Going Bananas

October 14, 2009

At age 18, Sam, a quintessential entrepreneur who was a non-native English speaker with no formal education, sold his first banana for a profit. Over the next 15 years, he sold so many bananas that he earned the nickname “Sam the Banana Man”. His success was created the old-fashioned way: he was quick to spot opportunity, he worked hard, and he acted on his good instincts. His core competence was “narrow and deep”: he sold bananas and bananas only. In fact, his Cuyamel Fruit Company in Honduras was so successful at selling bananas that his largest competitor decided that the only way to compete with Sam was to buy him out. And so they did.

In 1930, Sam Zemurray sold his Cuyamel Fruit Company to United Fruit Company, which we know today as Chiquita. When he sold Cuyamel, Sam also received 300,000 shares of United Fruit stock, trading at $158 per share, and got a seat on the company's board of directors. 

In 1930, Sam, the uneducated Jewish immigrant from Russia, retired with a net worth of nearly $50 million dollars. 

However, if you know history, you know that the Great Depression arrived just after Sam sold his business. By 1932, Sam’s stock had declined to $10 per share. Diversity is the first rule in investing, but unfortunately, Sam’s bananas were in one basket—that of United Fruits. 

Sam creatively, if not always ethically, got what he wanted. In this case he was upset at United Fruit for ruining his stock value. The new management had run the company into the ground and destroyed his fortune. So he did what all self-respecting banana barons do. He took immediate action. Read more