CHAPTERS
- 0:00 – 5:04
Cost Control and the Case for Remembering Leon Hess
David Senra opens with Leon Hess's command of station margins and a John Mackey story about controlling costs. He then reads sponsor messages for Ramp and Vesto before introducing the book Hess: The Last Oil Baron and why its authors think Hess should not be forgotten.
- •Hess could recite the margins of every East Coast gasoline station, as John Mackey could for Whole Foods
- •Mackey told Senra that Founders would have kept Whole Foods independent by stressing cost control in good times
- •Senra quotes Andrew Carnegie on costs being permanent savings
- •The authors call Hess the last oil baron able to build a vertically integrated energy giant
- •They say his legacy is fading and he should not disappear from public view
- 5:04 – 7:53
A Failed Father and a Depression Childhood
Senra starts Hess's story with his father, a failed entrepreneur whose coal business went bankrupt in the Great Depression. Leon, the youngest son, could not attend college and worked hard from a young age.
- •Leon's father tried produce, butcher shops, real estate and finally coal delivery
- •The family could not afford college for Leon, the youngest son
- •Leon dug clams and worked in the coal yard, building a long-hours work ethic
- •Senra says you can understand the son through the story of his father
- 7:53 – 11:09
Switching from Coal to Fuel Oil and the Bronfman Parallel
At 19, Leon sees that coal is a dead-end business and decides to deliver fuel oil. Senra compares this to Sam Bronfman fixing his father's mistake and to the idea of a generational inflection point.
- •Coal meant hauling 100-pound bags at tiny margins
- •Leon bets on fuel oil as a more economical energy source
- •Sam Bronfman saw his horse-trading father was on the wrong side of the transaction
- •Senra describes a generational inflection point as one person changing a family's trajectory
- 11:09 – 15:39
Starting with One Truck and Selling Residual Oil
Leon starts his company in 1933 with one used truck, selling residual oil that refiners discarded. Senra compares this to Sam Zemurray's discarded ripe bananas and traces how Leon grew a fleet and a storage terminal.
- •1933, age 19, one secondhand truck holding 615 gallons
- •Number six fuel oil was thick black oil refiners threw away
- •Industrial customers, ships and power plants used the oil
- •Zemurray and Hess both found opportunity hiding in plain sight, driven by desperation
- •By 1938 he had about 10 trucks and a storage terminal, and he worked backward from the end product toward the source
- 15:39 – 17:59
World War II Logistics and the Red Ball Express
Leon served as fuel supply officer for General Patton and worked on the Red Ball Express. The experience gave him a talent for moving fuel quickly.
- •Leon served as fuel supply officer for Patton
- •Patton prized speed and constant advance
- •The Red Ball Express carried supplies from Normandy to advancing troops
- •It ran 81 days, with 6,000 trucks, 23,000 people and 412,000 tons moved
- 17:59 – 22:46
Munger's Lollapalooza: Hess's Post-War Wave
Using Charlie Munger's surfing model and the Les Schwab example, Senra lists the factors that combined after the war to drive Hess's growth, from logistics skill to booming oil demand.
- •Munger says extreme success usually comes from multiple factors working together
- •Wartime logistics training suited moving heavy fuel oil that hardens if it cools
- •Fuel oil demand surged and driving created a gasoline boom
- •US production grew from 174,000 barrels a day in Rockefeller's era to 4.6 million
- •Relationships and capital access were the fifth factor
- 22:46 – 25:03
David Wilens: Mentor, Banker Connection and Father-in-Law
Senra describes David Wilens, New Jersey's attorney general, who ran Leon's business during the war and linked him to Chase Manhattan. Wilens also introduced him to his daughter Norma and taught him to balance work and family.
- •Wilens became friend, advisor and eventually father-in-law
- •He connected Leon to Chase Manhattan, to which Leon stayed loyal
- •Leon borrowed money to buy a suit for his first date with Norma
- •Wilens liked rich people who started out poor, like Leon
- •Leon balanced family dinners with late nights at the office
- 25:03 – 29:44
The Virgin Islands Refinery and Regulatory Advantages
Leon builds refineries, culminating in the largest in the Western Hemisphere in the US Virgin Islands. He stacks tax benefits, a local monopoly and regulatory workarounds, such as converting ships into legal barges.
- •First refinery built in New Jersey in 1957, then one in Texas
- •The Virgin Islands location offered foreign refiner status and Energy Department subsidies
- •He negotiated a local monopoly and 16 years tax-free
- •He modified ships to qualify as barges and avoid import taxes
- •Others like Shell and Standard Oil had built Caribbean refineries earlier, and Leon inspected his refinery every Friday
- 29:44 – 32:52
Gas Stations, Going Public and the Amerada Merger
Hess opens simplified gas stations, goes public via the Cleartrack merger, and then merges with Amerada in 1968 to become vertically integrated.
- •First station opened in 1960, with stations in 16 states by decade's end
- •Stations skipped repairs, batteries and credit cards to speed refueling
- •Cleartrack merger gave him a New York Stock Exchange seat
- •The Amerada merger created an integrated company, after a $100 million stake bought a board seat
- •Hess had refining but no production, while Amerada had production but no refining
- 32:52 – 36:27
The Wild Oil Business: Dictators, Bribery and Handshakes
Senra covers the chaotic side of the oil business, including a pistol on the table in Libya and Leon's letter to shareholders admitting an unsuccessful bribe. He highlights Leon's old-school code and the Foreign Corrupt Practices Act.
- •The book says the oil business is not all beer and Skittles, and Senra cites a line from Landman about constant crisis
- •A representative of Gaddafi put a pistol on the table during negotiations
- •Leon told shareholders he made payments with his own money that failed
- •The Foreign Corrupt Practices Act made such payments illegal soon after
- •Leon valued handshakes and keeping your mouth shut
- 36:27 – 40:39
A Family Company: Fatherhood and Grooming John
Despite being public, Hess ran like a family business. Senra covers Leon's closeness to his children, lessons his daughters recall, the Walt Disney comparison, and John's training to take over.
- •Leon was best man at his son John's wedding
- •His daughters cite lessons like treasure a good name and don't be the story
- •Senra compares Leon's fatherhood to Walt Disney's with his daughters
- •John was groomed from age seven, working in stations, refineries and oil fields
- •John studied Arabic and Farsi, then went to Harvard and business school
- 40:39 – 45:36
Leon's Management Style: Details, Cleanliness and Personal Touch
Senra lists the recurring traits of Leon's management: obsession with details and cleanliness, loyalty from employees, lean staffing and personal attention. He ties Leon's recall of margins to John Mackey.
- •He quizzed managers on tire life and insisted on clean bilges, trucks and stations
- •He was tough but fair, and employees did not want to disappoint him
- •He traveled constantly and sought out opportunity rather than waiting for it
- •He knew employees by name and ran a facility with 400 people where others used twice as many
- •Senra compares him to Mackey's encyclopedic knowledge of Whole Foods numbers
- 45:36 – 53:24
Hess Toy Trucks, the New York Jets and Hess's Legacy
Senra covers the Hess toy trucks and Leon's investment in the Jets, including his insistence that the team be sold after his death. He closes with the Chevron acquisition of Hess for $53 billion.
- •The toy truck idea came from a toy manufacturer friend, and Leon was personally involved in designing each toy
- •The toys became collector's items
- •He bought a 20% stake in the bankrupt Titans, later the Jets, for $250,000, and eventually became sole owner
- •He required the Jets be sold after his death and barred family from buying them
- •Chevron announced a $53 billion all-stock deal to acquire Hess
