#81 Henry Royce (Founder of Rolls-Royce)

Podcast: Founders
Source: whisper-base
Language: en
Duration: 4299s
URL: https://afp-922710-injected.calisto.simplecastaudio.com/57933a1d-c5a9-4040-9aca-e766ae2ec0eb/episodes/9780fc02-806d-43a9-b7ff-6c26286b1782/audio/128/default.mp3?aid=rss_feed&awCollectionId=57933a1d-c5a9-4040-9aca-e766ae2ec0eb&awEpisodeId=9780fc02-806d-43a9-b7ff-6c26286b1782&feed=3hnxp7yk
Fetched: 2026-03-03 09:19:02

The historic first meeting of Henry Royce and CS Rolls took place on May 4, 1904. The two men could have hardly come from more different backgrounds. CS Rolls had been educated at Cambridge and moved comfortably in London society among his aristocratic and wealthy friends. Henry Royce had known poverty and hardship all his life. The only university he had graduated from was the one of hard knocks. The one characteristics they both had in common was a certain prickliness, perhaps in both case, born of shyness than arrogance. And here's a quote from Rolls describing his meeting with Royce a few years later. And he says, you may ask yourself how it was that it came to be associated with Mr. Royce and Mr. Royce with me. Well, for a considerable number of years I had been actively engaged in the sale of foreign cars. And the reason for this was that I wanted to be able to recommend and sell the best cars in the world, irrespective of origin. The cars I sold were, I believe, the best that could be got at that time. But somehow I always had a sort of feeling that I should prefer to be selling English instead of foreign goods. In addition, I could distinctly notice a growing desire on the part of my clients to purchase English-made cars. Yet, I was disinclined to embark in a factory and manufacture myself. Firstly, on account of my own incompetence and inexperience in such matters, and secondly, on account of the enormous risks involved. At the same time, I could not come across any English-made card that I really liked. Eventually, however, I was fortunate enough to make the acquaintance of Mr. Royce. And in him, I found the man I had been looking for for years. Okay, so that's from the very first chapter of the book that I read this week and the one that I'm going to talk to you about today, which is Rolls Royce, the magic of a name, the first 40 years of Britain's most prestigious company from 1904 to 1944. When I started reading the book, I wasn't sure exactly who I was going to profile. And then, as you start to read, it becomes extremely clear that I need to focus solely focus on Henry Royce. So it's probably important to note that I didn't know anything about Rolls Royce other than that they make cars that cost as much as houses. And I had no idea about the founders. I stumbled upon this book accidentally. There was a thread on Twitter where people were recommending the best books to read on the very beginning of iconic companies. So I went through that thread, ordered a bunch of those books, and then one day I just picked this one up and started reading it. And wow, Henry Royce is one of the most incredible people that have come across since I started reading all these books for the podcast. And I think a good introduction into the life are more specifically the mind of Henry Royce is to look at the night before he died. The night before he died, he sat up in bed and drew a sketch on the back of an envelope which he gave to his nurse and housekeeper, telling her to see that the boys and the factory got it safely. He died before he reached the derby. This was the adjustable shock absorber. And I think that story just illustrates the life and the mind of Royce. He found something that he was extremely passionate about, something he dedicated all his resource and energy to, almost to the point of death, which obviously don't recommend, and I'll talk about that in a little bit. And he did so, and he thought about it up until the very time, the day before he died. Okay, so let's go back into the book. We're going to go starting with, you know, Rolls, his partner, is selling other people's cars at this time. And he was introduced through this guy named Edmonds to the work of Royce, because he just said he wanted to see if there was any high quality British cars. And so this idea that I came across first from Yovar and Chanard, which is the founder of Patagonia, it's a quality as a distribution strategy. And this is Rolls being introduced to the work of Royce. And he says, Rolls at this time had a prejudice against two cylinder engines. And he climbed into the high passenger seat of the little Royce, prepared for all this vibration and roughness that were usually associated with that type. So right off the bat, he's like, no, I don't really, I want to sell four and six cylinder engines. And he's talking about, listen, the two cylinders are crappy. I'm trying to sell quality. And he was fully expecting that Royce's two cylinders going to be crap too. And it says to his amazement, he found that the car had the smoothness and even the pull of the average four four cylinder allied to quite phenomenal degree of silence. He came, he rode and was conquered. So many years before Royce met Rolls, he was already an engineer by training. He already had started a company. I'm going to go back to his early life in a minute. But what I found interesting is Royce started making cars, not necessarily by accident, but basically at a necessity. He already had a business where he was making electric motors and electric cranes. Like cranes used for like imports and moving heavy equipment, things like that. And so we're going to learn a little bit about why Royce had to make the jump into making cars. He said helping Royce make the decision to build three prototype motor cars in the autumn of 1903 was the post-war slump, which left Royce, LTD, that's his company that was making motors and cranes, among with many others with spare capacity. Royce, mindful of the survival of his company and faced with declining orders and prices, felt that motor cars could be a new product on which he could use his talents as an electrical and mechanical engineer. While Royce was experimenting and building his cars, Rolls was asking Edmonds, that's the person that introduced them, if he knew a source of new cars. And so this of course is nothing new. It's talked about a lot. The timing is extremely important in the success or failure of a lot of different products. And they just happen to meet at the most at the most opportune time. Alright, so let's go back into Henry Royce's early life. He was descended from generations of farmers and millers, and his grandfather had been a pioneer in the installation of steam power in water mills. His father James, in the family tradition, trained to be a farmer before moving on to milling. However, James did not have a lot of success, and unfortunately as a result of this, Henry's early life was steeped in poverty. So since James proved to be unreliable and seemed unable to apply himself consistently, probably due to his suffering from Hodgkin's disease. By the time Henry Royce was born in 1863, he was in financial trouble and was forced to mortgage the mill. James died in 1872 in a poor house at the age of only 41. So therefore Henry Royce therefore knew poverty in his early life. And even before he was four, he was earning money, bird scaring in the fields. After his father died, he sold newspapers and he also delivered telegrams. So he said to start working right away to try to help the family. And Royce was a bit of a workaholic, is what you would describe him as today, to the point where he almost worked himself to death. So it says, fortunately when he was 14, on Ant on his mother's side agreed to pay 20 pounds a year, about 22 hundred pounds in today's terms, for him to be an apprentice at the Great Northern Railway work. So interesting, W.O. Bentley, the guy that that founds Bentley, and the company which Royce Royce eventually acquires, he actually started as an apprentice in the exact same railroad as well. So he said apprentice at 14 at the Great Northern Railway works. He went to evening classes in English and mathematics and learned a great deal about manufacturing and fitting in the workshop. Unfortunately after three years, the Ant felt, felt unable to continue her support. This was a serious setback for Royce, since failure to complete his premium apprenticeship denied him what was known as skilled status. However, Royce found work as a toolmaker with the leads engineering firm, that firm was called Greenwood Embatley, although it did not take long for Royce to secure this job, it was a very warring time. So just to pause right here, think about this, you're 17 years old, you're extremely poor, your father's dead, a lot of the family, most of his family had moved to Canada at this point. He had really no support system, so you have two options, like you're either going to fail and fall into a life of poverty or you're going to pull yourself out of it, and this is probably where Royce's fierce work ethic came from. So he says unfortunately, and then you add to the fact of your own personal family troubles, but then you have this huge economic depression that's occurring at the exact same time. So that's where they met by very worrying time, and this is a quote from another biography on Royce, and it says unfortunately at that time, there was one of our periodical seasons of trade depression. Henry Royce tramped, meaning walked, as he told me himself, many weary miles upon a vain quest. His powerful recommendations opened no doors, meaning the people he was previously practicing under. Great houses were discharging, not engaging men, so you have way more people wanting to work than jobs available. He must have come very near despair in those faithful days before he found employment. And then when he does find employment, it's not like he's in a great situation. So he finds a job he was paid what would be the equivalent of 60 pounds in today's terms. Of course, this book is about British history, so that's why I'm using those terminologies. And that was 60 pounds for a 54 hour week. So what does that mean? That means he worked from 6 a.m. until 10 p.m., and all through Friday night. Now, he does find an interest. He really likes being an engineer. I guess I should just, let me read the back of the book real quick, so you understand that this guy is just a flat out genius. So this tells the story of genius skill and dedication that gave the world cars and arrow engines unrivaled in their excellence, and I'll go into more detail like that. So he picks us up on a rather young age. He really likes engineering. He's really good at designing systems. He's especially good at taking systems other people of design and improving every single aspect of him, which is basically how he gets its product. And then he has an interest in electricity, which is obviously, you know, a booming or soon to be booming industry around this time. So his interest in electricity led to a job with the electric light and power company in London, and he progressed well enough to be sent as first electrician to the associated company. So there's another company called Lane, Casher, Maxim, and Weston Electric Company, and they were hired to light, like do all the street lighting and Liverpool, and he's right around 20 years old at this time. So he's doing that work for a while. However, the company winds up going out of business. So it says by the end of May 1884, the company went into liquidation, and Royce, who had saved 20 pounds, set up a business, and he called that business FH Royce and Company. So it said FH Royce and Company started with small items for individual sales, such as electric bell set, and quickly moved into subcontract work, producing bulb holders, switches, fuses, and filaments, as well as complete bulbs and registering instruments. So he just took the skill that he was trained in, which was electric engineering, and applied it to problems, products that he thought solved problems that he noticed at work. But they soon moved on to complete installations. Later Royce set up his skills at the time, so now this is a direct quote from Royce. So he says, in dynamo work, so a dynamo is a machine for converting mechanical energy into electrical energy. Sometimes it's also referred to as a, as a generate. And so Royce says, in dynamo work, in spite of insufficiently ordinary and technical education, he's describing himself, I managed to conceive the importance of sparkless communication, the superiority of the drum wound armature for continuous current dynamos. Royce and Company of Manchester became famous for continuous current dynamos, which had sparkless communication in our commutation, in the days before carbon brushes. It's not important to know the details, just know that he's innovating in the field that he just entered. While Liverpool from 1882 to 1883, I can see the value of three wire system of conductor in efficiency and the economy of distribution of electricity. And also afterwards, the scheme of maintaining a constant potential at a distant point. Both of these are successfully applied. In the early days, I discovered and demonstrated the cause of broken wires and dynamos through the deflection of the shafts by weight and magnetism. So this is an example of what I was saying earlier that he had this ability that he used all his, his entire life. And that was the ability to think about and improve existing machines. Another way to think about what's happening is he's just inventing and improving upon the main technology of his day. And that's something he continues with automobiles and then eventually into airplane engines, which is still, both of those lines of business are still in existence today. And the latter was caused by the outbreak of World War I. Okay, let's see. Okay, so it says this ability to observe, think about and then improve on existing machines and instruments was to be consistent theme throughout Royce's life. Okay, I kind of just said that profits were fed back into the business. And the reinvestment of those profits were just to the extent that there were actually were profits. The early days of his business was extremely trying. And so as with most small businesses, life was precarious. Royce told an interview many years later, and this is a direct quote from him. For many years, I worked hard to keep the company going through its very difficult days of pioneering personally keeping our few machine tools working on Saturday afternoons went when men did not wish to work. That's what I mean, he basically just worked if he was awake, he was working. And I remember many times our position was so precarious that it seemed hopeless to continue. And I think that's an important point. So she when I found that highlight or when I read that and I highlighted it was there's an alternate, there's an alternate history where, you know, somebody in this case where Roy says, okay, you know what, like this is hopeless. This is, I've come to the decision that I'm going to give up, which is extremely common. And I don't think many people would blame him if he did that. But think about all the stuff that you that he would have missed out, missed out on if he would have quit right then, you would have never had a Royce Royce car, Rolls Royce engine. None of the, you know, this is now a company that's been around for what 120, he was founded in 1906. So, you know, 115 years and granted the ownership change many times since then. But the point is like there's undoubtedly times in your life where you feel this way and, and you have quit. And I've been, I've done that as well. And sometimes that's the right decision and sometimes it's not. And unfortunately, there's no like easy formula to understand when, when is the right time to quit and when it's not. But it is important to realize that think about it in terms of like, okay, if I quit now, what are the opportunities I'm foreclosing on? Let's say five years from now, 10 years from now, 20 years from now. Because we're talking about this is the late 1800s. The business that he eventually found is, you know, eight years away. And then you figure is another few years after that from success. So the opportunities for, if you would have quit then you could have foreclosed the opportunity for the airplane engine, which is based on what I'm reading. Some of the highest quality airplane engines in manufacturing like available today. Well, that, that opportunity is 15 years from the point in that we're at in this story. So I just think it's, it's extremely motivating to understand that like, you know, everybody knows the name Royce Royce, even if you don't know who Henry Royce was, you know, before he listed this podcast. But not everybody in like, just like in the case of many of these founders that we talk about, not many people see the actual struggle and that, you know, it's not, oh, I have this idea. I'm a freaking genius and it's going to work. Like that doesn't exist. Not in the complex environment that we call life. So to me, hopefully it's motivating you because it's definitely motivating to me. Okay, so it says, the note I left myself, well, I'll tell you what the note is after. It says what the business needed was a steady stream of straightforward work to cover the overheads while Royce could give free reign to his creative genius. Certainly he became obsessed with work, often staying late into the night and even all through the night. On a number of occasions though, those arriving next morning would find him at a work bench asleep with his head on his arms. By the end of the 1880s, the firm was sufficiently prosperous for Royce, and this is his partner Claremont, to consider other matters beside the next item of production and the next source of income. So I don't think it's smart to deprive yourself of sleep. I think there's a clear reason that that sleep is present and required in so many forms of life on this planet. So it's obviously nature's way of telling us, hey, this is really important, you shouldn't cut this off. But some people are going to be so obsessed in the case of Royce and they're going to do this themselves. Now he winds up almost dying because of some of this. Now there's also obviously negative to that. There's almost like a positive externality to that too, and I'll get to that in a little bit, just remember I said that. But my point here is, this is a classic example of this personality trait that we see the PSDs, and this is poor smart and determined. And I'm not encouraging this kind of behavior, but I understand it when you figure the guy is working from time he's four or five years old, his dad's dead, he has no support structure at all. He's obviously extremely smart, he was born extremely smart, and then kept working out being extremely smart. And I just feel that when you're, there's just certain people like this, and sometimes they're middle class smart and determined. But there's a, I wouldn't say a special element, there's just, these people are unstoppable is what I'm saying. Like when you find somebody with all these traits, there's just nothing, they're going to accomplish what they set out to accomplish because they've adapted to the environment they were raised in, you can't replicate that. Nor do you want to. This is also, I've heard tons of people that are PSDs talk later in the life, they're like, I don't know what to do now because I was the son of a poor man, and my kids are the son of a rich man, or poor woman, rich woman, whatever, you know, person, such as men, of course. And, you know, that because humans will usually, like we're infinitely adaptable, but how do you have your child have that drive and determination that may have been spawned on with the early life realization that, oh, shit, I'm in a bad spot. And if I don't get my stuff together, I'm, this is my life is going to go poorly, you know, the Royce never had children, but if he did, they were never going to be raised in the same economic environment that he was. And I don't know if there's an answer to that, I've just heard a lot of people struggle with it. Okay, so at the end of 1880s, the company's prosperous, but the prosperity of the business was short-lived. After the war, there's a general sum of trade, and then there was cheaper dynamos and cranes. So the way he designs his products, they're like best in class, and then eventually people try to knock them off, or they try to make like cheaper imitations, and he was really adamant. He's like, I don't care about price, I care about quality, right? And so he winds up going into the car business by accident, because he's a crazy perfectionist. Like this guy is insane, and I mean that in the best positive ways. So he winds up realizing, hey, there's this huge new, or soon to be huge new industry that could be really beneficial to our company, because before Royce's is founded, he's still trying to do this. Basically, Royce comes as a spin-off from his electric motor and crane company, right? And so he's like, Royce turned his attention to motor cars as a potential new product for the company. And then this part really reminds me of you. Listen to my podcast I did on James Dyson, which is one of my favorite books I read, because I guys are not too. It all comes with, not only is this a new product line, so there's obviously, he sees that people are going to wind up buying these things, but it also comes from being frustrated with the things that are already out there. And so in James Dyson's case, he's using the Hoover Vacuum, it has a bag, he's like, this is ridiculous. So from the time I think he's like, let's say 33 years old, when he rips apart the Hoover Vacuum, he's like, this is ridiculous. It takes him 5127 prototypes, and I think he was 45 years old by the time he has the famous Dyson cyclonic vacuum that he owns, completely and he could sell. So Dyson is very much like a Royce, like these guys are insane. So this has frustrated with the inadequacies of the, I don't know how to pronounce this car brand, it's Decalville. So he said, frustrated with the inadequacies of this, whatever brand, although in many ways by the standards of the day, it was advanced. And therefore he saw he could build on it, Royce decided in the spring of 1903 to make a prototype car of his own. Some have tried to give the impression that it was almost by chance that Royce became involved in designing a motor car. Royce was not a man to rely on chance. He saw that the motor car had a great future, and that it would be an ideal product for his business. And this is just fantastic, especially for people that are not, that are listening to this, that are not already entrepreneurs, but I get a lot of DMs and emails from people that have been inspired to take the leap from the podcast. This is a really good way to identify an opportunity for entrepreneurs, whether existing or soon to be. He says there was never, there was nothing revolutionary about Royce's car. He had taken the best of current automobile design and improved on every aspect of it. So this is very again, I'm going to draw the parallel to Dyson. He's talks about, he's like, why don't you invent something new? He's like, I like to go after markets that are already there. People are already buying vacuums. Now they might be buying a $40 vacuum, and it's going to be really hard to sell them $150 vacuum, which he went up becoming a billionaire. So he's proved right that you could do it. So he's like, no, I'll just take, I'll take an art existing market, look at the ones that are full of crappy products, and I'll design the very best. Same reason, you could go down the street and buy, I don't know, well, I don't know how much car, like a new car start. Can you get like $10,000, $20,000? Like let's say, just an absolutely basic, basic car. You could do that, or you could buy one that costs the house. You know, it depends on how you want to build products, and I'm not saying go out and buy a build a $400,000 car. My point being is that there's, you already have people buying a product, and if you use those products, and you can identify deficiencies and things that you think should be better, then you already have an existing market. Now you just have to go and convince people that your alternative is better, and that's not easy either, but it is a good starting point. A lot harder than inventing something brand new, and then having to basically create the demand. James's point is that, Dyson's point is that the demand was already there. I just had to show them that they were buying things that were deficient. So I think that, again, that's another way to identify opportunity for entrepreneurs. This is a quote from this guy named Arthur, who's later manager at Rolls Royce. And this is him talking about Royce's early work on motor cars. I'm going to read that to you, but the note I also left myself was just make things better, and you have a product. It's kind of what I was just saying. I do not think that Sir Henry did anything of a revolutionary nature in his work on motor cars in the early days. This changes later on. He actually does. He has several inventions. He did, however, do, and again, that's probably a good point. You start where, like, he's denoting what cars start where you can. He did, however, do much important development and a considerable amount of redesigning of existing devices in apparatus so that his motor cars were far and away better than anyone else else's motor cars. I'm going to tell you more about the quality. The level of quality in this book when they describe early Rolls Royce's car is mind blowing. So he's continuing. This is still Arthur talking, and it says he paid great attention to the smallest detail and the result of his personal consideration to every little thing resulted in the whole, so that to every little thing resulted in the whole assembly being of a very high standard of perfection. It is rather to Sir Henry's thoroughness and attention to even the smallest detail than to any revolutionary invention that his products have the superlative qualities that we all know so well, so he's extremely detailed oriented. This is what I always find fascinating that these dichotomies in life, or maybe the word is paradox, whatever you use there, there's a lot of traits that you could have that can be extremely, they fall simultaneously both ends of the spectrum, right, and the hard thing is reconciling both. So, like, you can be, how do you build a great product? Be unbelievably detour-oriented, but you can also take that what is known widely known as a great trade and take it too far to the point where you're not making anything or the public never sees it, and in this case, it took the sickness. Rolls Royce almost dies in 1911, 1912, I think, and I'll talk about this more later, I think, but because he was just, he would, the level of detail, he literally wanted to, he would design new bolts, and he's like screws. Like, we don't need to innovate on every single thing, but he, that was just how he worked, and that's why I come away from reading this book with like, damn, you got to step up your game, man, there's people out there, because there's undoubtedly people, there's people like Royce before Royce, and there's people like Royce alive today, and there'll be people like Royce in the future. And just the level of detail that they think about things is extremely inspiring for me, it's like, it's a ego check there, it's like, okay, this dude is not playing. So there's more quotes. There was very, again, this doesn't come at, there's not all positives, right? We've talked about this many, many times. He's extremely, if, if, think about the kind of personality that is going to engage in this kind of behavior, do you think that's going to be pleasant to be around? It's very hard that you're going to find somebody that's this engineering genius, detail oriented, and also really personable. So it says to many, this is somebody I worked with him, he says to many, he would have seen a hard taskmaster in those hectic days, but it is only fair to add that he drove no one harder than himself. And this is something I was actually talking to a friend about yesterday, that there, you know, what I was just talking about, there's these weird things in life, these dichotomies that you have to keep in your head, where like something I always say, I was like, I think that the bigger problem for humanity, I think it's much, there's a much larger problem for people not believing they're good enough, then there's a problem that people believe they're too well, too good enough, right? And there could be like a lack of self doubt that causes somebody to not try something, and what's the end result of somebody not taking a risk and not trying something? Well, humanity as a whole in society in general is deprived of that person's talents, because they never even get off the runway, so to speak, right? And well, one of the things that I always talk about in my own personal belief is like, listen, you should be your own biggest fan. A hundred years from now, you and everybody you know is going to be turned into dust. Like you have nothing to lose, and I'm not saying take tail risks, don't take risks that can ruin you, but I'm saying like you, you're not getting another go at life as far as we know. So therefore, like the first step of doing a little do something is believing that you can do that. Now, that taken to an extreme of overconfidence, obviously not good, but at the same time that you should be your own biggest fan of my opinion, you also should be your own harshest critic. Now, that's taking a step back and really analyzing like, like being able to analyze, like what are you able to do right now? What are you doing now? Look, analyze your actions, and that's really hard for people to do. But that can also be taken to a negative, like a two of a negative extreme, where it's like your own harshest critic that you beat yourself up and make yourself depressed. So that's not the goal. The goal is, hey, have the confidence be your own biggest fan, and also to like walk that fine line of saying, hey, I am not doing the best I can in this area of my life. This is what I would do differently. And one thing I think is helpful in what I was talking to my friend about, is like, well, what if you just step back and you just try to be dispassionate about your life, and just analyze yourself as somebody else may see you, and just like identify the areas in which you, like, oh, if I was that person, I would do X, Y, and Z. And then you've identified the areas that you maybe can prove, and then just go and do that. I think that's very helpful, and I think that, I don't even think that's my original idea. I'm pretty sure I got that from Tim Urban, the writer of WAPA-Y. He's got an essay called Grand Theft Life, that I think takes like five or ten minutes to read, and I definitely would, because it's that idea. It's like, think about, like if you ever played Grand Theft Auto, you know, if your character needs to go make money, you take your character to go to work. If your character needs to get in better shape, you take your character to the gym. If your character needs new clothes, you take your, like, think about that, like, what if you ran your own life like that? So anyways, Royce is hard and demanding, but at least he's, on other people, but he's also doing it to himself. So at least at that point, it would be way worse if you're just sitting with his feet up in the office and like, you're not working hard enough. No, he's out there with the guy, with the guy's doing the work himself. And then again, some people can't work in that environment. They're like, forget this, I'm out. But some people will be like, hey, I actually respect him. So this is how one employee saw Royce and his name is Ivan. And this is a quote from him, he says, I not only admired him, I was one of the few people who were genuinely fond of him. This is one of the greatest quotes in the book. Henry Royce ruled the lives of the people around him, claim their body and soul, even when they were asleep. And again, I don't think you should treat people poorly. I'm not advocating for that, but you have to be who you are and Royce is an extreme character. This also reminds me of a quote that came from the Everything Story that book on Jeff Bezos, where it's like, if you're not good, Jeff will chew you up and spit you out. And if you're good, he will jump on your back and ride you into the ground. This is actually a quote from somebody that worked, I don't have the guy's name, unfortunately, I'm sorry. But you get the point, he worked for Royce. And he says, my favorite stories are Royce's workmanship. Design and quality to Americans, when they ask me about it, as they often do, is the use of taper bolts instead of rivets. So you're talking about the difference between the production, quality that Royce insisted upon, and then the American counterparts at the time. Remember, if you listened to last week's podcast, Henry Ford is basically the antithesis of Royce. Henry Ford was about low-cost mass production. Royce is about high quality, almost handmade kind of production. So it says, I remember Royce carefully explaining to me as a child how a hot rivet never filled a hole when it cooled. A cold rivet was punishing the metal too much. So we made taper bolts fitted perfectly in a hand-reamed hole, something Henry Ford would never do, making things by hands that's absurd to him. It is such details that explain the difference between Rolls Royce and other cars and Rolls Royce quality. Also, Royce himself, who taught us all the principles which carried on in the whole organization. And this is another random quote that I think is a good way to think about a product. The first car, lights like its successors, was not revolutionary in any single part, but in the excellence of the whole. I think that takes a very special mind to be able to hold all that in your brain and figure out what you're doing. So remember, I said that the first voice call that cars were not designed by Rolls Royce, they were still in this other company that he shared with his partner Claremont. And so his partner Claremont did not like Royce working in other things. No factor, Royce doesn't care, you're not going to be able to tell this guy what to do. He's not that kind of person. Claremont was becoming increasingly dischanted with Royce's diversifications. He did not like the move in the cranes, and in the 1899 flotation document, the directors have no intention of launching out into unfamiliar businesses were inserted. As for Royce's move into car manufacturing, Claremont was horrified, horrified, but he was not able to stop him. Another passage that gives you the idea of quality of Royce's work, quality is probably going to be the word that's most used in this podcast. It's over and over again. It's basically the most important thing to him. He says reliability was the strongest feature of these cars. One of them was sold to a customer and was returned in 1923 in perfect running order after a hundred thousand miles run over the hilly roads of Scotland. I think this is also interesting, where such early life of the Royce company is focused around quality, has all these like test the customer testimony to the quality of it. I can't help but think that, like we always discuss like menu, discuss like the power of compounding, right? And I can't help but I think now I don't know that much about cars, but the research I was doing before the podcast is saying that Royce is like one of the best known brands in the world. They said, according to what I was reading, it was the second only to Coca-Cola. I have no idea if that's true, but they're widely regarded as the highest quality cars in the world. And I can't help but think that like, they could be very well be the highest quality car in the world. I don't know I'm not a car person, but I can't help but think that a lot of like, that reputation compounded and even if they weren't, let's say you have a brand new company that can do a better job, but they don't have 100 years of compounding, like reputation and brand of quality work. The public is not actually going to know, like be able to tell the difference, you know? So this idea where compounding, greatest things in life come from compounding pops up in all different like manifestations. And I have a feeling that the reputation that Royce enjoys today for quality is influenced by that. It doesn't mean they don't make beautiful products. Now it's not what I'm saying. I'm just saying that like, it definitely enhances it. There's a lot of different reasons why somebody wants to become an entrepreneur or founder. And I think the one above all is this desire for control. And it says Royce, though he was deeply engaged in the development of a six cylinder car, still found time to design most of the factory buildings himself. He did not have time to design the factory buildings. He did it anyways. This is after they already, the car's in production. And it's, they're obviously building a factory because they need to produce more of them. And then this is his partner, Rolls. So Rolls is not going to be featured in this podcast much. Royce dies when he's 70. Rolls unfortunately dies four years after the company is founded. He dies at 32 years old. And he was a nut job too. But he was like not an engineer. He was into like motoring. So he, he'd do like car races. Then he would fly hot air balloons. He eventually starts having an appreciation for the work of the right brothers. And he's one of the first people in Britain to buy a right flyer. And he dies in a plane crash. I think he might have been one of the first people to fly over the English Channel and back the same day. Like he was a daredevil in some senses. And unfortunately he died, you know, really, really young. So he didn't really have much of an influence. He did, Royce was, you know, even though he wasn't really running the management of the company. But he did like he was the cornerstone of this company. So anyways, this is rolls on why the qualities of their cars are so high. He says we consider that the success of the Rolls Royce and its extraordinary durability and low cost of upkeep as exemplified in the 15,000 mile trial last year is entirely due to scientific design, to the original research work and close study of metals, which has been made by Mr. Royce and his assistance in the physical laboratory of the company. We regard this as perhaps the most important department in the works. Of course it is. And what I always find fascinating is this idea, I've talked to you guys about many times, is there's Danny Meyer, the founder of ShakeJack and Bill Gurley, the famous venture capitalist. They always talk about this idea of doing professional research. That is your obligation as an entrepreneur, as whatever craft you're doing, even if you're not doing it yourself, to not, when you're not working, to also study whether you're studying the pioneers of the industry, the history of the industry, in Danny's case, he wanted to open a barbecue, a high-end barbecue restaurant in New York City, and he goes on like, I don't know, I can't remember. He just goes on this road trip, and he tastes like 30 different variations of barbecue and he writes how he takes copious amounts of notes on this, this barbecue is cooked at this temperature, and they use this to like the prep work, and this is how they do this, and he breaks it down to like 10 different attributes of great barbecue, that kind of level of detail, and you're seeing this with Royce here as well, it's like, I'm not just manufacturing cars, well, what is the source material of what I'm making? So let's go and study scientific design of the metals of rivets. He has, like I just shared with you, his opinions on things that are different from hot and cold rivets, and the deficiencies of both, and this is why we do this. It's like, I appreciate that. It reminds you of that great documentary on Netflix, like Geo Dreams of Sushi. The guy has a very intimate knowledge of the craft that he's been doing for 40 years, and it comes down to like analyzing everything from his own methods, but also starting at the raw materials, which again, large part of your life is going to be taking up all your work. Why don't you want to try to be the best in the world at it? And Royce is definitely trying to do that. Okay, so Royce would give you the advice to do one thing and do it well. The other vital early decision made by the new company was to concentrate on one model. Now eventually they can deviate from that, but there's a brand new company. It's very extremely expensive. Most car companies have the time to go out of business, so we're not going to divide our attention. He says now that Royce had produced a model demonstrably superior to all its rivals. Royce would devote its energy exclusively to the model. So you have Royce focusing on one model once he proved that successful than the entire organization backs him up on that. Instead of deluding his skills over three or four models, Royce could concentrate on bringing one model to perfection. And this was Royce's new model. The previous three, four, all these different cylinder models were all based on the experience of the Decalville. That's that car I referenced earlier, but manufactured to Royce's standards. This one was revolutionary in every way, and there are those who say that the new six-cylinder Royce, which was called the Silver Ghost, is the most famous car ever made. That's bananas. And this is just, in addition to building a great product, they had an organization that was a great marketer. So Royce introduced, brought into the company, this name, Guy named Claude Johnson. A lot of people say that the company would never have been successful without Claude Johnson taking care of like the business side and Royce doing the product design. And this is some great early marketing of the Silver Ghost. Now we'll think about this. We're talking about the early 1900s. And it says to prove its smoothness and lack of vibration, which is a huge selling point. It's one of the only cars at the time that they capable of doing so. A penny would be placed on the end of its chassis while the engine was running. Or a glass full of water placed on the bonnet while the engine was taken up to 1600 revolutions per minute and not a drop spilt. I've seen car companies do that, you know, 80 years later. They put like glass on wine on the engine or something. More great marketing. They drove the Silver Ghost nonstop between London and Glasgow until 15,000 miles had been completed. The engine was always kept running except on Sundays when it was locked in a garage. When the 15,000 miles had been completed, Johnson invited this quality control department supervisors to strip down the chassis and engine and recommended which parts needed replacing to make the car as good as new. The engine was passed as perfect. The very few things that had to be replaced. The total bill for replacements was about 213 pounds. That's bananas. And I don't even think you could do that in today's cars. It was a standard of reliability, none of Rolls-Royce's competitors could come near to emulating. Now, what do you see? I hope the steam is this coming. This guy is so detailed oriented that nobody was even close to what he was able to do. And he wasn't even trained. I mean, the brand new industry. So it's not like a lot of people could be trained in the auto industry. But it's just like the power of sticking to the fundamentals and really focusing on what you're doing is, it's just amazing. Oh, this is fascinating. This is kind of side to Rolls-Royce's life. But there's regulations in Britain slow down the car industry heavily. However, and it came from corrupt lobbying from the Railroad industry. In Britain, development was held back by laws designed to protect a former way of life. And thanks to a powerful lobby in the House of Parliament, the interest of the railway companies passed the 1865 local mode of act. This is just, I think, instructive to when we're trying to think about any new technology. Again, history doesn't repeat itself. Human nature does. And, you know, people, not only will you have intrinsic interests that are going to actively fight against you and do things that are not best for the consumer, but they're going to pass silly things, because they're worried about this new technology. In some cases, it's not silly, but in this case, it is. And they're saying, hey, if you're going to have a car, at least three persons had to be employed to drive a self-propelled vehicle. While the vehicle was in motion, that doesn't mean it's an autonomous car. I mean, somebody's driving, and there's three people in front of them. While the vehicle was in motion, one of the three passengers was required to walk ahead at least 20 yards. And at the time, they had to wave a flag. And later legislation, they let them take down the flag. I mean, come on, man. Drivers had to give away to all of the traffic. The speed limit was four miles an hour. And there was also a license fee, which should be 1,000 pounds in today's terms, per county in which the vehicle was used. Face with these restrictions, early motor and pioneers were forced to spend time trying to have such laws repealed, rather than on the development of cars. The legal situation did not encourage the development of the nascent motor industry in Britain, and no less than a person than Thomas Edison wrote in 1901. Now here's a quote from Thomas Edison. The motor car ought to have been British. You first invented it in the 1830s. You have roads only second to those of France. You have hundreds of thousands of skilled mechanics in your midst, but you have lost your trade by the same kind of stupid legislation and prejudice that have put you back in many departments of the electrical field. That's hell of an indictment from Thomas Edison. So again, a reminder, every time a new technology is presented, humans act the same way. A reminder, humans are silly flawed creatures. Don't let anybody else tell you otherwise. And this is an example. What happens when you're driving one of these new vehicles? Well, this is their experience. This is a driver. On more than one occasion, I've had drivers of horse-drawn vehicles, remember what I'm replacing, right? Slash at me with their whips as I've passed them on the road. I've had stones hurled up my head and broken glass bottles deliberately placed in front of my, what they're calling motor tricycles. In driving through London, for example, one was bombarded by gears and insults from practically every bus driver and cab driver one met. Those are drawn by courses, by the way. And this bombardment increased tenfold if a car or motorcycle happened to need adjustment or should break down on the roadside. Queen Victoria, after seeing her son drive a car, said, I hope you will never allow any one of those horrible machines to be used in my tables, my horse tables. I'm told that they smell exceedingly nasty and are very shaking, disagreeable, conveyance sold together. Do you think a car smells worse than a horse? I mean, this is just silly nonsense, man. This is a good example of what a nascent industry looks like. Progress is slow but assured, although the industry, if it could be called such a thing at the stage, was fragmented and could not agree on basic questions of design. Should the cars have steering wheels or tillers? Should the engines be cooled by air or water? Should the ignition be electric or hot tubes? Should the tires be solid or pneumatic? And indeed, should the engines be powered by petrol or steam? So journalists are writing in 1899 about this industry. The industry is highly unstable. Hundreds of thousands of people, surely millions, have yet to see a motor car for the first time. Again, I just think it's a good idea to look to history to see how people reacted to it. They didn't know, I didn't know idea. They couldn't have known at this time. This is the birth, literally, the birth of one of the largest industries ever in ever existence. And this is how people are reacting. You just can't predict the future. So this is weird. And I can't figure this out. It says, the noise gets, the noise gets sick. But what is the sickness? No one ever says. It's just like it's a catastrophic. We'll name it. Maybe they couldn't figure it out in 1910. So this following rolls death in 1910. Another calamity struck the following year when Royce himself was taken seriously ill. Long years of overwork and neglect of the needs of his body, this sort of mentioning earlier, in terms of regular meals finally took their toll. He wouldn't eat or sleep for days on ends while he worked. Doctors were pessimistic about his chances for survival. And so now there's all these internal memos. This guy did, Peter Pew did a great job because he has access. It says, with unrivaled access to the company's archives, this is a unique portrait of both the iconic name and of British industry at its best. And so part of having access to all these archives, you have these internal company memos that are placed throughout the book, which I find fascinating. And this is the internal company memo and how they thought about Royce's talents. And this is Johnson, the guy running the company. For all intents and purposes, the guy running the company. This brings me to the point that one cannot help wishing that a portion of Mr. Royce's time should be spent right away from the works, meaning the factory, so that his brain might have the chance of producing for Royce a somewhat similar but better departure. So long as he insists on being worried with all the small, petty, irritating details, which he definitely was, which must inevitably surround him, so long as he supervises the works. So he's working in the factory with everybody else. His time and the value of his brains to our shareholders must to some extent be lost. That's interesting. His value of his brain to the shareholders, and the value of his brain to the shareholders is incalculable. That is to say, his brain is undoubtedly valuable at the works, meaning the factory, its most valuable property, namely invention, has not sufficient chance to be exercised. So this is what I meant about it's not a good thing that he almost died, but he winds up basically the rest of his life working what people would call working remotely today, and I'll get into that. So it says, this is Royce. This is an example. So after this, he's basically bedridden for a while. And he's just, that's fine, no factor. I'll work from bed. So this is his mind, and this winds up being a beneficial to the company. And again, he's not a people person anyway, so just room for the people. His mind, undistracted by the management of the factory, Royce kept his staff busy with a continual stream of ideas from his fertile brain. Often his health kept him in bed all morning, and this was the period of his greatest mental activity. Without making a single note, he would design a new component in his head. After lunch, he would explain his plan to an assistant, and then later had it put on a drawing board. It was found to be, I'm just skipping that word, not going to try to pronounce it. It was found to be mathematically correct. Blueprints would be sent to Derby, that's where the factory was, and finished parts would come back. Royce would turn them over in his sensitive hands, criticize them, and generally redesign them. So he did a lot of work with Wood before he would even commission it to be made. And he actually has really good ideas about that too, which I think I'd cover. So, okay, so this guy that tries to do a hostile takeover, he's trying to buy up all the stock, and a lot of it's privately held. So, Royce's father, after he passed away, had 30,000 shares. And this guy, he's talking about not knowing human nature. He's trying to do a hostile takeover, so he goes to his, this guy, the father who just lost his son, and is like, I'll buy your shares from you. And his father is going to do what most fathers do. You're like, get lost. You got your mind? Like, what? No. So then his father writes a letter to Johnson, Johnson's the guy running the company. And he's like, I love this, because this is the importance of control. And he says, he gently reprimands Johnson. Remember, he just lost his son, like a year or two earlier. In view of what you tell me, you must not mind my saying, that you have been lacking in foresight and forethought in not obtaining control of the company. A perfectly easy thing to do. Control is essential to the peace of mind, not only of the head of a business, but of the homeless employee. So he's not going to give him, he's not going to sell a stock. What's like, dude, what are you doing here? You guys should have majority control. Like, that's something you should do. Pay attention. I love that. Oh, so there's another luxury car brand that is called Napier, and this guy, Edge, was involved. And he was like a co-founder. It's like kind of the rules version of what the role CS roles played in Rolls Royce, Edge was playing in Napier. But anyways, this is just advice on how to get attention for your company to lower price. Edge was adept at roles had been at gaining publicity by writing dear sir letters to major newspapers and journals. It proved to be a lot less expensive than advertising. So again, most of their money had to go into the production of cars. So they'd get advertising basically for free by writing op-eds. They'd manufacture fake like a fake controversy. So Edge and Napier went up having beef, and they went up breaking up. And I just, I'm going to bring up this point because Royce didn't have this problem. He was always focused forever on quality. And so this is Edge describing why they had a falling out. He says, I saw that in Napier. So Napier is like the genius engineer in this case. His interest in Napier cars was beginning to wane. There was not the old enthusiasm, and there was a certain error of indifference as regard to the class of work that left the factory. His chief interest seemed to pass from the drawing office to his own bank account. And so basically, I said, listen, Royce didn't have the problem. He was focused forever on quality up until the day he died because he was doing something that he truly cared about. Another great quote that I remind myself over and over again is from Bezos. Missionaries make better products. And I definitely believe that to be true. And what's interesting is not only did Edge notice this, but eventually almost all of the talented engineers left Napier for Royce, because they knew too. They could see it. His heart's on it anymore. So World War I breaks out. Royce decides to design his first airplane engine. At the same time, the Royce Royce board were deciding not to make arrow engines for the government. Royce was designing the eagle. The eagle engine is the engine he makes for the government. Not for the last time Royce was ignoring what the board had decided in his absence. Like I said, you're not going to be up control. So he's like, the board said, no, we're not going to do this. Royce is too late, already designing it. This is the state of the airline industry and Royce began designing an airline industry. There is no airline. The airplane, they call arrow plane, I guess industry. In state of the industry, when Royce began designing plane engines, on the outbreak of the war, not a single British arrow engine was in production or anywhere near it. So he's at the very, very beginning. In designing the eagle engine, what did Royce's own experience and the necessity for swift action tell him? Remember, he's doing this for the government. They're at war. He's got to move it quickly as quick as they can move. And they still move rather slow. He should be considering safety, cost effectiveness, and what was readily usable. On the silver ghost, the crankcase, which was aluminum, crakeshaft, gears, lubrication, and pistons coolings were all the best available, so he used them. So he took what he learned from building car engines, took what was available, and applied it to building a first-rate engine. And it said, and then what's the result? This guy's a genius. He had an engine on the test bed in late February, 1915. It was expected to give 200 horsepower, but gave 225 horsepower on its first run. However, Royce was not satisfied with that. He strove to increase power, reduce weight, and fuel consumption. And at the same time, improve reliability. Oh, this was fantastic. I got to find how I can get this. He took a copious amount of notes, like I was saying earlier. Or maybe I didn't say for Royce. I was saying for Danny, but Royce did the same thing. And his work was so detailed that they made his notes into a book. So it says, Royce was testing every part to destruction. And whenever a major increase in power was achieved, a long endurance test would be run to prove that engine at the higher power. So impressive, with the instructions that Royce, the instructions from Royce, that in December 1915, Royce had, or excuse me, Johnson had Royce's memos on the subject printed and bound in an unlimited edition of 100 copies. The book was called The First Arrow Engines made by Royce, and in the preface were the words. Here's a direct quote from the book. In the opinion of the board of directors, the letters written by Royce, the engineer and chief in connection with the design, testing and manufacture of these engines, are so admirable as evidence of, listen to the words they use. As evidence of extreme care, foresight and analytical thought that the directors decided to have them printed and bound in order that the copies may be available for study and as an example to all grades of Royce engineers present in future. This is why I think everybody building a company right now with a bigger small should write down their thoughts in detail on them. Because, you know, I'll probably never run out of books on founders, right? There's tons of them out there. But there's not. I mean, and I'm only one person, right? I can read about 50 of these a year. So, let's see, let's say for a 20-year period, what does that mean? You're, it's a thousand books, something like that? That's not that many. Like, there's millions of companies that have, that are already in existence or have existed. I would love to get a copy of that book. I haven't looked for it. I gotta see if I can try to find it. But I think this is something that all should, everybody should do. Okay, so this is interesting. They have a nickname of it. Okay, so the note I left myself was the achievements of a thinking designer. I don't know what I meant by that. But it says, the book became famous. The book I was just referencing as the Rolls Royce Bible. So, that's the nickname, right? On December 19th, December of 1919, the Times, the newspaper printed a whole article about it concluding. The Bible was printed for the purpose of providing those engaged at the works with an example of engineering living, of engineering living, and of impressing upon them, the amount of care and thought needed for the design and manufacture of a successful arrow engine. During the war, its author received a remarkable tribute from a German engineer who had apparently studied the evolution of the engine from a six, oh, from a successive captured machines. So they shot down a plane and then reverse engineered it, right? And this is what he's saying. The German guy. He described it as a classic example of how a designer can avoid every possible difficulty that can be foreseen in a design and thus ensure success. And he declared that many details of the engine and undoubtedly not the result of long continued experiments, but the achievement of a thinking designer. Now, my note to myself makes more sense. This is a first that I've come across. A company so focused on quality that they risk going to prison. So there's this department. They're saying, hey, you need to hurry up and manufacture faster and even if you have to sacrifice quality and clawed and Royce refused. And it says, when the Ministry of Munitions tried to force Rolls Royce to get a dozen or so firms to make their engines, the very great man clawed Johnson and took the bold stand that he would tear up every drawing and go to prison rather than to agree to risk inferior skills of other companies. Johnson said that the plane of using other manufacturers for futile and would yield nothing but mountains of scrap. They're also cocky about their quality of their work. I mean, I kind of like if they're competing with other people, they're kind of, you know, talking trash here. It's interesting. He had his way. Other companies were not licensed in Johnson state out of prison. However, it almost led to Royce being nationalized. Think about that having such confidence in your work. We can't even give our plans to other companies. They wouldn't even know what to do with it. They would yield nothing but mountains of scrap. Here's the driver of the French War Minister gives a product review of some of their cars. This is hilarious. So the French, the driver, his name is Eduardo and he's writing the company. They're using their, I'll just read to you. After having studied all the makes of cars, which have passed through my hands, I wished by this letter to express the satisfaction I have experienced, not only he's listing all these like the 40 horsepower car, but these other two Rolls Royce cars that he used, which I drove a year before the war, but also two other ones which I induced, you convinced the war minister to purchase. So the French war minister is buying it on the recommendation of his driver. I travel with him, the French war minister, 35,000 kilometers in three months, all over France, but principally at the front, meaning the front of the war. Both our two cars traveled without a single breakdown and always behave perfectly. We traversed bad roads along deep ruts made by the wheels of heavy artillery and encountered shell holes where the wheels sank to the axle box, for instance, in the woods of Tracy, where we had to pass between trees without the trace of a road. There, I fully appreciated the endurance and remarkable supplements of your cars. It is only necessary to have done the journeys I have in them to be convinced of the quality of your cars. I think that's just a good, good etiquette for humans. In general, if somebody's making, whether it's a company or a person's making a product that you enjoy, tell them, like good feedback for them. And it's kind of opposite for what most people do. They just kind of, like you only contact a company when you're kind of upset, right? Okay, so they had a decision make after the war ends. Are they going to build cars, planes, or do both? The return of peace after four years of slaughter, the like of which have never been seen in the world before, brought the directors of rural's voice face to face with the need to plan the whole strategy of the company. Should they continue to manufacture air engines, should they return to making luxury cars or should they do both? Cars looked a much better proposition, although nothing new had been developed during the war. However, the magnificent silver ghost had been supreme before the war. And just as rural's voice had not been able to continue car development, neither had any of its rivals. So I included them in the podcast because imagine if you, in the industry in which you work in, was completely frozen for four years. It's such an interesting thought. And this happens over and over again when we talk about industry associated with war, both in usually in World War I and World War II. It's just something like we're very blessed and not have to deal with, and hopefully never have to deal with this. So this is Royce's plans for after the war. Although heavily engaged on aerodesign, aero engine design, during the war, Royce never the less found time to think about cars. In a memo dated July 1917, he announced that all post-war chapses would have electric self-starters and that he had been studying this landchester gearbox. So he says Royce had already begun to work on the design of a smaller car before the end of the war, fortuitously perhaps because the immediate post-war boom was followed by a slump. Johnson was concerned that not enough people would be able to afford the silver ghost and felt that a smaller 20 horsepower car would be a very useful addition to the company's range. Good thing that Royce was already working on that. And part of the reason is because Winston Churchill, so this is Winston Churchill imposed a road tax on all vehicles of one pound per unit of horsepower this meant that the silver ghost at 48 horsepower would cost its owner about 2,500 pounds per year. So obviously having one that's half the price would save your customers more money. Then there's a lot... Okay, so they've talked about this post-war slump. So all car companies, a lot of other car companies are getting kicked. They're having to deal with lack of demand and how are costs. And so for a short time, they're trying to think of maybe merging with a bunch of other car companies. You can guess by this point what Royce's response is and his is, of course, I'd rather retain control. From a personal point, this is Royce. From a personal point of view, I prefer to be absolute boss over my own department, even if it was extremely small. Rather than to be associated with a much larger technical department over which I just had joint control. But Royce was fearful of the future. And he says, I do not think the present way that is the multitude of small companies doing a great variety of work can possibly stand the competition after the war. And I'm anxious that our own position should not be equally weak. I feel that something must be done, otherwise the trade of motive, manufacturing will leave England. And so the example of that is the economist pointed out in 1923. Total British output of 37,000 vehicles was produced by no fewer than 90 different companies. So there's a lot of competition at the time. Going back to what it's like to work with Royce. This is another internal memo. And it says, unfortunately, we cannot deal with this business until Royce has finished designs of his 20 horse power car. He says, this will occupy him for two or three years. If we were able to employ some other engineer to design the car, Royce would still insist upon criticizing and probably redrawing every part of the design. And therefore, he would be overloaded and we should just be, and we would be risking his health. And so it's important to understand how important that that Claude Johnson was to success of Royce. And this is just comparing and contrasting to the different roles they played. It said, far worse for Royce's point, from Royce's point of view, was the loss of the man who had turned Royce's, because Claude Johnson dies, right, before Royce. So it says, they lost the man who had turned Royce's genius into a commercial proposition. And this perhaps is an appropriate moment to compare the qualities of the two men and to see how they complemented each other. Without Royce, the peerless engineer, there would have been no Royce cars and no eagle arrow engines in the First World War. That much is certain. But without Johnson's organizing ability and a flair for publicity, there would probably have been no company to exploit the cars and arrow engines. So they kind of need each other, right? And Johnson thought not only of external relations, but also those inside the company. Royce's lack of what today are called interpersonal skills with his managers and employees is well known. Although he engendered quite remarkable loyalty in spite of being a hard taskmaster, for example, almost all the workforce from Manchester moved to Derby between 1907 and 1910, many of them making the journey on foot. They wanted to work with Royce. However, Johnson was more aware of human relationships though even he might be dubbed paternalistic by today's standards. In the works, their hung notices exhorting the workforce to be accurate and be certain and reminding everyone, you are on your honor, not to depart from our standards. So Johnson also arranged for badges of merit to be given to those who it was felt had earned them. So he's just basically said, like he was just better understanding how humans they want to be recognized for the work today. He would arrange for the whole works management to go to the theater on Monday night. He organized regular medical checks and encouraged all types of sports. He had leadership skills and management skills. He didn't have the product genius so the engineering genius Royce did. But he also had things that are necessary for a company's success. But he also had the numbers to back it up. He said in purely financial terms, Johnson's record speaks for itself. 1926, Rolls Royce had made profits of 164,000 pounds and a return on capital of 20%. But perhaps Johnson's greatest contribution to Rolls Royce was his understanding of Royce himself. This is a really important part. And his unselfish action in 1911 in taking him on an extended trip through Europe and Egypt which almost certainly saved Royce's life. They left it like six months together. Johnson and then he winds up relocating him in South France because doctors ordered us to get out of like the cold damn bear environment he was in. So what is that? If you need dry air, is that tuberculosis? I don't know the sickness he had. Johnson also understood that both Royce and his employees would probably function better if they were kept apart. So it meant by Royce worked remotely. It was a happy coincidence that Royce's doctor prescribes sea air and that Derby, whatever other climactic attributes it offered, could not boast of sea air. If Royce had stayed in Derby, his obsession with detail might have well been hampered the commercial viability of the growing organization. Even when he was in the south of England and so he split his time between South and England and South France, he would become obsessed with intricacies of a component that might ultimately not even be used in production. And he would become involved in details that could easily have been left to others. For example, he insisted on designing the toolkits to be fitted into the cars. That's pretty crazy. He could not stand adjustable spanners and so he designed a full range of double-ended Oprah spanners. However, these did not satisfy him because each different size of nut required a different degree of leverage. He therefore designed a set of spanners with single ends, but with the length of each spanner exactly appropriate to the size of the nuts. He's like, that's... Somebody else could be doing that work. Somebody else could be doing that work. And so there's just an example of like the extreme, almost detrimental level of detail that Royce had. And this is a first-hand account. Like Royce was very much a distributed company. And so this is person working directly with Royce at the time. He was giving a first-hand a view of how the company operated in 1920s. In 1923, the control of the company was vested in three widely dispersed groups. All designing was carried out. This designing was carried out where Royce was living. So it's House. All the directors except Royce were based in London. And then the sales departments were... And manufacturing was in Derby. The function of the latter was to make parts of Royce's design. So the factories test them. Suggest means of eradicating any faults and finally carry out road endurance tests before releasing them for manufacturer. In essence, this was correct. It did not give the full story. There was also a major design office in Derby albeit under Royce's control. So it says, this is a more description. Because Royce's word was law throughout the company, the apex of the administrative triangle was undoubtedly the team of designers working under Royce. So he'd kept like a small team with them. There's like five or six people. So this is interesting. They worked in monastic seclusion. So like monks in a drawing office called Kamacha situated in the middle of a village about a quarter mile from Royce's house. To ensure a minute... This is really interesting. To ensure a minimum of distraction, the drawing office was for a number of years forbidden the luxury of a telephone, communication between Kamacha and another place that the company owned was maintained by the secretary who had to write a bicycle between the two places. It seemed to me that until his health deteriorated, Royce made the majority of all the technical decisions. As I later found out to my cost, if one attempt to turn Royce's from his chosen path by any arbitrary action, one got into very serious trouble. It's very severe trouble indeed. This was the team responsible for the design of every car and all their components from 1919 until Royce died in 1933. It says in matters concerning the actual model which eventually went into production, Sir Henry's decision was final, even though the sales department might not always agree that they were getting exactly what they wanted. And now this is the Peter Pee of the author wrapping up Henry's life for us. Royce was quite simply a genius. And thanks to a meeting with CS Rules, the benefits of his genius were spread and shared by the whole country, indeed by the world at large. We have noted his belief in hard work. He set the example and expected others to follow, as this guy named Ivan who worked with him in 1920s and who continued to serve the companies for the 1960s observed. Henry Royce ruled the lives around him, claimed their body and soul even when they were asleep, so that's the quote that's repeated. A.G. Eliot joined Rules Royce from the company's great rival, Napier, in 1912. He served the company for 44 years, instead of the silver ghost, Royce's masterpiece. And this is one of the best engineers that worked with Royce describing why Royce was so talented. When I saw the engine dismantled, it revealed new and advanced features of design, which astonished me. It was the first six-cylinder engine that I had ever seen fitted with a crankshaft damper. The first expanding carburetor with such effective schemes of jet and air control. The first valve gear with the silent scientifically designed cam and the first high-tension jump spark distributor. The last name feature being entirely new to motorcar ignition. Eliot recognized genius at work and felt compelled to leave Napier and join Rules Royce to see how it was done. And he said, he's still talking about Henry. He says, Henry Royce never claimed to be a good draftsman, but he had a wonderful eye for line and proportion instinctively knew the right shape for every piece. Nor was he trained mathematician, but he had his own way of doing calculations. By using simplified methods, showing that he had highly developed sense of the fundamental principles of mathematics. And of course, everyone who worked with him knew that he was perfectionist. They knew he would test parts far beyond anything they were likely to stand on the road. Some found his habit of changing and improving design's extremely frustrating. He wanted his designers to be rubbing out and improving all the time. This tradition of obsession with functional perfection long outlived him, and indeed is paramount in both Rules Royce companies today. His near fatal illness in 1911 and 1912, may from the company's point of view, have been a blessing in disguise. Never one of the world's great man managers, Royce was able to concentrate on what he knew best. And so this is a quote about what he knew best. His mind, undistracted by the management of factory, Royce kept his staff busy with a continual stream of ideas from his fertile brain. Royce is striving for perfection and everything he did was epitomized by a comment he made to a local person in this village that he was living. After he had stripped and rebuilt this person's lawnmower, and this is a direct quote from Henry Royce and his motto for life, whatever is rightly done, however humble is noble. And that is where I'm going to leave this story. If you want to get the full story and you want to support my work and this podcast at the same time, you can click the link in the show notes and if you buy using that link, Amazon sends me a small percentage of sale. No additional cost to you. It's a great way for you to get a great read, support the author's work, and support my work as well. You can also go to Amazon.com for us a shop, for us as founders' podcast, and you'll see every all of the books that I've covered for the podcast in reverse chronological order. My voice is going, I've talked enough. I will talk to you next week.