April 12th, 1204 AD. A ninety-seven-year-old blind man is standing on the deck of a warship, screaming at his soldiers to scale the walls of the richest city on earth. His name is Enrico Dandolo. He's the doge of Venice. And according to the chroniclers who were actually there, he stood fully armed on the prow of his galley with the banner of St. Mark before him and cried out to his men to drive the ship ashore if they valued their skins. A blind, non-aginarian leading the assault first to the walls. For three days they looted Constantinople. Gold, silver, artwork, relics, four massive bronze horses that still sit above St. Mark's Basilica in Venice today. One Byzantine witness wrote, They smashed the holy images, hurled sacred relics of the martyrs into places I am ashamed to mention. They destroyed the high altar, a work of art admired by all the world. But here's the thing that I find fascinating. While all the French and Flemish crusaders went on a rampage of destruction, the Venetians kept their heads. They systematically cataloged, packed, and shipped the most valuable items back to Venice. It wasn't just looting, it was inventory management. And when the Dutch settled, Venice walked away with three-eighths of an empire. Not through conquest, through a business deal gone horrifically right. No king authorized this. No pope blessed it. This was pure capitalism with a blade. With an edge, you might say. And it made Venice the wealthiest city in the world for the next 400 years. But here's what you don't often hear: Venice didn't have a standing army. They had maybe 3,000 soldiers total. What they had was a factory that could build a warship in a single day, a merchant fleet of 3,000 ships, and the most sophisticated financial system in medieval Europe. They conquered an empire without land, just infrastructure, capital, and ruthless focus. This is the story of how a city built on mud and wooden stakes in a literal swamp became the world's first global trading empire, how they invented mass production 600 years before Henry Ford, how they monopolized Mediterranean trade for six centuries, and what the stories of Venice can teach us about building wealth that lasts as modern timeless investors. I'm Ari Van Gemran, real estate fund manager and the host of the Timeless Investors Show. And I'm pleased to have you all here today to dive into another timeless lesson and parable from history. So before we dive into Venice's rise, let me set the scene. When most people think about medieval Europe, they imagine, you know, castles, knights, feudal lords fighting over farmland. But while everyone else was focused on acquiring land, which is something we love to talk about on this show, being real estate investors, Venice was playing a completely different game. They built an empire on trade routes, not territory, infrastructure, not armies, and network effects, not conquest, raw conquest, anyways, the aforementioned Constantinople example aside. So here's what I think makes Venice extraordinary, and why I chose to talk about it this week on the Timeless Investors Show. They lasted over 1,000 years. 1,000 years. By the way, the United States is, you know, what, 300 years or less old? I mean, this is like every single empire in history has outlasted us by 3x. They lasted over a thousand years as an independent republic, 697 to 1797 AD. They controlled Mediterranean trade for 600 plus years. At their peak, they were the richest city per capita in the world. They invented modern industrial production in the arsenal, which we'll talk about later. They pioneered international banking and insurance, and they never had a standing army, just the most dominant navy in history. And here's the kicker: Venice was built on a swamp. Literally, the city sits on 118 islands connected by canals. No farmland, no natural resources, no strategic land position, just mud, water, and wooden stakes. So, how did they become one of the wealthiest trading empires in history? By controlling the infrastructure, they could control the trade. So let's break down how they did it. Venice did not start as a power, it started as a refuge. In the 5th and 6th centuries, as barbarian invasions ripped through Italy, terrified Romans fled to the marshy lagoons of the Adriatic coast. Not because it was nice, because it was defensible. You cannot charge cavalry through a swamp. It's very difficult to besiege a city that's scattered across 118 islands. So while the rest of Italy was being conquered by Lombards, Goths, and Franks, Venice survived by being impossible to attack. And here's where it gets really interesting, and there's, you know, our first sort of timeless principle from their story. Their geographic weakness became their strategic strength. Because they couldn't grow food, they had to trade. Because they had no land army, they had to build ships. Because they controlled no territory, they had to dominate the sea lanes. So lesson number one, sometimes your greatest constraint becomes your moat. And history and business, you know, stories are filled, filled with anecdotes of people that took what everyone perceived as a weakness and leveraged it to their strength. You know, a very, you know, minor example in my own life is trying to get a job at Goldman Sachs with a history degree and coming from a non-tier one school. And, you know, I had to pitch myself and use history as my as my strength to get that job and take what others perceived as a weakness and parlay it into a strength to assist me with that. That that trade got me into equity research, it got me into Goldman Sachs, and it's helped us build a timeless investor brand to where it is today. So in 697 AD, Venice elected its first doge, their version of a, you know, you could call it like a CEO for life, and it officially became a republic. But they weren't independent yet. They were technically, I'm using air quotes, technically part of the Byzantine Empire, more, you know, correctly known as the Eastern Roman Empire, based in Constantinople. But it was brilliant positioning. Why? Because Byzantium was the wealthiest, most powerful empire in Europe at the time, and Venice became their preferred trading partner. Here's how it worked: the Eastern Roman Empire needed Western European goods, timbers, metals, slaves. Western Europe needed Eastern goods, spices, silk, glassware. Venice sat right in the middle, geographically and politically, and they played both sides and they took a cut of everything. So by the 9th century, Venice had special trading privileges in Constantinople that literally no other Western city had. They also paid lower tariffs. They had their own quarter in the city. They could trade directly with Muslim merchants, which the Pope technically forbade. So lesson two, we can take from the story is to position yourself and your business, whatever you're doing, at the intersection of capital flows. If you think about it from real estate standpoint, location, location, location, right? But Venice's real genius was understanding that trade requires physical infrastructure, which is a story we see time and again in the Hansiotic League, in all of the great trading, you know, constructs of history, physical infrastructure becomes really important. So here's how this is valuable for Venice. When other maritime cities were just sending out ships and hoping for the best, Venice was systematically building one, a fleet. By 1000 AD, Venice had the largest merchant fleet in the Mediterranean, not warships initially, just cargo ships. They had standardized designs for efficiency. They had state-owned and merchant-owned ships working together. Two, they had the Fondaci, Fondacci, the warehouses. They built massive warehouse complexes in every major port that they traded in, not just for storage, but for quality control and taxation. They created a network where Venetian goods were certified as legitimate, and this built trust, and that trust became premium pricing. Thirdly, and I f I love this, I love this anecdote. They built an insurance system. They invented marine insurance to protect merchants from losses. They created risk pools so individual merchants wouldn't go bankrupt from one bad voyage, which was obviously an issue. You know, we know the story of this is not a trading story, but the story of St. Paul's ship, you know, shipwrecking in the middle of the Mediterranean, and many, many, many others over history, right? And so this allowed more trade because risk was distributed. Insurance is one of the great financial inventions in human history, truly. So lesson three: infrastructure compounds. Build the plumbing, control the flow, control the infrastructure of everything. So around 1104 AD, Venice built something that would change everything for them. And it's one of the most incredible stories that I've ever come across. It's called the Venetian Arsenal. And it wasn't a shipyard, it was the world's first factory. Here's what made it absolutely mind-boggling. By the way, 1104 AD, guys, 1104 AD. At its peak, the arsenal employed 16,000 workers. It covered 110 acres, 15% of Venice's total area. And it could produce, this is a mind-blowing statistic, and I didn't even believe it when I first read it, so I had to do some fact-checking on it. It could produce a fully equipped warship in one day. And here's the here's the like this is a crazy anecdote. In 1574, King Henry III of France visited Venice, and the arsenal workers decided to show off. They built and fully outfitted an entire warship during the king's lunch. Think about that. While Henry was eating, they assembled a combat-ready galley from prefabricated parts, installed the masts, rigging, oars, weapons, everything. By the time he finished his meal, a warship was ready to sail. This wasn't normal production, to be clear. It was Venice flexing. So how'd they do it? Standardization. Parts were interchangeable. Workers specialized in single tasks. Assembly line production 600 years before Henry Ford. The Arsenal controlled, they had full vertical integrations. I want to go back to the infrastructure and complete control of all the cost inputs and everything because it's a big part of how we're thinking about building our company today as well. The arsenal controlled timber imports from Dalmatia, rope production from hemp farms that they owned, sail weaving from textile workshops, cannon foundries, and gunpowder production. The arsenal even had its own state-owned forest in the Monteo Hills to supply timber. So when war broke out in 1570, they produced 100 fully equipped warships in less than two months. Less than two months. So less than four, vertical integration plus standardization equals an unbeatable cost advantage. If you think you can literally apply this to any business you're looking at, or if you're an investor and you're looking at investing in companies, it's a really good framework to think about it. I can't get off my high horse on vertical integration. Standardization, I think modern-day terms you might say systems, you know, operating systems to repeat and scale your process over time. We don't necessarily need standardized parts anymore. But can you scale and standardize your business in a way that you have vertical integration plus operating systems to run a scalable, scalable system that thrives and wins? So why was this so powerful? Because it meant Venice could outbuild anyone. When Genoa, their rival, built 50 ships, Venice could build 100. When the Ottoman Empire threatened, Venice could mobilize a fleet in weeks that would take other powers months to assemble. This is the real estate equivalent of owning the construction company, the lumber mill, and the distribution network. You're not just building, you control the entire production stack. Dante Alighieri visited the infer the arsenal. Slip of the tongue, the inferno, the inferno, visited the arsenal in 1306 and was so amazed he wrote about it in the inferno. As in the arsenal of the Venetians, boils in winter the tenacious pitch, such not from fire, but from divine art boiled here at dense pitch. The arsenal was not just impressive, it was irreplaceable. Lesson five, build what your competitors cannot easily replicate. So by 1200 AD, Venice was already wealthy, but they were about to pull off the most tedacious business move in medieval history. And may I add as an aside, I think one of the most infamous acts in the history of Western Europe, a really long-term, very negative act on their part. It was not good for Europe at all, or Venice, frankly, in the long run, but it helped them a lot in the short run. In 1201 AD, Crusader knights from France needed ships to sail to Egypt and attack Muslim-held Jerusalem. So they approached Venice. The doge at the time was a legendary character that really should get a little more attention. He's going to get some on this show, whose name was Enrico Dandolo. I love these Italian pronunciations, 97 years old, blind and ruthless, like a character out of Game of Thrones. And he made them an offer. You work for us instead. Kind of like uh, you know, the godfather making an offer you cannot refuse, right? So Dandolo convinced the Crusaders to detour, and I'm going to use air quotes, detour through Constantinople and settle some old debts Venice had with the Byzantine Empire. The official reason, political instability in Byzantium, the real reason, Venice wanted to eliminate their only real commercial rival. So in April 1204, the Crusaders and Venetians sacked Constantinople. Great dramatic irony in a crusading force sacking the heart and soul of Eastern uh Christianity. Like I said, an infamous and not good act, but they looted the richest city in the Christian world. One contemporary wrote, probably no other city in history ever offered plunder like that found by the crusaders when they sacked the capital of Byzantium in 1204. According to the estimate of the Byzantines themselves, Constantinople at this time held fully two-thirds of the world's wealth. Two-thirds of the world's wealth in one city. And the Venetians, while everything everyone else was destroying things, were calculating, cataloging, and claiming the lion's share. The spoils were divided. The crusaders got half. Venice got three-eighths of Constantinople itself, plus strategic territories. Here's what they took: they took ports. They took the port of Crete, of Negroponte, Modon, and Coron, called the Eyes of the Republic, which controlled routes to the Levant. In one fell swoop, they seized basically the Mediterranean. The Made Nostrum was back in the hands of the Italians. The trade rights, they had a monopoly on silken ports, exclusive access to Black Sea trade, and reduced tariffs across the former Byzantine Empire. And the symbols, the four bronze horses that now sit above St. Mark's Basilica in Venice, countless relics, treasures, and art that made Venice even wealthier. It wasn't just plunder, although it was that. It was also the strategic acquisition of irreplaceable infrastructure. Venice didn't just conquer land, although they got very valuable land, they conquered trade routes. They didn't want to rule Constantinople. They wanted to control access to it. So think about that. If you can't outcompete your rival, you acquire the infrastructure that they depend upon. Sometimes the best investment is buying out your competition supply chain or owning the supply chain and controlling everything. Look at what Amazon's done, right? I mean, the ability to, I mean, this is why we have antitrust policies today to try to prevent this sort of thing from happening, but it's a timeless strategy, right? So after the Fourth Crusade, Venice entered its golden age. They controlled 3,000 plus merchant ships, trade routes from England to India, banking operations in every major European city, a spy network that rivaled any government, and manufacturing monopolies, especially glassmaking and Murano. Venice's competitive advantage came down to three things. They had an information advantage. Their merchants were everywhere. They reported back to the Senate constantly, and Venice knew about market disruptions before anyone else was aware. They had a financial infrastructure. They invented government bonds to finance wars without kings. They created the first public bank, the Banco della Piazza del Rialto in 1587. And they used double entry bookkeeping before anyone else. Fascinating. Financial innovation as a tool of conquest and growth and empire. And they had legal frameworks. Contracts are enforced by the state. Maritime law was standardized. Disputes were resolved quickly. So, lesson seven. There is a reason that investors all over the world still flock to the United States. And let us hope they continue to do so for my American listeners. But it is a huge boon for this country, a huge boon, and it is driven mostly by security and the rule of law. But in 1453, the Ottoman Empire conquered Constantinople. And this was a problem for many reasons. One of which was that Venice now had to deal with the Ottomans, and they adapted. They negotiated trade deals with the Ottomans. And may I add that Venice coordinating the sack of Constantinople did them no favors in the very long run because it allowed a hostile power to get into, you know, very close to their orbit and became a problem for them. But then something happened in 1498, something that Venice could not control. Vasco da Gama sailed around Africa to India. And suddenly, Portuguese ships could bypass the Mediterranean entirely. The Silk Road became obsolete. Venice's monopoly was broken. Lesson number eight: no moat lasts forever. You must constantly innovate. We think of this today in our modern capitalist society as creative destruction. Venice went through its own version of this. Even geographic advantages can disappear overnight. If you think about cities that relied upon a highway that disappeared or a train route that disappeared, like what you thought was stable can become unstable. So let's bring this back today to investing and building wealth. One, your constraint can become your mode. Venice had no land, so they mastered the sea. What weakness of yours can you turn into strength? Two, position yourself at the intersection of capital flows. Venice sat between east and west. Where are capital goods or people moving through? If you're a real estate investor, this becomes very important because you, you know, ideally want to target cities that sit at the intersection of global hubs, right? Which is one reason major West Coast and East Coast port cities will always be important, right? In my opinion, always be important. Three, infrastructure compounds. Own the warehouses, the ships, and the foundries. What infrastructure do you control? How are you thinking about infrastructure and building your company or your business or your investment philosophy and what you invest in and how you think about it in terms of the infrastructure that these companies do control and make a good investable asset? Four, vertical integration creates significant cost advantages. The arsenal controlled the entire supply chain. What dependencies can you internalize? Or if you're looking at investing in a company, what dependencies do they have that are a serious problem for them? And companies that are looking at, you know, vertically integrating and bringing these things in house, is that an advantage for them? Is that a cost-effective strategy? Number six, sometimes inquire instead of compete. Venice bought out Byzantium's trade routes. They conquered their trade routes in many ways. What infrastructure can you acquire versus build? What infrastructure are companies that you're looking to invest in taking advantage of and acquiring? Number seven, information plus capital plus rule of law equals compounding. Venice had all three. Where do these three conditions exist today? Where are their opportunities? You know, we talk a lot here on the show about West Coast real estate investment. We feel we have an information advantage versus many national investors in these markets. Why? Because everybody is relying upon the national news story. And we, you know, live in these markets. We're here every day on the ground. We see what's actually going on. We have an information advantage versus national investors. They have no idea, which is another argument. If you're a real estate investor, an active real estate investor, to niche down and focus on your market, develop information asymmetry, develop capital relationships, and invest where the rule of law protects you. And rule number eight, no moat lasts forever. Adapt or die. When new trade routes open, Venice declined. What technological shift could disrupt your advantage? Or said differently, again, if you're an investor, you're a passive investor looking at companies to invest in, how do you make sure you're not in the next Kodak, right? Kodak, your Kodak moment. Not a good moment for them. So modern applications, real estate investors. Venice teaches us to own infrastructure, not just assets. Think distribution centers, ports, value, you know, warehouses, industrial real estate ports are better than office buildings, data centers potentially better than retail. Business builders control the supply chain, not just the product, build what takes years to replicate or cannot be replicated, position at network intersections. And as a portfolio strategy, Venice had geographic diversification. They had ports everywhere. They controlled ports in many different locations. Vertically integrate where possible, focus on irreplaceable advantages. Venice lasted over a thousand years. They survived the fall of Rome, the Crusades, the Black Plague, the rise of the Ottoman Empire, and multiple wars with Genoa. They fell not to an enemy, but to obsolescence. When Napoleon invaded in 1797, Venice didn't fight. They just surrendered because by then they were irrelevant. But here's what's remarkable: the infrastructure they built still stands. The arsenal is still there. The warehouses still line the canals. St. Mark's Basilica still displays the bronze horses from Constantinople. Physical infrastructure can and does outlast the empires that fell before them. That's the lesson. When you're building wealth, don't just chase cash flow. Don't chase short-term gains. Invest in infrastructure that compounds, create advantages that cannot be replicated. Position yourself at the intersections that will matter for decades or invest in companies that are doing so. Because Venice teaches us this. The greatest wealth isn't necessarily built on land, it's built on control of what flows across it. Think well, act wisely, build something timeless. Break. If you enjoyed this deep dive into Venice and want more historical lessons applied to modern investing, subscribe to the Timeless Investor Show. Give us a review, leave a rating, it really helps the show to grow and find more people all across the world that are interested in these lessons. We release new episodes every week exploring the builders, the empires, and the timeless principles that create lasting wealth. You can read more about us and more of our thought at the Timeless Investor on Substack. Link in the show notes. And if you're an accredited investor interested in supply constrained real estate with structural modes, the kind of infrastructure Venice would understand, reach out. There's a link in the description as well. Until next week, think well, act wisely, build something timeless. Thank you.