Can the richest man in America also be one of the least wasteful? Everyone knows John D. Rockefeller as the oil tycoon and philanthropist. But what most people don’t know is that he attributes a huge part of his success to his aversion to wastefulness.
This was a virtue that his mother drilled into him as a young boy. Since they were very poor, she used to repeat maxims on frugality, such as “Willful waste makes woeful want.” As a result, Rockefeller remembered and lived these maxims throughout his life. No matter how wealthy he got or how much easier it would be to throw away waste, he’d always find ways to reuse any byproducts from refining oil into kerosene.
An early example of this was a very noxious product that other refiners couldn’t wait to get rid of. They threw away barrels of the stuff down the creeks and rivers, and this toxic runoff made Ohio’s Cuyahoga River flammable. It was said that if a steamboat threw away hot coals overboard, the water would catch fire.
Rockefeller, on the other hand, found uses for this toxic byproduct to fuel part of their refining process.
“We used to burn it for fuel in distilling the oil,” said Rockefeller, “and thousands and hundreds of thousands of barrels of it floated down the creeks and rivers, and the ground was saturated with it, in the constant effort to get rid of it.”
Source: “Titan: The Life of John D. Rockefeller Sr.” by Ron Chernow
What was this “waste” product? It was gasoline.
Since this was before the popularity of automobiles, no one knew what to do with the gasoline except for Rockefeller, who had the foresight to save it and use it as fuel. This meant that by the time the automobile industry took off, Rockefeller’s Standard Oil was ready to capitalize on this new market – right at the time when the rest of the kerosene industry was in trouble:
“Most momentous of all, the automobile promised to consume that vile, useless by-product, gasoline, and Standard Oil cultivated the new carmakers. When Henry Ford rolled out his first vehicle, Charlie Ross, a Standard Oil salesman, stood by with a can of the trust’s Atlantic Red Oil. “
It didn’t stop at automobiles, either:
“When the Wright brothers took off from Kitty Hawk in 1903, their flight was powered by gasoline brought to the beach by Standard Oil salesmen.”
Eventually, in 1910, gasoline sales outgrew those of kerosene and other oils.
“Waste” Products Lead to Innovation
Gasoline wasn’t the only waste product that Rockefeller reused and profited from. Here’s one of his early attempts at reusing waste:
“Since a residue of sulfuric acid remained after refining, Rockefeller drew up plans to convert it to fertilizer—the first of many worthwhile and extremely profitable attempts to create by-products from waste materials.”
This meant that Rockefeller didn’t see Standard Oil as merely a kerosene producer, but as a company that profited from every single aspect of the oil refining process:
“During its first two years, Standard Oil had dealt largely in kerosene and naphtha. Then, in 1874, the company branched out into petroleum by-products, selling paraffin wax for chewing gum and residual oil tar and asphalt for road building. Before long, the company was manufacturing lubricants for railroads and machine shops, as well as candles, dyes, paints, and industrial acids.“
In the end, it was Rockefeller’s diligence in turning waste into profit that kept his company extremely profitable when the rest of the industry was dwindling:
“After years of harrowing prophecies that the industry might vanish, the business outlook had never looked brighter, despite the growing use of electricity. Sales boomed in everything from oil stoves to parlor lamps to varnish, soaking up oil supplies and driving up prices. In 1903, the British navy outfitted some battleships to use fuel oil instead of coal, attracting the notice of the U.S. Navy. Paraffin wax had become a vital insulator in the burgeoning telephone and electrical industries. “
Going through all this history, it’s clear that Rockefeller’s ability to innovate and keep his business profitable through changing times comes from his willingness to avoid waste in such a wasteful industry. No matter how seemingly toxic or useless a byproduct was, he would turn it into an effective, sellable product.
Lessons From Rockefeller’s Innovative Approach to Waste
The experience of building an oil empire seems so removed from what majority of entrepreneurs face today, so what can we take away from Rockefeller’s story?
1. Don’t let competitors dictate what you’ll do.
If Rockefeller simply followed what competing refineries were doing, he would’ve joined them in polluting the rivers and creeks of Ohio with gasoline. Instead, he found a profitable use for this waste byproduct, which eventually became the core of their business.
This also meant that while his competitors were focusing solely on how to sell more kerosene, he was simultaneously building alternate revenue streams which paid off decades later. So by the time electricity replaced kerosene, his business kept thriving as others struggled to survive.
Rather than imitating what others are doing, dig deep into your own business and what you’re really releasing into the world. Oftentimes it’s not just a product or service, but a solution that people need. What is that need and how can you fill it better? How will that need change over time?
2. Avoid waste as much as you can.
Given Rockefeller’s wealth, he could’ve just thrown money at his business’ waste problems. Why spend time and resources on research and reuse when he could just dump all the byproducts somewhere? The answer is simple: his puritanical upbringing was drilled into his nature so deeply that he couldn’t bear to just throw things away.
It might be more convenient to just throw away unnecessary things, but there might come a time when you need them. By that time, it might be too late to get them back.
Whether it’s time, ideas, or human potential, it helps to be mindful of what we’re wasting. This is especially harder to do with knowledge work, where too many open tabs or spending hours on social networking doesn’t seem to cost too much. But over time, the cost adds up and the wasted time, energy, and attention can’t be easily reclaimed.