I love bananas and plantains, which are very similar to bananas and commonly found in the Caribbean. Until a recent trip to Trinidad, however, I had never given the banana industry second thought. On this trip, however, I listened to a terrific audiobook called The Fish that Ate the Whale and my hunger to learn more about the banana industry grew.
The Banana King. The Fish that Ate the Whale – The Life and Times of America’s Banana King was written by Richard Cohen. It is a biography of banana entrepreneur, Samuel Zemurray, who was born in the Russian Empire in 1877 and came to America when he was 14 years old.
Zemurray started hustling bananas in Mobile, Alabama when he was 18 years old. He would eventually become the majority shareholder and president of United Fruit Company, the largest fruit company in the world in the 1st half of the 20th Century. (United Fruit is now Chiquita Brands International)
While the details of his life are fascinating, I want to focus on Zemurray, the entrepreneur. If you are interested in studying entrepreneurs, you must have Zemurray on your list – the guy created opportunities from the waste of others and never saw an obstacle he couldn’t remove. Here are four examples.
Zemurray Created a Market for Unwanted “Ripes.” By the time Zemurray was 18 he had developed a knack for obtaining stuff for next to nothing and finding buyers. While roaming around the docks of Mobile he discovered piles of discarded, almost ripe, bananas. These bananas, called “ripes”, were discarded by shipping companies because they knew the bananas would never make it to northern cities without spoiling. But Zemurray knew the bananas were perfect for local Alabama markets so he rented a railcar, started to travel north, and sold almost ripe bananas to small grocers as he went. When he sold out, he traveled back to Mobile and started again.
During this time he became known as “Sam the Banana Man” and by age 21 he had saved $100,000.
Zemurray Bought Steam Ships and Land to Control Market. While still in his 20s he knew he wanted to backward integrate and own more of the distribution channel and obtain access to greener bananas. He partnered with an investor and purchased steam ships from failing businesses. Then he acquired bananas at the docks in Honduras. Next, he purchased and cultivated 5,000 acres of prime agricultural land in Honduras, so he could grow his own crop. According to author Cohen, many of his agricultural innovations greatly improved the productivity of the land and banana yield (Zemurray could often get three crops of bananas a year from his land.)
During this time Zemurray went deeply in debt and knew it would take several years to pay it all off.
Zemurray Overthrew a Government to Help his Business. In about 1911 the United States and J.P. Morgan cut a deal with the governments of Honduras and Nicaragua to restructure their international debt. To insure the debt got repaid the U.S. placed tax and tariff collectors at the ports in Honduras and these collectors would likely put Zemurray out of business. He met with Secretary of State Philander Knox and tried to negotiate a waiver or tax break, but this failed. During this negotiation Knox reportedly treated Zemurray disrespectfully.
So Zemurray, the entrepreneur in his early 30s, recruited deposed Honduran president Manuel Bonilla, who was living in New Orleans, to lead a coup to overthrow the sitting Honduras government. Zemurray helped plan, recruit, hire and pay mercenaries to support Bonilla. The coup was successful and Bonilla returned to power. To thank Zemurray, Bonilla issued land and tax concessions that would extend for 25 years. This saved Zemurray’s business, the Cuyamel Fruit Company.
Zemurray Takes Control of the Whale. Over the next 15-20 years Zemurray’s Cuyamel company gained significant market share from United Fruit Company, which had been “the whale” in the banana industry. The two companies fought a difficult competitive land battle in Central America. However, in 1930 the two companies agreed to merge and Zemurray “retired” with additional stock worth $31.5 million.
However, United Fruit continued to be mismanaged and with help from the Great Depression the stock price dropped 90%. Zemurray tried to get the Board of Directors to see a path to success, but they ignored him. He then privately talked with many shareholders, gained proxies, and in a dramatic 1933 Board meeting coup, fired the Board and president. Zemurray took over as President, returned it to profitability, and stayed in control until he retired in 1951.
Later in life Zemurray became a valuable American helping Franklin Roosevelt develop helpful programs during the Depression and supporting a U.S. led coup of Guatemala in 1953. A leading citizen of New Orleans, he donated significant monies, time, and his home to Tulane University.
Zemurray had all the traits you find in very successful entrepreneurs especially that drive and determination to overcome barriers. And the most significant barrier for Zemurray was the disrespect many powerful people showed him – this motivated him even more.