Hiatus 4 Billy Durant

billy durantTime for a break. I will be taking a hiatus in order to finish a languishing project I started last year. It is a book, a semi-fictional account of an extended episode in the life of one of America’s most remarkable characters of a hundred years ago: Billy Durant.

Billy didn’t have a big ego, so his creation was never named after him, so nobody knows about him. Don’t be fooled by his humility, he was to his age what Steven Jobs was to ours and he changed the face of his industry. His story follows the classic three-act drama, which I want to present for today’s generation to enjoy.

Act 1: 1886 – 1903

On a bit of a lark (and with nothing) Billy decides in his early twenties to buy a company making horse-drawn buggies. In less than ten years that company becomes the world’s largest manufacturer of horse-drawn vehicles. The company is known for its generous treatment of the employees — so much so that the wave of industrial unrest sweeping the country completely bypasses Billy and his company. By the age of 40, he has become Flint’s most prominent citizen but, bored, he moves to New York to participate in the fledgling stock market. He is good at that and his wealth continues to increase.

Act 2: 1903 – 1910

Billy sends one of his stressed executives to Europe to recover. However, upon his return, the executive tells Billy the horse-drawn vehicle business is doomed. He resigns while Billy scoffs at the motion that this newfangled automobile craze will hurt his business. “Why, we have a six-month backlog.” Billy hates automobiles: noisy, loud and dangerous.

On a visit to Flint, Billy steadfastly rebuffs a fellow businessman’s attempts to lure him into his Buick… until he learns the man wants to sell him not a car, but the whole company. Well, that is different. Bored with life, Billy takes up the challenge. His golden touch turns Buick into the number one automaker in America within 5 years.

J.P. Morgan and the Wall Street establishment look down their noses at the upstart from backward Michigan, but they recognize his golden touch and approach him with a view to create a consolidated auto company called United Motors. Billy agrees, but only if Henry Ford is included. Ford is in, along with Ransom Olds, the Lelands (who turned Ford’s failed second company into Cadillac) and of course Billy’s Buick. The deal falls apart when Ford and Olds insist on cash. Morgan is a Wall Streeter, which means his business is stocks, which is why he only wants to buy with stock. Indignant that country bumpkins want to tell him how to do things, he sends them home packing.

Unfazed, Billy says who needs Wall Street? He heads back to Michigan to form his own creation, General Motors, with Cadillac, Buick, Olds and Oakland/Pontiac. Unlike Morgan and his stocks, Billy funds his empire with debt. GM is wildly successful (as Billy’s ventures tend to be) but a recession causes GM to miss payments on the debt. To save the jobs of all his workers, Billy is forced to call in help from the Wall Street crowd. They agree, but at the first board meeting they fire Billy from his own company.

Betrayed, Billy vows: You have not seen the last of Billy Durant.

Act 3: 1910 – 1916

The Wall Streeters promote Charlie Nash (“the” Nash) to run GM their way. Nash does what all unimaginative bean counter CEOs do: he slashes costs, lays off thousands, cuts benefits… and cuts Buick’s successful auto racing team. Billy approaches one of the laid-off racing drivers and starts another auto company. The driver’s name? Louis Chevrolet. (See, you’re beginning to nod and smile already. Told you it’s a terrific story.)

With Billy at the helm, Chevrolet is a runaway success while the Wall Street-run GM sputters and stumbles. Calmly and shrewdly, Billy applies what he learned from his time in the stock market. He uses Chevrolet’s high-PE stock to raise money and buy GM’s low-PE stock for cheap. (You can read more about PE here and here.)

As the 1916 GM annual stockholder meeting winds down, a hand is raised from the audience. The board recognizes Billy and allows him to speak. Calmly, he introduces a formal motion to fire the entire board of directors. Aghast, they try to shut him up. However, by law they are required to count votes. Chevrolet owns 54% of GM stock, which means Billy’s motion carries… and in the classic story of redemption, he’s back!

In effect, Chevrolet takes over GM (which, incidentally, accounts for Chevrolet’s prominence in today’s GM branding). Billy, his redemption complete, shows Nash the door and makes Walter Chrysler America’s highest paid executive to run the day-to-day operations for the new GM.

I think that is a terrific story. I want to see if I can bring it to life in words, so that is what I will focus on for the next few months.

Billy, unselfish, made most people around him exceedingly wealthy. It is no coincidence that both of New York’s prominent skyscrapers, the Empire State and Chrysler buildings, were both built with money Raskob and Chrysler respectively made from their partnership with Billy Durant and General Motors.

Wish me luck (and a publisher) as I finish the good story.

I will send out an email to subscribers when “the regular” Bite the Bullet Investing resumes. Have a great summer!

12 Responses to Hiatus 4 Billy Durant

  1. Steve May 6, 2016 at 7:01 am #

    Good luck on the book William it sounds like a great story. Can not wait to read it!!!

  2. Mary Lou May 6, 2016 at 7:11 am #

    You’ve hooked me! Please write and write, I’m sure a good publisher is in your future. 🙂

  3. Nomad Mac May 6, 2016 at 7:44 am #

    As a “Bowtie” aficionado, I can say this book is in my cross-hairs for purchase.
    Go get ’em William!!!

  4. Pam May 6, 2016 at 9:19 am #

    As a lifelong Detroiter – I was surprised by how much of this story I did not know! I wish you the best of luck with your book and look forward to reading it someday!

  5. Chuck May 6, 2016 at 11:28 am #

    Best of luck, William! Sounds like an interesting story.

  6. Alan Harris May 6, 2016 at 3:01 pm #

    Really liked the story ….it just needs some ‘love interest’. FWD’ed it to a UK friend who is a film producer looking for a story. Here’s his reply
    ‘Hi Alan
    Thanks a million, just read it, sounds terrific !!!
    Will get onto it with my guys, also know a publisher that might be interested.
    We are off the Cannes film festival next week for 2 weeks, so catch up when I’m back
    Goodman!
    Enjoy the sunny weekend
    Eamon ”

    William: Hope it works out for you (plus my 2% finders fee natch) Let me know if you hear from anyone called Eamon in UK or Cannes.

    Rgs
    Alan

  7. Chris Tang May 6, 2016 at 4:10 pm #

    Wow. What a story about a great man whom I have no idea existed in American history. You go William! Best of luck in finish the project and finding a publisher and I look forward to your return when you are done with this very worthwhile project!
    Best,
    Chris

  8. Bob May 7, 2016 at 5:57 am #

    Best wishes on your book!

  9. Alan Harris May 10, 2016 at 10:38 am #

    William: I have someone interested in chatting with you about publishing. How can we contact? Please email me.

  10. Dede Heiman February 10, 2017 at 12:07 am #

    Here it is, 2017, so how is the book writing?. I remain fascinated with your narrative and have reread it several times, and shared it on my social media. When will you return to your investing blog?

  11. Dede Heiman February 10, 2017 at 12:07 am #

    Here it is, 2017, so how is the book writing?. I remain fascinated with your narrative and have reread it several times, and shared it on my social media. When will you return to your investing blog?

    • William February 16, 2017 at 8:24 am #

      The book is almost halfway. The research to keep the main events accurate is much more than I anticipated, but hopefully that makes it more gripping because truth is stranger than fiction in this particular case. Thanks for asking! 🙂

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