeding the $350MM overseen by the very well-known Andrew Carnegie.

Let’s recap, and even add some more factors. There once lived a man of top-down, bottom-up understanding. A non-self-promoting man. A man of honesty, piety, aptitude, and genuine love for humanity. A man likely you’ve never heard of, because he wasn’t a self-promoter.

Was called the greatest businessman of his time above Henry Ford and Andrew Carnegie.
Was perhaps the greatest development asker of all time at age 35, responsible for establishing the University of Chicago.
Conceived the world’s first permanent private foundation, then personally oversaw $500MM in distributions – that’s over $10B in today’s dollars.
Conceived the Rockefeller Institute and it’s unique research model.
Eradicated hookworm in the American South and the rest of the world.
Established black high schools in the south that allowed graduates to attend the best southern universities.
Finally, his most important move of all – one each of us and all Americans benefit from today – he sparked the 1910 Flexner report, establishing Johns Hopkins as the model for medical school education reform, which moved American medicine from the bottom of the barrel internationally to number one where it remains today. There’s not a person in here who hasn’t benefited from that.

Talk about an infinite life. Is the world better off because this man lived? His name was Frederick Taylor Gates. Now be honest, show of hands. How many of you have ever heard of Frederick Taylor Gates? Anybody? That’s the solution to our mystery.

I thank you.

End Notes

This was Part 1: The Speech. Part 2: The Q&A can be found here.

Peter doesn’t have a public web presence, but if you enjoy this speech, the next best person to follow is Blas Moros, who works with Peter at Glenair. You can find his website here and follow him on twitter @blasmoros.

The book in question, Frederick Taylor Gates’ autobiography, can be found on Amazon. Unfortunately, it’s going for $996.99. Fortunately, Blas has written up (and read) a summary and shared his takeaways here.

And if you want more from me, you can follow me on Twitter @kevg1412, or subscribe to my substack A Letter a Day, where I share some notes on one of the letters from my compilations each day.

Additional Reading

Written by FTG