In this episode of Motley Fool Answers, Robert Brokamp interviews Alan Pell Crawford, author of How Not to Get Rich: The Financial Misadventures of Mark Twain. They discuss how Samuel Clemens, one of 19th-century America's greatest authors and cleverest wits, repeatedly made a ton of money, and then repeatedly made bad business decisions that lost it all for him. More to the point, they consider what we can learn from his mistakes and rarer successes, as he no doubt would want us to. But first, Brokamp and his partner in crime, Alison Southwick, dig into the rise and fall of blood-testing company Theranos, and its charismatic CEO and founder, Elizabeth Holmes.
A full transcript follows the video.
This video was recorded on March 20, 2018.
Alison Southwick: This is Motley Fool Answers. I'm Alison Southwick and I'm joined, as always, by Robert Brokamp, personal finance expert here at The Motley Fool. Hey, Bro!
Robert Brokamp: Hello, Alison!
Southwick: In this week's episode, we've enlisted the help of author Alan Pell Crawford. He's written a book about Mark Twain and all the money mistakes he made. We're also going to talk about the downfall of Theranos and its tenaciously deceptive founder. All that, and more, on this week's episode of Motley Fool Answers.
Brokamp: So, what's up, Alison?
Southwick: Yeah, that's right. It's What's Up Alison, not What's Up Bro this week. We switched it up on you guys. So, what's up with me is that I've been thinking about how glad I am that we no longer live in a world of medical quackery, where someone can claim a technological breakthrough and then investors sink a ton of money into that. But then it turns out the inventor was lying the whole time. I mean, just outright lying!
Brokamp: That doesn't happen anymore?
Southwick: Recently the SEC charged Theranos CEO and founder Elizabeth Holmes, and her COO, with perpetrating an elaborate fraud to deceive investors into believing that their portable blood analyzer could conduct comprehensive blood tests from a single drop of blood. Normally these kinds of tests require vial after vial, and they have to be sent out, and they come back. It's very labor-intensive and time-intensive.
They said, "Oh, we've got a solution." They start Edison, which they later named the miniLab. Well, it turns out it wasn't true. The SEC says she deceived investors out of $700 million between 2013 and 2015.
We now know, of course, that they were lying, and it flat out didn't work, but investors and the media were being lied to constantly by the founder. Theranos faked demonstrations. They lied about clinical trials. Lied about military contracts. They told investors they would make $100 million in a year when they ended up making $100,000. She told investors they didn't need FDA approval because they were the "gold standard." Talk about lying!
So, how did this happen and how can you avoid a similar trap as an investor? I have three takeaways.
Brokamp: Well, what are they?
Southwick: The first takeaway is to blame the media, particularly the tech media. Elizabeth Holmes was a great story. She didn't look like your typical entrepreneur. She was young [just 19 years old] when she founded the company. She was quite striking in her black turtlenecks, red lipstick, and blonde hair.
On the one hand, I feel kind of bad about describing her and objectifying her as a woman and being like, "Oh, she was a beautiful woman in science," but I really think it was part of the story...
Brokamp: I think it was, too. I agree with you.
Southwick: ... and why it was so remarkable. And she contributed to that very cultivated image, as well. Unfortunately, in America, of course, we don't associate beautiful with nerd, so the idea that she could be attractive to reporters was a great story. She was on the cover of Fortune, Forbes, Inc. -- you name it -- and she was touted as the next Steve Jobs. Forbes said she was worth $4.5 billion. Of course, this was all on paper.
But something that I thought was even more interesting about this -- rather than the media just loving her -- was Nick Bilton, who at Vanity Fair gave us a glimpse into how the world of Silicon Valley and tech writers worked. I never had a clue. Here's a quote from an article he wrote.
"After all, while Silicon Valley is responsible for some truly astounding companies, its business dealings can also replicate one big confidence game in which entrepreneurs, venture capitalists, and the tech media pretend to vet one another while, in reality, they are functioning as cogs in a machine that is designed to not question anything and buoy one another all along the way. In the end, it isn't in anyone's interest to call it BS."
Brokamp: Right, because if you're that person who's constantly challenging things, you're not the person who's going to get the interviews and get the access.
Southwick: The access, right. It's all about the access. It becomes a cycle of hype where entrepreneurs want more money, Silicon investors want to make money off what they're investing in, and tech reporters want a good story and they want to get access to people like Elizabeth Holmes.
And she knew how to work the media as long as they weren't medical experts. One of the big reasons why I think this was able to happen was because she was a medical tech company. Tech companies and tech writers that were writing about her didn't really understand the medical technology.
But healthcare reporter John Carreyrou at The Wall Street Journal [two-time Pulitzer Prize winner] was skeptical for a number of reasons, but one of the big ones was that she just couldn't explain how it all worked. For example, when The New Yorker asked her how this amazing technology works, she said, "A chemistry is performed so that a chemical reaction occurs and generates a signal from the chemical interaction with the sample, which is translated into a result, which is then reviewed by certified laboratory personnel." And then she added, "Thanks to miniaturization and automation, we are able to handle these tiny samples." And so, tech reporters were like, "Cool! Sounds good."
Brokamp: I bet there's some synergy in there, too.
Southwick: There's some synergy. There's some out-of-the-box thinking. It's so exciting.
Rick Engdahl: It really sounds like a cartoon villain.
Southwick: It does. Miniaturization and automation? That could go wrong. So, you can imagine. You're a two-time Pulitzer Prize winning reporter at The Wall Street Journal, John Carreyrou. You hear this and you're like, "Wait a second!"
So, the lesson that I have, here, is that instead of listening to the hype, you should listen to what the most qualified people are saying. In this case it was the writer at The Wall Street Journal and others who wrote story after story about how he was skeptical of Theranos. Meanwhile, others were singing her praises and still putting her on the covers of magazines.
Lesson No. 2. The company was secretive -- very secretive. As the saying goes, "Two people can keep a secret if one of them is dead," and Holmes was always very...
Brokamp: Killing people?
Southwick: We don't know that for sure. Holmes was always very secretive about how the technology worked. She said that she didn't want to tip off the competitors and people were like, "OK, cool." But now we know why she was so secretive about the technology.
This is kind of crazy. When she raised money, she took it from VCs on the condition that she would not divulge to investors how the technology works, and she would have final say and control over all aspects of the company. It scared off investors like Google Ventures, because they were like, "Hey, tell us about your company before we invest," and she was like, "No."
They sent a VC to one of these Walgreens Theranos labs where you go to get your blood drawn [supposedly the whole thing she was selling]. The VC is there having his or her blood drawn and noticed, "Huh, that's more than a pinprick of blood they're taking, here. Something doesn't add up." That's why Google Ventures didn't invest in it.
People tended to shrug off her secrecy as just another thing that she borrowed from Steve Jobs [her turtlenecks, her work ethic, and drinking green juice all day all long]. Here's another thing that she did that's so super sneaky and smart. When she assembled her board of directors, she chose a dozen older white men almost none of whom had a background in healthcare. It included former Secretaries of State, like Henry Kissinger. Former Defense Secretaries. Someone told Vanity Fair, "This was a board that was better suited to decide if America should invade Iraq than vet a blood-testing company."
How great is that? She's the only woman on this board. Charming. Young. She hires all of these very intelligent men, accomplished in their own fields, and just charms the pants off them [not literally that I know of. I did not mean to say that. That was not planned].
Fun fact: Her board also included the lawyer who tried to stop the revelations of Harvey Weinstein's sexual harassment for decades.
Pro tip: If that lawyer is involved in a company you're investing in, I would call that a sell sign. The company also internally was very siloed. Employees were discouraged from talking to each other about what they were working on and every decision crossed her desk according to Vanity Fair.
The lesson is some level of secrecy is to be expected, but a patsy within an organization is going to stifle collaboration. As a best-case scenario, as a worst-case scenario it's hiding something. Some shenanigans.
The final lesson is that we all wanted to believe; none of us more than Holmes. What did Theranos promise to do? Two hundred forty tests ranging from cholesterol to cancer with a finger prick of blood. Less blood, cheaper cost. It was just amazing. It was like a mission.
It was going to make the world a better place, which apparently is catnip to Silicon Valley investors who want to look like good dudes as opposed to just greedily trying to make money like the rest of us. They all wanted to believe in it, none more than Holmes, though. From the very beginning people told her this wasn't possible. Her idea of running all these tests from a single finger prick of blood was not going to work, but she kept at it, and I believe that she still thinks that she can do this.
She is still speaking at events. She's ditched her turtleneck, by the way, and talking to reporters about the technology that she has made, even though everybody knows it doesn't work. Her tenacity, audacity, and her ability to compartmentalize is quite impressive and it's because of this that I wouldn't be surprised if in like 10 years' time she comes out of hiding and is, "Actually, I did it. I finally cracked it. I've been working on it. I finally did it this time." And I wouldn't be surprised if people invested money in her again, because she is that tenacious.
Brokamp: What actually happened in the news? The SEC is going after them. Is she personally in legal trouble?
Southwick: It was her and her COO. She has settled with the SEC. She has to pay like $500,000 and she has to give back some shares of the company. You could set them on fire at this point. The big news is the SEC. She's also being sued by Walgreens because of those deals. She was literally lying to everyone at all times.
I went back and read some old articles. She said, "No, I don't wear this black turtleneck because of Steve Jobs. I wear it because when I was a kid, my mom saw Sharon Stone at the Academy Awards wearing a turtleneck, and from that point forward she had me and my brother wear turtlenecks a lot." I was like, "You're lying! That's the dumbest thing I've ever heard. You are absolutely wearing a stupid black turtleneck every day to look like Steve Jobs. It invokes Steve Jobs."
Brokamp: And they had to keep the temperature low...
Southwick: Sixty degrees.
Brokamp: ... so she would be comfortable in the turtleneck.
Southwick: Which is awesome. The lesson, here, is that if something seems too good to be true, let's assume that they're lying. I know most of us want to assume that we have these amazing technological breakthroughs, and we do. A lot of great entrepreneurs and inventors are out there doing fantastic things, but let's just assume they're lying, first, and then best-case scenario you're pleasantly surprised. Because the length that people are able to go to, to deceive us is just mind-boggling. She was lying to everyone all the time.
Brokamp: It's like a whole other risk to investing. When you buy a stock, you have to put so much trust in what you're being told, and the more complicated an investment is, the more you just have to assume that the company knows what it's doing, because you're not going to go, "I own Intuitive Surgical. I don't know anything about their robots. I just assume that they work, and they make enough money to prove it." But you're still putting a lot of faith in that.
Southwick: I think she was able to get away with a lot because it was still a private company, so she didn't have to do a lot of the standard filings that you have to when you go public. She was going to get found out, anyway. It was just a matter of time. I think she felt like she was always on the cusp of getting there, and really wanted to believe until it came true. It just never came true.
Engdahl: Alison, you're giving her a lot of credit for actually having a technology of some kind. For her to think that she's almost breaking whatever.
Brokamp: You'd think she'd have to.
Engdahl: Is there actually a technology?
Southwick: There's a little black box.
Engdahl: But there's a real miniaturizer in there? That's how I lose my weight. I go into there.
Southwick: There is a black box [the Edison], and then they renamed it.
Engdahl: It's literally a black box?
Brokamp: It is.
Southwick: It's literally a little black box.
Engdahl: There's nothing inside of it.
Southwick: They did get approved for testing for herpes. They did get approved for some tests, but this claim that you could look for 240 different conditions out of one drop of blood is just too audacious. It's going to take vials and vials, and massive big machines to do everything she claimed it could do. It could do something.
Brokamp: Samuel Langhorne Clemens, better known as Mark Twain, is considered one of America's most treasured authors. He's known for such books as The Adventures of Tom Sawyer, The Adventures of Huckleberry Finn, and A Connecticut Yankee in King Arthur's Court. Much less known -- Twain was also an inventor, an investor, and an entrepreneur. He helped start an insurance company. He invented a clasp that was supposed to keep blankets on babies. He created a board game that was intended to teach historical facts. He founded a food supplement company. He has a patent on an alternative to suspenders. And he backed a company that made a machine that removed 99% of the steam from a pound of coal.
You may not have heard about all of these pursuits because most of them failed. He was lousy with money. And that's the lesson of a book entitled, How Not to Get Rich: The Financial Misadventures of Mark Twain. The author, Alan Pell Crawford, recently stopped by Fool HQ and he and I discussed how Twain repeatedly made, spent, and lost tons of money.
We're talking like millions in today's dollars, causing him to go deep into debt and eventually declare bankruptcy at the age of 58. A New York newspaper created a charity drive to raise money for Mark Twain until Twain's wife put an end to that. Fortunately, he recovered toward the end of his life with the help of a friend who took over Twain's finances and told him to put all his money in the stock market.
A bit about Alan Pell Crawford. He's a former congressional speechwriter and a press secretary, as well as the author of books on colonial America and a remarkably prescient 1980 book called Thunder on the Right. My discussion with Alan was about an hour long, so this is only a portion of it.
Southwick: And it was filmed in front of a live Fool audience.
Brokamp: And it was. Everyone ready? Here we go.
Alan Pell Crawford: Here's the story of a brilliant man and everything he does in the way of business success is a calamity. Millions of dollars are squandered and lost, and yet he never loses his sense of possibility. It's impossible not to love Mark Twain, Samuel Clemens. It's impossible to live with this man, go through these adventures with him, and not feel an enormous amount of sympathy, but to enjoy his personality throughout. That's why when I got done writing it, I was a little sad because I missed him.
Brokamp: It turns out that Mark Twain was born at a good time to be wealthy, because you cite Gladwell's research about how of the 75 richest people ever born, 13 were Americans born around that time, like Carnegie and Morgan.
Crawford: Yes, around 1835. Yes, that's true, and Mark Twain certainly made an astute business decision to be born when he did. It's true that this was a period of tremendous economic expansion in the United States so that great fortunes were made. That's undeniable. The Industrial Revolution was beginning to pick up. Fortunes were going to be made in steel, railroads, coal, and all of that. Industrialization was beginning to really take root.
Brokamp: He was born in 1835 in Florida, Missouri and he comes by his financial mismanagement honestly. His father was not very good with money.
Crawford: No, he came by it honestly and not by fraud. His father was from the western part of southwest Virginia in Campbell County. Twain says he didn't leave him any money, but he left him a great family name [Clemens], which he associated with and claimed to be members of the FFVs, the First Families of Virginia, like the Jeffersons and Randolphs that I mentioned before.
He was a very earnest man, John Marshall Clemens. He failed as a lawyer. He failed as a storekeeper. He failed as an innkeeper. He kept trying different things through the years and never succeeded. He did amass enough money at one point to buy [the family estimated at one point], as many as 100,000 acres in Tennessee. Undeveloped real estate. Later, I think, title was established to about 30,000.
And he kept telling the family, "Look, we don't have anything right now, but you hold onto that land until the time is right and the price is where it should be and sell it and we'll be fabulously rich. You guys will be taken care of for the rest of your lives and generations to come." And Twain said there's a blessing in being born poor and there's a great deal to be said for being born rich, but to be born prospectively rich is a curse. So, the family lived with a great sense of expectation, and they were highly intelligent people.
Twain got his sense of humor from his mother, clearly. She was a very lighthearted, engaging woman who had a great sense of humor, so on the one hand he gets a great sense of imagination from his mother and maybe a bad example of how to conduct yourself as a businessman from his father.
Although, I must say in his father's defense, in terms of imagination that his father spent years trying to develop what I think was a perpetual motion machine. Time that might have been spent earning wages was spent tinkering with inventions, since he had a brother, Orion Clemens, who spent years trying to invent a flying machine.
And Twain tries to invent things, himself, through the years, so it gives you a little insight into the peculiar kind of family that he grew up in. I offer no facile psychological explanations for why he was so determined not just to be prosperous, as he was any number of times in his life, but to be rich in the sense of a Vanderbilt or a Morgan or a Carnegie.
Brokamp: One of the first business pursuits Mark Twain tried, as I understand it, was to corner the world's cocaine market.
Crawford: Yes. I don't think he was 18 or 19 years old at the time, and there was a book of an American explorer who went to the Amazon. [He] observed the silver mining operations going on down there, and how these indigenous peoples could work endlessly with no food. They didn't seem to get tired. They were in very cold streams wading around -- and they were chewing a leaf of the coca plant. This man observed this, and Twain got this brilliant idea. He could see, I think, a tremendous market for this elixir that if you're running a textile mill in New England or something, and you want your workers to work uncomplainingly, all day and all night...
Brokamp: Cocaine's the answer.
Crawford: Yes, here it is. So, he decides he's going to take a ship from New Orleans to the Amazon and get it all figured out, and then his brother will join him. They'd have a monopoly on this product and ship it to Europe and the United States. Unfortunately, he gets to New Orleans, he runs out of money, and he also learns that there are no ships leaving from New Orleans to the Amazon and there wouldn't be, they said, for another half century, at least. So, he decides, "Well, I need to find a new occupation." That's how he ended up talking his way onto a job as a cub riverboat pilot on the way back north on the Mississippi.
Brokamp: I assume this is where he comes across the term that means water is deep enough to be safe, which means it's two fathoms deep, and that term is...?
Crawford: "Mark twain." At some point -- and scholars disagree about this and there are various theories -- he began to use the byline "Mark Twain," which does have the river usage that you're referring to. There was also another man that wrote a few pieces for one of the New Orleans newspapers who was himself on the river and used that byline first.
Brokamp: Oh, really?
Crawford: Yes, so plagiarism on top of all the other mistakes.
Brokamp: So, he has to pay $500 to be an apprentice on the riverboat. The problem with that situation is the Civil War breaks out.
Crawford: Yes. He was making a fair amount of money as a very young man in what was a glamorous occupation. The riverboats we think of as being kind of quaint. This was the glamorous thing to be doing. Twain did very well as a young man as a riverboat pilot. He loved the work and thought he would do it for the rest of his days.
Then something unfortunate happens, which was a war comes and shipping on the Mississippi River shut down. He knew about it, but let's say it became very vivid when he and another pilot friend were nearing St. Louis and their boat gets fired on by Federal artillery. Twain's just a passenger up in the pilot house when his friend is at the wheel. A shell hits them and stuff goes flying, and he says, "Sam, what do you think that means?" and Twain says, "I think that means they want us to slow down a little."
Twain then takes the wheel and heroically maneuvers the thing into safety, but that's the end of his piloting. In fact, according to his sister's account, he was scared to death that he was going to be impressed into the Union Army as a pilot on gunboats, and that they would shoot him at the least sign of a misstep.
At this point, again, he says, "I've got to find a new livelihood." And like thousands of other American men who didn't want to get shot, he left for the Nevada silver mining boom with his brother who was appointed to a government post out West.
Brokamp: So, he does some pretty dirty work, there, for a while. He and a friend do get the rights to a blind lead to some silver. Basically, they blew it.
Crawford: Yes. They stumbled onto a vein of silver that they could lay claim to. It was running through another company's claim that could shut this down. They had, I think, 10 days to do some very minimal work to make this claim theirs, legally, where everything had to stop and they got to go in there and make their millions.
When they discovered this, they sat up all night talking about what they were going to do with the money. They were going to spend a year and a half traveling in Europe. They were going to build mansions in San Francisco. Twain knew exactly where the billiard table was going to be and what his liveried servants were going to wear. In great detail they figure this out and then they don't communicate properly. One goes off in one direction and Twain goes out to visit a sick friend, and by the time they come back, they left notes for the other one on what you're supposed to do to work this claim so it's permanent and it's ours, and unfortunately neither of them got the other's note and, as Twain says, "I was a millionaire, there, for an hour or two, and now I'm poor again."
It's one of the early financial calamities. Again, I think what's wonderful about this is everybody who reads this will say, "Oh, my favorite time was when X happened," and in part because there's an irrepressibility to his personality. Nothing discourages him. Temporarily it does. There are periods when he can't sleep, and he paces the floor, and he drinks too much, and he worries. But then something occurs to him that, "Oh, this is going to be it. This time I'm going to make a fortune." All that other stuff seems to have been forgotten. He moves forward.
Crawford: At this point he's just beginning to do a little bit of writing. He's submitting comic articles to papers in California and Nevada. They seemed to be kind of popular. People think, "Eh, this guy's kind of funny." And he writes a letter to the brother back in Keokuk or St. Louis or wherever he was at the time saying, "I still haven't found my real calling in life. I'm still looking for it. I'm doing all these things. I'm kind of embarrassed to admit this, but I seem to have a knack for writing."
He says, "It's not writing of a high order. It's nothing to be proud of. I'm kind of embarrassed." It seems like a legit letter. He's not being facetious or sarcastic. He says, "It's nothing to write home about," although he's writing home about it, and says, "but I seem to be kind of good at this and maybe this is the card I should start to play."
Brokamp: So, he goes to San Francisco. He does get a job as a journalist. And as I understand it, you could get stock from miners for writing articles about the mines.
Crawford: Yes, journalism.
Brokamp: Exactly. You would be given stock and with, I assume, the assumption that you would write nice things about the mines.
Crawford: Yes, and they did. He amasses boxes of stocks in silver mines and he said that if there wasn't anything to be said about the ore that seemed to be produced, then they would talk about what a great management the team had, or some kind of new system for washing out the ore and pumping out the mines. They would find something favorable to say about the operation. And he said, "Sometimes even if we didn't say anything good about it, the owners were happy."
So, the price keeps accelerating, and then the losses come, and those stock certificates are worth nothing.
Brokamp: Let's jump ahead a little bit to where he does start getting money. First of all, he does eventually become a successful writer. But also, at least importantly, he marries rich.
Crawford: Yeah. That was one of his really good business decisions. He meets a young man from Elmira, New York who is very well connected socially and financially. His father is a coal baron in upstate New York. And according to Twain's account of this, the young man shows him a miniature of his sister, and Twain falls madly in love with the sister and begins to court her.
Yes, he married well and I'm sure that played a role in his choice, but it is a great marriage. Totally devoted. An oddest couple because she is very refined, educated, gentile, progressive. Her father was an abolitionist. High-toned New York society. And Twain is this upstart from nowhere whose only claim to prominence is a book that's of kind of raffish charm. He proposes to Olivia Langdon and she accepts his proposal of marriage knowing that it's such a far-fetched match. So, Twain's not only married rich but he's now part owner of a newspaper and he's got a mansion to live in, in Buffalo, New York. In the finest area of Buffalo, wherever that would be.
Brokamp: So, they stay in Buffalo for a while. They eventually go to Connecticut. And we see this a lot with many successful, wealthy people. It's not that they didn't make enough money. It's that they spent too much. They go to Connecticut and they build a 25-room mansion.
Crawford: Yes. But before this happens, they sell that house they were given as a wedding present at a loss, and then within a year the father dies leaving them the equivalent of almost $4.5 million. Now he's got another book contract. He's dabbling in a number of other investments.
They decide to move to Hartford, Connecticut, which is where his publisher is located at the time, as well as the insurance capital of the country. They fall in with a very well-to-do intellectual class of progressive people and they decide to build a mansion there, which is just incredible. At this point they're entertaining it seems like several times a week. Dinner parties and all of this, and things just get a little bit out of control.
Brokamp: So, they're spending that. They go to Europe. They come back with like 22 boxes of furniture and...
Crawford: Shortly after he got to Hartford, they had some friends who were businessmen, [unlike Twain]. They were going to start a new insurance company to rival the Travelers. Challenge the Travelers. And Twain invests, I think, $25,000 in that day's money and calculating the contemporary values of this is a complicated matter for historians, but I've done a little bit of it.
He becomes what we would call a brand ambassador for the insurance industry. He says that now that he's a vice president of an insurance company that he's lost all interest in politics, and the arts, and literature, and music, and all these other things. All he loves, now, is insurance. He says that the now locomotive explosion has a charm for him that it never had before, and he said he looks on crippled people with a sympathy he'd never known before. He says he regards them as advertisements.
Brokamp: He's investing in a lot of things that are not very well established. I should point out that some of the things he did he invested in or invented, because he also tried to invent things that actually did work out. For example, the scrapbook.
Crawford: Yes. One of his biographers said that the one book during this period that he produced that made money was not one he wrote but invented. Twain seems to have been a collector of clippings, especially the ones about himself. So, he invents what he calls "a rational scrapbook" with self-adhesives. It seems to have had some kind of gummy, sticky stuff on the page and I think you wetted that and then you pasted the clipping on that. This thing went through like 50 editions through the years -- Mark Twain's "self-pasting" scrapbook. And they made a lot of money off this.
Eventually he does complete Huckleberry Finn. At the same time, he decides to go into the publishing business. To start his own publishing company. And one of the first things he does is [decide] to publish Huckleberry Finn out of his own company, the Webster Publishing Company.
He hears that General Grant [former President Ulysses S. Grant], is going to write his memoirs. He goes to see Grant and bids for the right to publish those memoirs and he offers him something like 70% royalties, which was totally unheard of then or now. And Grant goes for this, because Grant's deeply in debt at this time, himself. He's dying of cancer and he's worried about what's going to happen to his family after his death.
So, they form this alliance [Twain and Grant], published the memoirs, and it is the most successful book-publishing venture in its time. In the history of American publishing. Grant's widow made almost $5 million off this in our dollars. I think that was $400,000 at that time. They wrote her first check for $200,000 to Grant's widow, Julia Dent Grant. Twain himself, as the publisher, made $200,000 off this, so he made $3 million or something like that.
It was a tremendous success. At the same time his company brings out Huckleberry Finn and that was a big success. And that was the last success Webster Publishing Company had. After that, they published book after book that had no commercial appeal. One was a collection of sermons. One was a book on 75 ways to cook eggs.
Brokamp: One was on the speech of monkeys.
Crawford: That's right. There was a book on the speech of monkeys. I'd love to read that.
Brokamp: Your book lists failed venture after failed venture. Briefly talk about the Paige Compositor, because that was probably the biggest one, and then we'll briefly get to how he actually, in the end of his life, did OK financially.
Crawford: There's some hope for him when he gets involved in an investment and a business that he understands. He had been a typesetter as a young man in his brother's print shop, so he'd been intimately involved in covers, and typefaces, and pagination, and all of this in book publishing. He didn't leave this to publishers. He worked, himself, very diligently to understand all aspects of it.
He found a young inventor who had developed the idea for something that would print newspapers faster than had ever been known and not only was it faster, Twain said unlike newspaper print shop workers, it didn't join a union and it didn't get drunk. So, he invests something like $4 million in this...
Brokamp: Over like 10 years.
Crawford: Oh, yes. He had the inventor on the payroll. This thing never worked properly. By the time they got it done, the Mergenthaler machine had become the industry standard. They lost everything on this. The publishing company went bankrupt, the Paige Compositor was a bust, and Twain in 1894 declared bankruptcy.
He is taken under the wing of a Wall Street tycoon named H.H. Rogers who worked for Standard Oil. Rogers helped him put his finances in order, again, arranged the bankruptcy in what one author has said was a fraudulent transaction. Transfers all the copyrights to Twain's books to Twain's wife, so that Twain, himself, has no assets. They all belonged to his wife and then as the books continued to sell, the money comes back in.
He goes on a worldwide lecture tour at about the age of 60 [and he was an old 60 at the time] and made a lot of money lecturing in India and in England. They keep sending that money back to Rogers to invest it for them and when he dies in 1910, I think Twain is worth $11 million.
So, there is a happy ending to this book. I wouldn't end it on a sour note because it would be unfair to the facts and unfair to Twain, for whom this is a joyful or crazy story. I think there's a great deal of hope. He's an irrepressible man who has a great sense of opportunity and excitement, and that's what kept me enjoying every step of the writing of this book.
Brokamp: Well, I think that's a great place to end it. It's an excellent book. A lot of great stories in it. Alan, thanks for coming here!
Crawford: Thank you!
Southwick: And that's the show. It's edited...
Southwick: Twainwreckingly -- never before has that been more true -- twainwreckingly by Rick Engdahl. Our email is Answers@Fool.com. I want to thank everyone on our Facebook group who has been kind enough to contribute to our Loofie episode which is coming up. If you want to vote on the best series from 2017 [whether you want to vote for Morgan, or you want to vote for Judge Bro], you can join our Facebook group and you'll find a link there to vote for the Loofies and have your voice be heard.
Brokamp: Also, in our Twitter account. You'll find it there.
Southwick: Or follow us on Twitter. That's true. That's the show. For Robert Brokamp. I'm Alison Southwick. Stay Foolish, everybody!
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Alison Southwick has no position in any of the stocks mentioned. Rick Engdahl owns shares of GOOGL and GOOG. Robert Brokamp, CFP owns shares of ISRG. The Motley Fool owns shares of and recommends GOOGL, GOOG, and ISRG. The Motley Fool has a disclosure policy.