Grandad Lost His Soul When He Sold His Business
Discover, your soul will be lost, too
Grandad grew up real fast but died real slow.
At age twelve John Tayloe started working. He had to. His dad passed away at forty, leaving a wife and four children. By the time John didn’t graduate high school in 1919, he was helping feed his brothers and sister with a full-time job as a conductor for the Louisville and Nashville Railroad Company.
Choo! Choo!
In their early decades, railroads were far more exciting and impactful than Tesla in 2020. L&N Railroad survived 122 years. It bought up other companies over the decades before being purchased by SCL Industries in 1972, and SCL was eventually merged into today’s CSX Company in 1986.
In his twenties John set out on his own. He established a paint and glass company with his brother in Paris, Tennessee. He incorporated glass companies in Paducah, Kentucky, Saint Louis, and Memphis. In Union City, Tennessee and in Walls, Mississippi, too.
In the fifties John helped transform the glass industry. He was among the first to frame sheets of glass in metal at his own shops. They could then be installed far more rapidly in the field.
One of the first roadside motels was born outside Memphis, Tennessee in 1952 and spread rapidly across America alongside the burgeoning national highway system. John’s companies supplied the windows for Holiday Inns. If you ever stop for a short night in a run-down, never-upgraded roadside motel, you might be looking through Tayloe glass.
A single Tayloe shop may still operate today. Mom didn’t know for sure whether that Chicago office was once connected to her dad, but the company flies one of the logos the business used way back when.
Having begun adult work at the age of twelve, John Tayloe promised himself he would retire early. At fifty he turned over management of his companies. He had decent money for his era, and he could spend his time doing whatever he wanted. Unfortunately, he enjoyed a nicely-mixed bourbon, and drinking became his occupation. John started dying on the day he retired.
Eight months later he got the best possible news: one of his businesses was failing.
John drove overnight to Memphis and began turning around Tayloe Glass, located in midtown. A week later he bought a nearby house and instructed his wife to move herself and the kids to Memphis. His wife was independent for the time — any time, actually — and she arrived when she damn well pleased.
John flourished until the clock chimed his second retirement. This one would be real, and he would not survive it. He sold his company to a competitor, creating the largest glass company in the region.
The real John Tayloe would never be seen again.
Organizations Can Be Like People
The soul of Discover Financial Services will soon never be seen again. After 31-years, the late-in-life love child of the venerable Sears Roebuck Company is being acquired by Capital One.
“Discover Financial’s story ends with takeover by Capital One.” — Crain’s Chicago
Its whole life Discover has watched its parent slowly dying in the corporate old-folks home. Since 2005 Sears has shared all its assets with its management company in the hopes of surviving another year on institutional Jell-o. Eddie Lampert’s Sears Holdings Company has hollowed out Sears as if it were Shel Siverstein’s giving tree.
“…as the boy grew older he began to want more from the tree, and the tree gave and gave and gave.” Shel Silverstein about The Giving Tree
Capital One acquiring Discover is a big deal. For only a 10% premium, upstart Capital One will transform the credit card industry very nearly into a three-company race. I remember in the early 2000’s when Capital One invested in every trick in the book to win new customers. It’s going for old-fashioned heft and vertical integration with the Discover deal.
The sale is also a big deal for tens of thousands of employees. Capital One’s press release declared $2.7 billion in “synergies.” The word synergy can suggest the generation of new super powers. Synergy in the Capital One press release means 1980’s style cost cutting in people, management, and systems. Music to the market’s ears.
A conference call was held with Discover employees after the transaction was announced. Folks could hear a pin drop at the start. According to an ABC 7 Chicago reporter, Discover CEO, Michael G. Rhodes remained “mostly quiet” on the call.
The people who invested their lives in Discover, especially the five-thousand at Discover’s suburban Chicago headquarters, are now marking the days till the end of those lives. CEO Rhodes had joined the company only weeks before, and his employees now understand the mission the Board has tasked him with.
Competition Is For Losers
In his 2014 WSJ article and book, Peter Thiel, Elon Musk’s former boss and one of the world’s wealthiest start-up investors, stated out loud the thing that American business people didn’t want said:
“Competition is for losers.” — Peter Thiel
He went on to declare that monopolists lied blatantly when they had to speak up.
“Since they very much want their monopoly profits to continue unmolested, they tend to do whatever they can to conceal their monopoly — usually by exaggerating the power of their (nonexistent) competition.” — Peter Thiel
You Feel Pain Only When You Care
The moment my grandad John lost his beloved Tayloe Glass, he foundered. Some said his demise was inevitable because there were no more mouths to feed in the family. No more customers to care for. No more employees to teach.
Some said it was because he had been swindled and knew it. John’s forte had always been in the doing, not in the finance. An extra bourbon or two on the night he signed the papers certainly didn’t help matters.
“John was a great man. He taught me everything I know about glass and business. I wouldn’t be who I am today without him.” — One of the many “glass men” at John’s funeral
The new CEO of Discover is going to do just fine when Discover dies. The interim CEO from last fall will do well, too. They won the CEO lottery.
As a young person I was taught to embrace the idea of Schumpeter’s “perennial gale of creative destruction” because the world does change. I still agree. Change is natural and often good.
As an adult I have come to see that much of this “destruction” is artificial. It is driven by the self-serving whims of a few, not the “invisible hand” of the market described by Adam Smith.
It is the thousands of people at the Discover company whom I feel for. These are the last survivors from the once great Sears Roebuck Company. They have done what we tell people they must do.
They pivoted in the face of changing fortune.
They innovated.
They executed.
They persevered.
They created a profitable company that people wanted to work in.
And what was their reward?
They worked good jobs that supported them and thousands of families for a few decades. That’s not nothing.
But if these people don’t leave now of their own accord, or take the separation package offered them, they will dwell in painful uncertainty for a month, or three, or twelve.
My grandad had himself to blame for the end of his beloved Tayloe Glass company. Over his last few years of life, he drowned his excuses in glass after glass of bourbon on the rocks because he knew he had a choice and made a bad one.
Thousands of people at Discover have little choice. Only the Discover brand will remain while its sinew will be absorbed into Capital One.
Discover, like its parent, will be punished by an America that loudly celebrates competition even though we know that competition is for losers.
Comments are welcome. Claps are deeply appreciated.
Please subscribe to read J Andrew Shelley’s stories and check out his book American Butterfly. It tells the story of America’s Culture War through the lens of a Southern family suffering great loss.