Rich Cohen shares five lessons from the Banana Man:
Samuel Zemurray, known to friend and foe alike as Sam the Banana Man, made his first fortune in “ripes,” bananas that the big fruit traders considered too mature to reach market in time for sale. Their rule of thumb was “One freckle turning, two freckles ripe” — thus consigning tons of fruit to a great reeking pile at the edge of the wharf, where it was pushed into the sea or simply left to rot.
When Zemurray, a young Russian immigrant, saw that first sad pile of ripes — circa 1895, in the port of Mobile, Ala. — he recognized his opportunity. For a man who spent his early years on a desolate wheat farm in Bessarabia, there was obvious value in even a freckled piece of fruit. By 1903, he was a mini mogul, with $100,000 in the bank.
From there, Sam went into yellows, even greens. In 1909, he headed south to Honduras, where he bought and cleared great swaths of virgin jungle and then, working with a mercenary army recruited in New Orleans, overthrew the government and replaced it with one more to his liking. He built a cracker-jack banana company down there and eventually took over United Fruit in December 1932. By the time he died in 1961, in the grandest house in New Orleans, he had been a hauler and a cowboy, a farmer, a trader, a political battler, a revolutionary, a philanthropist and a CEO.
1. Go see for yourself.
When Sam decided to become a banana grower, he moved to the jungle in Honduras. He planted stems, walked the fields and loaded banana boats. He believed that this was his great advantage over the executives of United Fruit, the market-leading behemoth that he battled for over a decade. U.F. was bigger, but it was run from an office in Boston. Sam was on the ground; he understood his workers, how they felt, what they feared and believed. Telling fruit honchos in Boston why he knew better, Sam would curse and say, “You’re there, I’m here.”
2. Don’t try to be smarter than the problem.
In the late 1920s, United Fruit and Sam’s company were trying to acquire the same piece of land, a fertile expanse that straddled the border of Honduras and Guatemala. But the land seemed to have two rightful owners, one in Honduras, the other in Guatemala. While U.F. hired lawyers and commissioned studies, trying to determine the legal property holder, Zemurray simply purchased the land twice, once from each owner. A simple problem deserves a simple solution.
3. Don’t trust the experts.
In the 1930s, with United Fruit staggered by the Great Depression — its stock price fell from $100 a share to just over $10 — the company’s executives, in search of a game plan, consulted experts, solicited reports and interviewed economists. Zemurray wanted answers to the same questions — by then, he was the biggest holder of United Fruit stock — but he went instead to the New Orleans docks, where he buttonholed the sea captains and fruit jobbers who really understood the situation on the ground.
He learned, for example, that banana-boat captains had been ordered to cross the Gulf of Mexico at half-speed, thus saving fuel. He also learned that, in the course of the extra days on the water, a large percentage of the cargo was going from yellow to ripe. One of Sam’s first orders when he took over U.F. in 1932 was: Don’t slow down; cut the number of crossings. Within six months of Sam’s ascension, the stock had rallied and reached $50 a share.
4. Money can be made again, but a lost reputation is gone forever.
Early in his career, Sam joined in a partnership with United Fruit. The behemoth gave him money and helped to distribute his product; he gave the company the use of his ships. One year, when banana workers went on strike in Nicaragua and blockaded the country’s rivers, U.F. broke the blockade with Zemurray’s ships, his company logo painted in big letters on the side. It made his name hated in Nicaragua. It was one of the events that convinced Sam to dissolve his partnership with U.F., no matter how much he had come to depend on its deep pockets. A person who doesn’t control his own name and image has nothing.
5. When in doubt, do something!
When Zemurray took over United Fruit in 1932, the company was a few months from collapse. The stock price was heading to zero, the best workers fleeing. As soon as he took control, he set off on a whirlwind tour, crisscrossing Central and South America, meeting workers in the field and asking for their ideas. The perception of activity, he explained, is just as important as the nature of that activity. The boys in the fields need to know that there is a person in charge. If they think you know what you’re doing, they’ll follow you anywhere.
He sounds like quite the operations guy. The admonition to go see for yourself fits the modern philosophy of management by walking around — or, if you want to use a more exotic foreign name, gemba kaizen.
Cohen distills it down to the Code of the Banana Man:
Power comes from knowledge, information and experience, which grow from the ground like a banana stem. If you lose touch with that, you’re ripe for the taking.