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Hi welcome to another ColdFusion video
Since 2013, this channel has featured the "How BIG" series
Essentially, the series explores the size and scope of different companies
Recently, Apple has passed the one trillion dollar valuation mark, but since "How BIG is Apple?" video already exists
I have the idea to take things a little further. I ask myself the question "What was the biggest company of all time?"
In this video, we'll quickly touch on the 8 most valuable companies in history and then spend some time on number one because it's a fascinating story.
This company was so large that they literally geographically shaped the world we know today.
Alright, let's get into it
At number 8, we have Microsoft in 1999. The company was valued at $0.9 trillion at the height of the dot-com bubble
Number 7 is Apple in 2018. This is due to the persistent popularity of the iPhone which makes up about 70% of the company's profits
Though some do speculate that this
Trillion-dollar stock figure is more complicated due to low interest rates making it viable for the companies to buy back
Its own stock, pushing up the stock price further
At number 6, we have Standard Oil. In 1900 this company was worth $1 trillion.
Standard Oil was soon broken up by the American government into well, pretty much every major American oil company
At number 5, we have PetroChina.
In 2007 they were valued at $1.4 trillion and this was right at the peak of oil prices just before the GFC
The 4th most valuable company of all time is Saudi Aramco, valued at $4.1 trillion at its peak in 2010
From here on we have to step back in time, hundreds of years to reach the real heavyweights
At number 3 and 2 respectively, are the South Sea company
worth $4.3 trillion and the Mississippi company worth $6.5 trillion both in 1720.
Of course, these numbers are adjusted for inflation
The reason for these astronomical valuations is quite interesting
In 1720, a bubble formed around
speculation of trade between North and South America
The two companies mentioned promised that they could capitalize on trade between the American continents and their stock rose accordingly
The speculators in these companies would coined the term 'millionaire'
In reality, mass trade between the Americas didn't really end up happening and the bubble soon popped
Okay, so on to number one
Valued at a ridiculous $7.9 trillion in 1637 is the Dutch East India Company
The story of the Dutch East India Company is absolutely fascinating
The story starts in the Netherlands in a time called the golden century, a period of Dutch history between
1600 and 1700 where Amsterdam was one of the richest cities in the world, due to its strong international trade
Trade was essentially how all countries made their money
In 1600, the Dutch government was worried about England becoming dominant in trade
To combat this threat, they sponsored the creation of the Dutch East India Company in 1602 and allowed the firm to become a monopoly in Asian trade
The company quickly became one of the dominant players in the trade of spices between Europe and Indonesia
Spices might not seem like much today, but back then spices were scarce and extremely valuable
They were used in medicine, to preserve cooked food, and to add flavour to meat
Spices actually improved the quality of life
Dutch East India Company is one of the most important companies in history and one of the reasons for this is that
it was the very first company to go public on the world's first Stock Exchange
From here, it continued to grow until it had 70,000 employees at its peak
In the 1600s, that was more than 0.01% of the world's population working for this one company
The firm ran their own shipyards, built a network of hundreds of bases, and had anything from officers to warehouse and heavy work stations
In order to keep their ports and continue trade, Dutch East India Company
developed their own army to protect the land that they gained and this is where things start getting beyond any company that we can imagine today
As the company grew, the foreign colonies gained more land and possessed a sense of governmental powers
The Dutch East India Company had the power to wage war, negotiate treaties,
mint its own coins, and even established new colonies. The company was even used to fight against the Spanish Empire in the early 1600s
and remember, this was a publicly traded company doing all of this
It doesn't stop there though
there were also expansive sailing expeditions that resulted in the discovery of new land
as it turns out the Dutch East India Company actually helps shaped the geographical knowledge of the modern world
They would stay operational for two centuries, and had effectively transformed itself from a corporate entity into a state, and then an empire
Ok, so now we know that the company started by trading spice and ended up a tyrannical Empire
But what was its most profitable business? The answer isn't one you would expect
The peak of their wealth came from flowers
Tulips to be exact, and the story of how this happened has gone down in infamy
It tells us a deep archetype story. Although technologies in the world may advance, human nature remains the same
Tulips were first introduced to Europe from Turkey and reached Amsterdam in 1554
The plants are immediately perceived as exotic goods, and their popularity began to rise
Having tulips in your garden became an important status symbol
In addition to this, the thing about tulips is they take seven to twelve months to flower and only bloom for about a week
This rareness and the fact that there are status symbol and highly valued, made the tulip product a prime candidate for the first
financial bubble in history
The tulip bubble
You see at the time, the Dutch were pioneers of modern finance
They devised a way to set up a market where you could trade tulips all year round even if they weren't in bloom
The prices were set by traders that signed to a contract based on future prices
This was the very first futures derivative market. The same kind that we used to trade stocks with today
Over time, the tulip market became more complicated and flowers were priced according to their rarity
As with all derivative markets, things tend to go out of control sometimes
The prices of the tulips are pushed higher and higher by speculators who plan to turn around and sell them for a profit
This is the very same thing that happens in all modern financial bubbles from people flipping houses
expecting the next guy to pay for it, to stock and bond traders doing the same thing. As I said, human nature stays the same
Many merchants sold all of their belongings to purchase a few tulip bulbs for the purpose of selling them at a higher profit
than they could ever imagine in their lifetimes.
This was the 1630s and the average person could expect to live fewer than 40 years and be lucky to make any money at all
Meanwhile, some of the tulip traders were earning the equivalence of sixty two thousand dollars a month
But it seemed like the tulips for a quick way to paradise and everyone wanted in
During the build-up and height of Tulipmania, the Dutch East India Company
incorporated the tulip trade into their operations and the stock price began to rocket upwards
By this stage, even England and France are trading tulips on the London Stock Exchange
The acceleration of price continued and soon does a price explosion of twenty fold just in a single month
To give you an idea, at the peak a single tulip bulb was worth ten times more than a craftsman's annual wage
By this point, the Dutch East India's value had risen to that infamous massive $7.9 trillion mark
To highlight how huge this was just one more time, if you put Apple, Microsoft and Google together,
Dutch East India Company was worth three times that combined value
So you might be wondering, what happened next?
Like all bubbles, the tulip bubble popped in late 1636
So what caused the crash? It turns out that some of the buyers in North Holland refused to show up to routine tulip bulb auctions
It signaled to the market that people just weren't going to pay any higher for the plant
This event caused the tulip price to fall a little
Investors then got cold feet and decided to sell. So the price fell more
More people saw the price falling and decided to sell as well, and the cycle continued. Soon the market violently imploded
Within just a few weeks,
Tulip bulbs were only worth a hundredth of their former price
This resulted in a full-blown panic throughout Holland and an economic crash that lasted years
The Dutch government would later make changes to the financial system to make sure that this never happened again
So what about the Dutch East India Company? What happened to them?
Well, the company stayed very powerful until the mid 1700s
but after bad management, and a war between the English and the Dutch,
the company was dissolved and overtaken by the government in 1799, and the colonies of the company became Dutch colonies
So, what does this tell us?
The tulip bubble speaks of human nature and greed. Like many things in life,
it's important to look at the underlying value of something and not just what everyone else thinks it's worth
The Dutch East India Company size is completely unparalleled today. There were a complete government within themselves
On one hand, I guess it warns about the close ties between industry and government. But on the other hand,
they did discover new lands, shaping modern geography, and also with a pioneering company to trade on the stock market forever shaping finance
But all in all, I just thought that was an absolutely fascinating story and I wanted to share that with you
So anyway, that is the end of the video. Thanks for watching
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Anyway, that's it and I'll catch you again soon for the next video. Cheers guys!
Have a good one