Leon Hess (1914-1999) is an entrepreneurial immortal, the founder of a $25 billion global energy colossus which to this day carries his name (NYSE: HES).
But for most of Hess's life, there have been precious few public details about how he grew his iconic enterprises. In their thorough new biography, Hess: The Last Oil Baron, journalists Tina Davis and Jessica Resnick-Ault shed light on a business builder whose success story--including service in World War II--isn't as well known as it ought to be.
Here are five takeaways from the book:
1. Spot opportunity where others see waste. For all of Hess's lucrative insights, none can top his first, which occurred in 1933, when he was 19. At the time, he was working for his father, Mores, a butcher who had many side businesses to help the family survive during the Depression.
One of those businesses was hauling 100-pound bags of coal directly to houses and stores in and around Asbury Park, NJ. The coal was used for heat and power. The margins were small.
What stuck with Hess from this experience was the overall demand not only for an energy source, but also for the proper logistics of its delivery. If there was a way to provide energy with a more efficient product than coal--something easier to deliver that he could sell for a higher margin--well, there was no question he'd have a local customer base.
He found what he was looking for in a product known as Number 6 fuel oil. Oilmen called it "bottom of the barrel" because it was the heaviest of all the substances separated out during the refinery process. Refiners at the time usually threw it out, because it had to be kept warm to stay in useful, liquid form. Hess recognized that he would have an abundance of low-cost supply that he could resell at nice margins--if he could keep it warm and liquid as he transported it from the refineries to his customers.
He bought a secondhand oil truck to do just that. Sources about where he bought this truck vary. Some say he bought it for $350 in Asbury Park. Others say he bought it for $25 in North Carolina. One reason it matters so much is because Hess trucks--and the popular toys they've inspired--are an essential piece of the company's iconography. By 1938 , Hess had grown the business to 10 trucks and moved the company to Perth Amboy, NJ. Today, the legacy of the trucks lives on in commercials like these.
2. Obsessed over details. "The first thing I look at on a tanker is the engine room bilge," Hess told Business Week in 1987. "Clean bilges denote good housekeeping." From the early days of his business, Hess was intent on making sure his trucks were clean. Later, when he opened his gas stations, he taught employees the importance of frequently painting and repainting to make everything look like new. He even painted the curbs of the stations white.
In the post-World War II years, this turned out to be a prescient move. "As the family car and car trips were becoming more prevalent, and as women began driving more, it could be an easy choice for those looking for quick service and clean bathrooms, giving him a potential leg up on rivals who did not put as much emphasis on appearances," write the authors.
3. Find a great mentor. In 1938, after moving his young business (no one used the term "startup" back then) to Perth Amboy, Hess met David Wilentz, a political heavyweight if ever there were. Twenty years older than Hess, Wilentz had served in the Army in World War I and studied law at New York University. Wilentz was also a national celebrity, having served as lead prosecutor in the ballyhooed 1932 trial regarding the kidnapping of the 20-month-old son of aviator Charles Lindbergh and Anne Morrow Lindbergh.
When Hess joined the Army in 1942 (eager to serve after Pearl Harbor), Wilentz offered to keep an eye on Hess's oil terminals. The authors also believe Wilentz helped Hess score a key intro to Chase Manhattan Bank. Chase's loans helped Hess maintain a cash flow as he continued to buy new trucks and expand his footprint throughout New Jersey and the northeast. When he returned from World War II, Hess married Wilentz's daughter.
4. Become a master of operations. During the war, Hess served in the Red Ball Express, helping to supply fuel for troop movements. Here's how it worked: Roads were marked with red balls so it would be easy for truck drivers to follow directions and know where to bring the fuel and other supplies. Drivers also used a one-loop highway. From August 25 to November 13, 1944, the Red Ball Express moved 412,193 long tons of cargo. "In its 81 days, it created a blueprint for how to move much-needed supplies across the field of war," write the authors.
"In the Red Ball Express he saw the immense need to move fuel at a rate not yet seen back in the U.S.," notes Davis. It's not a large leap to ascertain that Hess's experience informed his thoughts about what to do when he returned to the U.S.
5. Emulate other savvy leaders. "[General] Patton would scrap, even within his own army, to get his men what they needed," notes Resnick-Ault. The book subtly draws a parallel between Hess's tactics and Patton's. Hess employees once testified that they'd siphoned oil out of tanks they were leasing to another company. Patton, for his part, frequently commandeered gasoline earmarked for other U.S. troops.
Likewise, both men, says Resnick-Ault, "fostered loyalty from people who worked for them." It's unusual, she notes, to study a leader as prominent as Hess and find that "uniformly, everyone respected him." But it was the case, and it was largely true of Patton too. Both he and Patton, she says, "cared deeply about making sure the men working for them were taken care of."