Born in Berlin, Lody hailed from a family of soldiers and civil servants. As a child, Lody wished to become a seafarer, so he moved to Hamburg and became a cabin boy. In 1904, he graduated from a maritime academy in Geestemünde, passing the exams to become a captain with flying colors. Becoming seriously ill soon thereafter, he was unable to actually become a captain, so he became a tourist guide for Hapag instead. Lieut.-Gen. Sir Robert Baden-Powell, later 1st Lord B-P, founder of the Scout Movement, referred to Lody thus: A German destroyer, the Hans Lody, was named for him.