How to Build an Empire: The Story of Harvey Firestone and His Tires

Firestone Tire

Photo by Desert Bug

In 1926, Harvey Firestone sat down to write Men and Rubber: The Story of Business.  It outlines his philosophy on how to succeed in business, and to this day it’s still the best and most comprehensive story on how to build a business from nothing.

Firestone’s philosophy is quite simple.  It says that honesty is the fundamental principle of any business.  It says that a business must exist for a reason, and the single reason for the existence of any business must be that it supplies a human need or want.  “To make money” is not a good enough reason to be in business.  If fact, if all you want is money, Firestone advises you to get out of business as quickly as you can, and go work for someone else.  You are destined to fail otherwise.

Firestone was clear that a business must exist to supply a human need or want, and this philosophy can be further explained through Maslow’s Hierarchy of Needs.  The primary need for all humans is physiological, followed by safety, love/belonging, esteem, and self-actualization.  Humans seek to satisfy needs in this order.  Firestone was supplying tires, or facilitating transportation.  Transportation, depending on its intended use, could fall under physiological needs (driving to the grocery store for food), safety needs (driving to the office for work), or love/belonging needs (driving to family).  Either way, Firestone was clearly satisfying human needs with his tires.

This logic applies today as well.  For example, Mark Zuckerberg’s reason for starting Facebook (“to meet girls”), while it hurts my heart, does provide for the love/belonging needs that all humans naturally have.

That’s the end of my Zuckerberg digression – now back to Firestone…  

Firestone was a quick learner.  One of his first jobs was selling wild rose lotion, which he primarily sold to pharmacies.  He had difficulties selling to smaller pharmacies, noticing their size (or lack of, actually) led them to be overly defensive towards purchasing new inventory.  Larger pharmacies, however, were quick to understand the potential for making money through selling the wild rose lotion.  It didn’t take long for Firestone to figure out where to focus his efforts.

As Firestone navigated his career, and the fortunes of the tire company he created, he was constantly looking for ways to free up his time to think about the business.  He placed an incredible value on thought, and specifically thought targeted toward his business.  He reportedly spent 95% of his time thinking on the business, and the remaining 5% of his time reviewing the condition of his business and interacting with employees.

All of this thought led to Firestone’s unique ability to take seemingly complex issues and reduce them down to their simplest form (Reductionism).  He describes the essence of many business disciplines through common sense and mental models:

  • Economics:
    • Firestone often thought along the lines of comparing values.  He was all over the idea of Opportunity Cost.
    • Firestone realized that in order to facilitate growth, delegation was a necessity.  Even if Firestone could do a task better than the men he delegated it to (and he was considered one of the best salesmen of his time), he still delegated the task.  He knew he had no choice.  He completely understood the concept of Comparative Advantage.
  • Marketing:
    • Firestone believed the product was the marketing.  And since every product involves service, he felt the way to advertise his tires was on service to the buyer.
  • Sales:
    • Firestone had a simple sales philosophy: believe in what you have to sell, and the selling becomes a matter of showing your prospect how your product will help them.  Selling was simply explaining the favor he expected to do for a prospect. He never hired star salesmen, as he felt it was the duty of management to provide so good a product that any man of reasonable intelligence could go out and sell it.  To Firestone, selling started in the factory.  And from there it was a matter of finding whom to sell to, and finally, of finding real reasons why the prospect should buy.
  • Innovation:
    • Firestone believed that no business could succeed unless it constantly revised its product, not only to meet the actual demands of today, but also the potential demands of tomorrow.  Just like a Pari-Mutuel System, the odds of success are constantly changing as technology progresses, new competitors arise, and old competitors fall.  This implies that there must always be a better way of doing everything than the way that is standardized at the moment.  If you don’t find that better way, a competitor will.  Understanding that the odds for and against you are constantly changing is a good thing because it pushes you to find a better way.
  • Business Law / Negotiations:
    • Lawsuits are extremely expensive and counterproductive. Firestone felt that everything could be settled better by approaching the other party himself, providing complete transparency, and having an honest conversation.  Firestone often said that a fair man is drawn into court only when the other side refuses to face facts.  Deal with good people!
  • Human Resources:
    • Firestone realized that there is a constant Friction between people and work, and while optimism and enthusiasm can act as lubricants against this friction, they just aren’t enough.  He felt it took well-thought-out business principles to drive an organization.
    • Firestone knew that the hiring process was a crap-shoot, as he said “Through more than twenty-five years, I have been hiring and promoting men, and I know of no formula for either hiring or promoting.”  This is, of course, still a reality today.  So, instead of relying on GPA or experience, Firestone was more inclined to have a general discussion with a person – about nothing and everything – to find out what kind of human being he was dealing with.
  • Leadership & Management:
    • Although Leadership and Management are not necessarily the same thing, Firestone felt a business must be run by only one man.
  • Finance:
    • Firestone felt there were only two ways to fund expansion: on profits or on the combination of profits plus the proceeds of new stock issues.  He preferred the former. Debt to him was a constant menace.
    • Firestone felt strongly that the first task of a new business ought to be giving itself a surplus, or Margin of Safety.  “A man with a surplus can control circumstances, but a man without a surplus is controlled by them and often he has no opportunity to exercise judgment.”
  • Supply Chain:
    • Firestone thought that no man controls his business unless he can also control his sources
  • Manufacturing/Operations:
    • Other than being an incredible salesman, Firestone is most famous for his simple approach to Operations.  In any operation, he would always first ask “Is it necessary?”  If it was necessary, he would then ask “Can it be simplified?”  These two simple questions reduced waste and improved clarity – the same is true today.

Firestone literally spent over 20 years thinking purely about his business.  And in that amount of time, he managed to cut to the core of many business disciplines.  So much of what he advocated is common sense, but so little of it is commonly practiced.  He loved everything about business, and if you read his book that will become clear.

The guy was hanging out with Thomas Edison and Henry Ford on the reg.  They would camp together once a year, taking turns choosing a secluded location. Firestone kept impressive company, and he kept things incredibly simple.  And his drive towards simplicity greatly helped him to build an empire.