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Simons, Books, Software, AI Ghosts, Sea People, Amazon, Financial Literacy, IBM



The Greatest Capitalist Who Ever Lived: Tom Watson Jr. and the Epic Story of How IBM Created the Digital Age: How does a dyslexic party animal who suffered from clinical depression, nearly got expelled from high school, barely skated through college, and could hardly handle the rigor of his first job's training program go on to become CEO of the company that defined the computer industry in the mid-twentieth century?

It helped that the person in question was Thomas Watson, Jr., and that IBM's founding CEO was one Thomas Watson, Sr. Family ties matter, and they mattered even more in the fairly sedate business world of the 50s and 60s. Watson, Jr., the subject of the book, had the classic difficult-childhood-because-his-parents-made-it-too-easy: he was an unreliable student, his dad arranged jobs for him, and he didn't really face any challenges in his early life that weren't entirely self-imposed. This was not good for his mental health, and it meant that in early life he had few indications of future greatness—the only evidence that he was a forward-looking early adopter was that he was smoking marijuana a generation before the hippies discovered it.

What actually turned his life around was signing up for the military and discovering that he could actually do a good job without endless parental assistance. Here, too, luck came in handy: one of his first assignments was to convince military pilots and their commanders to use flight training systems. It's a stroke of luck that he was one of a tiny minority of recruits who happened to have direct experience selling computing hardware, and he did it well. He ended up working as an assistant to a general, who was more impressed by his output than by his pedigree.

Watson returned to IBM, and ended up running it. And, over his tenure, beat his father's growth record while navigating two tricky transitions: first, IBM under Thomas Watson, Sr. was a cult of personality: employees sang from the official IBM songbook to start the day ("Pack up your troubles—Mr. Watson's here!/And smile, smile, smile./He is the genius in our I. B. M./He's the man worth while."). Watson, Sr. had once, as a traveling sewing machine salesman, had his entire inventory stolen while he was at a bar, so IBM forbade employees from drinking. All business questions waited on the CEO. That model worked for a while, but didn't scale; Watson, Sr. made the prudent decision to relax some of the rules while he was still in charge (he surprised his son at one point in the 1950s by serving wine at a company function, though liquor remained a bridge too far for a while). So IBM was very much a business built in the model of one person; if your cult of personality outlives the person, it's just a cult. Watson, Jr. made IBM more of a normal company.

He also made it a much bigger company. He was early to recognize that the company's business was not selling punched cards but selling data processing services, so he took computers seriously as both a competitive threat and a revenue opportunity. This turned out to be the right call: the legacy business was threatened by both regulation and technological obsolescence, and for a while, Remington-Rand was ahead of IBM in the computer business. But they caught up, surpassed their rival, and became synonymous with computing just in time for computers to be synonymous with growth.

The best way to read this book is that it's a story about personal and institutional legitimacy. IBM had accomplished a lot before Watson, Jr. took control, but it was also over-optimized for a business model under threat, and for the constant attention of a singular executive. It's hard to imagine that the single person most qualified to run IBM happened to be the son of the previous CEO, but it's also hard to imagine someone not named "Watson" being able to slay as many sacred cows.

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