The Biography of The Founder of Glock

1. 0:00 – 2:02

   The Hammer Attack and the Embezzling Advisor

   1. DSDavid Senra0:00

      Gaston Glock arrived in Luxembourg in July 1999 for an urgent talk with the Shell company artist, Charles Ewert. Ewert picked up Glock personally at the airport. Before proceeding to their meeting, he suggested that Glock take a look at the new sports car that he had just acquired. It was parked in a garage. When they got to the garage, Ewert guided Glock down to the third underground level, where they found themselves alone. Ewert pointed out the sports car, and Glock approached on foot to take a closer look. Suddenly, a tall man stepped out of the shadows, lunging at Glock. Glock raised his arms defensively, and the attacker swung a large rubber mallet and struck Glock on the top and the side of the head. Rather than intervene to help Glock, Ewert turned and ran. "I'm a coward," he would explain later. Glock, meanwhile, was fighting for his life. The gunmaker, who usually carried a pistol, lacked one on this day. With no other option, Glock fought with his hands. He swung his large fists into the attacker's eyes and mouth. Though he was 70 years old, Glock put up a stout defense. He drew blood and knocked out several of his attacker's teeth. Despite the hammer blows to his head, he gained the advantage. When the police arrived, they found a bizarre scene. The bloodied attacker lay collapsed on top of Glock with his arms outstretched like Jesus. Glock was pinned to the ground, but not mortally wounded. His attacker was unconscious. Glock had suffered several hammer blows to the head and lost a liter of blood. At the hospital, though, he was strikingly composed. Before doctors finished patching him up, he summoned his personal bankers. Those two bankers held $70 million of his cash in accounts to which Ewert had access. Within three hours of the attack, Glock had moved 40 million to a secret Swiss account. Ewert was busy, too. He blocked the other 30 million from being transferred. Ewert, Glock's supposed financial advisor, had been stealing from him.

2. 2:02 – 3:35

   Book Introduction: Inexperience as an Advantage

   1. DSDavid Senra2:02

      That was an excerpt from the book that I'm gonna talk to you about today, which is Glock: The Rise of America's Gun, and it was written by Paul Barrett. I was not expecting to do this book this week. This book wasn't even on my radar until, like, a week or two ago. I saw somebody, uh, speaking about reading the book online, and what they said made me interested in ordering the book. And he says, uh, "What struck me is how his inexperience was a great advantage. He didn't assume anything about how to design a handgun because he never designed one before. Consequently, he, of course, designed the best one ever. He didn't know what was out of bounds." And so that idea of not knowing what's out of bounds, not knowing what you don't know, it sounds like, to a normal person, like a liability. But in, as we've seen, many of these, uh, the books that you and I go over together, uh, for entrepreneurs, especially going, attacking an industry they never worked in before, it winds up becoming s- an advantage, and that'll make a lot more sense as we go through the book. So that intro occurs about 15 years after Glock s- invents and starts selling his handgun. This story is wild because not only does he have people stealing from him, his financial advisor actually hired the guy to kill Glock. But what's crazy is, over the course of the story, Glock has so many of his top lieutenants and top executives steal from him, which I'll get to in a bit. I wanna start at the beginning because it doesn't make any sense. This guy was 50 years old. He was managing a car radiator factory outside of Vienna. He had a small manufacturing business on the side. He had never made a gun. I don't even think he owned a gun, and yet within a decade, he goes from zero to billionaire.

3. 3:35 – 5:38

   From Shower Curtain Rods to the Army Pistol Contract

   1. DSDavid Senra3:35

      So let's jump to that right now. After 30 years in manufacturing, Glock had yielded a respectable social station and a comfortable life. Still, he dreamed big. He was the son of an Austrian railroad worker. He was managing a car radiator factory outside of Vienna, and he operated a side business with his wife. Using a secondhand metal press, they produced a modest volume of brass fittings for doors and windows. He also made a bunch of shower curtain rods. Over time, the side business slowly expands, and this is one of the most important, um, ideas in the book, and that is to always do the best with the job in front of you because you can never predict what future opportunity that unlocks. He gets really good at manufacturing things with polymer and plastic. One of those things he actually is gonna make for the Austria's Ministry of Defense. He starts making knives for the Ministry of Defense. That is how he learns about the opportunity to make handguns. So it says, "The garage metal shop expanded over time to make steel blades, which so impressed Austria's Ministry of Defense that Glock obtained a contract to supply field knives and bayonets to the Austrian Army." And this is where he's gonna find out the opportunity. Watch, w- watch how fast he moves once he realizes there's a huge opportunity here. One day in 1980, he overheard a hallway conversation between two colonels that jolted his imagination. The army needed a new pistol to replace the antiquated ones from World War II. Glock interrupted the conversation and asked if it was possible if his company could bid on the pistol contract. He's asking to bid on a pistol contract. He's never made a pistol. Designing firearms was something far beyond his experience. He asked the colonels to describe the army's requirements for a new handgun. And I just love his mindset here. He's like, "Well, this shouldn't be too difficult to make," because he just describes it. To him, the handgun was simply another accoutrement that attached to a soldier's belt, similar to a knife that he already produced. As Gaston Glock himself put in an interview, "That I knew nothing was my advantage. That I knew nothing was my advantage." He gets to start with a blank sheet of paper. All of his competitors have decades, and some kind-- in some cases, centuries of built-up procedures and processes in the way they do things.

4. 5:38 – 8:35

   Research Process and Customer Requirements

   1. DSDavid Senra5:38

      So let's skip ahead and go into his initial research process because I think there's a lot of good ideas in here for you and I. Uh, Glock didn't own any guns. After the conversation at the defense ministry in early 1980, he bought a Beretta, a SIG, and a modern version of the German P38 pistol. He began disassembling the guns, putting them back together, and noted the contrasting methods used to make them. "I started intensive studies in such a manner that I visited the Austrian patent offices for weeks, examining generations of handgun innovation." So what's he doing there? He's doing exactly what you and I are doing. He understood that learning from history is a form of leverage. Listen to what he just said, "I started intensive studies in such a manner that I visited the Austrian patent office for weeks, examining generations of handgun innovation." What took people generations to learn, because he's going back and doing all this reading, he learns in a few weeks. "I bought and tested all modern pistols available at the time, and I tried to involve into conversation the best experts I knew." So he contacts a bunch of experts in the firearm industry. He invites them. He has a meeting with them. There's two guys, uh, two main guys here, and I just wanna go over this really quick. Uh, he invited several firearm specialists to join him. Among those who attended were this colonel, uh, a champ- who was a champion shoot- shooter who also oversaw weapons procurement for the Austrian army. That becomes extremely important. He also invited an author of technical books, such as Silencers for Hand Firearms, and then he just asked them flat out, "Gentlemen, what do you wanna see in a pistol of the future?" And the beautiful thing is his initial customer is going to give them the outline of exactly what he needs. Remember, he's gonna have to bid against o- It's not like they're just gonna give him the contract outright. He's gotta bid against other gun manufacturers. So it says, uh, "They desired a high-capacity pistol that held more than eight rounds. It should weigh no more than 28 ounces. It should have a light trigger pull for fast, accurate firing, and it should be streamlined and easy to holster. Crucially, the gun should have no more than 40 parts." This is so important. One of my favorite ideas about this entire book is the way this guy designs his company, and I'm gonna repeat a lot of the things that he does. He designed a product and a company based on limiting the amount of moving parts. This is gonna be very reminiscent of, like, the early days of, uh, Henry, when Henry Ford was building his car, of Herb Kelleher of Southwest Airlines. The limited moving parts, the sim- simple product, the simple business processes they all created allowed them to stack advantages at one after another. Wait till you see the profit margins that this guy... This is incredible. All right, let me... I'm getting ahead of myself. So it says, "The colonel also told Glock that the pistol should be able to withstand extended contact with snow, ice, and mud. It should fire 10... It should be able to fire 10,000 rounds with no more than one failure per thousand. The ideal pistol should have a long service life of 40,000 rounds." This professional research that Glock is engaged in w- is so important, and he knew, he knew it was important then. At the evening's end, Glock had his guests sign and date one of the sheets of paper that m- memorialized their thoughts. He treated the occasion as if it would be remembered by history. Another main theme that appears over and over again

5. 8:35 – 10:06

   Prototype in One Year and the Glock 17

   1. DSDavid Senra8:35

      in the book, you don't need much to start out. He began working on a prototype. He tested crude early versions in a basement firing range that he built specially for this purpose. He shot alone using on- This is hilarious. He shot alone using only his left hand. If the gun blew up on him, he would still have his good right hand. This guy moves fast, too. More professional research. Glock attended police academy classes and took private shooting lessons. Remember, he didn't own a gun. He knew nothing about it. "My intention was to learn as much as possible, as fast as possible." This process lasted one year. He filed for an Austrian patent on April 30th, 1981. It was his 17th invention, so he called the gun, he called his gun the Glock 17. So from zero to patent, that's one year. Then from finally actually submitting the actual prototype to, which is gonna be his first customer, that's another year, so two years in total. After another year of testing and improvement, Glock submitted four samples of the pistol to the Austrian army. "I worked for two years, day and night, to bring the sample to the army on time." Move fast. And then, as we'll see a few times today, Glock has a lot in common with James Dyson. Difference for the sake of it, and retention of total control. To this day, the Glock family owns the company. Glock is obsessed with control, just like Dys- James Dyson was. If you don't know what I'm talking about, uh, listen to episode 300. Uh, that's the third or fourth time I've read Dyson's autobiography. Two ar- overarching concepts would set the Glock 17 apart. Remember, he's bidding against other existing pistol manufacturers, okay? First, it was to be made largely

6. 10:06 – 13:07

   Difference, Polymer, and a Factory from a Blank Page

   1. DSDavid Senra10:06

      out of light, resilient, injection-molded plastic, and second, it was designed without a preexisting factory. I need to go ahead a few pages before I come back to this because this comes up over and over again. Its black plastic and metal construction set it apart from everything else on the market, suggesting modernism and efficiency, difference for the sake of it. Something that James Dyson talked about that benefited, that his product, his first vacuum cleaner benefited in the early days, that gave him an edge over all of his competitors, is it looked different. You would go into a store. You'd see seven, eight vacuum cleaners all look the same. Then you get to the end, and you're like, "What the hell is this thing?" It immediately snaps the consumer. It's like, "Oh, I need to pay attention. This is different." He also has a great line. James Dyson has a great line on the value that, that a strange-looking product will actually get you more media attention. He says, "It is one of the virtues of having such a strange-looking product that journalists are more likely to take an interest in it." That's something that he learned when he designed a, uh, a wheelbarrow with, instead of a wheel, had a ball, and he got so much more attention than other people trying to build wheelbarrows that all look the same, that he applied that idea about 10 or 15 years later when he was designing the vacuum cleaner. We see that same exact idea benefiting Glock right here. And so not only did Glock's gun look different, but it also had a, a huge benefit. Remember, it has to survive in rain, snow, and mud. This was j- as initially designed for the military. So the, he's using industrial plastic, which they said is often called polymer. Was actually remarkably strong and resistant to corrosion, a major problem with traditional steel guns. And then because he started from a blank page, he's like, "Well, I don't have to just manufacture guns in a factory that's been manufacturing guns for 50 years. Well, what would a factory look like if I designed it now from scratch?" This also gives him, this also makes him, uh, produce, uh, his gun a lot, uh, a lot more efficiently and cheaply, and that increases his margins. Uh, the important thing that gave him the, his big price advantage was that he designed the pistol for complete production on computer-controlled tools. And I probably have 75 highlights in this book, but really this is a summary of why, like, studying the way he... He's a very flawed person, as we'll get to later on. But his approach to company building and, and creating a new product is very fascinating to me. It says, uh, this is just a note I'm writing to myself, "The book is all simplicity, focus, and differentiation." That is the best way to get my attention. Simplicity turns me on. I love it. I am drawn to it. Glock produced the simplest handgun with only 34 components. Again, simplicity lets you stack advantages one on top of another. I also wrote down, uh, one of Steve Jobs' favorite quotes, one of my favorite quotes. This was plastered all over, uh, Apple in the early days, "Simplicity is the ultimate sophistication." That, of course, is Leonardo da Vinci. Because of the unfussy way, the simple way Gaston Glock fabricated his slide, his pistol required fewer steps to manufacture, saves money, and there were fewer opportunities for error, adds durability. The Glock 17 was put through a pl- preliminary firing run of 10,000 rounds. The Glock malfunctioned just once. And then again, the benefit

7. 13:07 – 15:38

   The American Market and Smith & Wesson's Response

   1. DSDavid Senra13:07

      of starting from a blank sheet of paper and a brand-new company. None of his competitors could say the same. He got it right because he hadn't done it before. One of the largest problems in getting a new design accepted by an established manufacturer is not just the, quote-unquote, "not invented here" syndrome, but also the we don't have that tooling syndrome. Why would we invent something new when you can simply modify what we already have? Glock started with a blank sheet of paper. As a result, he came up with something original, and he was at the right place at the right time. The book starts out with this, this crazy shootout that's happening in Miami in the 1980s between the FBI, police officers, and I guess these drug dealers or bank robbers. A lot of these cops and FBI agents get killed. They're all, at that time, they're, like, running around with, like, these Smith & Wesson revolvers that hold, like, six shots. And if anybody's seen the documentary that's on Netflix called Cocaine Cowboys, the flood of drug violence in Miami in the '80s, ended up spreading all over the country actually. These guys have Uzis. They have high-powered rifles, and so you have military and law enforcement officials all over the country and all over the world trying to get better guns that could hold more rounds and were more reliable. And so even though he starts out in Austria, he's going to wind up dominating the most valuable market for his product in the world. It's also interesting because he, I think, I'm pretty sure he's, he's pretty... He's, he's very anti-American. He does not like Americans. He says they're stupid, but that's where I think almost all of his wealth came from. Uh, within just a few years, another market, far larger and richer than the Austrian defense sec- sector, would be keen for a pistol of the future. American police officials wanted a new handgun, and Glock was there to offer a powerful alternative to the revolver. And then the author talks about the dynamics of this market, that the fact that the American civilian gun-buying population tends to gravitate towards what the professionals carry, and as a result for Glock, this will tran- this translated into a bonanza. And then finally, one more thing from this section before I move on, something we see over and over again, first they ignore you, then they laugh at you, and then they copy you. Smith & Wesson, who c- who dominated the American law enforcement market before Glock created something, uh, new and better, Smith & Wesson ignored Glock at first, then they scoffed at him, and eventually began, they began imitating him. He actually sues them later on and wins, like, a, a patent infringement case against them. Okay. So in addition to simplicity, differentiation, and, and, uh, retention of total control, the other main theme of the book that stuck out to me that I've been thinking about a lot, like how can I use this in my own business, is he's got all these very unique and unusual forms of distribution. And so my answer to this question, how did a pistol produced by an obscure engineer

8. 15:38 – 19:40

   Karl Walter and Media-Driven Distribution

   1. DSDavid Senra15:38

      in Vienna, a man who barely spoke English and had no familiarity with America, become in the space of a few years an American icon? The answer to that question is distribution, and a lot of this is gonna be media-driven, and media begets more media. So first of all, there's people in America that are really... They're gun salesmen. They understand the industry. They see this headline, and they're like, "Wait a minute. What's going on?" So this guy named Carl Walter is gonna play a very important role in the first few years of Glock. Glock, I don't think, really maintains very many professional resource, uh, relationships for a very long time. This guy, like, builds up his entire American distribution and sales force, and then he winds up firing him later on. But Carl is just this gun salesman, and then he sees a headline. He's like, "An unknown gun manufacturer won a large contract to supply pistols to the Austrian Defense, Ministry of Defense." He was intrigued. So let's go back to this very important theme that we see over and over again. Do the absolute best job on the opportunity that's right in front of you, because you have no idea what opportunity that will unlock in the future. Glock starts making knives for the Austrian government. He's reliable, does the best job possible, so then they allow him to bid on the pistol contract. He does an incredible job there. That headline then gets the attention of this guy, who's going to build out his entire American distribution and sales force. And so Carl is sitting in America reading a German's weapon magazine, and that's where he hears about the Glock 17. And so he says, "I was extremely curious why the Austrian Army bought it." So he goes and meets Glock, and there's two things that are happening here. One, he's like, "Well, here's this gap in this extremely valuable market." How many guns does the American police and military buy? And so he's like, "Well, there's actually some really... There's a lot of money to be made if we could convert US police departments from revolvers to pistols." And there's all these news stories about the cops in, in, in the 1980s being outgunned by other people, not, you know, having six shots, their, their guns jamming, all this other stuff. And so it's like, okay, well, why would you carry a Smith & Wesson revolver that carries six shots and can jam? Why don't you carry this weird-looking pistol that's made mostly of plastic by this Austrian engineer that carries 17? And so it goes back to the Dyson thing about having the benefit of having just a strange-looking product, assuming that the product is good. Obviously, we, we're, we're operating on the assumption that the product you're making is world-class or really great, and he's like, "Wow, that's really ugly." But that initial reaction by Carl is like, "Oh, that's really ugly," but yeah, at least you have his attention. And then this is another example of Glock's, like, fetish for simplicity working in his advantage, because Carl, at the time, when he's going to meet, uh, Glock, he actually works. He's a... He works for this company. I don't know how to pronounce this maker. It says, uh, he represented Steyr, S-T-E-Y-R. But Steyr made really complicated pistols, so it says, this is what Karl said, "The handgun that they made was far more complicated, and it was a pain in the ass to service." So Karl goes and meets Glock, and he says, "Hey, listen, I represent this handgun manufacturer in the United States. Perhaps I could do the same for you. I could represent Glock in the United States." Th- this is the crazy part. The, the, the biggest sales opportunity of Glock's entire career was somebody else's idea. And so Karl also had contacts in the, the American gun media industry. This is, again, this is s- this cannot be overlooked. It was extremely important. So he's having this conversation with Glock. He says, "Listen, the pistol will sell, but it must be sold." He meant that he could explain to the American law enforcement market why a gun that looked so strange deserved a chance. And so he brings with him this guy that runs this magazine, this really influential magazine at the time called Soldier of Fortune. And so he says, "So listen, this is my suggestion. You should give the, the scoop on publicizing the Glock 17 in the United States. Word of mouth will then spread in gun circles. By the time that you have expanded your manufacturing capacity, America would be hungry for your new pistol." So what Karl understood is that media begets more media, and this is gonna supercharge Glock's distribution. And so this article's gonna come out. The guy writing the article says, uh, "He argued that the Glock's design set it apart from everything else on the market." Back to the importance of differentiation.

9. 19:40 – 21:41

   Secret Service Gifts, Pentagon Trials, and Total Control

   1. DSDavid Senra19:40

      Now, the one, with the one exception, Glock studied and copied the greats. Remember, he was going back and reading generations of patent filings in a few weeks. And so this is from the article, "The only, uh, conventional thing, uh, about the Glock was the method of operation he adopted for his handgun. Glock borrowed his basic mechanics from John Moses Browning, the greatest gun designer of the late 19th century." Okay, so let's go back into more unusual distribution. This is fascinating. So the Secretary of State in 1985, the US Secretary of State goes and meets the foreign minister of Vienna. And so the US Secret Service agents and their Vienning, Viennan, uh, counterparts actually start talking, and the Austrian counterparts give the US Secret Service a gift. They give them a bunch of Glocks. "The US Secret Service, uh, agents returned with unusual gifts from their Austrian counterparts, three high-capacity black polymer pistols. It was Glock's first official foray westward." So that's the first way the pistols get from Austria to America. Once they're there, the Secret Service then passes some of the pistols along to the US Department of Defense. Those two organizations are both gonna be future customers of Glock. So then what happens next? American defense procurement officials invite Glock to compete in trials in 1984 to select a new sidearm for US soldiers. Now, I mentioned earlier that this guy's obsessed with control. You see this example. He, i- he objected to the Pentagon, so he's going to compete and then win at this. He objected to the, the Pentagon's insistence that the rights to manufacture the winning gun design would be open to competitive bidding. Glock intended to collect all profit from the production of his gun himself. It's really smart. Again, it goes back to the advice from James Dyson, retention of total control. And so then this goes back to how if you go back in, in Glock's life, even before he had a lot of financial success, he was obsessed with quality. In fact, there's a great line that comes somewhere later in the book where it says, "Quality will always bring you more money." Glock demanded high quality. He, the motto of the company is

10. 21:41 – 27:03

    Quality, Fewer Moving Parts, and 65% Margins

    1. DSDavid Senra21:41

       perfection. Glock, perfection. To this day, it's, like, all on the walls and everything. But this was very interesting. It, this is the s- three-star general in the Austrian army, and he's describing Glock at the early days of building his company. So Glock is still alive today. He's, like, 93. I think he's, like, 52 where we are in the book. He says, "There's this interesting guy. He never in his life designed a field knife, and he delivered the best quality samples among all the in- industry participating, and all those guys have been in the knife industry for hundreds of years. Then this interesting guy came back and sold a newly designed handgun to the Ministry of Defense. Quality will always bring you more money." Now, what happens if you're able to make high quality in the simplest way? You have a company that's going to, essentially, uh, he just created a money printing machine, and this paragraph is really the benefit of a product with fewer moving parts and a company with fewer moving parts. Uh, "They settled on a commercial wholesale price of $360 and a recommended retail price of $560. These levels undercut comparable American and European brands, yet they generated generous profits. Glock's gross margins exceeded 65%. By comparison, Smith & Wesson and Beretta ranged 5 to 20% of profit. The Glock's simpler design and the computerized manufacturing methods allowed for larger profits." Another benefit of a low-cost structure, Glock said in their first year, if they, they could break even, all they had to do was sell 8,500 guns for the year, right? So they have a very low cost structure. We sell 8,500 guns, we'll at least survive. They unveil the Glock at a trade show in America. They sell 20,000 units on the first day, and then you go into why so many people wanna buy it. One, it looks weird. It's getting covered in the media as a result of the fact that it looks weird. But then both professional and recreational gun owners want something that's simple. Less things can break in a life-and-death situation. This is, winds up being huge advantage for Glock. Again, make a product and a business with few moving parts. The pistol's design and its relatively few components was the most important thing. Because of these components, less parts can break, and therefore, the weapon will last longer. Let's go back to a reoccurring theme in the book, the fact that he's getting a ton of free media attention because his product looks so differently. Somebody writes, uh, they're mistaken. They thought that, somebody wrote an article, I think it was, like, The Washington Post or something. They're like, "Oh my God, this, this gun is all plastic. Like, you can sneak it through." It's like, they call it, like, the Hijacker Special or something like that. There's, there's metal in it. You can't sneak it through. But the result was a huge surge in demand for this pistol. The intense public attention devoted to the Glock did have an impact on the gun and its manufacturer. Questions about the pistol's unusual design and materials became a major selling point. Civilian orders continued to pour in as thousands of gun buyers decided to see what was all, what all the commotion was about. I'm gonna pause right here. Uh, when I did the, the book on Robert Caro, it's episode 305. I don't know if I mentioned this in, uh, in the actual podcast, but there was something fascinating where one of the very first, what we, I guess, would call lobbyists today, is this guy named Tommy the Cork. Tommy the Cork was really close with, like, FDR and Lyndon Johnson, and he winds up surviving and living longer than both LBJ and FDR, and he agrees to be interviewed by Caro. And Robert Caro at the time is a very young man. Tommy the Cork's older. Robert is in Washington, DC. You know, he's spending a few days with Tommy the Cork, interviewing him. Wakes up, reads, like, the front page of The Washington whatever Times or whatever. It's like, "Oh my God, Tommy the Cork has been caught in, like, this huge scandal," essentially, like, bribing politicians. And so Robert goes to meet him and is thinking, "Oh my God, Tommy's gonna be distraught. Maybe he won't meet with me." Goes to Tommy the Cork's office, and the guy's, like, smiling. He's, like, gassed up, completely energetic, and Robert's like, "What's going on? Like, didn't you see the newspaper?" He's like, "Yeah, that's why I'm happy." He goes, uh, "It's just free advertising, kid." And so this idea, "It's just free advertising, kid," I think is a main theme in this book. There's a lot of, uh, attention and controversy surrounding Glock's product, and in every case, even his, his attackers just make his company stronger, like we're seeing here. Uh, so it says, "Civilian orders c- orders continued to pour in. Thousands of gun buyers decided to see what all the commotion was about. More than 1,000 requests for free samples from law enforce- enforcement agencies poured in in 1986 alone." So you're not selling one or two b- uh, guns, right? This is another part of, um, his distribution strategy, is you could sell to consumers, but they might buy one or two or whatever the case is. These agencies are gonna buy a thousand at a time. Uh, some of the contracts in this book are, like, 150 million a year to this army, 100 and, uh, you know, 75 million to this other division in the US government or all these other governments. And a lot of them found out because of all the controversy in the media. More than 1,000 requests for free samples of law enforcement agencies in 1986 alone. Glock would send the guns for free, said, "Hey, if you wanna keep them, just send us a check," and the check, the price would be heavily discounted because Glock knew that the US, uh, gun-buying population is just going to copy what the law enforcement and the army has. 9 out of 10 of the recipients eventually sent a check saying that they would like to keep the guns. And so from just this one article alone, this is the, what they said internally at Glock, "You just got $5 million worth of advertising for free."

11. 27:03 – 27:47

    Free Advertising, Free Samples, and Free Training

    1. DSDavid Senra27:03

       Okay, so let's stay focused on more of their ideas for distribution. They actually... I mean, I guess this is kind of a, a t- this is kind of a, a version of influencer marketing combined with an idea that David Ogilvy learned. So David Ogilvy, before he started his advertising agency, he was actually, one of his jobs, he had multiple jobs, one of his jobs was selling stoves door to door. And so something that he learned was if you go up to knock on the door and somebody answers, like, "Hey, you wanna buy my stove?" Talk about it. That would have one conversion rate. And then if you say, "Hey, if, uh, here's a stove. This is all it does, but by the way, if you buy, you get six free cooking lessons with purchase." He said the word free is magical. Just that extra sentence or that extra offer wind up dramatically

12. 27:47 – 32:23

    Sam Colt's Playbook, Die Hard 2, and Single-Product Focus

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       increasing the percentage of customers who actually purchased. And so we see Glock having this, like, combination of influencer marketing plus free teaching and free lessons. It becomes a very powerful, uh, distribution component for them. In mid-1986, Karl Walter began putting some of the country's most admired shooting instructors on contract, that's the influencer marketing part, part of it, to spread the word about the Austrian pistol. This melding of training and marketing became a Glock hallmark. If a department would buy some Glocks, this is what they'd do. They would then dispatch another trainer as part of the procurement deal, a freebie for the new customer. That is the combination of the Ogilvy selling stoves and giving away lessons idea. And then this was also differentiated against their competitors because their trainers would come to you. The other existing gun manufacturers would make you come to them. They took the training program on the road. You had to go to Smith & Wesson Academy in Massachusetts if you were gonna use a s- if you were gonna use a Smith & Wesson. If your agency was going to adopt a Glock, we would send training your way. Again, this goes back to this more unusual forms of distribution. Why? Many times, instructors from neighboring agencies attended these sessions out of curiosity. Glock would then sponsor an open house seminar for all federal, state, and municipal trainers in a given region. This was just a brilliant way to sell this gun. And then what happens next could have been predicted by Andrew Carnegie when he says, "Cut the prices, scoop the market, watch the cost, and the profits will take care of themselves." The deals worked financially because of the company's startlingly low manufacturing costs, which Glock was able to push down even further to less than $100 a unit as its production volume grew. Targeting the lucrative professional law enforcement market was a great idea, but it was not a new idea. All the way back on episode 147, you and I have seen this idea before. Glock is literally running Sam Colt's exact playbook. He was just doing it 100 years earlier. Glock was not the first firearm designer to promote a handgun to the Americans in uniform as a means of developing a lucrative market. The first was Sam Colt. The strategy that the Glock team pursued 140 years later resembled that of Sam Colt. What allowed Sam Colt to get his business off the ground was the fact that he was winning endorsements from prominent lawmen and military officers of his day. This is more on what Colt and Glock had in common. Colt relentlessly pursued public contracts. This is exactly what I've been describing to you so far in the book. Regardless of the profit margin, government patronage, Sam Colt once said, is an advertisement if nothing else. Gaston Glock became the Sam Colt of the 20th century. Back to more unusual distribution, they get the gun in the hands of prop makers for movies. So they, they give, uh, pistols to the prop men, and then they also give them huge discounts, and they would let them cut the line in, in front of other customers. Glock gets one of the most valuable product placements ever in, uh, this movie called Die Hard 2 with Bruce Willis, and this is what Bruce Willis's character said in the movie. "That punk pulled a Glock Seven on me. You know what that is? It's a porcelain gun made in Germany. It doesn't show up in airport X-ray machines, and it costs more than you make in a month." And the crazy thing is all of that was made up, and it did not matter. It didn't matter that every single trait that Bruce Willis said, uh, rattled off on the pistol was incorrect. There was never a model called the Glock Seven. The gun was made in Austria, not Germany. It did show up on airport X-ray machines, and the Glock did not cost more than what a police captain made in a month. Despite all of the errors, as a result of that line in Die Hard 2, the Glock became an instant favorite of American gun enthusiasts. Another advantage that Glock had over their competitors was the fact that they were able to focus. They put all of their effort and resources behind a single product. American handgun makers offered many diverse models in the fashion of the Detroit car companies. Glock saw that as competing with himself and resisted the temptation. So this is what I mentioned earlier, how he goes essentially from zero to a billion, uh, within 10 years. Uh, here's some sales numbers 10 years in. The company sells more than 20,000 guns a month at an average cost of $600 apiece. They've sold over 500,000 Glocks in North America alone. Four out of five Glocks produced in 1995 were purchased by civilians who paid much higher prices than police departments. And this is the crazy part, is that demand is far outstripping supply of the Glock factory at this point in time. He had taken a hiatus from buying advertising. The factory in Austria could not make pistols fast enough to meet the demand.

13. 32:23 – 38:23

    Glock the Man: Tyranny, Excess, and Firing Karl Walter

    1. DSDavid Senra32:23

       And this is more about Glock the man, and then how he ran the company. A lot of weird stuff in here. Uh, a corporation does not have a soul. Its character reflects that of the people in charge. My favorite statement on that is that the founder is the guardian of the company's soul. Uh, Gl- Gaston Glock was very much in charge of his company, and he was a man with a complicated soul. Even those people who came to have grievances against him did not dispute his drive and tenacity. Well into middle age, he discovered a reservoir of ambition that fed the design of a truly innovative handgun. He was a late-blooming tinkerer whose breakthrough came at exactly the right moment. He had enough sense to hire an inspired marketer in Karl Walter. This is the guy I was telling you about earlier that really built the American marketing and sales organization in America, which is by far, uh, the most valuable part of Glock's business. At the beginning, Glock had no feel for the United States at all, and much of anything... Or, or much of anything outside of Austria. He evolved from a provincial manager of a radiator factory to a world-traveling industrialist. That is one of the craziest sentences in the entire book because it is true. He evolved from a provincial manager of a radiator factory to a world-traveling industrialist. He's owns all of the company. This company is worth billions of dollars. Glock built a cash machine with margins in the neighborhood of 70%. The slogan, "Glock Perfection," was not puffery to Gaston Glock. He believed it. His organization projected coolness, certainty, and arrogance. The founder was capable of charm, and at other times, he struck people as distant and condescending. He expressed disdain. This is so, this is the weird thing. He expressed disdain for Glock's American employees based on nothing more than their nationality. He hires a bunch of people that also speak German and that happen to work in America, and they just, they, they like to talk in German, and they talk about how stupid Americans are. This is... What a bizarre guy. Uh, he had an unforgiving management style. When one day, which one day he summarized, "Every morning, you have to slap everyone on the head just in case they did something wrong." Then he does just some unwise things. He goes around, like, uh, their, their American headquarters is right outside of Atlanta, and so he would, like, meet women at... He, he's married the whole time. Ugh. He winds up divorcing his wife, who he starts the company with, and now he is 93, and his new wife is 42. He winds up meeting a bunch of women in, uh, all around Atlanta, then hires them. And so in one case, this one lady's getting hired, and she's telling her... She's, like, a young woman. She's telling her mom, and, and her mom gives her the right advice. She's like, "You gotta be really weird. Like, you have to assume that he has lecherous intentions." That's the word she used, lecherous intentions. And he does. He's, like, kinda hires her as, like, this quasi-personal assistant, so she's gotta do a bunch of stuff in the office. But then he's like, "Oh, do a bunch of stuff at my house, including make my bed and then put candy on my pillow." And then she'd knock on the door, and he would answer it in his underwear. And so there's just a bunch of highlights. It just sounds like he w- spent a lot of his time seducing several younger women. Uh, he traveled in luxury. He has houses all over the world at this point. Uh, his female friends had carte blanche at Atlanta's most expensive stores. But at the same time, he would explode in rage when his employees bought what he considered unnecessary office supplies. And so you have the weird thing is as th- this crazy amount of demand for the product. The, the product is really good, and then the company that's built on top of this, like, fast-growing rocket ship, especially in the early days, it may be different now where it's, like, more mature, it just didn't have a lot of... It just wasn't handling the demand really well. The company was patched together on the fly. The company evolved into a money maker powered by excellent product design and a fearful desire not to displease Mr. Glock. Uh, the way I would describe it is, like, he, he was feared by his employees. And so he evolves into what you would describe as a tyrant, and there's a great line in here that really summarizes what's happening because everywhere he goes, his company's printing money, he's winning awards, and he's just like, "Oh, I'm, I'm amazing." Says he began believing his own news clippings. And so in a strange turn of events, he winds up firing Karl Walter. This is the guy that built- That there would have been no Glock without Karl Walter, but the problem was Karl tried to take some of the shine away from the founder. When the Austrian company received industry awards at, at any award shows, it was Walter who went up on stage to accept them. Glock has this big ego. This is not good. "Rule number one," this other guy working there says, "rule number one is that you let the guy who pays the bill take all the credit." At this point, Karl Walter's compensation was, like, a percentage of sales, and he was just getting too rich, and Glock didn't like that. Uh, in 1992, Glock proposed changing his contract to cut drastically his percentage commission. The owner had no intention of making, uh, him a multimillionaire. Taken aback, he refused. He had lived and breathed Glock for seven years. Was this to be the reward for all of his sacrifice, to be cheated by the man that he had made rich? Glock remained unmoved. "He gave me an ultimatum," Karl said. "Accept it, or..." And I took the or. Without hesitation, Glock fired him, the man widely created with establishing the company in America. Over the next 11 years, Glock would run through seven US sales managers. And this is a terrible line to have your company described as, and yet it didn't even affect... The crazy thing, it didn't-- the product and the demand was so high, it didn't even affect their, their financial performance. Distinguishing oneself within the company became a career killer. Later on in the book, it talks about the fact that a bunch of his employees were embezzling, uh, money from him, and they didn't feel bad about it 'cause they thought he was such, like, an ass, and they're like, "He's-- This guy's making $200,000 a day personally. He doesn't need the money." And a bunch of them actually go to jail for this, but that just gives you an indication of, like, what's happening, and Glock goes wild. You know, he's got all these mistresses. The money's going everywhere. Uh, they, they have, like, this company-wide outing every Thursday at this giant strip club in Atlanta. And so it says, "Gaston Glock was the king of the world. The girls, the guns, the money, and the liquor, and at the center of it all was this Austrian engineer that none of us knew very well." And

14. 38:23 – 40:06

    Theme Music, Billionaire Status, and Closing

    1. DSDavid Senra38:23

       then he doesn't stop there. This guy decides to have his own theme music. So he splits his time between Austria and, I guess, Atlanta, and he would go to this casino and this restaurant so much, and he would insist that when he shows up with his entourage, that the band stops playing. Literally, the, the, the house band has to stop playing whatever they're playing. They would pause for a moment, and then the band would swing into a rendition of Frank Sinatra's "My Way." That was Glock's theme. I did it my way. And yet, even through all these shenanigans, the fact that his top financial lieutenant tried to have him killed, the fact that his senior executive and longtime lawyer were both found guilty of embezzling money from the company, it did not affect this incredible financial performance by this company that he built. By the late 1990s, the gun business had made Gaston Glock a billionaire. Estimating the size of his fortune was and is difficult because most of it remains tied up in his privately held corporation. It is impossible to say how much cash that he has stashed away. That the pistols still managed to flow from the factory and sell throughout the world despite the executive chaos was one of the greatest tributes to the intrinsic quality of Gaston Glock's creation. And that is where I'll leave it. For the full story, I recommend buying the book. If you buy the book using the link down below, you'll be supporting the podcast at the same time. Another way to support the podcast, and if you haven't done so already, make sure you f- sign up for the Founders AMA feed. That link is down below. You can ask me questions directly in the welcome email after you sign up. There'll be a private email address where you can email me directly, and then I answer the questions that you send over email in short AMA episodes. I'm doing a few of those AMA episodes a week, so if that sounds interesting to you, that link is down below. That is 308 books down, 1,000 to go, and I'll talk to you again soon.

Episode duration: 40:07