John Rockefeller, Standard Oil and The Creation of Industries

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This article looks at the rise of John D. Rockefeller and Standard Oil. It examines how Rockefeller used vertical and horizontal integration, as well as negotiating discounts and pioneering industrial processes, to become a dominating force in the oil industry. It shows how the Standard Oil model is being replicated by Tesla in their new electric economy, and how new technology has the potential to create new industries.

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Looking at John Rockefeller and Standard Oil. There are a lot of similarities with what Elon And Tesla are doing. Rockefeller was laser focused on reducing costs and waste. Rockefeller used a lot of vertical and horizontal integration to reduce costs.

Deep Technology like nuclear fusion, molecular nanotechnology and reusable rockets will create entire new industries. This is an opportunity and many challenges. It is important to look at the historical creation of foundational giant industries and supply chains. There are also more recent examples of the creation of the internet, electric cars and nuclear fission power.

Standard Oil was the first conglomerate, controlling 88% of the oil industry by 1882.

There are puzzle pieces and steps to create an industry: .

1. From Science into Engineering .

2. Engineering into Products .

3. Products into Business .

4. Business into scaled industry .

5. Making the scaled industry involves scaling markets and supply chain .

Here is how John D. Rockefeller (Standard Oil) created parts of the oil industry and dominated the oil industry broken into the Industry creation steps. The Standard Oil model is being replicated in how Tesla is creating a new electric economy with Master Plan 3. It is also useful in analyzing how potential new technology like nuclear fusion, AI and reusable rockets could become successful to create new industries.

Standard Oil pioneered vertical integration - using raw material such as white oak timber – and horizontal integration – buying out other refiners and other oil producers.

1. From Science into Engineering.

Chemistry was used to develop oil cracking, creating oil byproducts and various aspects of refining. A refinery is a production facility composed of a group of chemical engineering unit processes and unit operations refining certain materials or converting raw material into products of value. Copper Oxides were used to remove sulfur from Ohio oil.

Standard Oil pioneered the process of treating the wood in a kiln to prevent leaking.

Rockefeller anticipated the rise of the automobile industry, and created a petroleum-based alternative to whale oil for lighting.

Standard Oil developed a kerosene that could be produced with 20% of the sulfuric acid used by competitors, thus greatly reducing costs of production.

2. Engineering into Products .

Engineering is used to turn proven science into products. Refineries are built, made more efficient and made larger. Oil is refined into kerosene and then into lubricating oil, gasoline, tar and paraffin.

3. Products into Business .

Rockefeller also negotiated discount with rail companies to lower the cost of transporting oil and oil products.

Eventually, hundreds of products are made from each barrel of oil and new markets are developed for the products. The markets are developed and grown for new products. Sales and delivery methods are made to supply global markets (Asia, europe and elsewhere).

4. Business into scaled industry .

He bought out other refiners and other oil producers. He employed his own plumbers and almost halved the cost of labor, pipes, and plumbing materials. Coopers charged $2.50 per barrel but Rockefeller cut this to $0.96 when he bought his own tracts of white oak timber. He had his own kilns to dry the wood, and his own wagons and horses to haul it to Cleveland.

He pioneered the steam-driven tankers which eventually allowed Standard Oil to become the first multinational corporation.

He negotiated huge discounts with rail companies to lower the cost of transporting oil and oil products.

His company perfected large steamship tankers to ship oil cheaply overseas.

5. Making the scaled industry involves scaling markets and supply chains.

The Oil Industry enabled to growth of tar for surfaced roads. It also scaled the markets for mail order businesses. It powered cities and businesses with energy. It fuelled the emergence of the automobile industry. Petroleum has been used in a variety of other applications, including as a lubricant, in medicine and much more.

Rockefeller's innovations in advertising, pricing, and branding are still studied by business schools today.

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