#4 The Remarkable Life and Turbulent Times of Joseph P. Kennedy
Founder's Podcast Episode #4 summarized and refined.
Welcome back to the 4th summary of Founder’s Podcast! Enjoy today’s newsletter on Joseph P. Kennedy!
Introduction
Joseph P. Kennedy was a highly talented, charming, energetic, and ambitious individual. Throughout his life, he experienced dramatic highs and lows, including great successes and significant failures, which he managed to overcome repeatedly.
Kennedy was an Irish Catholic from East Boston. Because of this, he was forced to break through many societal barriers and refused to play by conventional rules. He had extreme conviction and bravery and often spoke out, driven by distrust of those in power, when most felt he shouldn’t have.
Kennedy’s primary goal in life was to earn enough money so his children wouldn’t have to work to provide for them and their families so his children could focus on serving the public. Remarkably, he achieved this goal before the age of 40, ensuring his family’s financial security.
Today we delve into Kennedy’s life and his path to achieving his ultimate goal.
Early Ventures and Education
Kennedy attended Harvard, where he began showing his entrepreneurial skills and work ethic. During his time at Harvard, Kennedy was only 20 years old when he bought an old bus for $600 and painted the word “Mayflower” in big bold letters on the side of the bus. With his bus, he went into the sightseeing business.
Kennedy learned the passengers weren’t there for fresh air or the thrill of motor driving. They were interested in history. Learning this, he made special studies of Paul Revere and dug up every record he could find in the Boston libraries.
Although this early business didn’t make him famous and rich, it taught him many lessons about risk-taking, serving customers’ needs, and financial management.
His early start in the entrepreneurial world is an important stepping stone to his success.
Start in Banking
After graduating from Harvard, Kennedy decided to enter the banking industry. As an Irish Catholic, he faced significant prejudice and barriers in the banking sector, which was controlled by strong Protestant families.
Kennedy, being denied entry into the banking industry, needed to find another way to gain knowledge and build important contacts within the industry. He thought, “Okay, well, how can I get to my goal? Instead of going straight down the path, what most people do, I have to find a different way in and sneak my way in." So he decided, "Hey, I can meet a lot of bankers if I'm a bank examiner.”
At the end of the summer, he took and passed the examination and secured a job. The job paid only $1,500 annually, less than $35,000 in purchasing power today, but offered an invaluable hands-on banking education from the inside and the opportunity for Kennedy to introduce himself to the trustees and directors of the state's larger banks.
While he was working in the banking industry, he and his friend, Harry, started investing in real estate, forming their company Old Colony Realty. The real estate venture was one of the many side businesses Kennedy pursued. He could never focus on just one thing and this is an example of how throughout his life he will always have a side business he’s working on.
In December 1913, Kennedy resigned from his bank examiner position because he knew there was learning there was little room for growth within the company.
Kennedy returned home to East Boston to work at Columbia Trust Company, a company his father helped found. On January 21st, 1914, Kennedy became the youngest bank president in the state at Columbia Trust Company.
Kennedy was the first one to work and the last one to leave. He worked day and night, 7 days a week, 52 weeks a year. This all paid off when he achieved the unthinkable. In just 6 months of being president, he increased Columbia Trust’s holdings by 27%!
Career Progression and World War I
World War I started just 7 months after Kennedy became president of Columbia Trust Company. During World War I, he was of age for military service. At this time, he was already supporting his wife and his 2 children and he couldn’t afford to go to war.
Because he had experience in banking and was already the president of a bank, he was recruited by a local company in Boston, Fore River, that had a multi-million dollar contract with the US Government to build ships and other supplies as needed. He accepts the position at Fore River and gets a deferment because he’s not going to be enlisted into the Military and during the duration of the war he will be working day and night at Fore River.
At Fore River, Kennedy was responsible for managing housing for the influx of workers. He negotiated with government officials to quickly and efficiently spend funds on building temporary housing. He was also asked to oversee the feeding of tens of thousands of men who now worked at the shipyards.
Seeing the opportunity to make a handsome profit for himself, he organized a privately held company, the Fore River Lunch Company, and contracted out the task of feeding Fore River’s employees to his private company. He implemented a self-serve cafeteria that could serve 1,380 meals in 15 minutes.
Though not in uniform, Kennedy felt he was serving his nation by working 70+ hours a week and some nights sleeping at the office. Kennedy, on top of working these hours for Fore River, was still investing in stocks, running his real estate company, and now starting another business, the Fore River Lunch Company.
Kennedy’s final assignment at Fore River was to manage, as best he could, the influenza epidemic that hit Boston with a deadly effect in 1918. The city banned any public gatherings, shut down all entertainment centers, and advised churchgoers to stay home on Sundays.
Kennedy was given the task of converting shipyard dormitories into infirmaries to isolate the sick in hopes of stopping the spread of further contagion.
Although Kennedy’s family survived this epidemic, the pressure on Kennedy was so great that he developed an ulcer, the first manifestation of the stress-induced stomach problems that would plague him all his life.
In late October 1918, the epidemic had ended and a month later, the war was over. Kennedy remained at Fore River through the spring of 1919. After 20 months of being restless and anxious to move on, Kennedy tendered his resignation.
Transition to Hollywood
Instead of going back to the Columbia Trust Company like many thought he would do, Kennedy transitioned into the film industry.
He saw a lucrative opportunity in the movie industry. He initially tried his hand at film production but faced significant financial losses. He quickly saw that the real money was in distributing and exhibiting films rather than producing them.
He realized, "Hey, I lost all the money in producing and there's no money in producing, but there's a lot of money in distribution. So let me see if I can work my way into this business."
This is the very beginning of him figuring out how he's going to be able to amass so much wealth, because remember, his stated goals, as we talked about in the introduction was he wanted to make enough money that his kids, and he has nine kids, when it's all is said and done, never have to work so they can only dedicate their lives to public service. That is his life goal, and that's why he's doing everything he's doing.
In 1919, he founded Columbia Films and secured the franchise to distribute Universal’s films in New England. This strategic move allowed him to leverage his financial skills and connections to enter the film distribution business.
Kennedy then took control of Film Booking Offices and turned the struggling company around. He found the company in disarray and saw it as an opportunity to implement his financial expertise. He cut per-picture production costs, implemented new accounting procedures, and shifted control over expenditures from Hollywood to New York City. Recognizing the industry’s need for better financing, Kennedy established the Cinema Credits Corporation. This company provided more favorable financing rates for film production, helping Film Booking Offices and other studios reduce their borrowing costs and improve profitability.
Managing multiple companies simultaneously became Kennedy’s forte. In addition to Film Booking Offices, Kennedy took control of Pathe and K-A-O, two other major entertainment companies. He managed all three simultaneously, leveraging his financial expertise to streamline operations and increase profitability. Kennedy implemented significant cost-cutting measures, including firing overpaid executives and reducing studio expenses. His financial acumen and management skills made these companies more efficient and profitable.
Kennedy’s major breakthrough in Hollywood came from negotiating the sale of his companies. By consolidating Financial Booking Offices, Pathe, and K-A-O into larger, more efficient operations, he maximized his profits. The buyout of his companies resulted in Kennedy walking away with millions, making the peak of his Hollywood career.
Big Money
Kennedy paid himself $2,000/week(=$1.3 million today) and sold 100,000 shares of Pathe which amounted to $579,000(more than $7 million today)
He was also paying himself another $2,000/week from his other company, Financial Booking Offices. So Kennedy was paying himself in total, $208,000(=$2.6 million today) every single year. Kennedy’s big payout from Financial Booking Offices came from selling 37,000 shares in which he profited $905,000(more than $11 million today).
Along with Pathe and Financial Booking Offices, Kennedy received another colossal payout from his third company, K-A-O. In just 3 months of running K-A-O, Kennedy profited $1.2 million(=$15 million today) from his K-A-O stock.
His ability to juggle multiple ventures and extract maximum value from each deal allowed him to achieve his life’s goal.
Financial Mastery and Legacy
By the time Kennedy left Hollywood, he was a multimillionaire. He shifted his focus to preserving his wealth through strategic investments in real estate and oil. Kennedy bought significant properties, including the largest retail building in the world, the Merchandise Mart in Chicago. His investments in oil and real estate continued to grow his fortune.
To ensure his family’s financial security, Kennedy established trust funds for his children. These trusts were structured so that the principal could not be withdrawn, and only the interest could be used, ensuring long-term financial stability. This approach protected his wealth for future generations, aligning with his goal of securing his family's financial future.
Kennedy's financial strategies and investments made him one of the richest men in America by the 1950s. By 1957, Fortune Magazine estimated Kennedy’s fortune was between $700 million - $1 billion. His legacy is one of hard work, strategic investments, and securing his family's future.
Conclusion
Joseph P. Kennedy’s life is a story of relentless ambition, strategic thinking, and incredible success. He overcame significant barriers and prejudices to build a vast fortune. His hard work, smart decisions, and ability to adapt and pivot in various industries not only benefited him but also set up his family for generations.
Kennedy's story shows that with determination and clever strategy, great success is possible. His legacy of hard work, strategic investments, and securing his family's future serves as an inspiration for anyone looking to achieve their own financial goals.
My 3 Takeaways from the Podcast
1. Adaptability is key to success
Backstory: Kennedy's shift from film production to distribution after financial losses in Hollywood demonstrates his ability to pivot and adapt. He recognized more profitable opportunities and swiftly capitalized on them, leading to substantial success.
Takeaway: The ability to adapt and pivot in the face of challenges can open up new opportunities and lead to greater success. Be flexible and ready to change your approach when necessary.
2. Diversification creates stability
Backstory: Kennedy never relied on a single source of income. While running Columbia Trust, he invested in real estate and started the Fore River Lunch Company during his time at Fore River. This diversification ensured financial stability and spread risk.
Takeaway: Diversifying your ventures can provide financial stability. Having multiple income streams allows you to take more risk and can give you peace of mind knowing that you have multiple streams of income to fall back on in case of failure or loss of investment.
3. Obsession leads to success
Backstory: Kennedy's primary goal was to earn enough money so his children wouldn't have to work, allowing them to focus on public service. He relentlessly pursued this goal, working tirelessly across various industries, and achieved it before age 40, securing his family's financial future.
Takeaway: Having a clear, obsessive goal can drive relentless effort and determination. Pursue your goals with unwavering dedication to achieve extraordinary results.
Thanks for reading my newsletter! I hope you were able to take away something from it!
Stay tuned for my next newsletter which will be focused on Episode 5 of Founder’s Podcast: Steve Jobs.
See you next time!
~ AJ