Whether in business, war, or matters of the heart, the more the merrier is often the most crucial element in determining the outcomes of events. The ability to know what the competition’s strategy is for a business is potentially a game changer. A general, learning the details of a rival’s battle plan, gains immense advantage in plotting a counterstrategy. Knowledge is often not quantifiable, but it is invaluable.
One of the most famous and consequential uses of real-time knowledge occurred in Europe in 1815. In the early 19th century, information about distant events that could be obtained through communication channels took a long time to arrive. The roads were rough, unfinished, little more than cart tracks really. There was no cable transmission and no fast, organized courier services to deliver messages over long distances. News of the outcome of a major battle, treaty, or political issue could take weeks or months to arrive when the outcome was most eagerly awaited.
The Battle of Waterloo is possibly the most famous military confrontation in history. The site of the battle, the small and remote Belgian town of Waterloo, is today synonymous with the “final act”. Waterloo became the denouement of Napoleon Bonaparte. His ignominious defeat at the hands of British forces, commanded by the Duke of Wellington, hastened his exile to the tiny island of Elba and the decline of France as a military power for nearly a century.
The armies of Prussia, Austria, and Russia had allied to fight with the British against Napoleon. All of these great armies, moving across vast swaths of Europe’s terrain, required extensive supply, weaponry, and logistical support to keep troops prepared for the great battle. This was an incredibly expensive undertaking. Massive funding was required to support the campaign.
The Rothschild banking family was already famous throughout most of Europe for providing a secure source of funding for national governments. The Rothschilds had established five branches of their company. The largest and most important were based in Paris and London. The final Napoleonic war was largely financed by Nathan Rothschild of the London branch of the family. This house had provided large sums to both the British and the French. The Rothschilds were famous for their indifference towards rulers and governments. Nathan Rothschild once said, “The man who controls the British money supply controls the British, and I control the British money supply.” His goal was to make a profit no matter who was in power or who won a war.
Nathan Rothschild knew that early knowledge of the winner at Waterloo, the details of the battle, the severity of the loser’s defeat would be invaluable in financially manipulating the markets to profit from the outcome. The family had invested heavily over the decades in field agents who sent advice and messages, speedy parcel deliveries, and carrier pigeons trained to deliver notes quickly.
The arrival of carrier pigeons in London with the specific results of the Battle of Waterloo provided Rothschild with the information he needed to start spreading rumours. He initially spread the word that the British had lost. Investors began to adjust their positions in bonds and equities in reaction to this negative news. Rothschild took opposing positions, and then strategically released the real news that Wellington had defeated Napoleon. This allowed the family to make a profit on both sides of the trades. The Rothschild family is estimated to have extrapolated an increase in wealth of 20 times their pre-war capital.
The foresight to train a winged air force of carrier pigeons proved fortuitous and extremely profitable for the Rothschild banking house. The advantage they enjoyed in receiving information in real time and profiting spectacularly from the knowledge became legendary and only increased the perception that they were a family of financial Merlins. His power and wealth has multiplied exponentially in the last 200 years and has remained to this day.
In modern business and finance, the ability to gather information about competitor plans, information that will affect asset valuations and marketing strategies, is invaluable. Governments spend billions of dollars trying to steal state and trade secrets. Private investigators are used every day to investigate the fidelity and affairs of married spouses. Information is power.
Entrepreneurs can learn an important lesson from this chronicle of the Rothschilds’ use of carrier pigeons. If your project has true commercial value, it must be protected. You should assume that there are people working at the same time on a similar opportunity. Time is not your friend.
Whether you can discover a competitor’s plan or an adversary learns the details of your project, the first owner of knowledge can maximize profits. Placing second in this process is a sure way to lose the crucial first-to-market advantage. The Rothschilds gained fabulous wealth simply by learning the outcome of a battle before their competitors. For entrepreneurs to successfully benefit from their efforts, they must collect all relevant and available knowledge as quickly as possible.
Knowledge is invaluable, but it must be obtained and used diligently and with due speed.