Thursday, October 09, 2014

Christopher Columbus - Portrait of a 16th Century Entreprenur

Today, October 9th is celebrated as Leif Erikson Day in the United States.  

Leif Erikson was the Viking sailor who founded what is believed to be the first European settlement in the New World.  The colony, known as Vineland because of the abundance of wild grapevines, was located in what is now L'Anse-aux-Meadows in the Canadian province of Newfoundland.

However, it is not Leif Erikson but the later Italian explorer, Christopher Columbus, who has been honored with a nearby holiday that falls near the Leif Erikson holiday each year on the second Monday in October, that
is today's focus. 

While both men are remembered as great explorers and discoverers they were really a couple of ambitious fellows trying to make a living and get ahead financially. This is especially true of Christopher Columbus who, if he were alive today, would be considered an entrepreneur in the new tech economy.

Experience and Research Combine into a Plan to Find a New Route to Asia

Contrary to myth, Columbus did not set out to prove the world was round. Like most educated people, Columbus was familiar with the writings of both the ancient Greek mathematician Eratosthines of Cyrene (276 BC to 195 BC) and the Egyptian mathematician and writer Claudius Ptolemy (90 AD to 168 AD) both of whom not only produced mathematical proof that the world was round but also came up with estimates of the earth's circumference that were relatively close to its actual circumference. Ptolemy also produced a map of the world showing Europe and Asia and the Atlantic ocean in between.

Columbus also believed that one could reach Asia by sailing west across the Atlantic. This was also accepted as possible by most educated people at the time. There two practical objections to sailing west to Asia. First, the distance between the two continents was not known which opened the possibility that a ship could run out of food and water before reaching land. Second, navigation and map tools were still quite primitive which meant that, once out of sight of land, it became very difficult to determine one's location which could result in aimless sailing until running out of supplies.

Christopher Columbus had gone to sea as a teenager and, as an adult was an experienced sailor and navigator. He had experience sailing in both the Mediterranean and Atlantic. In the Atlantic he had sailed on voyages south along the African coast, west to the Azores and Canary Islands and north as far as England and possibly Ireland and Iceland. 

Columbus Had Extensive Network of Contacts and Connections

Like many of today's entrepreneurs Christopher Columbus  appears to have had good networking skills.  He used his networking skills to gather information and knowledge from the numerous sailors he encountered in his travels.  His network also came to include scholars, businessmen and those with political connections.  This gave him access not only to people in power but also libraries and archives where he increased his knowledge of geography, cartography and navigation.

His marriage in 1478 or 1479 to Felipa Perestello e Moniz (or Felipa Moniz Perstello) the daughter of a somewhat impoverished but respected Portuguese noble who had been appointed governor of the Maderias Islands by Prince Henry the Navigator not only gave him access to people with access to the royal court of Portugal and later Spain but, according to some historians, to Bartolomeo Perestrello's personal archive of charts and other materials relating to sailing and navigation.

Enterprise of the Indies - Columbus' Business Plan

Sometime after his marriage, Columbus began formulating a plan, which came to be known as Enterprise of the Indies. 

In this plan Columbus described how he planned to sail west to Asia along with evidence showing how this could be accomplished. He also provided details and the costs of what would be needed for the venture as well as detailed estimates of the profits to be made from the venture. Finally, the plan included what he personally expected from the venture. 

In addition to one-tenth of revenue to be earned from the sale of products shipped from Asia to Spain via the new trade route, he also demanded that he be given the rank of Admiral of the Ocean, as well as Viceroy and Governor of the Indies. These titles and revenues were to be ongoing and passed on to his descendants.

The Enterprise of the Indies was a business plan designed to get investors to invest in his venture. Columbus traveled around Europe, especially Portugal and Spain, meeting not only with monarchs but others who whose support could influence a monarch to provide other political and financial backing needed to launch the enterprise.

Christopher Columbus Raises Funds and Other Backing Needed for the Voyage
In the end it was Luis de Santangel, royal treasurer to King Ferdinand ("Spain" at that time was the Kingdom of Castile which was ruled by Queen Isabella and the Kingdom of Aragon ruled by King Ferdinand, these two kingdoms were later united into one along with other areas to make modern Spain but this was not in the lifetime of Ferdinand and Isabella) and a member of a banking family, who got the two monarchs to put aside the objections of their other advisers and reconsider the plan by Columbus. De Santangel argued that the potential return on the investment was so much greater than the initial investment that it was worth the risk.

Part of the contribution by the two monarchs was their requiring that certain people in the sea port city of Palos provide Columbus with two ships as well as join Columbus in his voyage. 

Whether this order applied directly to Martin Alonso Pinzon and his family or to others in the town as well is unclear. In addition to being experienced seafarers and ship builders the family was well known and wealthy. Martin or the family not only provided the ships but Martin also contributed a half a million maravedis toward the cost of the first voyage of Columbus. This was half the amount Ferdinand and Isabella contributed and came to one-eighth of the total cost of the voyage.

Martin Pinzon and His Contribution
Martin and his two brothers, Francisco and Vincent Yanez, sailed with Columbus on the first voyage. Martin commanded the Pinta with Francisco as master and the youngest brother, Vincent, commanding the Nina. Martin, as one of the leading members of the area was instrumental in recruiting skilled local sailors for the voyage.

While they started out as close partners, Columbus and Martin Pinzon became bitter rivals following their arrival in the New Wold and their return to Spain. 

Finally, in addition to the financing by the monarchs and Pinzons, Columbus is also supposed to have contributed personal funds to the voyage. A syndicate consisting of the Seville branches of seven Genovese banks also made a sizable contribution to the cost of the first voyage. 

The contribution by the monarchs, Columbus and Martin Pinzon were obviously equity investments in the project. 

As to the Genovese banks it is unclear as to whether their contribution was in the form of loans or equity investments on behalf of their owners or clients.

Gains and Losses by Columbus

While Christopher Columbus was smart and successful in his endeavor to find a new route to Asia, he wasn't without his faults.  

In researching his life one finds more than a trace of greed and egotism.  The profits, rewards and titles he requested were not only excessive but also unrealistic.  

Seeking a ten percent return on an investment is reasonable.  But demanding ten percent of all revenues from trade on the route he proposed to find was excessive especially since he was demanding this for himself and his heirs in perpetuity.  

The royal titles and positions he demanded for himself and heirs in perpetuity were also unrealistic.

These demands kept the King of Portugal from backing him and initially kept the Spanish monarchs from backing him.  It was only the financial acumen of Luis de Santangel, Treasurer to King Ferdinand, that saved Columbus after being first turned down by Ferdinand and Isabella. 

Despite his brilliance in devising and carrying out his plan, Columbus was naive to believe that the monarchs would actually live up to their part of the bargain they agreed to.  Just as ambitious politicians today don't hesitate dump supporters and reverse positions when it becomes inconvenient so too were monarchs of old.  

Finally, these faults hurt and distracted Columbus in the long run.  While he made three more voyages to the New World he was also forced to spend time and energy in legal battles and in other disputes. 

Like other successful entrepreneurs, Columbus was a good promoter and this served to help sell his plan and get backing for his successful first voyage.  Later activities in this area probably helped to spread his fame and keep his name and success alive in the ages since.

However, his preoccupation with proving that he had reached Asia and with fighting his critics helped to blind him to the fact he had discovered a new and previously unknown land.  
Others soon figured out that the route Columbus discovered led to a new land and not Asia. One who figured this out and publicized it was a Columbus contemporary, Amerigo Vespucci (who at the time of the first voyage of Columbus was manager of one of the banks that were involved in the financing of that first voyage).  

As a result of of his published accounts of the fact the lands Columbus were a previously unknown landmass rather than Asia, a German mapmaker in 1507, one year after the death of Columbus, published a map of the world on which America, the feminine form of Vespucci's first name, rather than Columbia, appeared as the name of the new lands. 


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