Founders
Episode 131 #131 Robert Friedland (Mining)
Founders

Episode 131: #131 Robert Friedland (Mining)

Founders

Episode 131

#131 Robert Friedland (Mining)

David Senra is the host of Founders, where he studies history's greatest entrepreneurs. This is what he learned from reading The Big Score: Robert Friedland and The Voisey’s Bay Hustle by Jacquie McNish.

What I learned from reading The Big Score: Robert Friedland and The Voisey’s Bay Hustle by Jacquie McNish.

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[0:04] Promoting a stock is like making a movie. You've got to have stars, props, and a good script. 

[2:22] He had learned that there was nothing that Robert Friedland could not sell. 

[2:50] This book is about how Robert Friedland accidentally discovers the largest nickel deposit in history. He winds up selling that discovery for over $4 billion.  

[3:50] Robert Friedland and Steve Jobs were friends in college. Robert influenced Steve. 

[4:50] Friedland grinned as if he had just won an award. But the prize being handed down was a two year jail sentence for selling drugs. Police confiscated 24,000 tablets of LSD valued at $125,000

[7:01] He is a very complicated character. He was involved in a lot of shady stuff on the way to becoming a billionaire. I was struck by the contrast between how the book describes Friedland and how he comes off in this sales presentation: China Is About To Ban The Internal Combustion Engine. He comes off as extremely likable and knowledgeable.  

[9:42] At Reed College Friedland’s drug conviction no handicap. The prison term only added to his mystique. Steve talks about the mind expanding experience that taking acid was. He felt it allowed him to approach product creation from a broader perspective. He said Bill Gates would be more interesting if he had dropped acid.  

[10:28] Friedland starts a cult. Even when he is in his early 20s Friedland is able to influence the thoughts of the people around him.  

[11:21] Frieland turns his uncle’s farm into a collective. The farm drew a steady stream of students. Including an introverted freshman named Steve Jobs. Steve devoted himself to reviving the farm’s Apple orchard. The orchard would later inspire the name of Apple Computer

[12:17] Robert Freidland’s influence on Steve Jobs: Robert was very much an outgoing, charismatic guy. A real salesman. He'd walk into a room and you would instantly notice him. Steve was the absolute opposite. After he spent time with Robert, some of this rubbed off.  

[12:57] Steve Jobs: Robert was the first person I met who was firmly convinced that this phenomenon of enlightenment existed.  

[14:07] Friedland returns from India and reinvents himself again. He wore flowing robes and sandals. He embraced universal love and rejected material attachment. Friedland and his disciples practiced yoga, Buddhist meditation, they grew their own food. They had children with names like Silver Moon and Ashberry. Friedland said he was a guru and his name was now Sita Ram Dass.  

[15:29] Steve Jobs: Robert walks a very fine line between being a charismatic leader and a con man. It started to get very materialistic. Everybody got the idea that they were working very hard for Robert's farm. And one by one, they started to leave. I got pretty sick of it and I left.  

[18:12]  By the late 1970s Friedland was creating another roll for himself. This time as a gold mining promoter on the Vancouver Stock Exchange. 

[19:37] When he introduced Friedland to some of his colleagues, they dismissed him as a Jesus look alike who preached about gold as if it were a second coming. The 31 year old clearly knew nothing about mining or the stock market, but he had an unusual intensity

[22:21]  There is a lesson here. He thinks he is going to find diamonds in Canada and he winds up accidentally discovering the largest nickel deposit in history. The lesson is that sometimes trial and error is the best way to discover an opportunity you didn’t even know existed

[24:43] Friedland constantly recreated his companies to bring himself closer to what was becoming his god: Money.  

[26:46] Friedland is a really good salesman. He has some negotiating tactics that you and I can learn from. 

[28:34] He never let failure stand in the way of his next venture and he operated in an environment where money was the only way of keeping score.  

[29:26] Outside of work Friedland had few interests. Friedland had a consuming passion for mining deals. He spent most of his days traveling the world in search of prospects or working the phones from his office. There was no time for hobbies. 

[31:45] They almost missed the greatest opportunity of their lives because they were distracted

[34:02] He realizes that when you have an opportunity you need to go all in on it. Don’t dillydally

[36:26] Friedland is definitely default aggressive.  

[37:50] The stock crashed, vaporizing more than $250 million of shareholder money.  

[40:06] I’m not worried about the details. This project is worth gigadollars. You’ve got to start drilling right away.  

[41:19] He is aggressive and patient at the same time. He milks this discovery for everything its worth.  

[43:11] I would say 25% of this book is Friedland negotiating and playing all these different companies against each other.  

[49:34] This is something that appears in tons of books. You have to watch your costs. Go back to Henry Clay Frick when he said, “Gentlemen, watch your costs.” Andrew Carnegie, Johh D. Rockefeller --they built companies you could not compete with because they could make a profit at a price that you could not. It is a massive advantage.   

[51:49] Steve Jobs focused on simple deals. This is what he told Bill Gates when he came back to Apple: So let’s figure out how to settle this right away. All I need is a commitment that Microsoft will keep developing for the Mac and an investment by Microsoft in Apple so it has a stake in our success.” When I recounted to him what Jobs said, Gates agreed it was accurate. He had been negotiating with Amelio for six months, and the proposals kept getting longer and more complicated. “So Steve comes in and says, ‘Hey, that deal is too complicated. What I want is a simple deal. I want the commitment and I want an investment.’ And so we put that together in just four weeks.” 

[1:00:17] Things can improve a lot faster than you think: Under Friedman's direction, Diamond fields has grown in less than 16 months from a dubious diamond play into the world's most sought after mining company, with a market value of more than $4 billion. His stake had suddenly become worth nearly $600 million. Not bad for a year's work.  

I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested, so my poor wallet suffers.”— Gareth

Be like Gareth. Buy a book. It's good for you. It's good for Founders. A list of all the books featured on Founders Podcast.

#131 Robert Friedland (Mining)

Introduction

"With typical impatience, he had been searching for a shortcut. 'Promoting a stock is like making a movie,' Friedland said. 'You've got to have stars, props and a good script.' Lately, good scripts had been hard to come by. Friedland's reputation as a daring penny-stock promoter with a Midas touch was unraveling with the collapse of his high-flying gold mining company, Galactic Resources. "13 months earlier, Galactic had sought bankruptcy protection in the wake of pollution and regulatory problems at its Colorado gold mine. The U.S. Environmental Protection Agency was billing the Colorado mine as one of the country's worst environmental mining disasters, and the U.S. Justice Department had launched a criminal investigation.

"Compounding matters, Friedland's backup script, a hot gold play in Venezuela, was on its last legs. Most major investors already shunned the 43-year-old mining promoter. And now he was marooned in the middle of nowhere with a handful of his remaining adherents. "'This is a historic occasion,' he began. 'They used to shoot people who entered the territory. Now you are part of a select group that has been allowed in. We are very proud of the company that has brought you here. In the year since Diamond Fields was founded, we have accomplished a great deal. We now have two diamond mines and the marine concession you see before you. These are the building blocks for a great major mining company.'

"Friedland sprang to his feet and begin to work the crowd, moving deftly from table to table. He quickly assumed an easy familiarity with his guests then launched into a passionate and impressive-sounding discussion of the area's diamond potential. 'By the time this stuff hits the water, 90%, do you hear me, nine-zero, is going to be gem quality and over one carat."

"He gestured seaward. 'And the diamonds are there, just lying on the gravel, waiting for us to suck them up.' Robert Friedland had won his visitors. Jean Boulle for one wasn't surprised. In his short year and a half with the charming American, he had learned that there was nothing Friedland could not sell."

That was an excerpt from the book that I'm going to talk to you about today, which is The Big Score: Robert Friedland and the Voisey's Bay Hustle. And it was written by Jacquie McNish. So this is another example of a book I didn't know existed. It was recommended to me by a listener. So let's not waste any time and jump right into the book. I want to tell you something I wish I knew upfront when I read it. So the title The Big Score, what does that mean? This book is fundamentally about Robert Friedland having a company, a mining company that accidentally discovers the largest nickel deposit in, I think, North American history, and he winds up selling that. Even though he invests, I think, less than $1 million upfront, he winds up selling that for $4.1 billion. And so the book is about how this happens.

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