How to manufacturer luck.
I often try to figure out how to explain concepts to my rising High School Sophomore. Explaining that success is 99% luck in way that shows just how hard you have to work to get lucky is the point of this post.
In 1852 the two oldest Studebaker brothers, Henry and Clement, or Clem as he was known, started the H. & C. Studebaker blacksmith shop in South Bend, Indiana. Population ~ 3000. At the time Henry was 26 and Clem was 22. The Studebaker brothers were sons of John Studebaker a second generation wagon maker and had a decade experience each already.
John Mohler Studebaker the middle brother went off to Placerville, California to make his fortune in the California Gold Rush. Finding all the mining work taken he used his family skills in wagon making to set up to make wheelbarrows earning the nickname “Wheelbarrow Johnny.”
Making wheelbarrows was quite profitable for John Mohler. When he returned to South Bend in 1854 he brought with him $8000 (equivalent of $310k today). He was just 22 years old. He joined his brothers business adding in the additional capital.
Now every town in America had a blacksmith shop. But, not every blacksmith shop was run by brothers who could make wagons and this was the key to the family success. This is the start of the “luck” that made the Studebaker brothers uber wealthy.
The year was 1861, and the “lucky” moment was the start of the Civil War. Henry was already well into middle age and a pacifist so he left the company to be a farmer. Clem was 30 and had likely been working for 15 years already.
Regardless, of Henry’s revulsion to violence the war was going to rage and US needed wagons and lots of them. And the remaining Studebaker brothers made them as fast as they could. During the war the Studebaker brothers sold over 6000 wagons to the US Government.
After the war business continued when another stroke of luck happened. A whole lot of Americans wanted to relocate west.
And they needed wagons to do so. And everyone knew Studebaker wagons. By the end of the 19th century, the Studebaker family was the largest carriage maker in the US. And this was all before the horseless carriage even existed. The first Studebaker car wasn’t sold until 1902 a year after Clem died.
Eventually, another family of brothers Lehman, along with Henry Goldman and his brother in-law Samuel Sachs, took Studebaker public in one of the most important IPOs in US history.
The point is, it takes a lot of effort to get lucky.
The second point is Studebaker and Lehman brothers both went bankrupt when then forgot that luck requires effort first and foremost and not just capital.