Giants of Industry: The Unfolding Stories of Goldman Sachs, US Steel, Samsung, and General Electric

Have you ever wondered about the true stories behind the names that dominate our world? We often hear about them in headlines, perhaps during market crashes or when a new gadget hits the shelves. But what about the journeys, the decisions, the sheer audacity that built these colossal enterprises? It’s more than just balance sheets and quarterly reports; it’s a tapestry woven with ambition, adaptation, controversy, and sometimes, plain old human drama. Let’s peel back the layers and explore the intriguing histories of some of the biggest names in industry: Goldman Sachs, US Steel, Samsung, and General Electric.

Goldman Sachs: From Humble Peddler to Wall Street Behemoth

When you hear “Goldman Sachs,” you probably think of banking, Wall Street, maybe even market crashes. This investment banking group, over 150 years old, has kept its name since its inception in 1869. It’s a money making machine, investing in companies like Spotify and Dropbox, and acting as the lead bookrunner for Twitter’s IPO. They’ve even committed almost $2 billion to philanthropic initiatives. But, let’s be honest, the name Goldman Sachs is also synonymous with corruption, market manipulation, offshore tax havens, and insider trading, to name just a few of its controversies. We’ve seen them in US court for violating money laundering laws and the Foreign Corrupt Practices Act. Yet, for all these good deeds and sins, this giant of commerce wasn’t started by some hedge fund manager or stockbroker, but by a humble German immigrant with a knack for business and a hunger for the American dream.

Post Civil War America was booming with engineering and growth. New technologies like the telegraph and railroads were connecting people, and changes in civil rights laws were reshaping American lives. The Suez Canal was built, the Brooklyn Bridge finished construction—truly, prosperity seemed on the horizon. It was the Gilded Age, and Marcus Goldman, a 48 year old German Jewish immigrant, knew it. He had come to America in 1848 as a refugee, escaping hard times and searching for better opportunities for his family. He arrived without knowing anyone, with only basic English skills. Initially, he settled in Philadelphia, peddling wares as a traveling salesman. But pushing that cart up and down the street wasn’t giving his family the life they needed, nor the respect he wanted. His desire was to be a businessman.

So, in 1869, he uprooted his wife and five children and moved them to New York City. He was following the exodus of German Jews, as Manhattan was seeing a rise in immigration due to the post war boom. There were more opportunities, especially on Wall Street. However, Goldman had no real background in finance. Nonetheless, he got his foot in the door by renting a small office on Pine Street with a sign out front that read “M. Goldman, Banker and Broker.” This may have been a brash move for some, but Marcus had displayed a talent for numbers all his life. So, if he was good at peddling items door to door, then he could peddle numbers bank to bank, right?

His start was in buying promissory notes—basically fancy IOUs—from merchants in need of ready cash, and selling them to bankers uptown for a profit. At the time, bank loans were hard to get, yet small companies needed help to turn their accounts receivables into cash. Marcus jumped on this demand by supplying a service. The operation was small time, but his specialization in an appealing area of the industry gave Goldman recognition and enough competition to slowly but surely scale his company. His small loans of liquidity to tanners and jewelers snowballed into a tight knit, profitable family business for the next 10 years.

Then, a new family entered the fold: the Sachs. Marcus had befriended Joseph Sachs many years before, during synagogue classes in their native Würzburg. In time, Sachs would move to the US too, and some of his five children would marry some of Marcus’s five children. Rosa Goldman became Mrs. Julius Sachs, and Samuel Sachs would marry Louisa Goldman. An interesting side note: they each had a child called Julius, whereas Marcus had Henry and Joseph had Harry. Think of them like the 19th century version of the Brady Bunch. Back to the topic, Marcus’s business had been growing so much that he wanted someone to help run it with him, which was how he came to pick his son in law Samuel, who was regarded as a moral and honest man. Thus, on September 20th, 1882, Goldman Sachs was born.

By 1896, the firm would have $1.6 million in capital, shared among five partners. The third partner to join shortly after Marcus teamed up with his son in law was Harry Goldman. Later, he would run the company with Samuel when Marcus retired. Their tenure together dramatically shaped the company in the next 30 years, including the start of the controversies. The conflict between the brothers in law benefited the company: Henry’s adventurous spirit brought them to new opportunities, but Samuel’s conservative approach helped them avoid catastrophe. This was perfect timing, because their niche market was becoming saturated with competition. They needed new ventures to stay ahead of the curve.

One such venture was to take companies public. In short, when a private company wants to go public, it means they need to IPO, which is most often handled by an investment bank. This is known as underwriting, which was Goldman Sachs’s next big step forward. Initially, they wanted to underwrite railroads, but they were warded off by stiff competition like J.P. Morgan. So instead, they focused on smaller commercial companies like cigar sellers and even Macy’s. But the first company they helped go public was Sears, whose valuation at the time was a modest $40 million in 1906. Of course, it helped that Henry was friends with Julius Rosenwald, the owner of the department chain. IPOing a company at this time was a huge risk, so to mitigate the chance of failure, Goldman Sachs partnered up with Lehman Brothers to underwrite $30 million in common stock and a further $1 million of preferred stock. If fortune favors the brave, then Goldman Sachs was fearless, because the IPO was a big success. Both firms had a big payday and also saw their reputation attract more clients from bigger firms.

It’s now 1914, and Goldman Sachs has become an investment bank on Wall Street. They were officially in the big leagues. With all that cash to reinvest, the Roaring Twenties was perfect timing yet again, except for Henry. Even though he facilitated the deal that brought the family business into Wall Street, his open support for Germany in the run up to World War I wasn’t, well, kosher. No doubt those family dinners were much more fraught than usual, especially since rival J.P. Morgan had been funding the Allied cause. In his defense, Henry’s family and culture were German, so it’s understandable why his patriotic reflexes tilted towards his ancestry, even though other members of the Sachs family wanted to support their new home of America. In the end, Henry resigned, and the company sailed off into the sunset without him.

What a sunset it was! Markets were soaring, optimism was high, champagne was flowing. So Goldman Sachs seized the moment by investing a million dollars into a trading company and selling the shares to the public at 10 times the price. They returned $93 million, with their original investment now worth 10 times the amount. But why stop there? If they can make an investment return like this out of thin air, why not make another, or another? After all, people were willing to buy them, just like the early days of Marcus Goldman when he was pushing his cart up the street. The old adage of supply and demand applied then as it does now. Let’s just hope a market crash doesn’t come along to ruin the party.

October 29th, 1929. The start of the Great Depression practically evaporated all of Goldman Sachs’s money. There were accusations of share price manipulation and insider trading. So, was this hubris for market meddling, or paranoia during an economic downturn? Perhaps it was character assassination from jealous rivals who were more battered by the market crash. In the next year, more investment firms went bust, and with it, investors, investment banks, and anyone else trapped in the house of cards. Yet, Goldman Sachs survived. How? The answer: Sidney Weinberg.

The third of 11 children from a poor family in Brooklyn, Sidney had been forced to leave high school early to help support his impoverished household. He started working at Goldman Sachs as the janitor’s assistant, but 15 years later, his grit got him to the top. It was his wit and charm that persuaded General Electric to go public. His clients liked him so much that they stayed with him even when Goldman Sachs went belly up and had its reputation dragged through the mud. Over the next few years, Goldman Sachs gradually pulled itself back together.

Then came the 1950s, when Sidney led them on what would be their boldest move yet: convincing Ford Motors to go public. There was little doubt that the IPO would make an investment banker filthy, stinking rich, but it wouldn’t be easy. Ford distrusted Wall Street. It was gambling and a rigged game against ordinary folks. That’s why J.P. Morgan Jr. had failed to take Ford public at one point. But what would be a bigger challenge was Henry Ford was an outspoken, one could say devout, anti semite. He continued to be one even after the end of World War II. You’d be right in thinking that a Jewish owned family company of bankers had no chance whatsoever of getting Ford to change his mind about Wall Street, which is why they didn’t. Nine years after Henry Ford died, they approached his grandson, Henry Ford II, to make the deal. It was the deal of the century, and the Jewish company doing business with a company whose founder had been a racist became a sea change in Wall Street. Now, the only thing more important than money was winning, even if you had to cheat.

Gus Levy, born in 1910 in New Orleans to a middle class household, made a name for himself as a trader in New York and became a well regarded partner at Goldman Sachs at the age of 30. His specialty was block trading. The idea is this: when an investor sells a large amount of shares, it can cause the market to react unpredictably. So, by privately negotiating a sale at a discount, a trader can then ride the fluctuations of the economy to resell off remaining shares at a profit. Simple, right? It’s now the 1960s, and Sidney Weinberg is retiring, and Gus Levy becomes heir to the Goldman Sachs empire. For the next decade, he made block trading a major source of revenue for the company. But trading more and more at a larger scale made them vulnerable. One mistake could cost them everything.

Then came 1968, and with it, the formation of Penn Central, which became the largest railroad company in the country with a staggering $1.2 billion in debt. But it needed more to operate. Goldman Sachs was hired to issue $100 million in commercial paper. Not only did the company finally get to underwrite a railroad company, but investors lined up when they heard Goldman Sachs was backing the “safe” investment. Unfortunately for them, Penn Central failed to generate enough revenue to maintain its railroad tracks and equipment. The company went bankrupt. Those who invested in the commercial paper were almost taken out completely, so they sued Goldman Sachs for misrepresentation. Goldman Sachs was the one who evaluated the risk, and it was them who pushed for the deal, so their hubris cost them 20 cents on the dollar. Yet, they came out on top. How? Goldman Sachs said that the payments were covered by insurance.

The 1970s saw more of Goldman Sachs’s securities go rotten. Settling million dollar lawsuits became the norm. But now the company had gone from boutique investment bank to elite institution. These times in court did little to sink the company. Sure, it was wounded, but it was still standing. Even the death of Levy from a stroke during a business trip did little to tank the company, because even though no succession plan was left behind, it was clear who the next leader would be: John Whitehead.

The ex Navy commander implemented his military training into the company culture so that the firm could get back to first principles. One of his drills was to test subordinates to see how long they would wait for a meeting with him. Naturally, some left after a few hours, but in the end, the remaining ones came to learn that if they needed to reach a big client, they must be conditioned to wait in their lobby for as long as it takes. Under Whitehead, the client came first. A sense of duty and diligence had re entered the culture of Goldman Sachs for the first time since Marcus dragged his cart up and down the streets of Philadelphia. And it paid off. By 1983, the company was raking in $400 million—a staggering 60% increase from the previous year. At the height of his success, he retired to work for Ronald Reagan.

Now the torch was passed to Robert Rubin, who stayed CEO for two years before passing the buck to Steven Friedman, another two year CEO. Why was their tenure so short? Hadn’t they just inherited the keys to the biggest money making machine on Wall Street? Well, it was because someone was after them: Rudy Giuliani. It’s 1987, and a senior partner in the company has just been busted for insider trading. His perp walk was splashed all over the papers, so now Goldman Sachs’s reputation was in the gutter once again. But they’ve bounced back before, and their customers knew it, so as long as Goldman Sachs kept making money, then all those corporations on their books had nothing to worry about, right? In fact, Rubin managed to get out of the banking world to enter politics before it was too late, this time working for Bill Clinton. So by 1993, Goldman Sachs profits were up to $2.7 billion, mainly due to trading by putting their clients’ interest first and having a few backdoor deals, it seems.

But that only lasted a decade. You see, even with their $98 billion of assets, senior partners were retiring, so the company needed to find a new, stable way to hold on to capital so that they wouldn’t be knocked down if too many partners took too much out too soon. You know what they did, right? Of course you do, you’ve been paying attention: they went public. There was just one problem: Russia. It’s 1998, and the biggest country in the world does what no economist thought would ever happen: they stopped servicing their debt. A sovereign country defaulting on its debt didn’t fit into any economic model. Other investment banks started hemorrhaging money, so Goldman Sachs dumped their bonds onto the market to accelerate the downfall. Thankfully, the Federal Reserve stepped in and bailed the billionaires out. It’s up to you to decide whether it was worth avoiding another financial crisis, because all that Goldman Sachs cared about was surviving.

With Goldman Sachs back on firm ground at the end of 1999, and at the height of the dot com bubble, Goldman Sachs went public. This meant everyone was finally able to see the paperwork, providing just how much profit the company had been making and how much was paid out to partners. Spoiler alert: it’s a lot. Now Goldman Sachs just needed an even newer way to make money, and what market was booming at the turn of the millennium? Mortgage backed securities, also known as the reason Hollywood made the movie The Big Short. Unless you’ve been living under a rock, you know the housing bubble triggered the 2007-2008 financial crisis, which was the most serious economic catastrophe since the Great Depression. This crisis bankrupted Lehman Brothers, the very same firm that helped Goldman Sachs all those years ago.

It’s worth noting that just before the bubble burst, the then boss of Goldman Sachs, Henry Paulson, did what every boss before him did: leave the company at their peak to enter politics. Hank Paulson was made the Secretary of the Treasury by George Bush Jr. That may explain how Goldman Sachs got another round of bailout money, but it doesn’t explain how they paid out record employee bonuses in 2009. Then again, those profits likely came from the company betting against the housing market while it was selling weak securities to people it knew couldn’t pay them back. But is that more tinfoil hat conspiracy?

Since then, the “Wolf of Wall Street” culture has been exposed. The company has gone through the courts with gender discrimination cases and plenty of sexual harassment lawsuits. Former employees have become whistleblowers, claiming the ethos of putting the clients first is long gone. One whistleblower said that clients were referred to as “muppets” behind closed doors, and seniors joked about ripping them off. Insider trading continues to dog the company, as does the revolving door with politics. And what about the conspiracy to allow $1 billion of bribes to obtain business from the Malaysian sovereign wealth fund? It’s up to you to decide whether Goldman Sachs is the largest money laundering facility in the world, or whether the scale of the operation is always going to attract bad apples. But one thing’s for sure, the company that started with a small time lender helping ordinary folk start their own business has now become an elitist behemoth that chews up ordinary folks and spits them out, all in the name of profit.

• Founding: Started in 1869 by German immigrant Marcus Goldman as a promissory note broker.
• Family Business: Grew into Goldman Sachs with the integration of the Sachs family through marriage.
• Underwriting: Transitioned to underwriting IPOs, notably Sears, often partnering with Lehman Brothers.
• Great Depression Survival: Pivoted to pioneering venture capital, investing in new businesses when traditional lending stopped.
• “The Devil’s Casino” Era: Experienced internal competition and scandals, leading to its acquisition by American Express and later spin-off.
• Post-Spin-off Leadership: Under Dick Fuld, underwent rapid expansion and diversification, including into mortgage backed securities.
• 2008 Financial Crisis: Heavily exposed due to high leverage and risky mortgage bonds, leading to its collapse.
• Controversies: Faced accusations of insider trading, market manipulation, and political influence throughout its history.
• Going Public: Became a public company in 1999 to stabilize capital and allow partners to cash out.
• Modern Perception: Continues to face legal challenges and whistleblower claims regarding its ethical practices and client treatment.

US Steel: From American Colossus to Global Contender

US Steel was America’s first billion dollar company in 1901. Accounting for inflation, its formation was worth $51.4 billion, making it larger than the national debt and three times larger than the federal budget. But 100 years later, it’s not even on the Fortune 500 list. In fact, US Steel may not be American for much longer if Nippon Steel gets its way. The symbol of American engineering could become Japanese for just $14 billion. That’s a yard sale discount for a world leading steel producer who erected the San Francisco Bay Bridge, part of NASA’s Kennedy Space Station, and even the home of the United Nations in New York. At one point, it cornered 67% of the booming steel business. But flash forward to now, and domestic consumption has been reduced to 8%. So, how did the biggest player in America’s industrial revolution fall from grace? Were they outpaced by new competitors? Were they outpaced by tech? Or did the guys at the top simply fall asleep at the wheel?

It starts at the dawn of the 20th century. It had become clear that the industrial revolution had a lot more gas left in the tank. So, J.P. Morgan and Charles Schwab decided to take advantage of this opportunity by teaming up. The two heavy hitting investors had set their sights on a formidable company set up by Andrew Carnegie. Carnegie is often cited as leading the expansion of the American steel industry because of his technological innovations and business strategy. Though born in Scotland, his family immigrated to the United States when they hit tough times. They settled in Pittsburgh, which would eventually become the home of the US Steel Industry and the address of US Steel’s headquarters.

But before then, young Carnegie had gotten acquainted with steel when he worked for Pennsylvania Railroad. Working as a telegraph operator was vital for his later success. Carnegie learned everything he could about management and cost control in a business as big as railroads. Success depended on moving big things efficiently. When he struck out on his own to become an industrialist, his innovations put him on the map. Take the Bessemer converter: it was a way to improve impurities cheaply. By investing in the invention early on, Carnegie was able to streamline his operations more than his competitors. Soon, his output was being used to create the railroads for the very train companies he used to work for. But it was the vertical integration of his company which helped him grow enough to buy out competitors. It also helped that he was in cahoots with the high flyers of the railroad business to keep costs down. But don’t worry about that. What’s important is how these strategic moves got the attention of the biggest money men on the planet.

When J.P. Morgan and Charles Schwab came knocking, Carnegie had found his ticket to retirement. They had observed how efficiently Carnegie made profit and figured that if they could overhaul the entire industry, then they could transform steel mills into gold mines. Charles Schwab got to work hashing out the secret deal. When Carnegie signed the dotted line, his enterprise landed him $480 million, the largest deal in American history at the time. Adjusting for inflation, Carnegie’s turn of the century payday is closer to $17.74 billion.

Once Morgan and Schwab had the business in their possession, they quickly combined it with their holdings in rival companies. One was Federal Steel Company, founded by Albert Henry Gary. He’s the fourth member of this story, think of him like the final member of the Fantastic Four of US Steel. Before getting into metal, he practiced law for 25 years. In fact, he only got interested in steel when he was a judge presiding over a case. The manufacturing and economics of it all intrigued him, so he swapped his law degree for furnaces. He climbed the corporate ladder, and after a few mergers and acquisitions, became the head of Federal Steel. So when Schwab pitched him the idea of merging the company he and Morgan had just bought from Carnegie, it was a no brainer.

The two businesses merged, and then the quartet snapped up a few more companies. They merged with Henry Moore’s National Steel Company, National Tube Works, American Steel and Wire, American Sheet Steel, American Steel Hoop, American Tin Plate, American Bridge, and everyone’s favorite, Consolidated Iron Mines Company (Lake Superior Consolidated Iron Mines). By combining these powers, US Steel was forged. An HQ was promptly set up in the Empire State Building, and Schwab became the corporation’s first president. He had been the one to suggest the merger to Gary to begin with, so it only makes sense that he called dibs on the fancy job title. As for Gary, he was made chairman, a role he held until his death. With everything in place, it was time to build up the company, the country, and the industry. But US Steel’s climb to the top wasn’t going to be easy. In fact, trouble started right away.

If you asked the board of executives at US Steel, they would have said that 1902 was a runaway success. By the end of the company’s first operating year, they were producing 67% of all steel. By comparison, Coca Cola’s US market share for non alcoholic beverages over the last 15 years averages out at 45%. For a drink you can get anywhere in the world, from a five star hotel in China to a humble beach vendor in Brazil, it still got nothing on US Steel’s dominance. They’d made such a splash that Wall Street came to know US Steel as simply “the corporation.” The ominous moniker fits the company perfectly. Instead of being infamous for its efficiency or creativity, it was distinguished by its enormous size. The Wall Street Journal wrote about its uneasiness over the magnitude of the affair. Never before had the world seen an integrated company this gigantic. Such a beast may not seem that original in our age, but for the time, this capitalistic Frankenstein’s monster divided opinion.

All the buzz must have made the executives feel like monopolization was a shoe in. Competitors knew it was just a matter of time until they were bought out or crushed. But at least they had a head start to escape. That’s because the creation of US Steel had its own problems. For starters, the formation had caused a lot of debt, like a lot of debt. Carnegie demanded that he be paid out in gold bonds. He’d encountered some financial turbulence before the merger and likely wanted to guarantee a risk free retirement. He’d previously told Schwab how Carnegie Steel would have cut prices to maintain market share. Seeing as Carnegie Steel was at the time the go to low cost steel manufacturer, his threat to undercut others was credible. Carnegie had also been gearing up with a price war when he was a direct competitor with J.P. Morgan’s own steel companies. Having a desperate or angry Carnegie in the mix wasn’t good for business. If gold bonds were what Carnegie wanted, then gold bonds were what Carnegie got. This meant that out of the gate, US Steel had created a debt obligation to one of its founders for his initial 47% stake, plus interest.

But this pressure was only the start of their problems. Competitors were nimbler. Their small size meant they could innovate faster. Seeing as how the industrial revolution was still in full swing, new tech was coming thick and fast. One competitor that could outdo them was none other than Bethlehem Steel. It had a reputation for its feats of engineering. It had a long track record of producing state of the art armor plating and boats for the US Navy. What they lacked in size, they made up for in adaptability. If US Steel was a Goliath of the industry, then Bethlehem Steel was David. But Charles Schwab anticipated that this shape shifting innovator would try to pull the rug out from under US Steel, so he bought them. Ownership transferred to the US Steel Corporation, and this tactic of swallowing up bigger and better competitors became the corporation’s playbook. However, they had to be careful with how they used it.

Theodore Roosevelt had become president in 1901, the same year that the company was formed. In the run up to the 1904 election, Roosevelt’s campaign relied heavily on his trust busting brand. US Steel was raising suspicion, so they couldn’t grow too aggressively without provoking an investigation. This meant the company’s success was slowed down by, well, its success. Yet, things only got worse from here. In 1903, Charles Schwab had a falling out with J.P. Morgan and Elbert Gary. He gave up his presidential position, left the company, and bought back Bethlehem Steel. Now US Steel’s most formidable opponent was back in the game, and the guy running it was the same guy who knew their company inside and out. Over the next few years, the market expanded, their market share fell, and the government got closer. But Elbert Gary had a plan to keep things running smoothly—a plan so radical that you’d have to be crazy or a genius to implement it. The plan was called “public opinion.”

From 1901 to 1911, US Steel and its subsidiaries grew steadily but cautiously. To keep costs down, they took advantage of black codes and discriminatory practices. That way, they could hire black labor at cheaper prices. They even had an agreement with counties in Alabama to use their prisoners as workers—a system of convict leasing was used to force prisoners into mines to gather ore and metal. By cutting costs, they were able to buy their largest competitor in 1907, the Tennessee Coal, Iron and Railroad Company. But all this did was force the government’s hand. In 1911, Washington finally broke up Standard Oil, the very company that had been set up by John D. Rockefeller back in 1882. If they went down, then surely US Steel was next on the chopping block. That’s why Gary leveraged public opinion. He knew Roosevelt would protect his image of being a trust buster no matter what. So instead of running from Roosevelt’s crusade, he took the president head on to cut a life saving deal.

In the winter of 1904, Gary offered to open US Steel’s books. In exchange, Gary argued, should the bureau find any wrongdoing, then the corporation would be warned privately, plus they’d be given a chance to set things right. Such a gentleman’s agreement would save Roosevelt a lot of time and energy. Most importantly though, this play appealed to Roosevelt’s interests: firstly, in accommodating the modern industrial order, and secondly, in maintaining his public image. Roosevelt agreed. It’s big brain moves like this which earned Gary the reputation of one of the dozen best known businessmen in the nation.

Other big brain plays include throwing his “Gary dinners.” He’d wine and dine heads of industry at private events so that he’d be able to leverage backdoor channels to reach agreements about cooperative pricing and marketing. This brought stability to an industry known for its widely fluctuating market, and it helped US Steel set the prices they wanted. However, critics would say it wasn’t quite the subtle tools of persuasion his biographers might describe. Gary would pull rank on any chairman or president who fell out of line. Anyone who refused to cooperate was promptly disciplined. Nowadays, schmoozing your manager at a wine bar is a reliable way to get considered for promotion, but back in the early 1900s, this was unconventional and bold. He was even known to U turn on his disdain for labor organizers, well, on at least one occasion. In March 1908, his meeting with casualty managers of the operating companies resulted in the Committee on Safety of United States Steel. Though a far cry from current day health and safety practices, it did help prevent further worker accidents, plus it stopped them from being sued. Okay, maybe Gary’s U turn wasn’t a complete U turn, but it showed he understood the power of PR. The point is, Gary had just sweet talked his way out of a Justice Department lawsuit, kept his executives in check, and found a way to placate disgruntled employees.

Unfortunately, a well oiled machine this size is not easy to manage. Information took a long time to travel to the top of the hierarchy, and the Carnegie executives who had stormed out of Gary dinners went on to create new, more agile companies. US Steel was confident they’d be able to smite these sprouting competitors, but the two world wars meant there was more than enough work to go around. By 1941, US Steel’s annual output was around 30 million tons—that’s three times what it made at its founding. But market share had fallen to around 35%.

The post World War II steel industry was an absolute juggernaut. It was the foundation of the economy. It had never been a better time to be into metal. Yet US Steel ended up with a smaller piece of the pie, even if the pie had grown. In their defense, the market had expanded so much that diluted market share was an inevitable outcome of success. By 1945, America was making up 60% of the world’s steel, thanks to innovations in technology pioneered by early days of US Steel. In fact, they were outpacing their biggest rival, Bethlehem Steel, with double the production. Surely this was enough of a reason for the guys running the machine to kick back and relax. Well, that’s exactly what they did. For example, steel’s price rose 7% every year between 1947 and 1957. The fat cats enjoyed the profits, confident that America still had a huge head start over emerging industries like Japan and Europe.

However, good times can sometimes create weak men. The complacency of the 50s meant they underestimated the technological innovations happening overseas. Take the Bessemer converter: it helped put Carnegie on the map, yet it was much more difficult to control than the brand new basic oxygen furnace (BOF). During this time, Europe experimented with the BOF, while Japan adopted it quickly. Unfortunately, American counterparts were far too slow to integrate it. It would be like if a company like Microsoft stuck with the floppy disk even when foreign companies were getting into CD ROMs. Even if US Steel wasn’t overconfident, what could they do? Their network was too big to update quickly or cheaply. Even when they finally got into basic oxygen furnaces, other companies and countries had been spending the interim time closing the market gap. When a BOF was finally built in the US, it produced 17% of steel for the country. By contrast, the BOFs in Japan were creating 55% of steel. That’d be like if Microsoft finally added a disc drive only to realize smaller rivals had beaten them to Wi Fi, USBs, and Steam accounts.

When the 1970s rolled around, US Steel’s steady coasting was turning into a rapid descent. During the mid 70s, Japan’s Nippon Steel had an average blast furnace size four times that at US Steel. By 1977, more than half of Japan’s blast furnaces had a volume of more than 2,000 cubic meters. If you don’t understand metric, just know that’s a bang for your buck. Yet in America, only 2.6% of the furnaces could match that cubic size, and that was in the whole country. For so long, US Steel had seemed like an unconquerable mountain, always looming and forever out of reach. But as history shows, everything goes very slowly until everything happens all at once. In the blink of an eye, US Steel was eclipsed by the bigger and better Nippon Steel. In a humiliating twist of irony, US Steel had to turn to Japan for help with a blast furnace because their Asian rivals had more experience. That’d be like if Bill Gates had to call Steve Jobs to help him reboot his personal laptop. Oh, and the place that had the broken furnace? That was in Gary Works. Once it was the largest steel mill in the world, now it’s just the largest steel mill in America.

Overnight, US Steel’s image went from the star of the industry to a washed up has been. After decades of leadership and fending off foreign price matching, US Steel realized it could no longer maintain its competitive edge. Edwin Gott was chairman of US Steel when he predicted that in 1970, worldwide demand for steel would rise by 25%. In the end, the opposite was true: demand flatlined. Countries that had previously imported American steel had become developed enough to decrease imports or were using new tech to manufacture their own. Or perhaps they got better steel from better companies who used better equipment. Throughout the early 1980s, US Steel’s market share fell to 20%. US Steel had officially become one of the least profitable steel makers in America. By 1985, 150 facilities were cut. By 1995, jobs had been cut from 171,000 to less than 2,100. But it’s worth noting that it was an industry wide problem. Other companies were having to tighten the purse strings too. Foreign competition was battering the American steel business. Everyone was on the ropes.

Thankfully for US Steel, streamlining the business made them enormously productive. This leaner, scrappier company managed to fend off competition and increase its exports significantly. As for their competitors, they failed to stay in the game. Between 1997 and 2001, 30 steel companies went bust. That’s an average of half a company going bankrupt every month. One of the steel makers to go under was long time rival Bethlehem Steel. But critics will say US Steel’s adaptation was too little, too late. They still lag behind non American competitors. They didn’t even adopt a mini mill until 2020. For those not in the metal biz, a mini mill is to steel workers what high speed broadband is to dot com companies. The point is, if mini mills are so great, then US Steel’s slow adoption of one is proof they haven’t really learned anything. They’re as slow as ever. However, they might be getting another second chance. At the end of 2023, Nippon Steel announced a deal to acquire the former giant. If the shareholders approve and the regulators give the green light, the $14 billion buyout would mean US Steel would still retain its name and Pittsburgh headquarters. This begs the question: would US Steel stay American or become Japanese? Maybe it’s not the time to ask, but if the Biden administration successfully opposes the deal, we’ll never see how the Japanese updates the former industry giant for the modern world. US Steel may have been too big to fail at the start, but now it might seem too nostalgic to die.

• Founding: America’s first billion dollar company in 1901, formed by J.P. Morgan and Charles Schwab through the acquisition of Andrew Carnegie’s steel empire and mergers with other companies.
• Early Dominance: Produced 67% of all steel in its first year (1902), earning the moniker “the corporation.”
• Challenges: Faced significant debt from its formation, competition from nimble innovators like Bethlehem Steel, and government scrutiny (trust busting).
• Adaptation & PR: Under Elbert Gary, used “public opinion” strategies (e.g., opening books to Roosevelt, “Gary dinners”) to navigate legal threats and stabilize the industry. Also implemented early safety measures.
• Post WWII Complacency: Despite leading global steel production (60% by 1945), became complacent, slow to adopt new technologies like the Basic Oxygen Furnace (BOF) compared to Japanese and European rivals.
• Decline: Lost market share significantly from the 1940s to the 1980s, becoming one of the least profitable US steelmakers. Faced massive job and facility cuts.
• Streamlining: Became leaner and more productive, fending off some competitors, but still lagged behind non US rivals in adopting modern technologies like mini mills.
• Current Status: Subject of a proposed acquisition by Nippon Steel in late 2023, raising questions about its future national identity.

Samsung: From Dried Fish to Global Tech Empire

Samsung is, well, it’s huge. It’s the largest company in South Korea, accounting for more than 20% of the nation’s total GDP. They pulled this off by making, quite literally, everything. We’re talking smartphones and washing machines, to military equipment and the world’s largest ships. The company employs so many people and is responsible for so much of South Korea’s way of life that some consider the secretive family at the top to be like a reincarnated royal dynasty. What’s even more shocking than the sheer breadth and power of this formidable conglomerate is its humble beginnings. Less than 70 years ago, Samsung was a tiny, family run fish trader. Now, it’s bigger than most countries. So, how did it go from being a small fish in a big pond to owning the pond? The secret, surprisingly, might be simple.

Samsung’s founder was Lee Byung chul, born on February 12th, 1920, to a wealthy landowning family. But that silver spoon wasn’t going to make life any easier for him. Korea was on the verge of seismic change; instability was about to rock its foundations. Lee’s family status among the ruling class was about to become a target on his back. That’s because just a few months after his birth, Japan officially annexed Korea as part of its colonialist agenda. This included forced cultural integration, unequal treatment of Koreans, plus a whole bunch of economic hardship and oppression. But the Japanese Empire’s ambitions couldn’t be achieved alone. Lee’s family was part of the Yongban Clan, a gentry composed of civil servants, military officers, and aristocrats. Think of them like the equivalent of Europe’s knights and lords, or Japan’s shoguns and samurai. Nowadays, “Yongban” is a bit of a jokey insult in Korea. Imagine an unemployed 40 year old neckbeard sipping energy drinks in his mother’s basement while she washes his laundry. You might think this life is good, but on the outside, it’s clearly not. He’s a Yongban. Yet the name used to command respect because these scholarly types guided Korea for hundreds of years. That’s probably why they were perfect candidates to be Japan’s cronies. Even though the Yongban dynasty ended in 1897, enough descendants were still in influential positions by the annexation of 1910. The Yongban who assimilated with Japanese rule got to keep their wealth and power. Those who didn’t had their Confucian ways of life squeezed out by Japan’s push for modernization. It was a classic case of adapt or die. This philosophy for survival became the backdrop of Lee’s formative years, even if he didn’t know it at the time.

But by 1938, he’d put that talent for adaptability into action when he dropped out of college and moved to a neighboring province. Here, he set up his own company called, well, you know the name, you’re watching this video, aren’t you? Samsung roughly translates to “three stars,” each star representing tenets of the company: greatness, prosperity, and longevity. At the time, you could fault him for being arrogant. I mean, greatness is a good aspiration for any local grocery trader, but are dried fish really prosperous? Well, Lee was doing something right. He had 40 employees under his belt, all working together to deal in noodles and locally grown groceries. Initial customers were based in Korea, but soon he was exporting to China. By the time the 35 year old Japanese rule of Korea ended in 1945, there were new business opportunities to be found. While Japan was being rebuilt with the help of the Allied forces, Korea had its own identity crisis. In just a few years, Lee would be able to redefine the identity and nature of his own company.

In 1947, the Samsung company was doing so well that Lee could uproot his HQ to Seoul, where all the big fish were—as in, other companies, not fish for selling. In less than a decade, he was living up to the first two stars of his company’s name: greatness and prosperity. But the third star of longevity would require a new way of thinking.

1950 was the year North Korea invaded South Korea, although North Korea swears that’s not what happened. Nonetheless, the fight to claim Korea’s true statehood was underway. The US and UN forces backed the South, while the North was helped by the Soviet Union and China. Before, Lee was caught between Japan and Korea. Now he was caught between Korea and China. Things heated up even more when his adopted home of Seoul became the base of operations for the South’s war effort. At one point, the South almost lost, and it looked like Lee’s company would be taken out by the North’s communist agenda. However, the North Korean army was repelled with the help of the United Nations command. Lee moved the head office out of Seoul, which was good timing. In January 1951, the communist forces captured the city. What followed was a two year war of attrition between the two sides of the conflict. Meanwhile, Lee had already pivoted to survive in the changing landscape by setting up a sugar refinery. Lee’s company adapted around the shifts in political power, the physical and ideological borders between his consumer base, and the pendulum swings of history.

Combat stopped on July 27th, 1953, with the signing of the Korean Armistice Agreement. Technically, the war is still ongoing; no peace treaty was ever signed. The Korean War displaced millions of people and had the highest rate of civilian casualties amongst all modern conflicts. By the time the armistice was signed, the peninsula had lost between 12% to 15% of its population. Almost all of Korea’s major cities had been destroyed. But for all intents and purposes, life in South Korea became peaceful, or at least it could start to be peaceful. In the wake of 1953, Korea needed to be rebuilt again, just like how Japan needed to be rebuilt after the end of World War II. The future was a blank slate, but to a business mind like Lee, it was a gold mine. The world had already seen Japan utilize business to rebuild infrastructure and reignite its economy. So when Korea was gathering up for the same thing, Lee jumped at the chance to help out. His next moves could put Samsung on track for success. Thankfully, he already had a track record for adaptation.

Postwar Korea was in dire need of infrastructure. Everything from food and water to iron and coal needed a pipeline. So, to reinvigorate the country, the new Korean government introduced protectionist policies to help establish large domestic conglomerates, also known as Chaebol. These companies were typically family run and shielded from competition or given easier financing to get them up and running. Think of it like state sponsored capitalism where everyone got $200 every time they passed go. Lee capitalized on these, pun intended, by moving into the textile industry and setting up the largest wool mill in the country. This way, Samsung grew along with its country, or at least that was the theory.

Having an ear to the ground would have helped Samsung respond to the direction of the country, but progress was slower than a glacier going uphill. Nonetheless, Lee found ways to diversify his company’s portfolio. As the 1960s approached, Lee snapped up three of Korea’s largest commercial banks, plus insurance firms and businesses which specialized in cement and fertilizers. In Monopoly board terms, this was like maxing out the red and orange set. Statistically, those are the best spaces to get on the game, though I know some people in the comments will swear the brown spaces are the true key to success. The point is, Lee positioned his company to be the go to guy for development. If you wanted to set up a business, you needed capital and protection. If you wanted to create a farm or build something, you needed construction materials and agricultural ingredients.

Life may have been good for Samsung, but Korea wasn’t doing so hot. The government was unstable and corrupt, and economic difficulties were a constant source of irritation amongst the people. People viewed this post war government as being an old boys club where traditionalists and elites didn’t serve the people. In some sense, you could say they were like the new form of the Yongban. This came to a halt in 1961 with a military coup on May 16th, known as, well, the May 16 coup. Park Chung hee and his allies pulled off the takeover and laid the foundations for the rapid industrialization of South Korea. The way they saw it, they’d already lost a vital decade of growth to previous government failings, which was why South Korea basically had the same GDP as its enemy over the northern border. One directive to compensate for lost time was to overhaul economic and commercial policies. You can imagine Park Chung hee wasn’t too fond of a Yongban descendant owning so many banks.

Lee was in Japan at the time, or perhaps left for Japan shortly after the coup. The exact details are a bit hazy. But what is known is that he didn’t return to South Korea until a new deal had been struck with its government. Once he’d agreed to give up control of the banks and follow other new policies, Lee was able to return home. So far, he’d been raised in the shadow of Korea’s elite, got caught up in Japan’s meddling, then sold fish to China. Later, China backed North Korea. When North Korea was defeated, Lee helped rebuild South Korea, only for the South Korean government to be hounded out by rebels—the same rebels which caused him to hide in Japan. You can imagine that the middle aged businessman was yearning for some peace and quiet. But the first thing he did in the wake of the coup was to set up the Federation of Korean Industries. Think of this as a lobby group for conglomerates that advocates for free market policies and private sector redevelopment. The timing couldn’t have been more perfect. The new Korean government had redrawn the economic road map, and Lee had a new terrain to adapt to. If he played his cards right, he could bring Samsung to the top of the corporate food chain forever.

Without the banks as a money spinner, Lee overhauled his cornerstone textile company into a vertically integrated backbone for his business. He purchased an oil refinery, a nylon manufacturer, and even a department store. In case it’s not obvious, he had stopped trading dried fish by now. Not only was he poised to take advantage of Korea’s incoming consumer boom, he was poised to take advantage of Korea’s national growth. The latter half of the 20th century saw South Korea go from a least developed country to a developed one. By the time the 1990s wrapped up, child mortality rates had plummeted, national GDP had skyrocketed, and the nation’s capital had hosted the Olympic Games. Historians refer to this period as the “Miracle of the Han River,” as a tongue in cheek nod to West Germany’s “Miracle of the Rhine.” It basically means a miraculous post war economic boom and has since gone on to become the model of growth for developing nations. As you can imagine, credit for this direction is debated. Some say Park Chung hee’s dictatorship was the main cause, but others say Samsung is to thank for saving the country.

In the lead up to the stellar growth, Lee spent the 70s setting up Samsung Heavy Industries to cater to military customers and Samsung Ship Building to attract partners in the import export hustle. In 1977, Samsung Precision Company was created for engineering and manufacturing projects such as security systems, industrial machinery, and cameras. As the 70s wound down, South Korea’s economic improvements encouraged the government to back heavy industries. On top of that, Lee was starting to realize that the key to adaptation wasn’t understanding your environment; it was about creating the environment.

Samsung invested heavily in the chemical and petrochemical industries in anticipation of a world driven by a technological way of life. Samsung had already started to enter the tech space back in 1969. Samsung Electronics was established to produce black and white televisions, air conditioners, and calculators. To an outsider, these businesses were too diverse: cargo ships and calculators? How are these going to work together? In reality, Lee was strategically gaining footholds in complementary emerging markets. Think of it like a butterfly: some evolve wings to appear like the faces of bigger predators that way they ward off a hungry neighbor. But Lee’s butterfly was trying to evolve wings to look like a new predator. After all, the aim of the game is survival, so you need to brace yourself for the future as much as you need to get through today.

So Samsung doubled down on this gamble by investing more into research and development through the 70s. Tech was still a few years away from Sony and Microsoft. Computers and electronics weren’t cool or consumer friendly, so Lee’s interest in propping up this experimental sector had to be carefully coordinated. His inroads into owning a telecommunications company helped boost sales of his televisions, and his various electronics related divisions got Samsung into the semiconductor market, which meant he could generate cash flow with B2B projects. As the 1980s rolled in, Samsung acquired more telecommunications hardware companies to buttress itself against competitors. If you’ve seen Wall Street, then you’ll remember Gordon Gekko’s lunchbox sized cell phone. Maybe you’ve seen archive footage of the revolutionary fax machines. Think of any piece of equipment that was a staple of office life, and it’ll likely have Samsung’s logo on it. In the same way Lee pivoted from infrastructure of groceries into infrastructure of nations, now he was pivoting to be part of infrastructure for business.

But things weren’t going to last forever. President Park Chung hee eventually limited the number of news outlets, which meant Samsung lost its broadcasting output. On top of that, the Federation of Korean Industries had come under scrutiny for its ties with Chaebols and allegedly prioritizing their personal business concerns over societal ones. Can you imagine a clan of corporations putting profit over people? Unthinkable! And then, to make matters worse for Lee, just as economic growth was nearing its peak, just as all his businesses were running smoothly and it looked like he’d skirt the building criticism, he keeled over and died. There’s nothing like death to inconvenience your business plans. He was 77 years old when he passed away on November 19th, 1987. But what’s the point of evolving to survive if you don’t have any descendants? Lee’s third son took over the empire and began the transition of the Samsung we love and hate today.

Samsung has businesses in hospitality, lithium ion batteries, credit cards, biotechnology, and theme parks. Its construction branch was contracted for Taipei 101 in Taiwan and Burj Khalifa in the United Arab Emirates. At this point in time, Samsung’s connections are so vast that it’d be simpler to list the things they don’t do. But why even bother doing that when we can focus on what they are known for today: consumer computer technology and, well, getting arrested.

In 1993, new Samsung head honcho Lee Kun hee took his father’s empire in a new direction. He sold off subsidiaries and downsized the company to narrow its focus on three key industries: electronics, engineering, and chemical—the pillars of any technology dependent civilization. From here, Samsung refined its tech to become a leader in screens, televisions, computer components, and of course, smart devices. Say what you will about Android’s emojis, they had wireless charging and multitasking while iPhone was still figuring out copy and paste. Since the turn of the millennium, Samsung snowballed into an undisputed global force. Wherever you go, Samsung is trusted as a brand and idolized as an employer. But the family running the show is viewed more cynically. They influence tech, commerce, and politics so much that there are some Koreans who view the dynasty as reincarnated monarchs. That might sound ridiculous to us because America doesn’t have a monarchy, but we do have royalty. It’s just our royalty is nowhere near as respected. Nouveau riche celebs like Kim Kardashian and Paris Hilton are envied but ridiculed. Family dynasties like the Kennedys and the Trumps are unifying but cult like. Even our messianic tech CEOs like Steve Jobs and Elon Musk are not as respected as the Samsung clan. How else do you explain the non issue of the CEO embezzling money for the former South Korean president? Well, I say non issue. It was a big deal back in 1996 when it came to light that he helped a president illegally amass hundreds of millions of dollars. But it was brushed under the rug twice: first with a suspended sentence of three years, and next with a formal pardon from the new president. To most business magnates, that would have been career ending. Instead, Lee carried on working and was even celebrated for his contributions to business and international relations.

But then in 2007, a former Samsung chief lawyer spilled the beans on Samsung’s under the table dealings. Lee Kun hee had a whole line of lawyers trained to take the fall for any scandal that might come his way. It was even normal for his team to fabricate evidence when they needed to protect the Samsung leader. It also turned out Samsung had illegally opened up thousands of bank accounts under its executives’ names. The chief lawyer even lifted the lid on an attempt to bribe the US federal district court judge who was presiding over a case of Samsung executives accused of price fixing memory chips. Police raided Lee’s home and office a few months later. He was found guilty of a litany of, shall we say, financial misbehavior. He resigned, got fined, and received a suspended sentence, which again was overturned with another presidential pardon. After that, he returned to Samsung, having learned his lesson, until 2017. That was when he was convicted yet again, this time for bribing former President Park Geun hye to grease the wheels of the government in favor of his business merger. Want to know what happened next? You guessed it: a presidential pardon. Lee kicked the bucket on October 25th, 2020, and his only son took the reins in 2022. As for the other members of the Samsung family, they operate other divisions and are equally protected by layers of wealth, lawyers, and an admiring public. It seems no matter what Samsung does, it will always be a family run empire that can use political connections and industry to get what it wants. In some ways, this is the logical end to its founder’s ethos. When Lee Byung chul was born in the ruins of the Yongban, he was told he’d have to adapt to the new way of life if he wanted to have any influence. He went from providing infrastructure to locals, government, and business. After his death, his machine went on to provide infrastructure for culture. Samsung is such a fixture in our modern, interconnected, tech heavy world that it’s hard to imagine a life without them.

• Humble Beginnings: Founded in 1938 by Lee Byung chul as a dried fish and noodle trader in Korea.
• Adaptability & Diversification: Consistently pivoted business models to survive political turmoil and economic shifts (e.g., sugar refinery during Korean War, textiles, banking, insurance, cement, fertilizers).
• Chaebol System: Benefited from South Korea’s post-war protectionist policies, becoming a large family run conglomerate.
• Government Influence: Faced challenges and adapted to military coups (e.g., Park Chung hee’s takeover forced Lee to give up bank control). Lee later founded the Federation of Korean Industries.
• Heavy Industry & Tech: Expanded into heavy industries (shipbuilding, military) and pioneered electronics (Samsung Electronics in 1969), strategically gaining footholds in emerging tech markets.
• Succession & Focus: Lee Kun hee, the founder’s third son, streamlined the empire in 1993, focusing on electronics, engineering, and chemicals, leading to global tech dominance.
• Controversies: The Samsung leadership has faced numerous legal battles, including embezzlement, bribery, and price fixing, often resulting in suspended sentences and presidential pardons.
• Enduring Power: Despite controversies, Samsung remains a powerful family run empire with vast influence in tech, commerce, and politics, seen by some as a modern monarchy.

General Electric and Jack Welch: The Rise and Fall of a Management Icon

Ah, Jack Welch. The name, for some, might send shivers down the spine, while for others, it might evoke a sense of unwavering worship. There really isn’t much middle ground when it comes to this CEO, is there? His legacy seems to swing wildly, from being hailed as a genius who revolutionized corporations with his management techniques, to being seen as a fat cat who, perhaps, made life worse for countless employees. Some even suggest he ran something akin to a bona fide cult, so steeped in capitalist fervor that even Ayn Rand might have cringed. He retired with a staggering $417 million severance package, the largest at that time, which, I mean, that’s enough to raise an eyebrow or two, even for his most dedicated disciples. Yet, he always saw himself as fighting for the little guy, championing the efficient infrastructure of small business over the sluggish mechanisms of big bureaucracy. But then, he never shied away from defending lucrative bonuses for CEOs, including himself, not even when firing scores of blue collar factory workers. His paradoxes, I think, stem from his background as a chemical engineer—a deep understanding of synthesizing opposing elements, creating catalysts, and measuring explosive outcomes. This might explain why his methods for success have, well, split people right down the middle. Was his business approach capitalism’s free radical, reactive, energetic, but ultimately short lived? Or was it something more? I wonder.

By the time Jack Welch entered the world in 1935, General Electric was already a household name, known for radios, irons, and so much more. What started in 1892 with founders like Thomas Edison and J.P. Morgan had blossomed into a cutting edge corporation. But when Welch passed away at 84 in 2020, he would leave behind a company almost unrecognizable to its founders. Not least because, just a few short years after Welch, shall we say, went to join the shareholders meeting in the sky, General Electric actually ceased trading on the Dow Jones Industrial Average.

Welch was born in Peabody, Massachusetts, the only child of parents with Irish Catholic roots. His father’s job as a train conductor provided a modest upbringing, especially as General Electric’s inventions were, at the time, genuinely raising the standard of living across the nation. We’re talking refrigerators, televisions, medical equipment like CAT scans, and even military applications such as submarine detection. Compared to the Great Depression that his immigrant family would have struggled through, Welch seemed to have everything going for him. Perhaps it was this relative comfort that propelled the straight talking Welch to get acquainted with hardship. His childhood stutter was the first thing he conquered, and he often credited his mother for convincing him that his tongue simply couldn’t keep up with his intelligent thoughts.

Throughout his middle school and high school years, Welch spent his summers caddying for golfers, delivering papers, and selling shoes. These odd jobs, I think, brought him closer to the types of people and worlds he’d later navigate. But it was his academic side that truly became the catalyst for change. He studied chemical engineering at the University of Massachusetts Amherst, interning at places like Sonoco and PPG Industries during his summers. The fact that he was securing placements at some of the big chemical industry players even before graduating demonstrates he was a cut above the rest. He made such an impression that upon graduating in 1957, job offers from major companies were hitting him left, right, and center. Others might have jumped at this first sign of stable work. However, this young chemical engineer valued the possibilities of strategic risk taking, so he doubled down on his talents by enrolling as a postgrad at the University of Illinois. When he left in 1960, the 25 year old Welch had a master’s, a PhD, and a wife. Kids really did grow up faster back then! He hit the job market scene bigger and better than ever, immediately snapping up a junior engineering role at General Electric. But little did anyone know that signing a contract for his first real job would become a pivotal moment in American business history, for better or, perhaps, for worse.

Over the next 20 years, Welch, well, he leapfrogged up the corporate ladder. I know, I’m mixing metaphors, but it’s just to emphasize how truly impressive his rise to the top was. Especially considering he almost got fired when a factory he was managing had its roof blown off in an explosion. Seriously, how many rags to riches billionaire stories involve Wile E. Coyote style shenanigans? It’s the kind of laboratory mishap that would probably make Thomas Edison proud. Yet, none of this would have happened if Welch had quit early, as he intended.

Welch was dissatisfied with the corporate culture. He couldn’t stand the amount of red tape. To him, wading through office politics just slowed down productivity and increased waste. So, he threatened to walk. That was a bold move, wasn’t it? This defiance marked the first time Welch’s radical outlook truly clashed with the norms of corporate culture. Remember, this was an office in the 1960s. At this point, the cubicle was some far off utopian ideal, not the dystopian wage cage us modern folk remember it as. So, if you’re feeling the strain from your open plan office life of foosball and mental health awareness month, spare a thought for what the mid century office worker endured.

Incredibly, his protest worked. An executive promised to instill a “small company atmosphere” if Welch stayed. Oh, and he got a raise, which apparently was the other reason he was prepared to leave. It seems his starting salary of $10,500 wasn’t enough, even though by 2024 rates, that’s at least six figures. I know plenty of millennials and zoomers who’d happily blow off the roof of a factory for that kind of cash. My point is, the idea of a small business feel with a big payout would go on to become the defining characteristics of Welch’s business philosophy, not just within his organization, but, arguably, in many other companies for the next 50 years.

As for his climb to the top, Jack Welch pretty much hit every story beat of the typical CEO legend. The only way his trajectory could be more Hollywood is if he started out as the janitor. He made vice president in 1968, heading GE’s plastic division, which by then was raking in $26 million in what was one of its most competitive emerging markets. That’s a lot of responsibility. He even oversaw the production and marketing for two big names in the polymer business: Lexan and Noryl. As all of us polymer fans know, the latter was famously used to mold cases for the Apple II computer. No wonder he was selected to be the vice president of the company’s chemical and metallurgical division in 1971. By 1973, he joined the ranks of group executives, managing medical systems and electronic component departments. His job title got longer, his responsibilities got bigger. In 1977, he was their new senior vice president, and by 1979, he was promoted to vice chairman. Then, just two years later, in 1981, Jack Welch was finally crowned General Electric’s youngest ever chairman and CEO. Becoming the big cheese took just 20 years, and now he’d have two more decades at the helm, plus another 20 years afterwards to see the consequences of his actions play out. For now, Welch was free to run the company the way he saw fit, and the first thing he did when he got the keys to the kingdom was to undo the old kingdom’s way of doing things.

By the end of 1982, Welch had, it seems, successfully removed every atom of the previous management’s infrastructure. He was in electronics, after all. Part of electronics is disassembling something so you can put it back together again in a more efficient manner. However, some critics labeled his strategies as “aggressive simplification and consolidation.” It’s not hard to see why. In layman’s terms, Welch figured out that the quickest way to save money and generate higher profits was to, well, fire people. Now, that might not seem so shocking today, but that’s only because we’re living in a time where Welch’s approach became the norm. For that, we can perhaps thank his vitality curve.

That was the name Jack Welch coined for his version of the Pareto distribution, otherwise known as the 20/80 split, where 80% of an outcome is decided by 20% of an action. Think of it like how 80% of how history works viewers are not subscribed. But Welch went one step further with his 20/70/10 split. He laid out the details in his book, Jack: Straight from the Gut. The 20% referred to the “best” employees, the A-class, whose work significantly improved the business. These individuals were rewarded with bonuses like stock options, raises, and, I guess, all the polymer they could eat. Okay, maybe not that, but there were plenty of big carrots on big sticks. The 70% was for the employees who did adequate work, the B-class. These were competent, dependable workers who might, in the future, rise to the rank of A-class, but would be fine where they were, so long as they didn’t drop into the C-class.

The C-class weren’t just the “worst” employees from a production point of view; they were considered toxic. They supposedly drained energy from those around them, like an office Grinch whose pessimism zapped the motivation of hard workers. But it didn’t matter what your position was or how long you’d been with the company; being in the bottom 10% was like speed running for a pink slip. Even if you dodged the firing squad this year, there was always the next round of evaluation. No one was safe. This approach became so infamous that Jack earned the nickname “Neutron Jack,” after the neutron bomb, for his ability to wipe out people while leaving the building still standing. He reportedly enjoyed surprise visits to factories and headquarters, just to make sure employees were doing their best to stay on his vitality curve.

But it wasn’t just Welch who had this ranking system; he instructed all his managers and executives to score their departments and employees according to a set of criteria. These calculations were processed through a series of questions and values, kind of like the world’s first algorithmically driven workforce. Except, there was no solid empirical data, and he was the first to admit the judgments couldn’t be perfect. But as cutthroat as it sounds, this method did carry the company through hard times. During his first year as CEO alone, the company recorded revenue of around $26.8 billion. At the height of Welch’s tenure, GE was raking in $460 billion worth of revenue. As controversial as his management was, Welch’s style was so popular that it still exists today, even if companies do it secretly under a different name. It has been estimated that between 12% and 30% of Fortune 500 companies still use his patented “rank and yank” system. Microsoft uses it, Google uses it, and of course, Amazon uses it to such an extreme that employees sometimes resort to relieving themselves in plastic bottles so that their computer boss doesn’t mark them down.

For example, the ranking system was easily exploited by office politics. A brown nosing employee could hold on to a B or A status, while a rival could sabotage a colleague to spare themselves from the chopping block. C-class employees could be bumped up to protect them from being fired if managers believed Welch didn’t understand the value they brought to their teams. But there was also the risk of the D-class. Every time a C-class was removed, new employees would be needed. This gave managers two courses of action: have no choice but to hire worse people because losing your C-class shrinks your pool of candidates, or deliberately hire bad people as scapegoats to protect your favorite staff members. As you can imagine, plenty of analysts pointed out that this approach wasn’t completely efficient. How useful could a strategy for efficiency be when it created a culture of cutting corners? And what about the short term gains over long term survival? Would that come to bite GE in the butt one day? Well, Welch had another ace up his sleeve: a way for people to change their minds about business and himself.

The Fortune 500 eventually declassified General Electric as an electrical equipment company and reclassified it as a diverse financial services company. This, apparently, infuriated Jack Welch. He severed all ties with any publications that viewed his company as an investment bank. But that’s exactly what General Electric had become. You see, Welch developed a habit for acquiring or merging with viable companies in other sectors, stripping them of their resources, then dumping the husk and moving on to the next money pot. That’s not uncommon when a business is moving vertically, but what made Welch’s idea his most revolutionary one to date was his focus on moving horizontally.

General Electric started dumping its manufacturing components to set up things like General Capital, General Capital Bank, General Capital Sponsor Finance, and a whole bunch of other money lending businesses. And it worked. By 2014, General Capital had total assets of almost $500 billion. Soon, other companies followed suit. Amazon went from books to products to food. Apple went from computers to music to phones to TV. Look at Warner Bros., Microsoft, Activision, Facebook—they all copied Welch’s structure for expanding by merging, acquiring, or diversifying their subsidiaries and portfolios, regardless of what industry they started in. His influence was becoming so respected that he was able to set up a cult.

Okay, it wasn’t exactly a cult, and I’m not just saying that for legal reasons. Plenty of journalists and reporters had directly asked Welch whether his summer course for CEOs was a boot camp for company bosses or really an evangelical retreat to recruit missionaries for his worldview. He denied them, of course. But these concerns stemmed from a few questionable actions. The first was taking a training center set up by General Electric in the 50s and converting it into a members club, complete with golf courses and jacuzzis—all things class A employees would love. Second, he screened the students of his master class rather than being open to anyone looking to succeed. He allegedly vetted candidates on how well they already agreed with him. But it was the third thing that many feel proves that the cult of Jack Welch was real: it started when he spearheaded companies buying back their own stock.

On one hand, he was diluting the power of shareholders. He had always hated bureaucracy and red tape. But on the other hand, this artificially inflated the stock value. The fewer stocks there are, the more they are worth, and the higher the earnings per share. Even if other CEOs weren’t signing up for his summer camps, the fact that they copied every step of his playbook proves that he was more than an idol; he was an ideal. His reputation was impervious to criticism. It didn’t matter whether he was calling climate change “BS” or fighting New York State over his factories dumping chemicals into the Hudson River. CEOs weren’t even phased when he displayed contempt for his workers, when he joked that an ideal corporation would be floated around the world on a raft to take advantage of tax breaks, loopholes, and cheap labor. Heck, even when General Electric was found guilty of defrauding the Pentagon of millions of dollars during some jet engine contracts, Jack Welch was still kept as CEO for 10 more years. By the time he did start retirement, Welch was able to negotiate a $10 million advance on the rights to his memoir, though he said he’d donate the profits to charity. Unfortunately for Jack, the undoing of his reputation and company was just around the corner.

Jack Welch once said that his leadership success of 20 years could be measured by looking at his impact over a comparable period. He’d probably come to regret those words, as post Welch General Electric was characterized by steady decline and, eventually, sudden collapse. It started with scandals. In 2014, General Capital agreed to pay the largest credit card discrimination settlement in history. They’d been denying consumer benefits and debt relief to Spanish speakers and exploiting vulnerable groups like elderly customers by consistently failing to communicate the fine print of their costs and fees. But a Welch fanboy might argue that this wasn’t on his watch, so old Jack can’t be blamed, even if he did set up the system and culture in the first place. Even Welch’s handpicked successor went on the record to say the company structure was worse than he was led to believe.

So what was Jack’s defense? 9/11. He said that the destabilizing effects of the terrorist attacks affected production and revenue across all industries. But that’s like saying if the wheels fall off your secondhand car the moment someone else starts driving it, the problem is the potholes in the road and not your shoddy maintenance. Even if you think I’m not being fair, you can’t blame Bin Laden for the Great Recession. Suddenly, all the stocks and bonds propping up General Electric’s finance operations weren’t that impressive. All those A-class employees discovered their bonuses were worth a lot less, and that their ranking wasn’t going to give them job security when General Electric began selling off divisions and assets to survive. Even when Welch wasn’t firing people, employees were still losing their jobs.

Worse, when Jack Welch divorced his second wife, his private finances were dragged into the spotlight. Courts discovered his payment deals with General Electric were a lot more lucrative than anyone realized. We’re talking the use of a private jet, an apartment in New York, and even tickets to baseball games. So much for needing to close factories to save money. Then again, his defenders say that those bonuses came from the profits he generated. As recently as 2020, General Electric was ranked as the 33rd largest firm in the United States. Surely that says something about the longevity of Welch’s leadership. However, just a few years later, the conglomerate was hemorrhaging money. Even a pivot to aerospace didn’t help. COVID-19 affected the travel industry so much that the jig was up for General Electric. The empire had, it seems, gone from A-class to C-class.

Of course, Welch never really took accountability for the decline of the company. His defenders say the fault lies with his successor’s shortcomings, but critics often point to his rewriting of the rule book as a recipe for disaster. So, the question remains: were Jack Welch’s radical CEO ideas more like the experiments of his younger chemical engineering self—working in theory, perhaps, but not always in practice, especially when you blow the whole thing up? What do you think? Was Jack Welch a maverick whose ideas stand the test of time, or did he do the ultimate “rank and yank” by getting away scot free?

• Early Life & Rise: Jack Welch, a chemical engineer, joined GE in 1960 and rapidly ascended, becoming CEO in 1981.
• “Neutron Jack” Era: Implemented the controversial “vitality curve” (20/70/10 rule), routinely firing the bottom 10% of employees to boost efficiency, earning him the nickname. This practice was widely adopted by other companies.
• Horizontal Diversification: Transformed GE from a manufacturing company into a financial services giant (General Capital), a strategy widely emulated across industries.
• Controversies & Immunity: Faced accusations of running a “cult” and legal/environmental issues, but his reputation largely remained intact during his tenure, partly due to strategic stock buybacks.
• Post-Welch Decline: GE experienced significant decline and scandals after his retirement, raising debates about the long-term sustainability of his short-term focused strategies and high leverage.
• Lack of Accountability: Welch often attributed GE’s later struggles to external factors rather than his own policies.