Jeff Bezos Says Companies Don't Last '100+ Years.' This 1 Beat the Odds (But Maybe Not for Long)
Beating the odds, building an iconic company, and then what happens. Also, 7 other things worth your time.
“If you look at large companies,” Jeff Bezos told Amazon employees in 2018, “their lifespans tend to be 30-plus years, not 100-plus years.”
Let’s talk about a company that beat those odds—even though it recently marked an unfortunate milestone, after 102 years in business.
The company is Hertz, which filed for Chapter 11 bankruptcy protection on Friday. Hertz has been straining (WSJ, $) under the weight of $19 billion in debt, to say nothing of an idled fleet of 700,000 cars, and we’ll get to the recent story of how it got in this position below.
But still: 102 years and counting. And, to quote Monty Python, it’s not (quite) dead yet.
So let’s do a brief history lesson, and then come back to the present. There are two names to know when we talk about the Hertz origin story:
Walter Jacobs, who was 22 when he launched the original (and very likely first) rental car company in the United States: “Rent-a-Car” of Chicago, in 1918 and—
John D. Hertz, who bought out Jacobs in 1923, but kept him on as a top executive, eventually president, for decades afterward.
Jacobs first. He was working as a car salesman when he used his savings to buy a dozen Ford Model Ts, paint them, and launch the company. He also worked as his own fleet mechanic.
He grew his venture to about 565 vehicles and $1 million a year in revenue — $14 million in 2020 dollars — and sold to Hertz, who was then known primarily as the founder of Yellow Cab Company, one of the first taxicab companies.
Now, Hertz. Both men were self-made, but Hertz’s story is probably more extreme. He was an immigrant—arrived at age 5 from modern-day Slovakia—grew up poor, changed his name from Schandor Herz, mostly likely due to anti-Semitism.
That’s also why when he became a boxer he fought under the completely made up nomme de guerre, Dan Donnelly.
Hertz sold newspapers, wrote for them, quit because it didn’t pay enough (smart guy), managed other fighters, and then sold cars. He launched his cab company and ran it in the same pugilistic way during the 1910s and 1920s.
(This is all ancient history now, but references I find say his rivalry with Checker Cab involved politics, corruption and even gun violence in the 1910s and 1920s in Chicago.)
Hertz renamed the rental car company—ooriginally, and I love this: the Hertz Drive-Ur-Self System. But then Hertz the man apparently became more interested in other things: the cab company, his racehorses, and eventually endowing scholarships for engineering education.
So, Jacobs stayed closely involved. He served as company president until 1960, even as it was acquired by other companies and then spun off again, and then as a member of the board of directors until he retired in 1968.
He was also credited with innovations that seem obvious today, like franchising, the use of credit cards to reserve cars, and airport locations. (Avis claims to have been first to be in airports, too, but we’ll leave it at that.)
Ultimately, Hertz grew into a mammoth Fortune 500 company, at one point the world’s dominating rental car brand. For anyone who doesn’t know, I think I’m legally obligated to mention that its spokesperson from the 1970s up until the early 1990s was O.J. Simpson. (Videos here and here, for your viewing pleasure.)
The company was owned at different times by GM, by RCA, by the predecessor of the company that owned United Airlines, by Ford, and eventually by a private equity firm that bought it in 2005. Spun off again, it went public and was worth $15 billion as of 2014.
But by last week, just before the bankruptcy filing, it was down to $500 million.
Besides Covid-19, a report in the Wall Street Journal says Hertz took on far too much debt, bought too many cheap sedans when its core customers wanted SUVs, and didn’t refresh its fleet as often as in the past, leading to customer complaints.
Now, I do suspect the brand will survive in some form. Even if another company were to acquire its assets, it might be smart to rebrand as Hertz. There’s 100 years of history there.
Nevertheless, I feel like this is a poignant end to the story of Walter Jacobs—and to a lesser degree perhaps, John Hertz.
You spend your life building an iconic brand, you succeed, it lasts decades longer than you do—and yet, as Bezos predicted at the start of this article, ultimately there’s a shelf-life.
Maybe it’s 100 years, maybe it’s a lot less. Eventually it catches up with everybody.
A final note: The New York Times digital archives are a great starting point for me when I research people like this. The obituary for Jacobs, who died in 1985, talks about his son and four grandchildren; I spent a little time trying to find them for this article, but to no avail.
The obituary for Hertz, who died in 1961, mentions his wife and son (but oddly doesn’t name the son). It also talks about the engineering scholarships he endowed, and says (remember, at the height of the Cold War), that he was honored by the Pentagon for “dedicating ‘most of his personal fortune to the defense of the United States.’”
7 other things worth your time
Twitter reports, you decide: The social media company added a factcheck label to one of President Trump’s tweets (about whether voting by mail leads to fraud) for the first time Tuesday. (ReCode)
President Trump responded by accusing Twitter of interfering in the 2020 election. (Business Insider)
About 1 in 5 teachers say they won’t return to the classroom if schools opens in the fall. I guess we’ll see what they actually do, versus what they say in May, but this is worth keeping an eye on. (USA Today)
The NHL, NBA, and MLB are all floating more plans. For hockey: a 24-team playoff in two cities to be named later. The NBA maybe wants to play at Disney World. And baseball is arguing with its players now over how much less it will pay them than in a normal season. (Yahoo Sports)
Facebook learned its algorithms “exploit the human brain’s attraction to divisiveness,” according to a 2018 internal report, but the company refused to do any anything about it, in part because they feared being accused of political bias if they changed. (The Wall Street Journal, $, but here’s a free summary of the WSJ report on Endgadget)
Scared Americans who are nevertheless starved for travel are spurring boom times in the RV industry. (“The minute the campgrounds opened on May 1 and the governor turned everyone loose, our business went through the roof.”) (Bloomberg Quint)
At least 11 local news stations around the country that are alleged to have taken a press release and video from Amazon and run it as if it were news. That’s one of the Things You Don’t Do. It’s fine and fair to report, if true, that Amazon has say, spent $800 million on overtime, as these videos say. But simply airing the company’s video, as if it’s your own news report? That’s part (but only part) of what gives media a bad name.
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