9 minute read
Amadeo: The "OG" Level Five Leader
Amadeo: The “OG” Level Five Leader
By Steve Clabaugh, CLU, ChFC
He was born 126 years before Jim Collins’ graduate students started the research project that resulted in the classic leadership book “Good to Great.” His passion for his company and the people he worked with and served demonstrate the truly timeless nature of relational leadership principles. I am excited to share with you the story of Amadeo Pierro Giannini, better known as AP Giannini, and often referred to as “America’s banker”.
If you recall, Collins’ definition of a Level 5 Leader is: “one who builds enduring greatness through a paradoxical blend of humility and professional will”. Not only does AP Giannini exemplify that unique definition but the customers he served, and greatly cared about, are the same folks we serve today in offering Voluntary Benefits. Let’s take a look at his life’s story and point out some lessons we can implement today.
AP was born in 1870 to Italian immigrants Luigi and Virginia Giannini. His father farmed 40 acres of fruits and vegetables in the Santa Clara Valley of California. One day, when A.P. was 6 years old, he watched as his father drove up in a horse-drawn wagon full of vegetables. One of the farm’s employees approached Luigi and an argument ensued over the amount of $1.00. In a fit of anger, the employee pulled out a pistol and shot Luigi dead.
Virginia, with A.P. by her side, took on the responsibility of running the farm, selling the crops and transporting them to the markets in San Francisco. She maintained the success Luigi had established and, in the process, met Lorenzo Scatena, who transported her crops into the city. After she and Lorenzo were married in 1880, they sold the farm and moved to the city where Lorenzo eventually formed L Scatena and Company, in the business of buying and selling fruits and vegetables for growers located up and down the river AP loved the business and “Pop” Scatena. He worked each day from midnight until early the next morning before going to school. At age 15, he quit school to work full-time in the business.
When he got married at age 21, Pop granted AP half the business. By age 31 he and his wife Clorinda had 11 children AP decided he had enough of the produce business and retired. He had saved over $300,000 during his 15 years with Pop and sold his half back to him for another $100,000. This would be the equivalent of more than $10,000,000 in today’s dollars.
He may have retired from the produce business, but he didn’t retire from life. Over the years he had met and worked with hundreds of men and women in the fields, on the docks, on ships and other related jobs. He knew these men and women, mostly immigrants, had financial needs for seeds, plants, equipment, homes and families.
In the early 1900’s, working class folks didn’t have access to banks. Banks were just for the very wealthy and, in fact, they considered the working class to be a bad risk for any type of loan. The only access they had to capital was through, often unscrupulous, loan sharks. The famous song “Mack the Knife” tells the story of the bloody collection tactics of a loan shark from that era.
AP saw it differently; he took his savings and started a bank just for lower- and middle-income folks. They were referred to in a condescending manner by the big banks as the “small people”. He named it Bank of Italy and he started by making small loans to farmers, dock workers, stevedores and even housewives. He and his first customers knew each other well and the business was quickly successful. In addition to loans, he taught and encouraged folks to set aside money in savings for the future and sent his employees to the schools to set up tiny savings accounts for children. He knew that starting early to build a relationship would enable the bank to win customers for life. It is said that some 60% of the children who started a penny savings account, went on to become long-term customers of Bank of Italy when they grew up.
For several years, the Bank of Italy was too small to have its own vault for cash, so he rented space from a large bank in San Francisco. Following the San Francisco Earthquake of 1906, AP knew his customers would be desperately in need of money to live and recover from the devastation. He rode the train, bummed rides in cars and trucks and walked, to cover the 17 miles from his home to the bank in San Francisco. Taking out the $80,000 that was stored there, much of it in coins, he used a horse and wagon full of either produce or garbage (there are conflicting stories about this part), to hide the money from thieves and take it back to his home. He hid the money under the floorboards in his house for safe keeping.
The next day, he set up his first “branch bank”. It consisted of a wooden plank set on top of 2 barrels. From there he met with his customers and gave them loans, based on a handshake, to get them through the crisis.
You may remember the scene from the movie “It’s A Wonderful Life”, where the main character, George Bailey, staved off a run on the savings and loan by giving out his own money to help his neighbors survive. Director, Frank Capra used AP as the model for the George Bailey character and the traditional bankers of the day for the hard-hearted Mr. Potter. Years later, AP confirmed that not one loan went unpaid from that experience.
A.P.’s bank was already a success when he came up with the idea of creating “branch banks” to serve folks in large and small communities. Over time he opened some 400 branches throughout the state, which angered the big banks, some of whom even suggested that the idea was somehow against the law. Not only did he open local branches, but he hired local people to run them and gave local people the opportunity to buy stock in the Bank of Italy. This “local” approach enabled managers to understand the needs and abilities of their customers to repay. Some other innovations that angered the established banking institutions included: advertising for new customers, paying reasonable interest on savings accounts, charging reasonable interest rates on loans, and accepting a wide range of items as collateral for loans (including cows).
His banking for the “small people” paid off in profits so much so, that he was able to acquire a smaller bank with a big name. He changed the name from Bank of Italy to the name of his new acquisition – Bank of America, which is the name it continues to operate under to this day.
In 1929, the Great Depression hit the country and banks were hurt by the economic downturn like virtually all other businesses. But because of their commitment to local leadership, Bank of America had fewer foreclosures than other banks. During this time, AP was hospitalized in Rome with a life-threatening illness. He agreed to hire a Wall Street banker, Elisha Walker, to manage the company, along with A.P.’s son Mario. As the economic downturn continued, Walker determined that the company was failing and decided to shut it down and liquidate the assets. From his hospital bed, A.P. sent a message to his son, “there’s no compromise with right or principal.” Despite his condition, he sailed back to California and organized a stockholder revolt. His insistence that local folks be able to buy stock in the bank paid off when he and his team mobilized the “small people” shareholders to vote against the plans to close the bank. He was able to capture 61% of the 200,000 stockholders votes and threw out the leadership team and went back to work to rebuild the business.
There are many more fascinating stories about A.P. Gianinni and I recommend Todd Buchholz’ book “New Ideas from Dead CEOs” as a great place to start reading about A.P. and other incredible leaders from the past.
What are the lessons we, in voluntary benefits today, can learn from this “OG” Level 5 Leader?
1. Be proud of who you serve.
AP considered himself one of the “small people” and he loved serving them He was very proud of the homes, farms and businesses that were built and grew as a result of their ability to borrow and save.
2. Offer products and services that meet the real needs of your customers.
Fair interest rates for savers and borrowers, along with a generous definition of acceptable collateral, enabled more people to benefit their businesses and families.
3. Invest in the community in ways that benefit everyone.
A.P. invested in the dreams of a young artist by the name of Walt Disney, who wanted to create animated films.
He believed the emerging motion picture industry would become a huge boost to the economy and he supported many other producers and directors.
In 1932, he learned of a plan by a civil engineer for a unique construction project AP bought the entire $6,000,000 bond issue for the building of the Golden Gate Bridge.
4. He built the business to serve others, not to enrich himself.
AP vowed he would never become a millionaire. One time his accountant told him that his net worth was close, so he donated over $500,000 to provide educational scholarships for his employees and to fund medical research.
Our industry, and our world today needs to develop more Level 5 leaders. I hope this story will motivate you to develop the passion and dedication to become one.
As always, if you have questions or want to discuss more about relational leadership, please feel free to contact me at sjcsr@hotmail.com.
Steve Clabaugh, CLU, ChFC - started his career in insurance as a Field Agent, moving on to Sales Manager, General Manager, Regional Manager, Vice President, Senior Vice President, and President/CEO. A long time student of professional leadership, Steve created the Relational Leadership program that has been used to train home office, field sales associates, mid-level managers, and senior vice presidents.
Effective leadership today requires more than technical and professional expertise in a particular field It requires successful team building skills in equal proportion to knowledge, experience and talent The purpose of this program is to prepare and strengthen the skills of current and prospective future leaders in:
• Selection and Training
• Team Building Process and Challenges
• Mentoring
• Positive Problem Solving
• Effective Conflict Management
• Determining and Achieving the Best Outcomes
• Applying Classroom Principles to Real World Challenges
