Business Leader Profiles for Students
Business Leader Profiles for Students Volume 1 Jaime E. Noce, Project Editor Foreword by David Kelly, College of Lake County
Business Leader Profiles for Students Staff
Copyright Notice
Editorial: Sheila M. Dow, Editor. Jennifer L. Carman, Susan J. Cindric, Donna Craft, Andrea L. deJong, Kelly Hill, Jane A. Malonis, Rebecca Marlow-Ferguson, Jenai A. Mynatt, Terry Peck, William A. Petrick, Michael Weaver, Contributing Editors. Diane Maniaci, Managing Editor. Synapse, the Knowledge Link Corporation, Indexer.
While every effort has been made to ensure the reliability of the information presented in this publication, Gale does not guarantee the accuracy of the data contained herein. Gale accepts no payment for listing; and inclusion in the publication of any organization, agency, institution, publication, service, or individual does not imply endorsement of the editors or publisher. Errors brought to the attention of the publisher and verified to the satisfaction of the publisher will be corrected in future editions.
Graphic Services: Barbara J. Yarrow, Graphic Services Manager. Randy Bassett, Image Database Supervisor. Robert Duncan, Senior Imaging Specialist. Mike Loguz, Imaging Specialist. Permissions: Susan Trosky, Permissions Manager. Kimberly F. Smilay, Permissions Specialist. Steve Cusack, Kelly Quin, Permissions Associates. Sandy Gore, Permissions Assistant. Product Design: Cynthia Baldwin, Product Design Manager. Pamela A.E. Galbreath, Senior Art Director. Production: Mary Beth Trimper, Production Director. Evi Seoud, Assistant Production Manager. Research: Victoria Cariappa, Research Manager. Michele P. LaMeau, Andrew Guy Malonis, Gary J. Oudersluys, Research Specialists. Jeffrey D. Daniels, Norma Sawaya, Research Associates. Corrine A. Stocker, Research Assistant. Technical Support Services: Jim Edwards, Mark F. Mikula, Technical Training Specialists. Theresa Rocklin, Manager, Technical Support Services. Wayne D. Fong Programmer/Analyst.
i i
This publication is a creative work fully protected by all applicable copyright laws, as well as by misappropriation, trade secret, unfair competition, and other applicable laws. The authors and editors of this work have added value to the underlying factual material herein through one or more of the following: unique and original selection, coordinating expression, arrangement, and classification of the information. All rights to the publication will be vigorously defended. Copyright © 1999 by Gale Research 27500 Drake Rd. Farmington Hills, MI 48331-3535 All rights reserved including the right of reproduction in whole or in part in any form. ISBN 0-7876-2935-9 ISSN 1520-9296 Printed in the United States of America.
Table of Contents INTRODUCTION . . . . . . . . . .
viii
ADVISORS AND CONTRIBUTORS
. . . .
vii
A Scott Adams . . Paul Allen . . . Gil Amelio . . Wally Amos . . Arthur Andersen . Marc Andreesen . Hiroaki Aoki . . Steven Appleton . Minoru Arakawa. Elizabeth Arden . Ted Arison . . Giorgio Armani . Mary Kay Ash .
. . . . . . . . . . . . .
. . . . . . . . . . . . .
. . . . . . . . . . . . .
. . . . . . . . . . . . .
. . . . . . . . . . . . .
. . . . . . . . . . . . .
. . . . . . . . . . . . .
. . . . . . . . . . . . .
. . . . . . . . . . . . .
. . . . . . . . . . . . .
1 5 9 12 15 18 22 25 29 32 35 39 42
Charles B. Babbage . . Steve Ballmer . . . Jill Barad . . . . . P. T. Barnum . . . . Eddie Bauer . . . . John Jacob Bausch . . L. L. Bean. . . . . Scott Beck. . . . . Alexander Graham Bell Lyle Berman . . . . Susan Vail Berresford . Jeff Bezos . . . . .
. . . . . . . . . . . .
. . . . . . . . . . . .
. . . . . . . . . . . .
. . . . . . . . . . . .
. . . . . . . . . . . .
. . . . . . . . . . . .
. . . . . . . . . . . .
. . . . . . . . . . . .
45 48 52 55 58 61 64 67 71 76 79 82
B
i i i
Nicholas Biddle . . . Edwin Binney . . . Cathleen Prunty Black . William Edward Boeing Richard Branson . . . Christina Brown . . . Helen Gurley Brown . William Cullen Bryant . Warren Buffett . . . Daniel Hudson Burnham Adolphus Busch . . . Nolan Bushnell . . .
. . . . . . . . . . . .
. . . . . . . . . . . .
. . . . . . . . . . . .
. . . . . . . . . . . .
. . . . . . . . . . . .
. . . . . . . . . . . .
. . . . . . . . . . . .
. . . . . . . . . . . .
85 88 91 95 99 104 107 110 114 117 121 125
F
. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
129 132 136 139 143 147 150 154 157 160 163 168 171 175 178 181 185
G
. . . . . . . . . . .
. . . . . . . . . . .
. . . . . . . . . . .
. . . . . . . . . . .
. . . . . . . . . . .
. . . . . . . . . . .
. . . . . . . . . . .
. . . . . . . . . . .
189 192 195 199 202 206 210 214 218 222 226
. . . . . . .
. . . . . . .
. . . . . . .
. . . . . . .
. . . . . . .
. . . . . . .
. . . . . . .
. . . . . . .
230 233 236 239 243 247 251
Marshall Field . . . . . . . . . . . Debbi Fields . . . . . . . . . . . . Paul Fireman . . . . . . . . . . . . Harvey S. Firestone . . . . . . . . . . Donald Fisher . . . . . . . . . . . Jane Fonda . . . . . . . . . . . . Malcolm Forbes . . . . . . . . . . . Eileen Ford . . . . . . . . . . . . Henry Ford . . . . . . . . . . . . Benjamin Franklin . . . . . . . . . . Tom Freston . . . . . . . . . . . . Alfred Fuller . . . . . . . . . . . .
254 258 261 265 269 273 277 281 284 289 293 296
C Ely Callaway Jr. . Andrew Carnegie Hattie Carnegie . Steve Case. . . Stephen Chao. . Arthur Cinader . Liz Claiborne . . Jim Clark . . . Lilia C. Clemente Bennett R. Cohen Colonel Sanders . Scott Cook . . Joan Ganz Cooney Camille Cosby . Casey G. Cowell. Jenny Craig . . Mary Cunningham
. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
D Arthur Davidson . Suzanne de Passe John Deere . . Michael Dell . . Fred DeLuca . . Cecil B. DeMille Richard DeVos . Walt Disney . . Donald Douglas . Charles Dow . . du Pont, Éleuthère
. . . . . . . . . . . . . . . . . . . . Irénée
E Robert Earl . . George Eastman . Robert J. Eaton . Thomas Edison . Michael Eisner . Roger Enrico . . William Esrey .
i v
. . . . . . .
. . . . . . .
B u s i n e s s
Nely Galán . . . George Gallup . . James Gamble . . Bill Gates . . . . Anne Geddes . . . David Geffen . . . Louis V. Gerstner Jr. Jean Getty . . . . Roberto Goizueta . Christina Gold . . Ellen Gordon . . . Berry Gordy Jr. . . Leon Gorman. . . Jay Gould . . . . Katherine Graham . Earl G. Graves . . Jerry Greenfield . . Andrew S. Grove . Daniel Guggenheim.
. . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
300 303 307 310 314 317 320 324 328 332 336 340 343 347 350 353 357 360 364
. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
367 371 374 377 381 384 387 390 394 398 401 405 409 412 416 420 423
H J. C. Hall . . . . . James Halpin . . . . John Hancock . . . Ruth Handler . . . . William Harley . . . William Randolph Hearst John Heinz . . . . Leona Helmsley . . . John Hendricks . . . Milton Hershey . . . Tommy Hilfiger . . . William Hilton . . . Charles Elmer Hires . Herman Hollerith . . Ron Howard . . . . Howard Hughes . . . H. Wayne Huizenga .
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
I Lido Anthony Iacocca . . . . . . . . . Masaru Ibuka . . . . . . . . . . . . Michael Ilitch. . . . . . . . . . . .
428 432 436
J Steve Jobs . . . . John H. Johnson . . Linda Johnson Rice . Robert Johnson . . Quincy Jones . . . Michael Jordan . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
440 444 448 451 455 459
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
463 466 469 472 475 479 483
Edwin Land . . . . . . . . . . . . Estee Lauder . . . . . . . . . . . . Ralph Lauren . . . . . . . . . . . . Geraldine Laybourne . . . . . . . . . Andrew Lloyd Webber. . . . . . . . . George Lucas. . . . . . . . . . . . Henry Luce . . . . . . . . . . . .
487 491 495 499 502 506 509
K Donna Karan . . . Will Keith Kellogg . William Russell Kelly Calvin Klein . . . Philip Knight . . . Blanche Knopf . . Raymond Kroc . .
Jean Nidetch . . . John W. Nordstrom .
. .
. .
. .
. .
. .
. .
. .
. .
. .
581 584
Mo Ostin . . . . . . . . . . . . . Elisha Graves Otis . . . . . . . . . . Michael Ovitz . . . . . . . . . . .
588 591 595
O
P David Packard . . . Roger Penske . . . . Ronald Owen Perelman Steve Perlman . . . Ross Perot . . . . . Eckhard Pfeiffer . . . Jane Cahill Pfeiffer . . T. Boone Pickens . . Bob Pittman . . . . J.D. Power. . . . . Barbara Gardner Proctor William Cooper Proctor Wolfgang Puck . . . Joseph Pulitzer . . .
. . . . . . . . . . . . . .
. . . . . . . . . . . . . .
. . . . . . . . . . . . . .
. . . . . . . . . . . . . .
. . . . . . . . . . . . . .
. . . . . . . . . . . . . .
. . . . . . . . . . . . . .
. . . . . . . . . . . . . .
598 602 605 609 612 616 620 624 628 631 634 637 640 644
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
648 652 656 660 663 666 670 675 680
L
M Stanley Marcus . . . Willard J. Marriott . . Oscar Mayer . . . . Cyrus McCormick . . Dick McDonald and Mac Scott McNealy . . . Andrew Mellon . . . Charles Merrill . . . Jane Metcalfe. . . . Thomas Monaghan . . J. P. Morgan . . . . Akio Morita . . . . Samuel Morse . . . Peter Morton . . . . William Mow. . . . Rupert Murdoch . . .
B u s i n e s s
. .
. .
. .
Sumner M. Redstone . Jerry Michael Reinsdorf R. J. Reynolds, Jr. . . Sylvia Rhone . . . . Tony Ridder . . . . John D. Rockefeller. . Anita Lucia Roddick . Helena Rubinstein . . Margaret Rudkin. . .
. . . . . . . . . . . . . . . . McDonald . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
512 516 520 524 528 532 536 540 544 547 551 555 559 563 567 570
. .
. .
. .
. .
. .
575 578
David Sarnoff . . Dorothy Schiff . . Howard Schultz . . Richard Schulze . . Charles Schwab . . Frederick August Otto Richard Sears. . . Melvin Simon . . Isaac Merrit Singer . Samuel Slater. . . Alfred Sloan, Jr. . . C. Harold Smith . . Frederick Smith . . Jack Smith . . . Russell M. Solomon Steven Spielberg . . Leland Stanford . . Thomas Stemberg .
f o r
S t u d e n t s
N Condé Nast . James Near .
R
. .
L e a d e r
. .
. .
P r o f i l e s
S . . . . . . . . . . . . . . . Schwarz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .
683 686 690 694 697 700 703 707 710 713 717 720 723 727 730 733 738 741
v
John Stevens . . . . . . . . . . . . Martha Stewart . . . . . . . . . . .
744 748
T Dave Thomas. . . . . . . . . . . . Susie Tompkins . . . . . . . . . . . Donald John Trump. . . . . . . . . . Earl Silas Tupper . . . . . . . . . . Ted Turner . . . . . . . . . . . . Donald John Tyson . . . . . . . . . .
752 757 760 764 768 772
V Jay Van Andel . . Cornelius Vanderbilt Gloria Vanderbilt . Lillian Vernon . . Gianni Versace . .
. . . . .
. . . . .
. . . . .
. . . . .
. . . . .
. . . . .
. . . . .
. . . . .
. . . . .
776 780 784 788 792
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
795 799 802 805 809
Sam Walton . . . . . . . An Wang . . . . . . . . Charles B. Wang . . . . . Vera Wang . . . . . . . Aaron Montgomery Ward . . . Andy Warhol . . . . . . . Jack Warner . . . . . . . Sam Warner . . . . . . . Thomas J. Watson . . . . . Jack Welch . . . . . . . Helmut Werner . . . . . . Leslie Wexner . . . . . . Eli Whitney . . . . . . . Charles Kemmons Wilson. . . Oprah Winfrey . . . . . . Kenneth Wolfe . . . . . . F. W. Woolworth . . . . . Stephen Gary Wozniak. . . . Frank Lloyd Wright. . . . . Wilbur Wright and Orville Wright William Wrigley, Jr. . . . . Samuel Wurtzel and Alan Wurtzel
. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
812 816 820 823 826 829 833 837 840 844 848 851 855 858 862 866 869 872 876 880 884 888
.
.
.
.
.
891
MASTER INDEX . . . . . . . . . .
897
W Linda Wachner . Ted Waitt . . . Charles Walgreen DeWitt Wallace . Lila Wallace . .
v i
B u s i n e s s
Z Darryl Zanuck
L e a d e r
. .
. .
P r o f i l e s
. .
f o r
S t u d e n t s
Advisors and Contributors Advisory Board A five member board consisting of teachers and librarians on young adult business literature needs was consulted to help determine the contents of Business Leader Profiles for Students. The members of the board for this volume include: Maria Cummins: Cataloger for Yahoo.com; Librarian, Santa Clara County Library/Cupertino Public Library, San Jose, California. Katherine Bailey: Librarian, Seabreeze High School, Ormond Beach, Florida. Chris Erdman: Teacher, Skyview High School, Vancouver, Washington. Bob Kirsch: Librarian, Lake Forest High School, Lake Forest, Illinois. Alan Nichter: Librarian, Lutz Branch Library, Lutz, Florida.
Contributors Many writers contributed to the text of Business Leader Profiles for Students including: Mary Alice Adams Geraldine Azzata Beth Babini Kari Bethel David P. Bianco Carol Brennan Daniel S. Burt Alan M. Campbell Karen Cangero
Lorna Cunkle Laurie DiMauro Cathy Dybiec Holm Debby Felder Andrea J. Fine Kristen Grifka Stefanie A. Halliday Daniel J. Harvey Evelyn Hauser Scott Heil Norman W. Leahy Patrick J. Longe Wendy H. Mason Chrstine Miner Minderovic Jacqueline Mitchell Sally A. Myers Donovan M. Rothschild Robert E. Schnakenberg Ann M. Schwalboski Pamela Shelton Kenneth R. Shepherd Elizabeth Shostak Geri Speace Jane E. Spear Jill Stanley Deborah A. Straub Mark Suchowski Richard P. Wasowski Joan S. Wheeless Angela Woodward
v i i
Introduction The purpose of Business Leader Profiles for Students is to provide readers with a comprehensive resource of business biographies, giving them easy access to information on past and present business leaders. The book focuses on prominent individuals who have made significant contributions to business and industry. Part of Gale’s successful line of business products for students, BLS is specifically designed to meet the curricular needs of high school and undergraduate college students and their teachers, as well as the interests of general readers and researchers studying business figures. See Gale’s Company Profiles for Students for in depth information on 280 prominent U.S. corporations. The material in this book focuses on the company’s founder and reports on his/her management style and impact on society. Each entry in Business Leader Profiles for Students includes an overview of the person’s greatest accomplishments, information on his/her personal life, career details, and a section on how the person influenced society and the economy. The reader will also learn about the person’s education, management style, and business philosophy. To aid the reader a chronology is provided in each entry, detailing key dates in the person’s life, and interesting and important facts about the leader’s life and career. The topic list for this volume was selected by surveying many sources on business, economics, and history and also by analyzing course curricula for various school districts. The list of both historical and contemporary business leaders was approved by an advisory panel of five high school teachers and high school and public librarians.
v i i i
and begins by the person’s name, date of birth, and their company affiliation or occupation. The following elements are contained in each entry. • Overview: this section provides a summary of the person’s most important contributions to business, industry, and society. This paragraph will give interesting information on the person’s greatest achievements. • Personal Life: this section includes a detailed description of the person’s life, circumstances of birth and childhood, family life, influential friends or relatives, experiences that may have affected the person later in life, marriage, religion, and circumstances around their death. This section also includes information on the person’s education, business or personal memberships, affiliations, or awards the person has won. • Career Details: this section discusses significant factors about the career of the individual, especially when their greatest successes were achieved. It focuses on highlights of the person’s career including details about what the person may have invented or innovations and new practices that have impacted business and industry. This section may also include information on how the individual tailored their product or service to compete successfully in the marketplace. It may detail the past and current strategies of the person’s professional career or management style.
How Each Entry Is Organized
• Social and Economic Impact: this section discusses what effect the individual or their product or service has had on industry or on society in general.
The chapters in BLS are organized alphabetically by last name. Each profile focuses on one business leader
• Chronology: the element featured in an easy-toread box lists dates of major events or achievements
I n t r o d u c t i o n
highlighting the individual’s personal and professional life. • Sources of Information: lists mailing address and/or web site when available to help the reader with further research. • Bibliography: this section provides user with suggested further reading on the business leader. These sources, also used to compile the essays, are publicly accessible materials such as magazines, general and academic periodicals, books, and online databases. • Master Index: includes business leaders, companies, and industries.
to suggest business leader names for inclusion in future volumes or who have other suggestions are cordially invited to contact the editor at: Editor, Business Leader Profiles for Students Gale Research 27500 Drake Rd. Farmington Hills, MI 48331-3535 Telephone: (248)677-4253 Toll-Free (800)877-GALE Fax: (248)699-8070 E-mail:
[email protected]
Comments and Suggestions The editor of Business Leader Profiles for Students welcomes your comments and ideas. Readers who wish
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
i x
Scott Adams Overview Scott Adams is the mind behind “Dilbert,” a comic strip that spoofs the absurdities of corporate life in topics ranging from diabolical bosses to moronic marketing ideas to the very cubicles that encompass most office workers. Taking aim at every facet of the business world, Adams is the keen spokesperson for the “Dilberts” in the world. His strip is featured in 1,700 papers around the world and debuted as an animated prime-time television series in the fall 1998.
(1957-) “Dilbert” Comic Strip
Personal Life Scott Adams was born in June 1957 in Windham, New York, in the Catskill Mountains. His father, Paul, was a clerk at the post office, and his mother, Virginia, was a homemaker who also worked on an assembly line. As a child, Adams admired cartoonists. “I always wanted to be Charles Schulz and work for Mad magazine,” he recalled in America’s Network. At age 11, he ambitiously submitted a lengthy application to the Famous Artists School in Westport, Connecticut, supplying information about himself. He told the school that he was a “C” student who had been interested in art for “about four years” and that his favorite artist was Al Capp, who penned the comic strip “Li’l Abner.” He expressed a desire to create sports and animal drawings as well as cartoon strips, and answered “yes” to the question, “Are you willing and able to study at home and work by yourself?” The application also asked, “Why would you like to become an artist?” Adams replied, “It could be a good job when I get older. I like to draw.” He was also required to include
1
S c o t t
A d a m s
ministration from the University of California at Berkeley. Throughout his career, he held a number of “humiliating and low-paying jobs,” as his Harper Collins biography stated. Adams worked as a computer programmer, financial analyst product manager, commercial lender, budget manager, strategist, project manager, and eventually, as an applications “engineer” at Pacific Bell, where he was employed from 1986 to 1995. There, he was responsible for figuring out how to make the ISDN lines run properly, a telecommunications position that he chose because he “thought it would be a happening industry,” as he remarked to Patty Wetli in America’s Network. For a time, he admitted to Robert McGarvey in Entrepreneur, he was a manager himself, in charge of a group ranging from 7 to 15 people. Also along the way, he became a certified hypnotist.
Scott Adams holds an ink drawing of his popular comic strip character “Dilbert”. (AP Photo/Ben Margot.)
several samples of his work and received a “B” from the test grader. However, he was not accepted, because at age 11, he was too young. The letter from the Famous Artists School explained that he could enroll at age 12, but he never followed up. Adams lives in Dublin, California, with his girlfriend Pam Okasaki. They have two cats, Freddie and Sarah. Most of his time is spent reading the hundreds of e-mail messages that readers supply each day, as well as working on his web site, The Dilbert Zone (http://www. unitedmedia.com/comics/dilbert), which is one of the most popular sites on the web. He also gives interviews and speeches. Like Dilbert, Adams is a “techie,” someone who enjoys technology for its own sake.
Career Details After high school, Adams went to Hartwick College in Oneonta, New York, where he got the worst grade given in a drawing class. Practicality overcame creativity, and he got a bachelor’s degree in economics instead. After graduating, he was hired in as a teller at Crocker National Bank in San Francisco in 1979, where twice he was robbed at gunpoint. He worked there for eight years, and went on to get his master’s degree in business ad-
2
B u s i n e s s
This string of corporate positions gave rise to Adams’ now-famous “Dilbert” comic strip. As he sat in boring meetings, he considered the ludicrous nature of the business world and began doodling his thoughts. He lampooned his boss and coworkers, developing the character of Dilbert to reflect his feelings of disillusionment. Dilbert is the typical cubicle dweller frustrated with the incompetence of corporate management. His cohorts include Dogbert, the corporate consultant whose goal is to conquer the world; Catbert, the evil human resources director; and Ratbert, a lowly worker rodent. Dilbert’s world also includes his pointy-haired boss, named Boss, and his coworkers Alice and Wally. In 1988, while the strip was still a collection of sketches, Adams caught a television program about cartooning and wrote to the show’s host, Jack Cassady, to ask how he could break into the business. Cassady returned a hopeful letter and Adams started at the top, sending his comics to the New Yorker and Playboy. When he was rejected, Adams decided he probably was not good enough, and set aside his dream. Cassady sent him another encouraging letter, however, which convinced Adams to keep trying. Among other places, Adams mailed his work to United Media, which picked his strip out of the thousands they receive each year and began syndicating it in 1989. “Dilbert” began appearing in about 50 newspapers to start, and by 1998, it was reaching more than 1,700 papers worldwide. In 1993, he was the first comic artist to print his e-mail address (
[email protected]) in the strip, inviting readers to contact him, and he also set up a web site called The Dilbert Zone. Adams kept his job at Pacific Bell for several years while fulfilling his contract to United Media to draw “Dilbert.” It was at the office, in fact, that the character was christened after Adams held a “name-the-nerd” contest. He told Training magazine that he kept both jobs for the extra money and medical benefits, and because it “prevents me from becoming a hermit, which I have a real ability to do. I’m not the most social creature in the world.” He also admitted, “Of course, I get a lot of material from
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S c o t t
there (Pacific Bell), so it is a source of constant inspiration. Probably the more interesting aspect is that when you don’t need to work there anymore, it’s a completely different experience. It still takes long hours, but things that would frustrate you if you knew that you just couldn’t escape them don’t frustrate you if you know you could leave any time you want.” His boss finally hinted in 1995 that he should resign, although Adams does not feel that “Dilbert” had anything to do with his departure. Adams noted that his bosses never contacted him about the strip, although he assumed they must have heard about it. He was profiled in a number of periodicals, and “Dilbert” became extremely popular in offices nationwide. By the mid-1990s he also had published a number of collections of the “Dilbert” strips in books, including Dogbert’s Clues for the Clueless, 1992; Shave the Whales, 1994; and It’s Obvious You Won’t Survive by Your Wits Alone, 1995. Later, he also came out with Dogbert’s Top Secret Management Handbook, 1996, as well as more collections. Adams also released a book featuring a young Dilbert that was designed to help kids use and understand computers. By the end of 1997, Adams had over 20 books in print, many of which hit the New York Times bestseller list. On April Fool’s Day, 1998, the socially conscious corporation Ben & Jerry’s introduced a new flavor of ice cream called “Dilbert’s World Totally Nuts!” after Adams’s hilarious character. “The thing that’s special about this is that it’s the first Dilbert product that doesn’t have any bitterness,” Adams commented wryly. To kick off the enterprise, Ben & Jerry’s, with permission of United Airlines, set up cubicles at New York City’s La Guardia airport and offered free samples. They even wrote checks to some lucky fliers, refunding the price of their airline tickets. In the fall of 1998, United Paramount Network (UPN) debuted the Dilbert animated prime-time series, with Adams and Larry Charles, the Emmy-award winning producer of Seinfeld and Mad About You, as executive producers. Fox had developed a live action Dilbert in 1997 but decided to shelve it. UPN programming director Tom Nunan, quoted in the Business Wire, said the series was a good fit for the network because “it’s smart, slightly subversive, and has broad appeal.” Also in the Business Wire, Charles remarked, “Like the Dilbert strip, the television series will explore the surreal subculture of the corporate world, with its rigid rules, rituals, languages and customs, thereby revealing the absurdity of the society at large.”
Social and Economic Impact
A d a m s
Chronology: Scott Adams 1957: Born. 1968: Applied to Famous Artists School but his application was denied. 1979: Began working for Crocker National Bank. 1986: Began working as applications engineer at Pacific Bell. 1989: United Feature Syndicate launched “Dilbert” comic strip. 1992: Published first book of “Dilbert” selections. 1993: Published e-mail address in strip, asking readers to write to him. 1998: Ben & Jerry’s Ice Cream introduced “Dilbert’s World Totally Nuts” flavor. 1998: Aired first Dilbert animated television series.
spirit-shriveling tedium, Adams captures the lunacy of our little lives just as surely as Pogo or Peanuts or Doonesbury did in their primes.” In an Associated Press article printed in Newsday, Robert E. Cole, a business professor at the University of California at Berkeley, noted, “I think he’s extraordinarily skillful at tapping into the kind of dissatisfaction and stupidity that most American workers experience in the workplace.” Adams undoubtedly hit a nerve among workers, writing about the numerous frustrations of office life, including low morale, dumb dress codes, bad decisions by bosses, power-hungry coworkers, senseless meetings, and the like, especially targeting faddish management concepts such as empowerment, business process re-engineering, and total quality management. He also explained the power structure as a root cause of worker dissatisfaction in modern corporations in Industry Week, saying, “Lots of employees want to be creative and have control. But how do you run a company that way? Ideally, companies want a few creative people and lots of competent followers. But most employees want to be the creative ones.”
Lisa Schwarzbaum in Entertainment Weekly summed up the social significance of Dilbert, writing, “In nailing the Kafkaesque world of office existence, with its petty humiliations, meaningless jargon, and
Adams expanded on this with Robert McGarvey in Entrepreneur, telling him, “Employees are constantly being put in situations where their expectations of what they are getting are rising. Empowerment is a good example
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
3
S c o t t
A d a m s
‘We’re going to give you lots of power!’ But then they are told ‘Check with me before you order that pencil.’ So employees are in a position where they see all these little contradictions, and those contradictions make them feel powerless.” Adams, in addition, outlined the age-old battle of capitalism: “There’s a constant battle. The employer is trying to get you to work more for free, and the employee is trying to do less work and get paid more.” Adams is also known for putting into words The Dilbert Principle, also the title of one of his books published by HarperBusiness. As he outlined in Entrepreneur, “The Dilbert Principle explains why there are so many incompetent managers. It holds that the least competent people are promoted into management so that you don’t waste your good people on trivial issues like writing mission statements and holding meetings. What managers do doesn’t add a lot of value.” Using light, sarcastic humor, Adams sheds light on the power struggle between workers and management at all levels and between workers and colleagues, which allows millions of unhappy employees each day to find a little solace in the fact that they are not alone. Adams also accuses firms of instituting policies that have little or no meaning to the average worker and tend to condescend to them. “When companies go to employees and say stuff like, ‘Quality is No. 1’ or ‘The customer is No. 1,’ that seldom works,” Adams told Industry Week. “In my ideal company, I’d say to the employees, ‘You, personally, are No. 1 you! and then your family and then your coworkers.’ And somewhere after that is the customer and the stockholder. Of course, it’s often in your family’s and your coworkers best interest to treat customers as No. 1. But let’s not lie to workers. They’re smarter than that.” The appeal of “Dilbert” has not been limited to just corporate American culture. It reaches about 150 million fans around the world in about 35 countries, and was the first syndicated strip to appear on the World Wide Web. It remains one of the most popular Internet entertainment sites, with 4.5 million hits each month. The Dilbert Principle is the best-selling business book in history, spending 27 consecutive weeks on the New York Times bestseller list. Adams’s strips, by lancing the sacred cows of the business world, have altered the way many people view corporations and bosses. Perhaps the corporate world will benefit from the mockery and become a better place in which to work, or maybe not. Adams remarked in Newsday, “My goal is not to change the world. My goal is to make a few bucks and hope you laugh in the process.”
4
B u s i n e s s
Sources of Information Contact at: “Dilbert” Comic Strip United Media, 200 Madison Ave., Fl. 4 New York, NY 10016 Business Phone: (212)293-8500 URL: http://www.unitedmedia.com/comics/dilbert
Bibliography Barrier, Michael. “‘Dilbert’ Creator Thinks Small.” Nation’s Business, October 1997. Brown, Tom. “Decoding the ‘Clueless’ Manager.” Industry Week, 3 July 1995. Cawley, Janet. “Corporate Raider.” People Weekly, 3 June 1996. Filipczak, Bob. “An Interview with Scott Adams.” Training, July 1994. HarperCollins Publishers. “Scott Adams.” New York, NY: HarperCollins Publishers, 1997. Available from http://www. harpercollins.com/authors. “High Flying April Fool’s Surprise Launches Ben & Jerry’s Newest Flavor, Dilbert’s World Totally Nuts.” Business Wire, 31 March 1998. Locke, Michelle. “Dilbert’s Dad/Scott Adams’ Goal: Yuks, Bucks.” Newsday, 23 February 1997. Luscombe, Belinda. “Adams’ Family Values.” Time, 21 October 1996. McGarvey, Robert. “The Adams Principle.” Entrepreneur, September 1997. Newsmakers, 1996 Cumulation. Detroit: Gale Research, 1997. Schwarzbaum, Lisa. “Books: Comic-Strip Relief: If You Have to Ask Who Dilbert Is, You Don’t Work in a Cubicle. EW Looks at Why the Quirky Character is Suddenly as Popular as the Office Water Cooler.” Entertainment Weekly, 31 January 1997. “Short Takes: Dilbert, Dogbert, Wally and the Gang Head for TV.” The Atlanta Journal and Constitution, 12 February 1998. Snider, Mike. “‘Young Dilbert’ Teaches Kids About Computers.” USA Today, 15 September 1997. Thatcher, Mike. “The Truth about Cats and Dogs.” People Management, 19 December 1996, 30. United Media, Inc. “The Dilbert Zone.” New York, NY: United Media, 1998. Available from http://www.unitedmedia.com/ comics/dilbert. “UPN Announces the Primetime Animated Series Dilbert from the Popular Character’s Creator Scott Adams and Emmy AwardWinning Producer Larry Charles.” Business Wire, 10 February 1998. Wetli, Patty. “Dilbert Exposed!! Meet the Man Behind the Dweeb.” America’s Network, 15 July 1994.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Paul Allen Overview Paul Allen cofounded Microsoft Corporation with his childhood friend Bill Gates. Together, they built Microsoft into a multibillion-dollar empire by developing software that revolutionized the world of personal computing. Allen left the company in 1982 due to ill health and has subsequently pursued investments in high technology, entertainment, and sports.
(1953-) Paul Allen Group
Personal Life Paul Allen was born January 21, 1953 in Seattle, Washington. His parents, Faye and Kenneth Allen were both librarians. They helped him develop a wide variety of interests, taking him and his sister, Jody, to museums, galleries, and concerts. Allen showed an early interest in science. When he was 10, his mother hosted meetings of his grade school science club. In 1965, Allen entered the seventh grade at Seattle’s Lakeside School. Three years later, Allen met an eighth-grader named Bill Gates. The two shared an intense interest in computers and quickly became friends. Gates and Allen became so proficient that they helped teach computer courses at Lakeside while still students. In 1971, Allen graduated from Lakeside and enrolled at Washington State University. Over the next decade Allen collaborated with Gates on several business ventures, including the founding of Microsoft Corporation. In 1982, Allen developed Hodgkin’s disease, a cancer of the lymphatic system. His illness dramatically changed his life, causing him to leave Microsoft. Never
5
P a u l
A l l e n
produced by the MITS company of Albuquerque, New Mexico. MITS hired the pair and made Allen their director of software; he and Gates moved to New Mexico. While working for MITS, Gates and Allen formed their own company to develop and market computer languages. They named their company “Micro-Soft.” In 1976 he left MITS to work full time for his new company. The company’s name was later altered to Microsoft. Allen’s success with Microsoft was rapid and enormous. Microsoft developed software for Apple and Radio Shack, makers of the best-selling personal computers of the day. Other early contracts were for Texas Instruments and Ricoh. In 1978, Microsoft sales went over the $1 million mark, and the company moved to the Seattle suburb of Bellevue, Washington. Microsoft grew quickly, forcing Allen and Gates to hire more employees, delegate authority, and buy software when they did not have the time to develop it themselves.
Paul Allen.
(AP Photo/Tim Sharp.)
married, Allen spent more than two years traveling and enjoying time with his family during his recovery. He also used his time away from work to pursue his many interests, including art collecting, basketball, and music. An avid electric guitar player, Allen emulates his musical idol Jimi Hendrix in his rock band called The Threads.
Career Details Even while attending college, Allen was eager to start his own business. He had read about Intel Corporation’s 4004 chip, the very first computer microprocessor. In 1972, Allen and Gates purchased the next generation of the chip, the 8008, for $360. It was the main component of a special computer they built to measure traffic volumes for cities. Gates and Allen formed the Traf-O-Data company to sell the machines. The venture was shortlived but gave the duo important experience running a business and writing a special version of BASIC, a simple, interactive computer language designed in the 1960s. Allen left Washington State University in 1974 to accept a job as a programmer with Honeywell in Boston. Then came a major turning point for Allen. He read a magazine article about the Altair computer kit, the world’s first “minicomputer.” Inspired, he convinced Gates that they should write a BASIC interpreter for the machine. An interpreter is a program that executes a source program (such as BASIC) by reading it one line at a time and performing operations immediately. The Altair was
6
B u s i n e s s
The turning point for Allen (and Microsoft) came in 1980 when he was approached by computer giant International Business Machines (IBM). IBM was secretly developing its own personal computer and needed to purchase programming languages for it. IBM bought virtually every program Microsoft had. In addition, Allen acquired a program from nearby Seattle Computer, reworked it with Gates, and sold it to IBM as the Microsoft Disk Operating System (MS-DOS). Gates and Allen convinced IBM to allow other computer manufacturers to copy the specifications of their Personal Computer (PC). The resultant flood of PC “clones” encouraged software developers to write programs compatible with these machines. The PC, using MS-DOS, became the dominant computer platform in the world. In 1982, Allen discovered he had cancer. He took a leave of absence, and eventually left his position with Microsoft. When he returned to work, Allen took his career in a dramatic new direction. Although his illness ultimately led to a positive change in his life, he was initially forced to leave the company he founded just as it was poised to conquer the world market. In 1985, Allen founded Asymetrix, a company devoted to producing computer applications to help programmers and non-programmers develop their own software. A year later, he formed Vulcan Ventures to research and manage investments. This endeavor marked the beginning of Allen’s new career as an investor, following his vision of a “wired world.” Over the next decade, Allen invested well over $1 billion in a wide variety of companies, including Ticketmaster, America Online, Inc. (AOL), Egghead Software (a retail chain), and many lesser known technology firms. In the early-1990s, he invested heavily in new media and entertainment ventures. These included companies to provide entertainment and information for the Internet as well as Dreamworks SKG, a movie and television studio. Among the technology firms in which Allen has invested are the Seattle companies Cell Ther-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
P a u l
A l l e n
apeutics, Inc., a biotechnology developer, and the biopharmaceutical company Darwin Molecular Corp. To make his vision of a “wired world” a reality, Allen created his own think tank, Interval Research, in 1992. Allen provided funding for 100 scientists for ten years to create a facility similar to the Palo Alto Research Center (PARC) funded by Xerox Corporation in the 1970s. Its purpose is to imagine future uses for the Internet and compatible technologies. He subsequently formed the Paul Allen Group to encourage cooperation among his numerous investments. As an investor, Allen looks for projects that combine his many interests, such as sports, art, and music, with emerging technology. His massive fortune allows him to take risks and be patient with his investments. By 1996, Allen had amassed a fortune of about $8 billion, making him one of the three wealthiest people in the United States. Even after leaving Microsoft, he kept his seat on the board of directors and remained the company’s second largest stockholder. His enormous wealth allowed him to pursue his “wired world” vision as well as other interests. He bought the Portland Trailblazers of the National Basketball Association in 1988 and housed them in a state-of-the-art arena. He also acquired the right to buy the National Football League’s Seattle Seahawks in 1996. Allen’s sometimes risky investment strategy has occasionally led to setbacks. Some analysts believe he has paid too much for his investments, and some of his companies have gone bankrupt. In addition, America Online rejected Allen’s attempts to form a close alliance after he acquired 18 percent of the on-line service.
Social and Economic Impact By cofounding Microsoft, Allen profoundly changed the lives of people everywhere. MS-DOS revolutionized personal computing, eventually selling more than one hundred million copies. Allen also played a major role in other breakthroughs, including the Microsoft Mouse, a device to input data, and the evolution of graphical user interfaces (GUIs), which had first been conceived by PARC researchers and which led to the development of Microsoft Windows. In the early days of Microsoft, Allen and Gates did the vast majority of work themselves, employing a tiny staff and checking every line of computer programming themselves. Although they conferred on virtually all decisions, Allen said the pair played different roles in the company, “I [Allen] was probably the one always pushing a little bit in terms of technology and new products, and Bill [Gates] was more interested in doing negotiations and contracts and business deals.” As an investor, Allen still prefers generating ideas to managing the daily operations of his companies. He delegates executive duties to a small number of trusted aides and gives them a great deal of freedom to make decisions.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Chronology: Paul Allen 1953: Born in Seattle, Washington. 1968: Met Bill Gates. 1975: Cofounded “Micro-Soft” with Gates. 1982: Diagnosed with Hodgkin’s disease. 1985: Founded software developer Asymetrix Corp. 1986: Formed the management investment firm Vulcan Ventures. 1988: Bought the Portland Trailblazers of the National Basketball Association. 1992: Created the think tank Interval Research. 1994: Won Lifetime Achievement Award from PC Magazine. 1997: Given Lifetime Achievement Award by the Software Publishers Association.
As a high school student, Allen had relentlessly sought ways to spend more time working with computers but was frustrated by the high cost and limited access of the emerging technology. Allen and Gates looked to a time when every person’s desktop would have a computer. With Microsoft, they began to see their vision become reality. Since leaving Microsoft, Allen has followed his personal vision. He anticipated the coming of the “information superhighway” as a young man and has worked to create a “wired world,” as he calls it, in which personal computers can link people to “content sources,” such as newspapers, libraries, data bases, shopping outlets, and more. His motivation, according to an interview in the Seattle Times in 1992, stems from “a desire to do new and creative and exciting things with technology— products that people can use and really enjoy and hopefully enrich their lives.” Allen has made many charitable contributions, mostly to institutions in Seattle and the Pacific Northwest. He and Bill Gates donated a science and math building to Lakeside School in 1987. Allen also funded a library at the University of Washington to honor his father’s work at the school. Since 1986, he has created five foundations devoted to charity, the arts, medical research, music, and forest preservation. The Experience Music Project, which includes a museum dedicated to
S t u d e n t s
7
P a u l
A l l e n
rock guitarist Jimi Hendrix, supports “education and creative innovation in American popular music.”
“Paul Allen: New Age Media Mogul.” Business Week, 18 November 1996. Schlender, William. “Bill Gates and Paul Allen Talk.” Fortune, 2 October 1995.
Sources of Information
Seattle Times, 27 September 1992.
Bibliography Kirkpatrick, David. “Over the Horizon with Paul Allen.” Fortune, 11 July 1994.
8
B u s i n e s s
“The Wired World of Paul Allen.” 13 June 1997. Available from http://www.paulallen.com.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Gil Amelio Overview
(1943-)
Gil Amelio took over a struggling Apple Computer Corporation in 1996 as president and CEO, and helmed the sinking ship for 17 months before being unceremoniously fired. Amelio, an expert in semiconductor technology and a respected Silicon Valley executive, later wrote a book about his experience at the computer industry’s most legendarily rebellious innovator.
Personal Life Amelio was born in New York City in 1943. He attended the Georgia Institute of Technology throughout the 1960s, earning a Bachelor of Science degree in 1965, a Master of Science two years later, and a Ph.D. in solidstate physics in 1968. A Republican and a Roman Catholic, he is married to Glenda Amelio, with whom he has two children, Anthony and Tracy; he is also parent to two stepchildren. Though Amelio does indulge in a love of aviation—he enjoys flying his own Piper Cheyenne—he is described as being far from the classic charismatic, media-savvy computer industry executive.
Career Details In 1962, when he was still in college at Georgia Tech, Amelio cofounded an Atlanta software company, Information Sciences. After earning his advanced degrees, he was hired in 1968 by Bell Telephone Laboratories in New Jersey in its Device Development division.
9
G i l
A m e l i o
tem, and a corporate culture that was legendary for its nonconformity. Amelio was tapped early in 1996 to take over the reins of Apple, which was rumored to possibly even be on the auction block.
Chronology: Gil Amelio 1943: Born. 1962: Cofounds Atlanta software company. 1969: Earned a Ph.D. in physics. 1971: Began working in the semiconductor industry. 1983: Became president of Rockwell International. 1991: Named CEO of National Semiconductor Corp. 1995: Elected chair of National Semiconductor Corp. 1996: Named CEO of Apple Computer. 1997: Fired from Apple. 1998: Co-authored On the Firing Line: My 500 Days at Apple.
He remained there for three years before heading west to Mountain View, California, to work for Fairchild Camera and Instrument. Fairchild was the first microchip producer in Silicon Valley, and Amelio became general manager of its microprocessor division. He stayed there until 1983, when he was wooed by Rockwell International to be president of its semiconductor division. When Rockwell merged that division with its communications sector in 1988, he was made president of the new group. Amelio joined National Semiconductor Corp., located in the heart of Silicon Valley in Santa Clara, California, as its president and CEO in 1991. The company was in perilous health, and Amelio was taking over from the retiring company founder. National Semiconductor had performed poorly in recent years, suffering huge financial losses as a result of increased competition in the semiconductor field from Japan. Amelio’s strategy was to refocus on improving analog chips for specific industries, and to increase market share. He was also credited with injecting the ailing company with a much needed morale boost. By 1993 the company was profitable again, and he was elevated to the position of chair of its board of directors in 1995. A book published that same year, Profit from Experience, chronicled his experiences there. Amelio had also sat on the board of Apple Computer since 1994. The company, developer of the revered Macintosh personal computer, had begun to flounder in recent years after a string of notable flops, heavy competition from Microsoft and its Windows operating sys-
1 0
B u s i n e s s
Apple had witnessed phenomenal growth in the 1970s and ‘80s with its innovative products and enjoyed a cult of dedicated, near-fanatical devotees as its user base. When Amelio entered the executive offices of the Cupertino, California company, however, its staff was demoralized, it was bleeding money every quarter, sales were dismal, and its stock performance was very poor. Its first-quarter losses for 1996 were $740 million. Just a few months after Amelio came on board, Apple shares descended to a ten-year low. Furthermore, Apple had only enough cash on hand to see it through two months, which is usually a predictor of certain financial doom for a company. Amelio was hailed as Apple’s savior, partly based on his record in turning around National Semiconductor. He was given a five-year contract that paid almost $1 million annually, plus stock options and bonus stock if Apple’s performance improved. He reorganized the company twice, and laid off 2,800 employees in an effort to stop the bleeding. But Apple’s share in the personal computer market continued to slip, and hovered below five percent (Microsoft and Windows enjoyed the rest of that market). He engineered a comeback of sorts for fired Apple founder Steve Jobs, who had gone on to launch a new Silicon Valley company, NeXT Software. Amelio was fired from Apple in early July of 1997, after just seventeen months on the job. The stock had just sunk to an eleven-year low, and the board was dissatisfied. Ellen Hancock, whom he had brought on board to become Apple’s director of advanced technology, departed with him. Jobs then became CEO. Ironically, it seemed to cost Apple more to get rid of Amelio than to keep him: his severance package was estimated at about $7.5 million in both salary (the remaining years on his contract) plus stock. He went on to become a partner at the Parkside Group, LLC, a San Francisco investment firm, and coauthored a book on his experiences at Apple entitled, On the Firing Line: My 500 Days at Apple, with William L. Simon.
Social and Economic Impact Though Amelio is known as a savvy corporate leader for his business sense, his scientific background is also noteworthy. His name is on sixteen patents, and he is the coinventor of the first charge-coupled image sensor, which greatly aided the development of the consumer camcorder. Some industry watchers theorize that Amelio was fighting a losing battle in attempting to rescue Apple, given its nonconformist corporate culture that viewed au-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
G i l
thority and standard business practices with a healthy dose of skepticism. Amelio seconded this idea in a speech before the Commonwealth Club in San Francisco. “Around Apple they still believe that no one ever got a really great idea while wearing a suit and tie,” he joked a few months after his departure. The company then seemed in even more dire straits than before: after he was fired, Apple nixed launch plans for Rhapsody, a new operating system, after the company had spent over $400 million to buy it from Jobs and NeXT. Others believe that Apple would have been sold, possibly to Sun Microsystems, had Amelio not stepped in and exerted some control over the balance sheet when he did. Amelio has called Apple “a contrary organization,” and later likened his tenure there to overseeing a group of teenagers who would willfully disobey. But he also said that accepting the much publicized salary offer in the first place, which the Apple board of directors had sweetened to lure him from National Semiconductor, was a decided mistake, simply because of the hostile press it brought; many wondered why Apple was paying a hefty six-digit figure when the company was suffering such losses. There was resentment from inside the company, among stockholders, and in the press. “You don’t expect your religious leaders to be making big bucks, and I was leading a religion,” Amelio later told ComputerWorld’s Joseph E. Maglitta. Amelio did, however, set Apple on the right track, primarily by lowering its “break-even point,” or point at which a company stops losing money and begins to operate at a profit. He is also credited with improving the quality of Apple products, a factor that helped win back some loyalists. In retrospect, Amelio saw his tenure as a
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
A m e l i o
positive one overall and—as a Macintosh devotee and Apple shareholder himself—was happy that the company did not end on the auction block. Under his leadership, Apple introduced several new products, especially in the first part of 1997, and Amelio notes that unlike other Apple launches, all were released on time. The appearance of Steve Jobs back at Apple headquarters was also a significant event. Jobs is a legendary figure in Silicon Valley, and his return in December of 1996 gave the devoted Apple base of users, employees, and stockholders great hope for the company’s viability. With Jobs, Amelio devised a blueprint for Apple’s future, a plan that is still in place.
Sources of Information Contact at: The Parkside Group 650 California St., Ste. 2400 San Francisco, CA 94108 Business Phone: (414)393-0630
Bibliography Gruman, Galen, and Tova Fliegel. “Amelio Ousted.” MacWorld, September 1997. Hamm, Steve. “At the Core of Apple’s Amelio.” PC Week, 20 January 1997. Maglitta, Joseph E. “My Tough Luck.” ComputerWorld, 27 July 1998. Schlender, Brent. “Something’s Rotten in Cupertino.” Fortune, 3 March 1997.
S t u d e n t s
1 1
Wally Amos (1936-) Uncle Noname Cookie Company
Overview Wally Amos gained prominence as an entrepreneur in the mid-1970s when he developed and marketed a brand of chocolate-chip cookies under the name “Famous Amos.” In a world of mass-produced food products, Amos seemingly hit upon the universal “soul food”: the American home-style chocolate-chip cookie. Two years after opening his first store in Los Angeles, Amos was at the helm of a large corporation, selling cookies as well as other “Famous Amos” paraphernalia, worldwide.
Personal Life Wallace Amos, Jr. was born July 1, 1936 in his parents’ home in Tallahassee, Florida. He was the only child of the marriage of Wallace and Ruby Amos. The senior Wallace Amos, whom his son once described as a “good person . . . who always remained true to himself,” worked in Tallahassee at the local gas company. Neither parent could read or write. The Amos household was characterized by a strict code of personal behavior. His mother, especially, was an uncompromising disciplinarian. Amos later recalled that the person of greatest influence in his childhood was his father’s mother. In Current Biography Yearbook, Amos reported that his grandmother treated him “with a very tender and understanding kind of love.” In his autobiography, The Famous Amos Story, Amos said that his parents rarely laughed and seldom displayed affection toward him. He added that they were both conscientious churchgoers who regarded “anything that appeared to be fun, like dancing” as a sin.
1 2
W a l l y
A m o s
At age 10, Amos began attending a school established in his mother’s church. Amos said: “We were made to think, to be curious, to seek solutions, and not add to problems.” At school, he claimed that he had developed an intense desire to become successful and to make money. When Amos was 12, his parents separated and later divorced. At the same time, he moved to New York City to live with his mother’s sister, Della. He described his Aunt Della as “happy all the time,” and as a woman who loved to cook and bake, especially chocolate-chip cookies. Of his experience living with his Aunt Della, Amos noted “for me, chocolate-chip cookies have always been an expression of love.” In 1951 Amos moved in with his mother and grandmother, who had also moved to Manhattan. That same year, his fascination with cooking led him to enroll in the Food Trades Vocational High School. He quit after two years, however, and joined the U.S. Air Force in 1953 where he earned his high school diploma equivalent. Amos has married three times, first in 1958. He has three sons and a daughter and lives in Hawaii.
Wally Amos.
(AP/Wide World Photos, Inc.)
Career Details After his discharge from the Air Force, Amos enrolled at the Collegiate Secretarial Institute in Manhattan. He attended classes there and worked also as a stockroom clerk at Saks Fifth Avenue department store until 1961. He then started another job, in the mailroom of the William Morris Agency, a leading theatrical booking and hiring agency. Because of his intelligence and high motivation to please others, he went, in a few short months, from mailroom worker to become a personal secretary to Howard Hausman, who was a senior vice-president with the firm. Amos ultimately advanced to the position of a full-time William Morris talent agent where he contributed to the careers of such entertainers as Paul Simon, Art Garfunkel, Diana Ross, Sam Cooke, and Marvin Gaye. In 1967, five years later, feeling “burned out” and “stagnant,” as he put it, Amos left the agency and went to Los Angeles to create his own entertainment agency. Working in the business in Los Angeles was frustrating, and Amos was nearly always in debt. As he wrote in his autobiography, he began slowly to console himself and his frustration by making chocolate-chip cookies in the style of his Aunt Della. At first Amos used the Nestle’s recipe printed on the side of the chocolate-chip bag. He began using these cookies, later, as “calling cards” when meeting with clients, and when attending meetings with producers. “The cookies’ reputation began to grow as my contacts multiplied,” he recalled in his book, The Power in You.
versation with a close friend. To establish his store he raised $25,000 from entertainment friends including singers Marvin Gaye and Helen Reddy. The store opened on March 9, 1975, on the corner of Sunset Boulevard and Formosa Avenue in Los Angeles. On the first day, customers were lined up outside. Within two years, his business operation evolved into a corporation which sold cookies nationwide in a variety of upscale stores. The cookies now carried with them a line of paraphernalia for the “Famous Amos” fans who desired them: t-shirts, umbrellas, duffle bags, and “Famous Amos” jewelry. His two factories were then making six tons of chocolate-chip cookies a week. By 1985, however, the Famous Amos Cookie Company was suffering debilitating financial losses, and Amos sold a controlling share in the venture to a Texas investment group. He retained a position on the board of directors but was relieved of day-to-day responsibilities in the company. In the late- 1980s the company changed ownership several more times, and Amos ultimately became a mere figurehead with no role in the operations of the company he had founded. He finally parted with the Famous Amos company in 1989. Recalling the episode in the Providence Business News in 1995, Amos said, “I was irresponsible. I didn’t have a good management team . . . . Ultimately, I started having cash flow problems. I started losing the company in 1985. By 1989 it was gone. The new owners came in and I was outside looking in.”
Amos decided to sell his cookies as a full-time occupation in October 1974, after a long and searching con-
Within two years Amos returned to retail marketing based on a chocolate chip theme with his Chip & Cookie concept. Located within department stores, Chip &
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
1 3
W a l l y
A m o s
Social and Economic Impact
Chronology: Wally Amos 1936: Born. 1975: Opened first Famous Amos retail outlet. 1986: Won President’s Award for Entrepreneurial Excellence. 1987: Won Horatio Alger Award. 1989: Ended relationship with Famous Amos Cookie Company. 1992: Started Uncle Noname Cookie Company. 1996: Uncle Noname released line of low-fat baked goods.
Cookie included baked goods, storybooks and a variety of merchandise. He was sued by the owners of Famous Amos who successfully contended that Amos had relinquished the rights to use his name and likeness in marketing a food product. Barred from using his name in future cookie ventures, in 1992 Amos developed and marketed Uncle Noname (pronounced no-NAH-may) baked goods, the name being a play on his enforced anonymity. Among the products developed by the company are pound cakes in such flavors as banana blueberry and orange cranberry, and fat-free muffins in a variety of flavors, including corn and honey raisin bran, apple cinnamon, chocolate passion, and blueberry. Amos is a popular motivational speaker who has used his celebrity status to promote literacy and to support drop-out prevention programs. Amos is also the author of four books: the autobiographical volume The Famous Amos Story: The Face That Launched a Thousand Chips (1983), the motivational work The Power in You: Ten Secret Ingredients for Inner Strength (1988), The Man with No Name (1994), and Watermelon Magic: Seeds of Wisdom. Slices of Life (1996).
1 4
B u s i n e s s
In developing his cookie business, Amos’ approach was highly personal. He had enormous enthusiasm for his products, and he used his boundless energy and personal popularity to promote them. Amos was disciplined, cared about quality-control issues, and was not afraid to leave one endeavor to explore another. As an article in Current Biography Yearbook, states: “In the process of promoting his client, whether an entertainer, or a cookie, Amos himself became a star of sorts on the American scene.” On June 13, 1977, Amos’ picture was on the cover of Time magazine, which ran a lengthy article about him and his success. In 1986, President Ronald Reagan formally presented to Wally Amos the President’s Award for Entrepreneurial Excellence. “I am in the people business, not the cookie business . . . I deal in love.” With this remark, made by Amos after he sold his cookie business, Amos turned to the new passion in his life—lecturing on inspirational issues. With his vision of obtaining, maintaining, and increasing the quality of love in his world, Amos has been recognized for his passion, conscience, caring, and charity.
Sources of Information Contact at: Uncle Noname Cookie Company P.O. Box 897 Kailua, Hawaii 96734
Bibliography Amos, Wally and Camilla Denton. Man with No Name. Lower Lake: Aslan, 1994. Amos, Wally and Camilla Denton. The Power in You: Ten Secret Ingredients for Inner Strength. Chicago: Nightingale-Conant, 1988. Amos, Wally and Leroy Robinson. The Famous Amos Story: The Face That Launched a Thousand Chips. Garden City: Doubleday, 1983. Graham, Judith, ed. Current Biography Yearbook. New York: H. W. Wilson and Co., 1995. Hughes, Allan J., Jr. “Wally Amos Still Famous but with a Lower Case “F.” Providence Business News, 11 December 1995.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Arthur Andersen Overview Arthur Andersen was the founder and senior partner of Arthur Andersen and Company, now the second largest of the Big Five accounting firms. His Chicagobased firm offered a full range of financial services including auditing, tax services, and specialty consulting in areas such as technology applications. Andersen established the company’s focus on maintaining a strong organization through training, effective corporate policies, and a strong understanding of economics and business trends.
(1885-1947) Andersen Worldwide
Personal Life John William and Mary Aabye Andersen, Arthur Andersen’s parents, immigrated to the United States from Norway in 1881. Arthur Edward Andersen was born on May 30, 1885, in Plano, Illinois. He became the youngest certified public accountant in Illinois when, at the age of 23, he earned his degree from Illinois University in 1908. He went on to receive a B.B.A. from Northwestern University in 1917. Andersen married Emma Arnold on August 8, 1906 in her hometown of Chicago. The Andersens had three children: Ethyl Bernice, Arthur Arnold, and Dorothy Emma. Andersen was considered a “liberal Republican” and enjoyed photography, fishing, and golf. He died in Chicago on January 10, 1947. Before receiving his business degree, Andersen took a job teaching accounting at Northwestern University. In 1911, he briefly worked as controller for Schlitz Brew-
1 5
A r t h u r
A n d e r s e n
emphasized the importance of a sound understanding of economics and finance. He based his philosophy on the belief that this knowledge should come from three sources: experience, education, and research, and he set out to build his company on these principles. “We want to measure our contribution more by the quality of the service rendered than by whether we are making a good living out of it,” he claimed when he opened his company. “It has been the view of accountants up to this time that their responsibility begins and ends with the certification of the balance sheet and statement of earnings. I maintain that the responsibility of the public accountant begins, rather than ends, at this point.” The firm was licensed as accountants and auditors in most states and soon acquired large corporate clients, including ITT, Colgate-Palmolive, Stratton, Briggs and Co., and Parker Pen. When the company expanded in 1915 and opened an office in Milwaukee, it strengthened ties with one of its most important clients and Andersen’s former employer, Schlitz Brewing. Andersen’s partner Clarence Delany left the firm in 1918, and Andersen continued as director of the company.
Arthur Andersen, standing, pictured at the annual Associated Business Papers, Inc. conference in 1930. (Corbis-Bettmann.)
ing, but returned to Northwestern to become the head of the accounting department at age 27. Andersen would continue to teach at the university until 1922. He also worked for the Chicago office of Allis-Chalmers Co. and, from 1907 to 1911, was a senior accountant for Price, Waterhouse. During 1911-12, he was comptroller for the Uihlein interests of Milwaukee. Andersen was a member of numerous professional and civic organizations, including the American Institute of Accountants, Illinois Society of Certified Public Accountants, American Economic Association, United States Chamber of Commerce, Norwegian-American Historical Association, Illinois Historical Society, Alpha Kapa Psi, Beta Gamma Sigma, Beta Alpha Psi, and several golf clubs. He received LL.D. degrees from Luther College in 1938 and from Northwestern University, Grinnell College, and St. Olaf College in 1941. In 1940, the government of Norway made him a commander of the Royal Order of St. Olav.
Career Details In 1913, Andersen founded his own accounting firm, Arthur Andersen and Company. He was the first university professor to go into public accounting, and aimed to challenge existing practices in the business. He envisioned a firm that would be a knowledge enterprise, and
1 6
B u s i n e s s
The firm grew rapidly, and Andersen became an authority on financial affairs. He was often asked to provide expert analysis in legal cases and provided advice as a member of various boards. He served as chairman of the board of certified public accountant examiners for the state of Illinois; he was a director of the State Bank and the Trust Company of Evanston, Illinois; he served as a trustee for Chicago’s Century of Progress, and he was the president of the board of trustees for Northwestern University. Andersen also authored a number of magazine articles and books, including Major Problems Created by the Machine Age, (1931); Duties and Responsibilities of the Comptroller, (1934); The Future of Our Economic System, (1934); Present Day Problems Affecting the Presentation and Interpretation of Financial Statements, (1935); and A Layman Speaks, (1941). Andersen’s fledgling firm was aided by the 1913 implementation of the federal income tax, which created an increased demand for accounting services. To be near the Internal Revenue Service, he opened an office in Washington, D.C. During the 1920s the firm opened six new offices and began providing financial investigation services. This led to Andersen’s appointment in 1932 as the representative for several New York banks when Samuel Insull’s utilities empire collapsed. The firm investigated Insull’s financial affairs, Andersen testified in court on the matter, and the firm guarded the remaining assets during refinancing. This proved to be an important event for the firm during the Great Depression, and helped establish its superior reputation. The company also grew to be an international force under Andersen’s direction. In 1930 he coordinated expansion to other countries and continents, with his firm’s affiliation with McAuliff, Davis & Hope, Chartered Ac-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
A r t h u r
A n d e r s e n
countants. This led to work in the British Isles, Europe, Asia, and South America. In 1938, Andersen was asked to become the first salaried president of the New York Stock Exchange. Though flattered by the offer, he declined to focus on management of his growing firm.
Chronology: Arthur Andersen
Social and Economic Impact Andersen instituted managerial, recruiting, and training advances that provided an important foundation for the company’s continued growth. In 1915 the company became the first accounting firm to adopt a formal recruiting program for college graduates. In 1940 a school was created for training the firm’s 35 new auditors. This tradition was evident when, in the early 1970s, the company opened Andersen University, a center for professional education. Andersen also established policies and procedures that transformed the workings of the small, informal company and allowed it to become a large, complex organization. In 1942 a new branch of the firm was created, that would become known as management information consulting. When Andersen died in 1947, his 25 partners felt the tremendous void that was created by the loss of his strong influence and presence. However, with Leonard Spacek as the new managing partner, Arthur Andersen & Company was positioned to further develop its reputation as a progressive firm and to grow into the largest organization of its kind. It tested the practicality of using computers in business by computerizing a client’s payroll in 1952; and it made important contributions to the emerging areas of industrial engineering, functional accounting, and management information practices. The business is now divided into two separate organizations, Arthur Andersen and Andersen Consulting, which have been administered from a headquarters in Geneva, Switzerland since 1977. Today, Arthur Andersen is a global organization employing more than 58,000 people in 363 offices in 78 countries. In 1950, Ohio State University established The Accounting Hall of Fame. The board elected Arthur Andersen in 1953, commending his “contributions as an educator and outstanding practitioner . . . . He had an unswerving faith in education as the basis upon which the new profession of accounting should be developed.”
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
1885: Born. 1908: Became youngest C.P.A. in Illinois. 1913: Founded Arthur Andersen & Co. 1915: Became the first accounting firm to adopt formal recruiting program for college graduates. 1930: Coordinated expansion of firm in Europe, Asia, and South America. 1932: Appointed to represent several New York banks after collapse of Samuel Insull’s utilities empire. 1938: Invited to become first salaried president of New York Stock Exchange. 1940: Opened school for training new auditors. 1942: Created new branch in management information consulting. 1947: Died.
Sources of Information Contact at: Andersen Worldwide 225 N. Michigan Ave. Chicago, IL 60601 Business Phone: (312)782-0225 URL: http://www.arthurandersen.com
Bibliography “About Arthur Andersen.” 27 May 1998. Available from http:// www.arthurandersen.com. “About Arthur Andersen.” 27 May 1998. Available from http:// www.fsti.com/tei/triad/arthur.htm. National Cyclopaedia of American Biography. New York: James T. White, 1949. Spain, Patrick J. and James R. Talbot, Hoover’s Handbook of American Companies 1996. Austin, Texas: Reference Press, 1996.
S t u d e n t s
1 7
Marc Andreesen (1972-) Netscape Communications Corporation
Overview The amazing growth of the Internet and the World Wide Web has been due in large part to the genius of Marc Andreesen. His browser software, Mosaic and Netscape Navigator, has made using the World Wide Web easy and popular for both businesses and average consumers. The company he helped found, Netscape Communications, made Andreesen an instant millionaire and helped to bring the Internet into the lives of ordinary people.
Personal Life Andreesen was born in Iowa in 1972. He grew up in the small town of New Lisbon, Wisconsin, with his parents, Lowell and Patricia. Marc Andreesen’s father works as an agriculturist and his mother works for Land’s End, a catalogue retailer. Andreesen was not the typical New Lisbon boy. He spent his early years reading and learning about computers to alleviate the boredom of small town life. In sixth grade, he wrote his first computer program—a virtual calculator for doing his math homework. But the program was on the school’s PC, and when the custodian turned off the building’s power, Andreesen’s program was wiped out. The next year, his parents bought him his first computer, a TRS-80 from Radio Shack that cost only a few hundred dollars. Marc taught himself BASIC programming from library books so he could write video games for the new PC. Andreesen’s teachers and classmates from New Lisbon remember him as a good student who excelled
1 8
M a r c
A n d r e e s e n
in computing, math, English, and history. “Marc had an intellectual capacity that could intimidate people,” said his former principal Ken Adams. Andreesen could also challenge teachers, and was known to question the relevance of their assignments. At the University of Illinois, Andreesen planned to major in electrical engineering, which he considered his most lucrative option, but then changed to computer science. He graduated with a BS in 1993. Andreesen now lives in Palo Alto, California with his fiancée, Elizabeth Horn, and their pet bull dogs. He enjoys a range of interests, including science fiction, classical music, philosophy, and business strategy. As might be appropriate for a computer whiz, Andreesen claims to be a “Netizen” himself—he gets all his news from the World Wide Web, buys his books from the online site Amazon.com, and even uses the Internet to check theater times.
Career Details A $6.85 an hour job at the University of Illinois Champaign-Urbana’s National Center for Supercomputing Applications (NCSA) got Andreesen interested in the Internet. At the NCSA, he worked with master programmer Eric Bina to develop an interface that could navigate the World Wide Web, integrating text, graphics, and sound. The result was Mosaic, which the NCSA team completed in 1993 and posted for free over the Internet. Over 2 million copies of the browser were downloaded the first year. Mosaic was responsible for a 10,000-fold increase in Web users over a period of two years. After graduating from Illinois in 1993, Andreesen took a job with Enterprise Integration Technologies, a producer of Internet security-enhancement products, in California. Soon, however, he received an e-mail from Jim Clark, a former associate professor of computer science at Stanford University. Clark had founded Silicon Graphics Inc., which made computers that specialized in graphics processing, and was interested in improving on Mosaic. He set up a meeting with Andreesen, and the two decided to combine Andreesen’s technical knowhow and Clark’s business expertise to launch their own company in 1994. The company was named Mosaic Communications Corp., but when the NCSA, which owned the copyright to the Mosaic software objected to the name, the partners changed it to Netscape. Andreesen, as vice president of technology at the new company, worked to make Mosaic faster and more interactive. Andreesen was helped by several team members from the original Mosaic project at NCSA, whom he persuaded to join Netscape. Soon, the company released their new browser, which the development team wanted to call “Mozilla”-
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Marc Andreessen.
(Courtesy of Netscape Communications.)
short for Mosaic Killer. The marketing department, however, insisted on Netscape Navigator. The program was distributed free on the Internet, and quickly became extremely popular. This established Netscape as a “brand” name, and prompted computer users to try other Netscape products. Soon, the company was profitable. On 9 August 1995, Netscape first offered shares in the company to the public. That day, shares opened at $7 and shot up to $36. They closed at $29. In one day, the then-24-year-old Andreesen became worth more than $50 million. To celebrate, he went out and bought his first suit. By December of that year, Netscape’s stock reached an all-time high. The value of Andreesen’s shares in the company skyrocketed to $171 million. But at almost the same time, Microsoft Corporation, which until then had been focusing primarily on PCs and had ignored the Internet, realized the value of browser software and announced that it would begin to work in that area. In July 1997, Andreesen became executive vice-president in charge of product development at Netscape. In charge of a staff of 1,000, Andreesen set out to stay ahead of the giant Microsoft. In September 1997, Microsoft launched its first browser, Internet Explorer 4.0. This was Netscape Navigator’s first real competitor, and it began to lure Netscape users away. In January 1998, Netscape shocked Wall Street by announcing an $88 million loss for the quarter. By April, according to Business Week, Microsoft
S t u d e n t s
1 9
M a r c
A n d r e e s e n
Navigator for free, he took a chance. But the browsers became so popular that users quickly developed confidence in the Netscape brand, and purchased other Netscape goods and services.
Chronology: Marc Andreesen 1972: Born. 1993: Developed Mosaic. 1994: Cofounded Netscape Communications, Inc. and released Netscape Navigator. 1995: Netscape IPO earned millions in first day. 1995: Microsoft announced it will enter browser market to compete with Netscape. 1997: Andreesen took control of product development at Netscape. 1998: Andreesen shifted focus to intranets and content-rich Netscape Website.
had captured about 40 percent of the browser market, while Netscape’s share had shrunk from about 80 percent to around 60 percent. Andreesen’s challenge is to get Netscape back to profitability. He no longer writes software programs himself, but as the head of product development, envisions new solutions for emerging technologies. With Netscape CEO Jim Barksdale, Andreesen is shifting the company’s focus away from the browser market and toward innovations for intranets (corporate networks) and electronic commerce. He is also developing Netscape’s Website into an Internet gateway similar to America Online.
Andreesen is known for putting in long hours at Netscape, but his management style differs very much from that of his main competitor, Microsoft. Andreesen remains close to the programmers who work for him, and he maintains a collegial, team-like atmosphere. He does not insist that his employees work long hours-in fact, he encourages them to limit office hours to 50 per week. Characteristic of this team-oriented approach is Andreesen’s decision to offer Netscape’s browser code over the Internet to anyone who wants it. His reasoning is that the feedback he gets from other software developers could lead to new ideas for Netscape. Andreesen has had to respond quickly to the intense competition within the computer industry. Microsoft’s entry into the browser market has challenged Andreesen to continue to improve Netscape’s products and to develop new ones. One new focus is to add substantial content and services to Netscape’s Website, making it a rival of America Online. “Our biggest mistake,” he told Business Week “was we didn’t think of this two years ago.” Though he admits he needs more experience, Andreesen likes business strategy. Venture capitalist John Doerr commented that Andreesen “has retained his fresh point of view about what’s possible . . . . He has grown a lot . . .” And investment analyst Mary Meeker said of Andreesen “He’ll be a great CEO-five to ten years from now.”
Sources of Information Contact at: Netscape Communications Corporation 501 E. Middlefield Rd. Mountain View, CA 94043 Business Phone: (650)254-1900 URL: http://www.netscape.com
Bibliography Chandrasekaran, Rajiv. “Netscape’s Boy Wonder Looks Beyond the Browser.” Washington Post, 25 March 1997.
Social and Economic Impact Andreesen’s browser software had a profound impact on society. According to People Weekly, Mosaic stimulated a 10,000 percent increase in the number of Web users within two years from its debut. And Netscape Navigator was even more popular. The astronomical growth of the World Wide Web could not have occurred without a simple product that helped users find their way through the vast, and sometimes disorganized, material on the Web. And the first such product was invented by Andreesen. From the beginning, Andreesen used innovative strategies to get his program out to the public. By allowing computer users to download Mosaic and Netscape
2 0
B u s i n e s s
Collins, James. “High Stakes Winners.” Time, 19 February 1996. Hamm, Steve. “The Education of Marc Andreesen.” Business Week, 13 April 1998. Harmon, Amy. “Cyberspace Stars: Can They Stay Online?” Los Angeles Times, 28 October 1996. Holzinger, Albert G. “Netscape Founder Points, and It Clicks.” Nation’s Business, January 1996. “Illinois’s Boys Make Noise and They’re Doing it with Mosaic,” Highlight from CS Alumni News, Winter 1994. Newsmakers. Detroit: Gale Research, 1996. McCarthy, Ken. “Marc Andreessen: The Man Behind Netscape,” E-Media 14 August 1995. Available from http://www.e-media.com.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
M a r c
A n d r e e s e n
Marc Andreesen: Netscape Communications Executive. Newsmakers 1996. Detroit: Gale Research, 1996.
Tetzeli, Rick. “What It’s Really Like to be Marc Andreessen,” Fortune, 9 December 1996.
“Spinning a Golden Web: Marc Andreesen’s Internet Software Earned Him $50 Million in One Day.” People Weekly, 11 September 1995.
“VeriSign Hall of Fame: Marc Andreessen,” VeriSign, Digital ID Hall of Fame, 1997.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
2 1
Hiroaki Aoki (1938-) Benihana
Overview Hiroaki “Rocky” Aoki is the founder of Benihana Restaurants, which brought Japan’s teppan table cooking to America. The popular chain of Japanese style eateries are located in the United States, Canada, Mexico, England, South Korea, Japan, Australia, and Thailand. He is also a world-class sportsman and participates in longdistance road rallies, speedboat racing, and ballooning. He is a noted philanthropist and fundraiser. His charitable interests include international art exchanges and environmental causes.
Personal Life Hiroaki “Rocky” Aoki was born on October 9, 1938, in Tokyo, Japan. He was the first child of Yunosuke and Katsu Aoki, a well-to-do couple. Rocky’s parents owned a popular Tokyo jazz, coffee, and tea club, named Ellington after celebrated American jazz musician Duke Ellington. After Japan bombed Pearl Harbor in December, 1941, Japan and the United States entered into a state of war. Despite this, the Aokis stayed in Tokyo until 1944. Then the war forced them to leave and the family moved to Rocky’s mother’s hometown in the rural province of Gumma. After the war, the Aoki family returned to Tokyo. They started a new enterprise in the nearly destroyed city, a restaurant called Benihana. Rocky Aoki attended Keio, an exclusive private high school in Tokyo. He then pursued his studies at Keio University. He was a gifted student, but was in trouble more than once for fighting. Athletics are where Rocky
2 2
H i r o a k i
A o k i
truly excelled. He competed in track and field, karate, and wrestling. He was captain of the Keio wrestling team and was one of Japan’s top wrestlers by age 19. In 1959, he was an alternate on Japan’s 1960 Olympics wrestling team. The team toured the United States and Rocky was undefeated in his weight class. America intrigued him and he decided to pursue an athletic scholarship so he could study in the United States. Several colleges offered Rocky a wrestling scholarship. He lived in New York City while deciding which scholarship to accept. In New York, he lived with Seiji Ozawa, an old family friend from Japan and later conductor and music director for the Boston Symphony Orchestra. Rocky first enrolled at Springfield College in Springfield, Massachusetts. He quickly transferred to C.W. Post College in Long Island, New York. Rocky soon found himself in trouble for fighting again and was dismissed from Post. He then entered New York City Community College and earned an associate’s degree in management in 1963. Rocky married his wife, Chizuru, in 1964, the year that he first opened a Benihana restaurant in New York. In Benihana’s early years, Aoki lived frugally, investing everything he had into his new enterprise. By the early 1970s, the investment paid off and Aoki was a wealthy man. He then began to live like a wealthy man, sometimes investing in opportunities that netted him fiscal losses, but gained him notoriety. He backed a Broadway play starring Joan Rivers that flopped, opened a posh Manhattan club that failed after only one year, and promoted a boxing match in Japan for long-time friend Muhammad Ali that attracted publicity, but little money. Rocky Aoki’s leisure activities took on a note of flamboyance and recklessness. In 1974, he won the world leisure class backgammon championship. He became a champion powerboat racer and was nearly killed in a 1979 accident. He piloted a helium balloon across the Pacific in November 1981. Rocky won the first Milan-Moscow Road Rally in 1987 in his 1959 Rolls Royce Silver Wraith. Later, when asked to reflect on his rapid rise to fortune and fame, Aoki admitted handling the whole situation poorly. Rocky told Jack McCallum, author of Making It in America: The Life and Times of Rocky Aoki Benihana’s Pioneer, “When I first started making money, my personal life got poorer . . . . And I kept my family poor. I didn’t want to put money into them. I wanted to put it where it would show.” In the 1990s, Aoki settled down a bit and has devoted his time and money to more socially responsible ventures, including art and environmental programs.
Career Details
Hiroaki “Rocky” Aoki.
(Courtesy of Benihana.)
from various part-time jobs to help attain this goal. After graduating from New York City Community College in 1963, Rocky was presented with the opportunity to realize his dream. The owner of an unsuccessful Chinese restaurant offered Rocky his prime midtown Manhattan space, charging only a pittance for rent. Rocky sought the assistance of his wealthy parents. They helped him secure a loan so he could bring their Benihana restaurant to New York. In May 1964, Rocky Aoki opened the first American Benihana restaurant. Benihana is a Japanese word meaning red flower and saffron. Benihana features teppanyaki-style Japanese cooking. Teppanyaki actually means steel top in Japanese and at Benihana, guests are seated around a steel-topped table that incorporates a grill. The diners’ meals are prepared on the grill while the chef’s knife-wielding skill provides dinnertime entertainment. Benihana’s business was very slow for the first six months. Then, an enthusiastic review in the New York Herald Tribune brought hungry customers to Aoki’s door. Benihana became a most fashionable eatery, with stars like Sean Connery, Lawrence Welk, and Burt Bacharach as regular customers. Rocky opened the second Benihana on May 15, 1966 on Manhattan’s East Side. Chicago saw its first Benihana in 1968 and Benihana of San Francisco, the West Coast’s first, opened in 1969.
Long before graduating from college, Rocky Aoki had wanted to open a restaurant. He had saved $10,000
Benihana’s popularity soared during the 1970s and 1980s. A publicly traded arm of Benihana-Benihana, Inc.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
2 3
H i r o a k i
A o k i
Chronology:
Rocky Aoki resigned as Benihana chairman and chief executive on May 19, 1998, amid speculation that his personal investments are under investigation by the U.S. Attorney’s Office. Aoki released a statement saying that the investigation does not involve Benihana or its stock. He remained majority stockholder of Benihana and continued to be available as a consultant.
Hiroaki Aoki
Social and Economic Impact
1938: Born. 1960: Emigrated to the United States. 1963: Earned Associate’s Degree in Management. 1964: Opened first American Benihana restaurant in New York City. 1969: Expanded Benihana business to the West Coast. 1974: Won World Leisure Class Backgammon Championship. 1987: Established Benihana, Inc. a publicly-traded arm of Benihana. 1995: Sold 21 Benihana restaurants to Benihana National Corporation. 1998: Resigned as chairman and CEO of Benihana, Inc.
was created in 1987. Aoki’s privately held restaurants were now known as Benihana of Tokyo. He began to turn his attention to other business ventures, including Dyna-Tech Nutritionals, Inc., a line of diet and health products. In 1989, Benihana, Inc. was sued by shareholders accusing Rocky Aoki of diverting funds from the publicly owned Benihana to Benihana of Tokyo. The lawsuit was settled in 1991. The early 1990s brought dismal performance to the Benihana chain. In 1995, Aoki sold all 21 U.S. restaurants, except those in Hawaii, to Benihana, Inc. The buyout deal was worth about $6.15 million to Aoki, who remained majority stockholder, chairman, and chief executive of Benihana, Inc. From 1993 to 1998, Benihana again enjoyed mass popularity and financial success. The company’s net income rose 191% and revenues rose nearly 43 percent over those five years. For the fiscal year ending in March, 1998, sales were a record $99.8 million, a one-year increase of 18.2%, while net income rose 20.4% In 1998, the Benihana chain consisted of 49 restaurants-including 9 recently-acquired Samurai and Kyoto restaurants.
2 4
B u s i n e s s
In 1964, nobody knew what a theme restaurant was. But, before Hard Rock Café and Planet Hollywood, there was Rocky Aoki and Benihana. His innovation led to the creation of one of the most successful restaurant chains in history, and brought entertainment and Japanese food to American diners. Rocky Aoki is no stranger to philanthropic causes. He was recognized by the United Nations’ Environmental Program Directorate for sponsoring the New York Times environmental supplement, Imagine. He also established a Green Arts Program promoting international art exchanges. In 1993, Aoki sponsored art exhibits in Japan, the United States and England, showcasing the work of environmentally concerned Japanese artists.
Sources of Information Contact at: Benihana 8685 NW 53rd Terrace Miami, FL 33166 Business Phone: (305)593-0770
Bibliography “Benihana Buying Founder Aoki’s Units.” Nation’s Restaurant News, 16 January 1995. “Company Capsule, Benihana, Inc.” Hoover’s Online, 1998. Available from http://www.hoovers.com/. Gall, Susan and Irene Natividad, eds. The Asian American Almanac. Detroit: Gale Research, Inc. Kane, Cheryl. “Rocky’s New Gig: Diet Pills.” South Florida Business Journal, 21 January 1994. Walker, Elaine. “Benihana CEO Quits Amid Personal Inquiry.” Miami Herald, 20 May 1998. Zia, Helen and Susan B. Gall, eds. Notable Asian Americans. Detroit: Gale Research
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Steven Appleton Overview
Micron Technology, Inc.
When Steve Appleton became chairman and chief executive officer (CEO) of Micron Technology in 1994, his role was to guide the semiconductor manufacturing company through a turbulent time. With increasing competition from Japanese manufacturers and the company’s management in turmoil, the then-34 year old Appleton provided the direction and leadership necessary to maintain Micron’s dominance in the industry.
Personal Life Steve Appleton grew up in Los Angeles, the son of a school teacher mother and a father who owned doughnut shops. He studied hard and graduated from high school as class salutatorian, but according to a profile by Peter Burrows in Business Week, he ran with a rough crowd. One friend reportedly died of gunshot wounds and others ended up in prison. Appleton looked to Tennis as the ticket out of the tough neighborhood. By sheer guts and determination, Appleton made himself into a top high school player. His success on the courts led him to Boise State University (BSU), which he attended on scholarship. Competing for BSU in the Big Sky tennis tournament in 1982, Appleton broke his right hand. The next day, he cut off the cast and competed in the finals, finishing second in singles and winning in doubles. He taught himself to play lefthanded to finish the season. Today, Appleton is a fitness fanatic who can bench-press three 300 lbs. His daily schedule includes
2 5
S t e v e n
A p p l e t o n
Career Details After completing his bachelor’s degree in business administration at Boise State in 1982, Appleton joined Micron’s graveyard shift in 1983. He started at $4.46 per hour on the company’s 64-Kbit DRAM line. DRAM (Dynamic Random Access Memory) chips are the most common type of memory chip used in the computer industry. By the time Appleton began his career, many U.S. DRAM manufacturers had been destroyed by Japanese competition. Only Micron and Texas Instruments were still manufacturing the chips in the United States, and Micron, using a unique manufacturing process, had established itself as the low-cost producer. Appleton’s drive propelled him from the production floor to the board room in just 12 years. On the way, he worked as production manager, director of manufacturing, and vice president for manufacturing. He became president and CEO in one of the executive upheavals for which Micron has been notorious. In 1994, company cofounder Joe Parkinson, along with his chief operating officer and chief financial officer, left the company for “personal reasons.” Industry analysts suspected friction between Parkinson and Jack Simplot, a potato farmer whose $150 million investment in the company made him Micron’s largest single investor.
Steve Appleton addresses the media during a news conference following Micron’s annual shareholders’ meeting. (AP Photo/Idaho Statesman, Chris Chung.)
just four hours of sleep, but he schedules his long work day around 4:00 a.m. and 9:00 p.m. workouts in his gym. He also flies his own fighter plane and competes in triathlons, skydiving, and motorcycle racing. Appleton is divorced and is the father of two daughters. He is a member of the board of directors of the Semiconductor Industry Association and of St. Luke’s Hospital in Boise, Idaho. He is a trustee of Boise State University and a member of the Semiconductor Technology Council.
2 6
B u s i n e s s
The announcement that Appleton would take over management of the company surprised Wall Street, according to Idaho Business Review, and indicated that there might be a serious rift between shareholders and management regarding the future direction of Micron. But as stock analyst Thomas Thornhill noted in Idaho Business Review, “The silver lining in all this is that Steve came up through the operating side of the company, and has great depth of operating experience, and has day-today responsibility for the principal operating unit.” According to the Seattle Times, workers cheered Appleton’s ascension, saying that he knew the company from the ground up and would be the right person to keep Micron competitive in the industry. According to Business Week, Micron’s workers admire him for his work ethic, enthusiasm, and willingness to hear all sides of an issue. As a line manager, it is said, he once mediated a worker’s complaint with his boss by interviewing all 22 workers on the shift, and then moving the supervisor. He also introduced a novel, but popular, pay plan. Micron employees are given a lower base pay than they would receive at other companies, but they take home 10 percent of the company’s profits. Thus, the payroll drops in a bad year, limiting layoffs. In a good year, workers share in the bonanza. When Appleton assumed leadership of Micron in 1994, he announced that the company would continue the basic strategy that had brought it success. It would continue to emphasize quality and low cost, and to control as much as possible in the production process. By
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S t e v e n
A p p l e t o n
also focusing on its workers, the company ensured a loyal and skilled labor force. Appleton’s widespread popularity throughout the company ultimately saved his job. It was the support of 20 angry and frustrated friends and colleagues that set in motion his recall when he was dismissed by Micron’s board of directors in January 1996. Company executives demanded that the board rehire Appleton and insisted that the board end its autocratic interference in the company’s management. According to Fortune’s Andy Sewer, the board, recognizing it had fired the best man to run Micron, was in a no-win situation unless it acted immediately to rehire Appleton. As part of his agreement to return, Appleton obtained a promise that the board would cease its day-to-day oversight of the company and later saw to it that many of his rivals left the company. By 1997, Micron had topped Japanese and South Korean companies to become the largest unit-volume DRAM producer in the world. Converting to smaller geometries and larger wafers in the production process, enabled the company to beat its competitors. Micron produces some of the semiconductor industry’s smallest die sizes: all of Micron’s DRAMs are manufactured in eightinch wafers at .25 or .21 micron (one-millionth of a meter) line widths. Micron uses a unique intelligent burnin and test system as part of its stringent quality assurance and testing process on every device it makes. In late 1997, Appleton announced that Micron would devote 10 percent of its wafer starts to 64-Mbit chips. His announcement made it clear that Micron intended to remain competitive in the future of the memory chip market. “Micron will be there when the 64 Meg takes off, and we will become the market leader—just as we have in 16-Meg,” Appleton told Jack Robertson of Electronic Buyers News. He also announced that the company would spend up to $1 billion in capital investment in fiscal 1998.
Social and Economic Impact Micron has remained a success due to Appleton’s unique business strategy. Under Appleton, Micron has survived the fierce competition in the DRAM industry by focusing on quality and low cost. The company’s main facility is located in Idaho, where costs for land, facilities, and labor give it a competitive edge. Micron has been very conservative about expanding operating facilities. It runs its plants at about 90 percent capacity while other manufacturers run at 60 to 70 percent, enabling Micron to keep production costs low. The company began construction of a $2.5 billion test facility in Lehi, Utah, in 1995, but has decided not to open the plant until market conditions warrant.
Chronology: Steven Appleton 1983: Joined Micron Technology as a factory worker. 1994: Appointed chairman and chief executive officer of Micron. 1996: Fired and re-hired as chairman and chief executive officer. 1996: Micron received ISO 14001 certification for environmental standards. 1996: Joined team to negotiate U.S.-Japan Semiconductor Agreement. 1997: Micron became world’s largest unit-volume DRAM producer. 1997: Micron earned U.S. EPA Evergreen Award for Pollution Prevention
mental issues. In 1996, the company received ISO 14001 certification—an internationally recognized standard for environmental management. Micron’s environmental team focuses on reduction of hazardous chemicals in the manufacturing process and on recycling. In 1997, Micron earned the U.S. Environmental Protection Agency’s Evergreen Award for Pollution Prevention. EPA regional administrator Chuck Clarke praised award recipients as “models of how American businesses can achieve economic prosperity while not jeopardizing the environmental quality of future generations.” Appleton was appointed to the National Semiconductor Technology Council by President Clinton. In 1996, Appleton was one of three SIA executives involved in negotiating the U.S.-Japan Semiconductor Agreement. Appleton has been instrumental in ensuring a place for U.S. companies in the computer age.
Sources of Information
In addition to its sound business strategy, Micron has served as an example in its commitment to environ-
Contact at: Micron Technology, Inc. 8000 S. Federal Way PO Box 6 Boise, ID 83707-0006 Business Phone: (208)368-4000 URL: http://www.micron.com
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
2 7
S t e v e n
A p p l e t o n
Bibliography Burrows, Peter. “Micron’s Comeback Kid.” Business Week, 13 May 1996.
2 8
Robertson, Jack. “One-On-One—Appleton plots Micron’s 64-Mbit DRAM strategy.” Electronic Buyers News, 1 September 1997.
Corporate Profile, Micron Technology, Inc. Available from http:// www.micron.com/html/body_corporate_profile.html
Robertson, Jack. “Steve Appleton-Micron Scores Gains as Others in DRAM Arena Hemorrhage.” Electronic Buyers’ News , 22 December 1997.
Dunphy, Stephen H. “Staying chipper: Despite shake-up, Micron exudes confidence in future.” Seattle Times, 3 October 1994.
Sanchez, Jesus. “Micron CEO is reappointed days after resigning.” Los Angeles Times, 27 January 1996.
Environmental Policy, Micron Technology, Inc. Available from http://www.micron.com/html/body_environmental_policy.html
Yoder, Stephen Kreider. “Micron Watchers are Left Baffled by Resignation of Top Executives.” Idaho Business Review, 26 September 1994.
MacLellan, Andrew. “Appleton Incident Puts Focus on Micron.” Electronic News, 5 February 1996.
Who’s Who in America. New Providence, NJ: Marquis, 1996.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Minoru Arakawa Overview Since 1980, Minoru Arakawa has served as president of Nintendo of America, a subsidiary of Nintendo Ltd. Under his leadership, the company grew to become a major provider of computer games and software to American consumers. Forced in the mid-1990s to shift strategies, the company remained a viable competitor in the industry and has made internal changes, such as developing more resources in-house, to continue as a force in this highly competitive industry. Moreover, the company continued to develop new games and resources to meet consumer demands.
(1946-) Nintendo of America, Inc.
Personal Life Minoru Arakawa was born in 1946. He studied engineering and obtained master’s degrees in that subject from both Kyoto University and the Massachusetts Institute of Technology. In 1981 he immigrated to the United States and began serving as president of Nintendo of America, a subsidiary company of Nintendo Ltd. Although an outwardly quiet and mild-mannered man, colleagues at Nintendo described Arakawa as a savvy negotiator with a competitive and stubborn streak. He worked well with coworker Howard Lincoln even when Lincoln was selected over Arakawa for the top position of chairman of the company. The two shared adjoining offices and regularly spent family holidays together. Arakawa married Yoko Arakawa, the daughter of Hiroshi Yamauchi, head of Nintendo Ltd.
2 9
M i n o r u
A r a k a w a
After its 1993 assault and advertising coup, Sega grabbed 57 percent of the American market for the 16 bit consoles used to play the games. Yamauchi, Nintendo’s president, blamed Arakawa for the loss in market because Arakawa failed to respond quickly and effectively to Sega’s ad campaign.
Chronology: Minoru Arakawa 1946: Born. 1949: Fusajiro Yamauchi started Nintendo Ltd. 1980: Immigrated to United States of America. 1980: Became president of Nintendo of America. 1992: Nintendo Ltd. purchased Seattle Mariners baseball team. 1993: Nintendo negatively impacted by Sega ad campaign. 1993: Stalled publication of Game Over: How Nintendo Zapped an American Industry, Captured Your Dollars, and Enslaved Your Children. 1994: Arakawa bypassed for chairman promotion by Howard Lincoln. 1997: Released Nintendo 64. 1998: Released Zelda 64.
Yamauchi publicly commented on his decision, claiming that he wanted to see Arakawa give more authority to high level Americans but that was not all. Yamauchi publicly criticized Arakawa, making it clear that his job was in jeopardy if his performance results did not improve. Such criticism exposed the company’s weaknesses. A Nintendo vice president of marketing, Peter Main, admitted in a Television Digest article that the business needed a jolt and that a lot of fundamental changes were underway, including relying less on Japan for supplying company software and hardware development. The change in leadership was needed to redirect the company along a more aggressive and visible direction. Arakawa instigated an aggressive marketing campaign to respond to market share losses caused by Sega. Software began to be developed in-house in order to cut costs. Nintendo also directed its focus away from CDROM software, believing that consumers would find the necessary hardware too expensive.
Career Details Arakawa came to Nintendo of America in 1980, when he was hired by his father-in-law and head of Nintendo Ltd., Hiroshi Yamauchi, to serve as president of Nintendo of America. Previously, Arakawa had built office buildings and hotels in Vancouver, British Columbia and had worked for trading companies in Japan such as the Marubeni Company. Prior to 1993, Nintendo held the majority of the $6 million market for video games in the United States. In 1994 a number of changes were implemented by the president of Nintendo Company Ltd., the parent company of Nintendo of America, which redirected the company strategy and, to a large extent, affected the career of Arakawa. The reason for this action was Sega, Inc., which proved to be a formidable competitor in this market. Sega unleashed its Sonic the Hedgehog character, and it rose to become a popular selling product, beating sales of Nintendo’s Super Mario character and related games. Sega was merciless in its strategy of upstaging Nintendo. It launched an advertising campaign that labeled Nintendo’s Mario character as uncool. Sega’s offensive was swift and fierce, making it difficult for Nintendo to respond quickly.
3 0
Moreover, Yamauchi implemented several changes in response to the situation. In a move that surprised the business world, Yamauchi elevated Nintendo of America Executive Vice President Howard Lincoln to chairman, bypassing his son-in-law Arakawa in the process. According to Television Digest, the move demonstrated an unexpected power shift in the company.
B u s i n e s s
Despite what may have looked like internal rivalry to outsiders, Lincoln and Arakawa remained close friends and often spent holidays together when they weren’t overseeing the company from adjoining offices. By 1995, Nintendo Ltd’s sales had climbed to $4.7 billion, with Nintendo of America contributing less than half to the total. Arakawa had enormous respect for Lincoln and according to Arakawa’s wife, was very impressed with Lincoln from the start. Another Nintendo customer, Gregory Fischbach, founder of Acclaim Entertainment, commented that the company had recognized that the two men knew how to work together and if the company aligned them, maybe one plus one gets three. The two complemented each other with their skills. The more extroverted Lincoln served as media point person, and dealt with abstract ideas, while Arakawa was better with numbers. Both were skilled negotiators. Typical of past Nintendo strategy, Arakawa and Lincoln kept their future plans quiet while Sega publicly touted triumph. Unknown to Sega at the time, Nintendo was developing the game Donkey Kong Country, a product released in 1994 that sold 7 million copies in its first four months on the market. According to Lincoln, Nintendo also was in better financial shape than Sega dur-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
M i n o r u
ing the public trouncing. In Puget Sound Business Journal Lincoln claimed that in 1994, Nintendo profits were five times greater than Sega’s, and that Sega held $2 billion in debt while Nintendo had none.
Social and Economic Impact Between 1985 and 1995 under Arakawa’s leadership, Nintendo of America grew from 75 to 1,400 employees and sales rose from $100 million to $4.7 billion. During this time the company introduced three new game platforms: the Nintendo Entertainment System, the Game Boy, and the 16 bit Super NES. During those 10 years, American consumers purchased more than 65 million games and corresponding software programs in the millions. Throughout the 1980s and 1990s, Nintendo and Sega dominated the video game market and filled a void left by the failed Atari Company in the 1980s. Nintendo and Sega sold game hardware—machines to play the games on—relatively cheaply and made money off related software. In fact, software proceeds made up a large part of Sega’s and Nintendo’s profits in 1993, with a combined total of more than $1 billion. Walter Miao, an industry analyst said in Fortune that “you can talk all you want about the electronic highway and video on demand but the only place anyone has ever sold anything interactive is in games.” Miao predicted that the computer game market would grow to $7.5 billion in 1994. Between 1987-1993, Nintendo and Sega managed to place 64 million game machines in American homes, nearly half of that market penetration was achieved in 1993, when Nintendo games reached 30 million American households. Nintendo continued to diversify its products and released the Nintendo 64 in 1997. The new product boosted Nintendo sales figures and attracted players other than the typical Nintendo customer, a 7-14 year old boy. Market research by Nintendo indicated that 40 percent of those buying the new Nintendo 64 were over 18 years old. In 1998, Nintendo planned a release of a related product, the game, Zelda 64. Nintendo, while monitoring the Internet gaming market, did not believe that the two types of customers overlapped. The company, in the late 1990s, continued to focus on video games rather than interactive games that could be played over the Internet. Nintendo used its clout to modify the publication of Game Over: How Nintendo Zapped an American Industry by forcing the publisher to discard thousands of book dust jackets that featured the Nintendo character Mario. The book gave an inside look at management practices
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
A r a k a w a
at the company, portrayed Yamauchi as a workaholic and Minoru and wife Yoko as fearless bootstrappers who weren’t afraid to work on assembly lines when needed. Arakawa and other Nintendo peers such as Lincoln regularly practiced community philanthropy and remained quiet about it rather than taking the opportunity to promote themselves. When Yamauchi purchased the Seattle Mariners baseball team for $75 million to keep the team in the community, Arakawa and others annually gave away 600 baseball tickets to a boys and girls club. Cost to the company for the yearly donation (including tickets, soda and food) was estimated at $500,000.
Sources of Information Contact at: Nintendo of America, Inc. 4820 15th Ave. NE Redmond, WA 98052 Business Phone: (206)882-2040 URL: http://www.nintendo.com
Bibliography Baker, M. Sharon. “A Feistier Nintendo Fields Tag Team of Lincoln and Arakawa.” Puget Sound Business Journal, 10 March 1995. Carlton, Jim. “Nintendo’s Lincoln is Named Chairman of U.S. Unit as Market Share Slides.” Wall Street Journal, 16 February 1994. Deutschman, Alan. “Books and Ideas, Mind Games, Trade Myths, and More.” Fortune, 31 May 1993. Dun & Bradstreet, Inc. Million Dollar Database. Dun & Bradstreet, 1997. Available from http://www.dnbmdd.com/netbrs/ pgate...cope=range&x_rangelo=1&x_rangehi=1. Gross, Neil and Robert D. Hof. “Nintendo’s Yamauchi: No More Playing Around.” Business Week, 21 February 1994. Newnham, Blaine. “Mariners Home: Ditto Fans: Team has to Wait for Any Boost in Attendance.” Seattle Times, 13 June 1992. “Nintendo America Shuffles Top of Deck.” Television Digest, 21 February 1994. Sheff, David. Game Over: How Nintendo Zapped an American Industry, Captured Your Dollars, and Enslaved Your Children. Random House, 1993. Snider, Mike. “Nintendo Plans Zelda 64 for Next Big Play.” USA Today, 23 June 1997. Tetzeli, Rick. “Serious Fun, Forget Pacman.” Fortune, 27 December 1993. Who’s Who Among Asian Americans. Detroit: Gale Research, 1994.
S t u d e n t s
3 1
Elizabeth Arden (1878-1966) Elizabeth Arden, Inc.
Overview Elizabeth Arden was a pioneer in the U.S. cosmetics industry, introducing American women to products such as lipstick, rouge, and mascara. Starting with a single shop on Fifth Avenue in New York City, she developed her company into an international business that reached $60 million in annual sales. While she cultivated a sophisticated, high-society image, Arden promoted the idea that beauty was within the reach of all women.
Personal Life Elizabeth Arden was born Florence Nightingale Graham in 1878 in Woodbridge, Ontario. Her father, William Graham, was Scottish and her mother, Susan (Pierce) Tadd, was English. She was the fourth of five children. The couple immigrated to Canada, where they worked a farm near Toronto. Arden was married twice, to banker Thomas Jenkins Lewis in 1915 (divorced 1934) and to Prince Michael Evlanoff in 1942 (divorced 1944). Subsequently, she lived with her brother’s daughter, Patricia Young. Arden had a particular love for horses and dogs. She enjoyed flower and landscape gardening and interior design. By the end of her life, she had an extensive art collection that included works by O’Keefe, Cassatt, Laurencian, and Chagall. Contemporary accounts of Arden’s childhood put a rosy cast on her upbringing in Canada. Accounts of her father describe him raising exotic vegetables under glass, and her education was supposedly carried out in Cana-
3 2
E l i z a b e t h
A r d e n
dian schools and by tutors. Since her death, however, it has been thought that Arden did not finish high school because she was poor and needed to work. She worked as a dental assistant, cashier, and stenographer before moving to New York City with her brother in 1908.
Career Details Arden was introduced to the cosmetics industry when she took a clerical job with Eleanor Adair, a London firm with a shop on Fifth Avenue. She learned how to give facial treatments and studied the basic elements of cosmetic formulas. By 1909 Arden had opened her own Fifth Avenue shop with partner Elizabeth Hubbard. The pairing did not flourish, however, and Arden soon was sole owner of the company. She then adopted the name Elizabeth Arden for the business and for herself. Some sources say Arden formed her name by taking “Elizabeth” from her former associate, Elizabeth Hubbard. Other sources attribute the new first name to Queen Elizabeth. It is agreed that “Arden” comes from a favorite poem, Tennyson’s “Enoch Arden.” Arden’s own flawless and youthful complexion was excellent advertising for her facial treatments and creams. In 1914, however, Arden traveled to France, where she saw cosmetics skillfully applied and where—unlike in the United States—they were gaining popular acceptance. She proceeded to offer products such as lipsticks, rouges, mascara, and foundation creams, as well as fluffy, nongreasy facial creams. Working with chemist A. F. Swanson, she developed two products that became extremely popular, Cream Amoretta and Ardena Skin Tonic. Such products were truly innovative and demanded premium prices. Their success allowed Arden to move into improved quarters in New York and to open branches, first in Washington, D.C. and Boston, then in Paris by 1922. By 1957 there were some 150 Elizabeth Arden salons.
Elizabeth Arden.
Arden increased her cosmetics sales by developing a wide range of colors and shades, allowing her customers to coordinate their makeup with their own coloring and clothes. Having established herself as a beauty expert, Arden opened two health resorts that offered special diets and exercises for clients. Her first health and beauty spa, Main Chance Farm, located in Mount Vernon, Maine, was the first of its kind in the United States. Later, she opened a second spa in Phoenix, Arizona. Beginning in the 1940s, she also sold custom and readyto-wear clothes, designed especially for her salons. However, Arden did not build her empire solely on sales to the elite clientele who could shop her salons. She also promoted her business to a far larger audience by selling her products in department stores and by offering written advice, such as the pamphlet “The Quest of the Beautiful.”
As chairperson of the board and director of Elizabeth Arden, Inc., Arden was an extremely feminine figure: petite and often dressed in pink. Although her first husband worked as manager of the cosmetics line during their marriage, she was always in full control of the company’s development. In her beloved hobby of horse racing, Arden was also known as a hands-on manager and a successful one, too. Not only did her horse Jet Pilot win the Kentucky Derby in 1947, her stables often made impressive winnings, such as the $589,000 they earned in 1945.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
(The Library of Congress.)
Social and Economic Impact Beginning at a time when no respectable woman would use a product beyond facial cream, Arden succeeded in selling makeup, as well as expensive facial treatments, creams, and tonics. She provided her customers with superior products formulated by her own chemists and presented them in stylish, elegant salons. She quickly made her cosmetics business a popular and financial success. During her lifetime, the company reached $60 million in annual sales and cosmetics became one of the top 10 industries in the United States.
Arden was an astute businesswoman, who gave equal attention to developing breakthrough products and to creating a sophisticated, high-society image for her company. In the case of one of her best-selling products, Amoretta face cream, she persisted in working with chemists until they created a pleasant, light cream that
3 3
E l i z a b e t h
A r d e n
Chronology: Elizabeth Arden 1878: Born. 1908: Moved to New York City and took first job in the cosmetics business. 1909: Opened shop on Fifth Avenue in New York City, selling facial creams. 1909: Changed her name from Florence Nightingale Graham to Elizabeth Arden for business purposes. 1914: Began selling cosmetics such as lipstick, rouge, and mascara. 1940: Began selling designer clothing. 1947: Arden’s racehorse, Jet Pilot, won the Kentucky Derby.
Arden was an active Republican and during the 1940 presidential election, campaigned vigorously against Franklin D. Roosevelt and for Wendell Willkie. Soon after the election, she ran into trouble with the Federal Trade Commission (FTC) who charged her with violating the Robinson-Patman Act by not properly training her employees. Convinced that the Democrats were behind the FTC’s actions as punishment for her stand against Roosevelt, Arden appealed the FTC’s charges to the U. S. Supreme Court. She lost the case, but the ruling required little change in the structure of Arden’s company. Now under the corporate ownership of Eli Lilly, the Elizabeth Arden, Inc. continues to be a successful and respected entity. However, it has lost some of the cachet that it carried during its creator’s lifetime. Arden was a key figure in the company’s corporate life and in its public image. Seemingly, Arden herself could not imagine the company existing without her, for although she was approaching the age of 90, she never made special arrangements for the disposal of her company, which had to be sold in order to pay inheritance taxes. Until her death in 1966, Elizabeth Arden remained the sole owner of her company.
1953: Named to the Boston Distribution Conference Hall of Fame. 1957: Owned over 150 Elizabeth Arden salon branches. 1966: Died.
Sources of Information Bibliography Bondji, Victor, ed. American Decades: 1940-1950. Detroit: Gale Research, 1995.
was far superior to the oily petroleum products that were common. To create an elegant, elite image for her business, Arden not only focused on carefully decorating her salons and using finishing touches such as a liveried doorman, she also established herself in New York society. This difficult task was aided by her friendships with Elizabeth Marbury and Elsie De Wolfe. She also made advances in social circles by marrying a Russian prince. This event is sometimes seen as a competitive stroke against her greatest business rival, Helena Rubenstein, who had also married royalty. The rivalry between these two women was highly publicized, with Arden referring to Rubenstein as “that woman.”
3 4
B u s i n e s s
Candee, Marjorie Dent, ed. Current Biography Yearbook. New York: H. W. Wilson, 1957. Current Biography Yearbook. New York: H.W. Wilson Co., 1966. Fucini, Joseph and Suzy. Entrepreneurs. Boston: G.K. Hall & Co., 1985. Gay & Lesbian Biography. Detroit: St. James Press, 1997. Martin, Albro. Encyclopedia of World Biography. Palatine, IL.: Heraty, 1987. Vare, Ethlie Ann and Greg Ptacek. Mothers of Invention: From the Bra to the Bomb: Forgotten Women & Their Unforgettable Ideas. New York: William Morrow, 1988. The World Almanac Biographical Dictionary. New York: World Almanac, 1990.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Ted Arison Overview In 1973 Ted Arison retired from his commercial shipping operation in New York City and moved to Miami, Florida. There he bought an old, outdated ship called the Mardi Gras for $1. Although the ship soon ran aground, Arison turned the debt-ridden vessel into the flagship of his Carnival Cruise Lines. By 1988, Carnival had become the biggest cruise operation in the world and Arison himself had become one of the world’s richest men, with net assets of more than $1.5 billion.
(1924-) Carnival Cruise Lines Inc.
Personal Life Ted Arison was born in Tel Aviv in 1924, the son of Meir, a multi-millionaire magnate who operated the largest shipping company in Palestine, and Vera Arisohn. “He and his family were on vacation in Yugoslavia in 1939 when World War II broke out,” writes Estelle Lander in New York Newsday. “Arison’s father secured live seats on a flight out of Rome, stuffed his relatives into a cab for a 600-mile ride, and escaped.” Arison married Mina Wasserman in April, 1948. The marriage, however, ended in divorce and Arison married again in 1968, this time to Marilyn B. Hersh Lin. He has two children, Mickey and Sharon, from his first marriage, and a son, Michael, from his second. Arison began his career working as a manager for the firm M. Dizengoff & Company in Tel Aviv from 1946 to 1951. He had served in the British army during World War II and he interrupted his position with
3 5
T e d
A r i s o n
Ted Arison.
(AP/Wide World Photos, Inc.)
Dizengoff to serve with the Israeli Army during the 1948 war for independence. In 1952 he liquidated the family business, according to David Nickell in South Florida Business Journal, and relocated to the United States. He “formed a syndicate to organize a cargo line,” explained Lander, but “went broke after buying too many ships during the Korean War; when the war ended, the ships’ value dropped.” By 1959 he had reversed his misfortunes, becoming owner, chairman and president of Tran-Air, an air freight transportation company in New York. In 1966, at the age of 42, he retired from Tran-Air, sold the company, and moved to Miami, Florida.
3 6
B u s i n e s s
Career Details Arison’s career as a cruise line executive really began after his retirement. Only two weeks after selling Tran-Air, said Nickell, returned to the shipping business as owner and operator of the Arison Shipping Company. His connections in Miami brought him in touch with Meshulam Riklis, with whom Arison founded Carnival Cruise Lines in 1972. The oftenrepeated story of the company’s beginnings is that Arison paid Riklis a total of $1 for a retired transatlantic ocean liner, which he renamed the Mardi Gras. Arison also assumed the new company’s $5 million in debts.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
T e d
Although there were some early failures—the most spectacular of which was the running aground of the Mardi Gras on its first trip with a passenger list made almost entirely of travel agents—business quickly picked up. Arison bought Riklis’s share of the company in 1974, and by the early 1980s he was showing profits in the millions of dollars. In 1985 Carnival Cruise Lines was rated the top private company of the year by the South Florida Business Journal, and the following year, Arison sold shares of Carnival to the public, but retained about 80 percent of the company’s stock. In the early 1980s Arison began to diversify his holdings. He surrendered the presidency of Carnival Cruise Lines to his eldest son Mickey in 1980 and began to enter other lines of business. Arison created Carnival Leisure Company to run a casino and hotel facilities in the Bahamas, and Nosira Shipping Ltd., a freight-transport company operating out of the United Kingdom. He also acquired New York City-based Ensign Bank, a small thrift institution, and began cautiously looking for opportunities to merge it with other small banks. “In 1984 and 1987,” wrote Susan Harrigan in New York Newsday, “he withdrew offers to buy Freedom Savings & Loan Association of Tampa, Fla., and the Miami-based American Savings & Loan Association when talks entered the detail stage.” Attempts to merge the institution with Anchor Savings Bank in 1988 and Centrust Bank of Miami in 1990 were also abandoned. Finally, in September of 1990, the federal government had to seize control of the bank because of severe losses, costing Arison about $11 million. The bank, explained Newsday contributor Greg Steinmetz, “had $1.79 billion in assets before the failure and lost $34 million since the beginning of the year.” Ensign was not Arison’s only problematic investment in the late 1980s and early 1990s. He owned about 50 percent of the Miami Heat, a National Basketball Association (NBA) team that suffered the league’s worst season-opening losing streak in its first 18 games played. In Miami he also owned a 27-story luxury condominium property, Harrigan added, which went mostly unoccupied during the late 1980s because of a downturn in the local real estate market. Arison retired from active daily service with Carnival in 1991, turning management of the company over to his son Mickey. Since that time, he has divided his time and money between supporting the arts and contributing to philanthropic foundations in Israel, especially providing housing for new immigrants, said Betsy Mullins in the South Florida Business Journal.
Social and Economic Impact
A r i s o n
Chronology: Ted Arison 1924: Born in Tel Aviv. 1946: Began working as manager for M. Dizengoff & Company. 1948: Served in Israeli army. 1952: Emmigrated to United States. 1959: Became president of Tran-Air Company in New York City. 1966: Moved to Miami, Florida, and founded Arison Shipping Company. 1972: Founded Carnival Cruise Lines in partnership with Meshulam Riklis. 1983: Created Ensign Bank. 1988: Carnival becomes largest cruise line in the world. 1991: Retired from Carnival, turning the business over to his son Mickey.
in the South Florida economy. “Company officials,” stated the South Florida Business Journal in 1985, “estimate that its cruise business pumped $60 million into the local economy last year in the form of hotel stays, meals and local transportation utilized by Carnival passengers before and after their cruises.” The company pays no U.S. taxes because its ships are registered in Panama. Arison’s policy of keeping a fairly large part of the profits in the company, also helps keep Carnival almost debt-free. Carnival experienced regular growth during the 1970s, but it was during the 1980s that the line saw large-scale success. Arison, said Lander, “developed the seven-day cruise package while working with what is today Carnival’s major competitor—Norwegian Cruise Lines. After buying Carnival . . . he turned it around by promoting free cruises for airline personnel and cutting prices.” “The company follows a policy of strict expense control and lean management,” stated Harrigan, “but heavy service aimed at keeping passengers happy.”
With projected yearly incomes in the hundreds of millions of dollars, Carnival has become a major force
Carnival is credited with pioneering the modern notion of a vacation cruise for average people. By the 1970s the passenger shipping industry was viewed by
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
3 7
T e d
A r i s o n
many as a dying business because flying had become a more convenient and popular mode of travel. What made Carnival Cruise Lines special was Arison’s concept of marketing cruises—once reserved for the wealthy and retired—to young, single people. Arison lowered prices in order to attract these professionals. Cruises in 1989, said Susan Salter in Newsmakers, could start as low as $425 for three days on board, including airfare to and from the point of departure. The magnate also launched an aggressive advertising campaign that emphasized fun and excitement. Carnival ships regularly carry casinos, discos, movie theaters, and nightclubs in order to keep their clientele entertained. This was due, said Harrigan, “more to serendipity than to studies. In order to save money, the Mardi Gras had to cruise slowly, and Arison filled it with entertainment such as discos and casinos in order to distract the passengers.” Such measures made the cruise itself an attraction rather than just transportation to a vacation spot, as had been true before Carnival entered the business. Arison has made the “fun cruise” concept work in several different markets, providing destination cruises to resorts and casinos in the Bahamas and elsewhere. In partnership with developer Douglas Spohn he also created the Olde Towne Athletic Club, a business and social club that was aimed at middle and upper-class families. Olde Towne Athletic Clubs Inc. opened several branches in Georgia in the late 1980s. Arison’s desire to remain in the business swirl never ceased. Retirement never held him back from pursuing other interests. Failed ventures did little to dampen his business spirits. He is a prime example of how good busi-
3 8
B u s i n e s s
ness skills can be transferred, reshaped and updated to address a variety of business needs.
Sources of Information Contact at: Carnival Cruise Lines Inc. 3915 Biscayne Blvd. Miami, FL 33137 Business Phone: (305)263-1007 URL: http://www.carnival.com
Bibliography “Carnival Gets Nod from Business Journal, DHS as Initial Winner of Top Private Company Award.” South Florida Business Journa, 19 August 1985. Fogarty, Fred E. “Arison: Life Is a Carnival.” South Florida Business Journal, 22 July 1985. Harrigan, Susan. “Ensign, Anchor Try to Set Sale.” New York Newsday, 26 December 1988. Lander, Estelle. “Ted Arison Builds His Empire with Shipping and Savings.” New York Newsday, 19 November 1998. Mullins, Betsy. “Arison Sells Stock, Profits $17.7 Million.” South Florida Business Journal, 26 February 1993. Nickell, David. “Arison’s $1.8 Billion Makes Him Wealthiest in South Florida Area.” South Florida Business Journal, 30 May 1988. Salter, Susan. “Ted Arison.” Newsmakers, 1990 cumulation. Detroit: Gale Research, 1991. Steinmetz, Greg. “Feds Take Over Ensign; High-Risk Loans Cited.” Newsday, 1 September 1990.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Giorgio Armani Overview Giorgio Armani has been a major fashion influence on both sides of the Atlantic since the early 1980s. He challenged traditional designs by creating elegant clothing that emphasized the body, becoming in the process one of the most respected creators of apparel for both men and women. His fashions are in great demand among celebrities and have also changed the way average Americans approach fashion.
(1934-) Giorgio Armani SpA
Personal Life Giorgio Armani was born on July 11, 1934, in Piacenza, Italy, a small town southeast of Milan. He was the second of three children of Maria and Ugo Armani, who managed a transport company. Though Armani never had any formal art training, he has said that growing up in Italy helped foster his aesthetic sense because it afforded him so many opportunities to see excellent design in architecture, interiors, sculpture, and painting. Armani entered the field of fashion in an indirect way. To please his parents, he began studying medicine at the University of Bologna in 1952. He quickly realized, however, that becoming a doctor was not for him because he could not stand the sight of blood. After briefly pursuing photography and then serving in the Italian Army, he took a job as a window dresser at Milan’s La Rinascente department store. Armani remained there for seven years, learning the nuts and bolts of merchandising and discovering that he had a flair for retailing that enabled him to work his way up to the position of menswear
3 9
G i o r g i o
A r m a n i
change the rigid, boxy jackets that had until then dominated men’s fashion. “They turned out the jackets like cars—they all looked the same,” declared Armani. Instead, he emphasized fluid lines and achieved his characteristic “unstructured” look by eliminating interfacings, shoulder pads, and linings. “I invented a type of sports jacket that’s relaxed, informal, less stiff,” he observed. “The body moved easier in a suit made of soft fabrics.”
Giorgio Armani.
Though Armani’s styles were expensive, their elegance was undeniably appealing. Within a year, he was designing for women as well as for men after observing that they were shopping for themselves at his menswear stores. In 1976, only two years after Armani’s designs debuted in Italy, Barney’s of New York introduced the Armani line in the United States. Combined sales of Armani clothes reached $90,000 that year, and soon other designers had begun to imitate his distinctive style. In 1979, the designer launched a second line of clothing. It was more traditional but still focused on elegance of structure and material. That same year, Armani received a Neiman-Marcus Award for Distinguished Service in the Field of Fashion. In 1981, more than 600 American fashion writers chose him to receive a Cutty Sark Award as outstanding international designer. (Popperfoto/Archive Photos.)
buyer and later fashion coordinator. He eventually went on to become a major success in the fashion world. Armani lives what he calls an “absolutely banal” or dull life in his 400-year-old palazzo (palace) in Milan. This building houses his studio, his two-level apartment, an indoor pool, and apartments for both his mother and for his partner, Galeotti. At the center of the palazzo is a ballroom where he puts on fashion shows. While he is known in Milan as “The Maestro,” Armani is a shy man who prefers not to be in the limelight. A vegetarian, a non-smoker, and a nondrinker, he describes himself as a workaholic who oversees every detail of production at his company, from designing to advertising. He considers his employees his “family.”
Career Details The various positions Armani held at La Rinascente enabled him to obtain an extensive education in the complex world of retailing and marketing. After leaving La Rinascente, Armani took a job at the textile and garment firm Nino Cerruti, where he developed an understanding of fabrics and industrial tailoring. In 1974, Armani launched his own design label with money that he and a partner raised by selling a Volkswagen. The new company, named Giorgio Armani SpA, had a working capital of only $10,000. From the very beginning, Armani’s styles were distinctive. As he explained in an interview with Playboy, his goal was to
4 0
B u s i n e s s
In 1980, Armani opened Giorgio Armani U.S.A. in New York City. Employing mass production techniques from the Italian firm Gruppo Finanziorio Tessile, he was able to lower the prices of his garments significantly while retaining their high quality. Featuring men’s suits priced in the range of $275 to $400 instead of $700 or $800, the Armani line began attracting a wider range of customers. That same year, Armani designed the wardrobe worn by actor Richard Gere in the film American Gigolo, which brought him even greater visibility. By 1982, his company’s estimated total revenues were $135 million, a figure that represented a 60 percent increase over 1981 sales. In 1982 Armani became the first fashion designer to be featured on the cover of Time magazine since Christian Dior. During the 1990s, he dressed several prominent movie stars for Oscar night ceremonies, imbuing Hollywood with “drop-dead glamour.” According to the Fashion Page web site, in 1998 his company boasts sales of almost $1.7 billion, with 2,000 stores selling Armani products worldwide. His products now include not just clothing but perfume, accessories, and even umbrellas. Armani believes that the future of the fashion industry lies in lifestyle marketing. As he told the Daily News Record, “I would like to develop new product applications that could be used for interior design, such as furniture, lamps, and other objects .... The designer has entered our lives in all sectors—people just won’t accept a mundane object anymore.”
Social and Economic Impact Armani considers his greatest achievement to be the creation of a more casual, relaxed image for men. “I al-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
G i o r g i o
A r m a n i
ways believed that men needed to be as comfortable in their clothes as women were,” he told the Daily News Record. “I think I will be remembered as someone who, to a certain extent, broke the rules.” By eliminating the superfluous, focusing on comfort, and acknowledging the elegance of simplicity, Armani has changed fashion for women as well as for men. His flowing, neutral-toned jackets for career women replaced the austere, “dress-for-success” suits that aped what businessmen typically wore. He introduced beautiful fabrics and subtle tailoring, following his own inspirations rather than a rigid fashion formula. For example, a trip to Japan inspired much of his 1981 collection, and an Italian motorcycle sport influenced his “Easy Rider” collection of 1982. “Drastically imposed a fashion . . . would mean having no respect for the consumer,” he once explained. “As far as I am concerned, I do just the opposite: if I catch sight of a man or woman on the street dressed in a way that strikes me as uniquely elegant, I might interpret it for my collections. The goal I seek is to have people refine their style through my clothing without having them become victims of fashion.” Fashion critics have praised Armani’s designs for their elegant simplicity, prompting New York Times writer Bernadine Morris to refer to him as “the world’s master tailor.” Celebrities such as John F. Kennedy, Jr., Michelle Pfeiffer, and Jodie Foster regularly wear Armani clothes. In the music world, Gwen Stefani of No Doubt has modeled his fashions, and Jakob Dylan of the Wallflowers has become known for his trademark black Armani suit. Thus, more than two decades after launching his own line of clothing, Armani continues to shape the worldwide fashion industry.
Chronology: Giorgio Armani 1934: Born. 1954: Began working at La Rinascente department stores. 1954: Joined Nino Cerruti as menswear designer. 1974: Introduced first Armani menswear collection. 1975: Cofounded Giogrio Armani SpA and added women’s designs to Armani line. 1976: New York retailer Barney’s introduced Armani line in United States. 1980: Designed Richard Gere’s wardrobe in American Gigolo and launched Giorgio Armani U.S.A. 1985: Won the Cutty Sark Men’s Fashion Award. 1991: Awarded Honorary Doctorate from Royal College of Art
“Giorgio Armani.” Playboy, May 1993. Hirshey, Gerri. “Giorgio Armani.” GQ: Gentlemen’s Quarterly, November 1996. Intimate Architecture: Contemporary Clothing Design. Cambridge, MA: MIT Committee On the Visual Arts, 1982.
Sources of Information
Kopelman, Jill, et al., “Interview’s Women Who Rock!” Interview, November 1996.
Contact at: Giorgio Armani SpA Via Borgonuovo 21 Milan, 20122 Italy Business Phone: 02-723181
“Law: In Corruption Case, Armani Agrees to a Plea Bargain.” Wall Street Journal, 13 May 1996.
Bibliography
Martin, Richard, ed. Contemporary Fashion. Detroit: St. James Press, 1995.
Agins, Terry. “Who’s News: Calvin Klein Names Forte, Executive at Rival Armani, To Two Key Positions.” The Wall Street Journal, 24 March 1994.
Martin, Richard and Harold Koda. Giorgio Armani: Images of Man. New York: Rizzoli, 1990.
Bruzzi, Stella. “Sight and Sound A-Z of Cinema: Fashion.” Sight & Sound, November 1996.
Martin, Richard, ed. The St. James Fashion Encyclopedia. Detroit: St. James Press, 1997.
Current Biography Yearbook: 1983. New York: H.W. Wilson Co., 1983.
Mead, Rebecca. “The Last Designer.” New York, 16 September 1996.
“The Fashion Page: Giorgio Armani.” 27 May 1998. Available from http://www.glitter.com/designers/Giorgio Armani/index.html.
Pendergast, Sara, ed. Contemporary Designers. Detroit: St. James Press, 1997.
Forden, Sara Gay. “Giorgio Armani: The Past, Present and Future of Designer Men’s Wear.” Daily Record News, 8 June 1994. Forden, Sara Gay. “Numero Uno: Giorgio Armani, the World’s Most Successful Designer, Still Isn’t Satisfied.” Women’s Wear Daily, 26 October 1994.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Spindler, Amy M. “Couture Skips the Revolution.” New York Times, 4 February 1997. Ward, Melanie. “Armani in America.” Harper’s Bazaar, September 1996.
S t u d e n t s
4 1
Mary Kay Ash (1918-) Mary Kay Cosmetics
Overview With innovative sales techniques and programs aimed at boosting the self-esteem of her employees, Mary Kay Ash has built the largest direct-sales cosmetic empire in the United States. Mary Kay Cosmetics is a Fortune 500 company with more than $1.5 billion in retail sales annually.
Personal Life Mary Kay Ash was born May 12, 1918, in Hot Wells, Texas. She was the youngest child of Edward Alexander and Lula Vember Wagner. As a child, Mary Kay was forced to be self-reliant. Her father was ill with tuberculosis, and her mother worked 14-hour days managing a restaurant. Ash did the housework, cooked meals, and cared for her father. She gives much of the credit for her later success to her mother, who constantly encouraged her. Ash was an honor student with a keen competitive streak. One of her favorite hobbies was extemporaneous speaking, which she enjoyed doing competitively. She placed second in a statewide speech contest while still in junior high and was an honor member of her high school’s debate team. She completed high school in just three years, but her family could not afford to send her to college. Instead, she married J. Ben Rogers when she was 17 years old, and they had three children. The marriage failed after her husband, who had been drafted by the military, returned from fighting in World War II and announced he wanted a divorce. At 27, Ash enrolled in
4 2
M a r y
K a y
A s h
undergraduate courses at the University of Houston, intending to become a doctor. The emotional turmoil surrounding her divorce, combined with her other duties of homemaking and child-care, prompted her to quit college and concentrate on a career in sales. Ash remarried in 1960, but her second husband died suddenly of a heart attack three years later, just as she was preparing to launch her new business. Shortly afterward she met her third husband, Melville Jerome Ash, whom she married in 1966. Although Ash took this husband’s surname, she was already widely known as Mary Kay by 1966. Ash has documented her experiences in two books: an autobiography entitled Mary Kay: The Success Story of America’s Most Dynamic Business Woman and a leadership guide entitled Mary Kay on People Management.
Career Details In 1939 Mary Kay began work as a salesperson for Stanley Home Products, which sold household products at “parties” hosted by a housewife and attended by women friends and neighbors. Her sales were remarkable, and in 1952 she was lured away to become national sales director for World Gifts, another direct sales company. In little more than a decade she extended World Gifts distribution into 43 states and earned a seat on the company’s board of directors. In 1963 Mary Kay sustained a devastating blow. After less than a year at work, a male assistant, whom she had trained in everything she knew about selling and training others, was promoted above her at twice her salary. In response to this incident, she quit. At the age of 48, a veteran of both direct sales and the corporate boardroom, Ash felt challenged to offer energetic women business opportunities they might not find elsewhere. She soon came up with a blueprint for a workable direct-sales company. What she needed was a product, something that could be used up and reordered again and again. With her life savings of $5,000, Ash bought the recipes for special skin softening formulas from the daughter of an Arkansas hide tanner. She furnished a modest storefront in Dallas and set up a small manufacturing plant. Ash’s first employees were her second husband, a chemist, and nine of her friends. Tragically, her husband died of a heart attack just a month before the business was to open, but she still launched Beauty by Mary Kay on September 13, 1963. Through sheer hard work and enthusiasm, Ash, her son Richard Rogers, and their staff of consultants made $198,000 in wholesale revenue the first year. The following year the total reached $800,000. By then, Beauty by Mary Kay had been rechristened Mary Kay Cosmetics and had attracted a sales force of 3,000 women. Mary Kay Cosmetics offered its stock for sale to the public in
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Mary Kay Ash.
(Courtesy of Halcyon Associates, Inc.)
1968 and the company’s greatest period of growth after its formative years came in the 1970s and early 1980s, when stock prices rose by an astonishing 670 percent. In 1981 sales reached $235 million, an increase of 41 percent over the previous year. Sales dropped from $323 million to $249 million between 1983 and 1985. The stock bottomed out at nine dollars a share. In part, the crisis was a result of the improving economy. Women traditionally quit their jobs or found steadier employment rather than continuing to work in direct sales, according to Texas Monthly. The company’s growth was stagnant. “What few analysts or business reporters understood, however, was that Mary Kay Ash was prepared to give up her entire net worth to stay on top,” wrote Skip Hollandsworth in Texas Monthly. “In a major $450 million leveraged buyout in 1985, Mary Kay and her family purchased all the company’s publicly issued stock and took Mary Kay Cosmetics private. A new group of younger executives, brought in to handle the day-to-day operations, quickly updated the company’s image. The rather bland line of cosmetics was revamped and pretty young models were pictured in the product catalogs. The executives also boosted the commissions paid out to consultants to persuade younger women to leave their highrise offices and join Mary Kay.” Ash was succeeded by her son Richard in 1987, but remains active in the business. In 1995, a decade after the leveraged buy-out, Mary Kay was selling an esti-
S t u d e n t s
4 3
M a r y
K a y
A s h
Chronology: Mary Kay Ash 1915: Born. 1963: Launched Mary Kay Cosmetics in Dallas, Texas. 1964: Mary Kay Cosmetics earned $198,000. 1968: May Kay Cosmetics stock went public; sales top at $10 million. 1970: Opened first Mary Kay branch office. 1981: Wrote autobiography, Mary Kay: The Success Story of America’s Most Dynamic Business Woman.
Perhaps the most outstanding characteristic of Mary Kay Cosmetics is the enthusiasm of its sales force. This infectious fervor for both product and company philosophy is largely the result of Ash’s personal style. She showers top performers with lavish gifts and public praise. Every year the company awards trademark pink Cadillacs, diamond jewelry, and five-star vacations to deserving employees. The affection of her work force was once the subject of amusement in the business world, but now other companies study her program of self-esteem boosts and generous incentives. Ash has been credited with offering a business run by women to benefit women. Remembering the promotion she lost to a man 30 years earlier, Ash told Texas Monthly, “Those men didn’t believe a woman had brain matter at all. I learned back then that as long as men didn’t believe women could do anything, women were never going to have a chance.” She continued, “I feel God has led me into this position, as someone to help women to know how great they really are.”
1983: Named one of America’s 100 most important women by Ladies Home Journal. 1985: Leveraged buy-out returned company to private ownership by family. 1987: Succeeded by her son, Richard, as head of Mary Kay.
Sources of Information Contact at: Mary Kay Cosmetics 16251 Dallas Pkwy. Dallas, TX 75247 URL: http://www.MaryKay.com
Bibliography mated $866 million in products, at wholesale, to 20 million women annually. Over 6,500 of the 30,000-member sales force drive complimentary pink Cadillacs and other automobiles worth more than $90 million. The company also claims responsibility for creating more than 75 millionaires, calculated by the number of women who have earned more than a million dollars in commissions over the course of their careers. The Ash family’s personal fortune, according to Texas Monthly, is estimated at more than $325 million. From its base in Dallas, Mary Kay Cosmetics has grown into an international empire, with consultants throughout Canada, Europe, and even the former Soviet Union.
Colwell, Shelley M. “Mary Kay at 30: Still in the Pink.” SoapCosmetics-Chemical Specialties, September 1993. Current Biography Yearbook. New York: H.W. Wilson Co., 1995. Farnham, Alan. “Mary Kay’s Lessons in Leadership.” Fortune, 20 September 1993. Fitzpatrick, Doreen D. “New American Heroes: Women Venture Forth Where Capital Fears to Go.” Westchester County Business Journal, 23 May 1994. Hollandsworth, Skip. “Hostile Makeover: In Dallas the Frenetically Fashionable Jinger Heath is Locked in a Beauty War with the Venerable Queen of Cosmetics, Mary Kay Ash.” Texas Monthly, November 1995. Layman, Richard, ed. American Decades: 1960-1969. Detroit: Gale Research, 1995. Neely, Jamie Tobias. “In the Pink: Makeup Queen Mary Kay Remains Driven by Success.” Spokesman-Review, 19 October 1995.
Social and Economic Impact The company’s success rests nearly as much on Mary Kay’s dynamic personality and personal sales ability as it does on the quality of the merchandise. From the outset, Ash’s company was different. Her salespeople were called “consultants.” They demonstrated products on clients at home “classes” aimed not only at selling cosmetics but also at fostering better self-images among women customers. Ash managed company affairs, particularly the important task of motivating and rewarding her consultants.
4 4
B u s i n e s s
Newsmakers. Detroit: Gale Research, 1997. Steffy, Loren. “No Powder-Puff Battle: Mary Kay Sues Two Rivals Over Names.” Dallas Times Herald, 9 November 1990. Terry, Dian. “Mary Kay Reports Record Sales for First Half of 25th Anniversary Year.” Business Wire, 8 August 1988. Who’s Who in America. New Providence, NJ: Marquis Who’s Who, 1996. Who’s Who of American Women. New Providence, NJ: Marquis Who’s Who, 1996.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Charles Babbage Overview Although Charles Babbage never built an operational mechanical digital computer because of technology limitations, his design concepts conceived 150 years before the computer came into practical usage have been proven correct, and Babbage is regarded as the “father of the computer.” Babbage was an expert mathematician who was also a significant economic theorist and inventor. He invented many measuring tools and standardizing techniques, including the cow-catcher on trains, the lighthouse signaling device most commonly used, a mathematical means for code-breaking used by the British government, the dynamometer, and the ophthalmoscope.
(1792-1871) Inventor
Personal Life Charles Babbage was born in a wealthy rural area of England known as Teignmouth, in Devon county, on December 26, 1792, at the beginning of the Industrial Revolution era. He came from a family with a long heritage in England; he grew up as an aristocrat. His father, Benjamin Babbage, was a well-known banker. Babbage grew up in a region of England that was economically based on agriculture, mining, and the seaport town of Dartmouth. After a comfortable childhood filled with curiosity about science, Babbage attended Cambridge College in England, where he excelled in mathematics. With friends at school he modified some aspects of calculus and transformed calculus throughout all of England. In 1817 he received his master of arts degree from Cambridge University.
4 5
C h a r l e s
B a b b a g e
Career Details Babbage lived his life largely in the role of an amateur scientist and inventor who pursued several other avocations as well, including that of philosopher, aesthete, politician, professor of mathematics, and founder of several scientific societies. He spent his life as a booster of science in general and as a champion of technology and the Newton physics of the day. He was a member of the British Association for the Advancement of Science and the founder of several organizations, including the Statistical Society of London, the Royal Astronomical Society, and The Royal Society. He was also honored with the Lucasian Chair of Mathematics at Cambridge University. Throughout his life Babbage invented many mechanical items, including the cow-catcher on trains, the dynamometer, the standard railroad gauge, lights for lighthouses, time-signals for the world’s most accurate clock in Greenwich, England, as well as the heliograph and ophthalmoscope. He is known today primarily as the man who spent his life trying to literally build the first universal digital computer.
Charles Babbage.
(The Library of Congress.)
Charles Babbage lived a life that earned him the title of eccentric. He was known as a cranky, rather continually distracted man “with a dirty collar.” He was extremely intelligent and lived much of his life pursuing his curiosities in uncommon ways. He was, for instance, intensely interested in beauty, but spent his time finding beauty in unusual objects: stamped buttons, the shape of stomach pumps, the physical appearance of both railroad trains and train tunnels. He found beauty in most things that suggested humans’ mastery over nature. He married Georgianna (Whitmore) Babbage while at Cambridge University in 1814, at the age of 23. The marriage was a comfortable one, but in August of 1827, at age 35, his wife died suddenly. Babbage left England after his wife’s death to wander Europe for a year, presumably to deal with his grief. His personal life did not demand that he pursue a career. He was somewhat independently wealthy and so continued to pursue directions that intrigued him personally. He had considered becoming a minister for a time, but that was largely because he had little interest in pursuing business or law, which were common careers for affluent educated men of his era. When Babbage died in 1871, at age 81, few knew that a crater on the moon had been named for him. His burial procession was small, and his passing was virtually unnoticed in the English press. His life of science and invention was basically ignored during his own time.
4 6
B u s i n e s s
The idea of the computer first occurred to Babbage while in college. As a member of an academic society, he had been given the task of verifying tables of astronomical data. He found numerous errors. Indeed, errors in mathematical tables were becoming increasingly common during these early years of the Industrial Revolution, and they often had disastrous results. For example, mistakes such as inaccuracies in navigational tables were often the cause of shipwrecks. Babbage thought there should be a way to create a machine that could calculate mathematical data much faster than a human could, and without error. He then set to work to try to make such a machine. By 1822 Babbage had worked out all the ideas for the logical structure of the computer, which he had called the “Difference Engine,” a machine that could compile and print mathematical tables. His small working model won the Royal Astronomical Society’s first Gold Medal. The following year, Babbage received government funding to build a full-scale model. But progress was slow and expensive, and in 1834 the government withdrew its support. By then, Babbage had conceived of the more complex idea of the “Analytical Engine,” which was a programmable automatic machine that could not only compute a single mathematical function but could be programmed to perform many different computations. Although the Analytical Engine was never finished, due partly to the limitations of nineteenth-century technology, it was Babbage’s invention of the Difference Engine and the Analytical Engine that earned him the modern-day title of “the father of the computer.” Babbage was also an important political economist. He was one of the first to talk about the impact of the factory in economics and to discuss the division of labor. His theories and discussions were later incorporated and dis-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
C h a r l e s
B a b b a g e
cussed by John Stuart Mill and was fundamental to Marxist theory of capitalist socio-economic development.
Social and Economic Impact Babbage saw the computer, if developed, as working hand-in-hand with industry to improve the lives of people with accurate and scientific knowledge of the world. His research into many areas, because of the limitations of existing technology, made his ideas of genius seem merely visionary and impractical. Even though Babbage’s attempts to build his Difference Machine and Analytical Engine did not result in an actual product that could be used at the time, his efforts had a profound effect on mechanical engineering. Many improvements to machine tools and techniques ensued from his research and efforts, which included a study of all mechanical devices that could be used to build his machines. Babbage also had a profound effect on society by organizing large social gatherings where the European intellectual elite could meet and discuss ideas. Despite his reputation of being cranky and cantankerous, he was a leading London socialite and his famous Saturday night parties often numbered between two and three hundred guests. Babbage’s ideas planted the seed that eventually grew to be the modern-day computer. No other device can claim such a staggering effect on society in the twentieth century as the computer; and Babbage’s visions for the machine were finally realized more than 100 years after his death.
Chronology: Charles Babbage 1792: Born. 1822: Won a Royal Astronomical Society Gold Medal for his invention, the “Difference Engine.” 1823: Received government funds to build a full-size “Difference Engine.” 1833: Wrote and published The Economy of Manufactures and Machinery. 1835: Created the first reliable actuarial tables. 1835: Conceived the idea of the “Analytical Engine,” the direct ancestor of the modern digital computer. 1837: Wrote and published A Ninth Bridgewater Treatise. 1864: Wrote and published Pasages from the Life of a Philosopher. 1871: Died.
Crystal, David, ed. Cambridge Biographical Encyclopedia. London: Cambridge University Press, 1994. Hyman, Anthony. Charles Babbage, Pioneer of the Computer. New York: Princeton/Oxford University Press, 1982. Hyman, Anthony. Selected Works of Charles Babbage. London: Cambridge University Press, 1989.
Sources of Information
Mosely, Maboth. Irascible Genius: A Life of Charles Babbage, Inventor. Hutchinson, 1964.
Bibliography Adams, W. Davenport. Dictionary of English Literature, Detroit: Gale Research, 1966.
Muir, Hazel, ed. Larousse Dictionary of Scientists. New York: Larousse, 1994.
“Charles Babbage.” Available at www://ei.cs.vt.edu/history/Babbage.html.
The World Almanac Biographical Dictionary. New York: World Almanac, 1990.
“The Cranky Father of the Computer.” Fortune, March 1964.
World of Invention. Detroit: Gale Research, 1994.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
4 7
Steve Ballmer Microsoft Corporation
Overview Steve Ballmer who has worked for Microsoft Corporation since 1980, has left a lasting impression on his business colleagues and the Microsoft employees with his energetic and motivational style. Credited for revamping the Microsoft marketing program, Ballmer has served as second in command to Chairman Bill Gates. Gates relied on Ballmer for his opinions and as an information provider. Ballmer has continued to benefit Microsoft Corporation by combining his personal charisma with business savvy and a sharp intellect.
Personal Life Born in a suburb of Detroit, Michigan, Ballmer’s charisma and talent as a motivator were revealed early in life. While attending school in Birmingham, Michigan, a teacher remembered that Ballmer was always very excited and animated. Ballmer first met his future boss, Bill Gates, in 1973 when they attended Harvard University. In a Computer Reseller News article, Gates described Ballmer as his opposite. Ballmer was involved in a wide variety of extracurricular leadership roles, while Gates knew no one. Although Gates dropped out after his first year at Harvard, Ballmer completed school with a degree in applied math and economics. After graduation, he worked for Proctor and Gamble. He also attended Stanford Business School before Gates recruited him to join the young Microsoft Corporation in 1980. In 1992, Ballmer surprised many in the software industry by publicly voicing his support for the Clinton-
4 8
S t e v e
B a l l m e r
Gore campaign. Other industry players, including Microsoft, had traditionally steered clear of taking political stances. Ballmer insisted that his support, which included a $2000 personal check, had nothing to do with the views of the company and were based on his respect for Al Gore. However, Microsoft at that time had been undergoing an 18 month investigation by the Federal Trade Commission, who questioned whether the company was complying with fair competition laws. Ballmer denied any connection between the investigation and his personal support of Clinton and Gore in that year’s presidential campaigns. Ballmer remained largely devoted to work in his life, though in a 1992 Seattle Times article he mentioned that he had decreased his working hours down to 60 hours a week from a previous 90-100 hours per week. He was hoping to spend more time with his wife, Connie, and their two sons. His hobbies include jogging, golf, and watching basketball games. But generally, he said, “I don’t juggle, I don’t ride a unicycle. I work. I’m consumed by it. It’s fun.” (An August 1998 Time magazine article values Ballmer at $14 billion.)
Steve Ballmer.
Career Details In 1980, Ballmer joined Microsoft in the company’s first non-programming position. Gates hired him at a starting salary of $50,000. Ballmer’s immediate advice to Gates was to hire 50 to 60 more people (the company at that time had a base of 30 employees.) Gates reacted strongly, claiming that Ballmer was going to “bankrupt the company.” In their first years together, Gates and Ballmer often clashed on strategy. They learned to work together and modified their strategy so that they planned for the long term, without losing control. Ballmer undertook such tasks as heading the systems software division, driving the company’s marketing efforts, and providing a crucial link with key company customers. Ballmer and Gates worked together in the early years to achieve their long term vision for Microsoft. Although they were fortunate to have International Business Machines (IBM) as a first customer for their MS-DOS program. Ballmer and Gates actively recruited college graduates to work for the company, and established offices in Europe. They were also careful to ensure that the company had no cash flow problems so that they could continue to keep their focus on becoming a billion dollar software company.
(AP/Wide World Photos, Inc.)
the company sales strategy and taking it to unprecedented heights. Between 1991 and 1995, sales increased at the rate of $1 billion per year. According to a 1995 article in Computer Reseller News, employees were inspired by Ballmer’s hard driving motivational style and his productive work habits. When the Federal government began to object to what was perceived as Microsoft’s monopoly on the software market, sources close to the company attributed the origins of the troubles to less senior employees who were trying to imitate Ballmer’s competitive style and strategy. As one Microsoft marketing manager put it, “(Ballmer) challenges you to think outside the box. After a session with Steve, you want to run through walls for the guy.”
During the late 1980s, Microsoft made new strides in the software industry and continued to penetrate new markets for their products; Ballmer was instrumental in guiding and representing these company moves. They collaborated with Ashton-Tate to provide a software development kit, released an improved operating system, and signed deals with such companies as Compaq and Novell. By 1995, Microsoft had annual revenues of nearly $6 billion. Ballmer was responsible for steering
Ballmer was also instrumental in the success of Windows 95 software, having previously laid the groundwork for the development of earlier Windows versions. Additionally, he smoothed the original Windows partnership with IBM, a relationship that was not always easy due to philosophic differences and IBM’s bureaucracy. Ballmer later referred to the relationship as dancing with the bear. Microsoft wanted IBM to install Windows on its computers. IBM, however, wanted its own versions of Windows and DOS, which eventually became known as OS/2 and Presentation Manager. However, the partnership ended in 1992, when IBM announced a plan to combine Windows into OS/2, with the emphasis on the latter. Ballmer argued that the arrangement would not work technically. Microsoft also opposed IBM’s move
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
4 9
S t e v e
B a l l m e r
Chronology: Steve Ballmer 1973: Meets Bill Gates at Harvard University. 1980: Joins Microsoft Corporation. 1984: Begins directing Microsoft work on Windows. 1984: Named head of Microsoft systems software group. 1987: Begins directing Microsoft work on OS/2. 1992: Promoted to Microsoft’s head of Worldwide Sales and Support. 1995: Becomes the 29th richest man in America. 1998: Appointed President of Microsoft Corp.
because it had the potential to undercut sales of Microsoft’s successful MS-DOS program. The incident ended a relationship of 11 years between Microsoft and IBM. Shortly after the break in that collaboration, Microsoft changed the name of the newest version of OS/2 to Windows NT, standing for New Technology. Ballmer designed the means by which Microsoft distributed and resold its products, and he created strategies for pricing and branding that led Microsoft to the forefront of the software industry. To market Windows 95, Ballmer made a mock television commercial which became famous and which demonstrated his charisma and salesmanship. Ballmer’s extroverted style, according to peers, masked his sharp intellect. Though Ballmer served Microsoft’s sales force, industry observers such as software newsletter publisher Jeffrey Tartar warned that, “the notion that Ballmer is the rah-rah king of Microsoft really underestimates his role. He’s the marketing genius behind that company. He comes up with the branding, the pricing. These are things that Bill Gates neither knows nor cares about.” Ballmer’s ability to take in and retain information worked to his advantage, both with colleagues and potential competitors. One colleague in the industry, Doug Hamilton of Hamilton Laboratories, encountered Ballmer at a trade show. Hamilton was shocked when Ballmer “knew my product, knew where I was, knew all about me because Microsoft makes it their business.” Hamilton contrasted that with the attitude he had encountered at IBM, who acted like they could not be bothered.
5 0
B u s i n e s s
Besides being a good listener, Ballmer admitted to being a sponge for information and is recognized for being an excellent strategic thinker. Ballmer was well known for his loud and forceful meetings; in one case, he damaged his vocal chords and required surgery to recover. At marketing presentations he often cut straight to the point, insisting that presenters cut out the marketing talk and get to the real issues. Company sources called this strategy “push back.” By 1995, Microsoft had grown to more than 20,000 employees. In mid-1995 Ballmer and Gates announced the company’s next strategic direction, to facilitate customers’ use of the Internet and intranet applications. Ballmer promised that Microsoft would lead the way in providing new Internet technologies that would satisfy customers needs. The company updated software such as Internet Explorer and Windows NT to keep up with technological advances in the Internet. In an article in Computer Reseller News (November 16, 1997) Ballmer commented on Intenet trends, emphasizing that the Internet provided an excellent way for businesses to access potential customers. He predicted more and more commerce being conducted on the Internet once issues such as security and speed of transactions were overcome. (Ballmer also believed that an increasingly mobile workforce would lead to changing customer needs, such as increased demand for sophisticated laptops and new functions provided by PCs, like videoconferencing and better links, to work mainframes and the Internet from home.) Microsoft’s entry into the world of the Internet reflected how the company had reacted to technological trends in the past—Microsoft was not always the first company to recognize an opportunity but when it did, it was especially skilled at spotting or creating products that would catch on. While Microsoft had excelled in selling PCs to corporate customers, it still had not sold corporate customers on the use of Microsoft software for more centralized corporate functions like record keeping or budget management. Ballmer recognized that as a weakness and focused company efforts on customer service and developing software that could meet corporate needs. Ballmer also recognized the threat to Microsoft from companies that were working on ways to eliminate operating systems such as Windows from computers. Two contenders included Lotus Development Corp. and Netscape Communications Corp. Bill Gates appointed Ballmer president of Microsoft Corp. on July 21, 1998. His new responsibilities included addressing these problems. An August 1998 Time article quoted Bill Gates citing that one benefit of making Ballmer the president is that Gates will be freed up to work on “architectural breakthroughs” for a variety of computer devices.
Social and Economic Impact While Ballmer has been at least partially responsible for Microsoft’s meteoric rise in the software industry, he
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S t e v e
also realized that the ongoing government investigation into the company was shaking company relationships with customers and hurting company morale. The probe was initiated when the Justice Department decided that Microsoft was violating the tenets of fair competition when it included its Internet software with every sale of Windows 95. In 1998, Ballmer admitted that the company, known for its hardball tactics and fearlessness, was examining whether its corporate culture needed to change. But Ballmer refused to apologize for the company’s aggressive stance in business. In an article in the San Francisco Chronicle Ballmer said “I’m not apologetic. This is America. This is capitalism. The notion that added value for consumers is criminal is ludicrous. If we can’t add innovation, then that doesn’t help the customers.” Ballmer went on to describe the future of Microsoft, including such as simplifying software, doing everything on the Internet, and making software smaller for appliances and bigger for networks. Ballmer’s influence on the computer world is undeniable. His participation in the development of the Windows operating system has meant that the average person can easily navigate computers. Though Microsoft has been accused of being monopolistic, the domination of this operating system has allowed a nearly universal exchange of information. Ballmer has also contributed to Microsoft, and by extension the computer world, in less tangible ways. He has brought a new philosophy to Microsoft and the computer world. In a world of technology where Microsoft is sometimes seen as the evil, monopolistic empire, he has understood the importance of maintaining customer satisfaction on all levels, whether the customer is a business or an individual. According to Microsoft, his new goal is to reinvent “the Microsoft working environment so that the company is even more responsive to changing customer needs, new technologies and market dynamics.”
B a l l m e r
Angwin, Julia. “Microsoft’s Power Player - VP Steve Ballmer Defends his Company.” San Francisco Chronicle, 6 December 1997. Burgess, John. “His Firm Facing AntiTrust Probe, Microsoft Executive Stumps for Clinton.” Washington Post, 30 October 1992. Corcoran, Elizabeth. “Microsoft Official Says Battle is Taking a Toll.” Washington Post, 8 January 1998. Darrow, Barbara. “Steve Ballmer.” Computer Reseller News, 13 November 1995. Dellecave, Tom, Jr. “View From the Top: Perched Atop Microsoft, Steve Ballmer Tells How to Turn a Profit on the Internet.” Sales and Marketing Management, September 1996. Flores, Michele Matassa. “Microsoft at 20, Bill Gates at 40—A Look Ahead.” Seattle Times, 13 August 1995. Hamm, Steve. “The Hard Sell.” PC Week, 10 October 1994. Hinsch, Kathryn; Taucher, Marty; Lematta, Claire; and Pam Edstrom. “Microsoft Announces Version 1.2 of MS OS/2 With Presentation Manager.” Business Wire, 16 May 1989. Jewitt, Joel. “Everex Announced the Availability of Microsoft OS/2 Operating System for Its Personal Computers.” Business Wire, 17 October 1988. Johnston, Margaret. “Headaches Greet Microsoft President: Ballmer’s Major Challenges Include Customer Satisfaction and Rivals’ Complaints.” InfoWorld, 27 July 1998. Maloney, Janet. “Mr. Surround-Sound: Think Bill Gates is Competitive? New Microsoft President Can Outbark Him Any Day” Time, 3 August 1998. Richardson, W. Knox; Taucher, Marty; Hinsch, Kathryn; Edstron, Pam; and Claire Lematta. “Ashton-Tate and Microsoft Announced Software Development Kit for SQL Server.” Business Wire, 14 September 1988. Selingo, Jeff. “Right Hand at Microsoft: Gates’ Pal Touts Firm’s Latest Products.” Arizona Republic, June 21, 1995. “Steve Ballmer: President.” Microsoft Corporation Available at http://www.microsoft.com/presspass/exec/steve/steve.htm. Sweney, John; Globe, Debra; Berman, Mike; Rice, Nora; and Tony Sapienza. “Compaq Signs Integration Agreements with Microsoft, Novell, and SCO.” Business Wire, 15 October 1990.
Sources of Information Bibliography
“The Top 25.” Forbes 13 October 1997.
Andrews, Paul. “The Man Considered No. 2 Behind Gates Hopes for Order in Windows-OS/2 Battle,” Seattle Times, 15 April 1992.
Whitaker, Mark. “How We Did It.” Newsweek, 23 June 1997.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
5 1
Jill Barad (1951-) Mattel, Inc.
Overview As president and chief executive officer (CEO) of Mattel Inc., Jill Barad has made a name for herself as a savvy executive in the toy industry and as one of only four women to head a Fortune 1000 company. Barad was responsible for the boom in Barbie doll sales, which account for more than one-third of Mattel profits. She took part in management decisions that helped to revitalize the company after a corporate crisis in the mid-1980s.
Personal Life Jill Barad was born in New York City on May 24, 1951, to parents Larry and Corinne Elikann. A television director and pianist/artist, the couple taught their daughter that she could be anything that she wanted to be, that being female was not a barrier to having a career and that no field of endeavor was off-limits.
Career Details Having been named as one of 1994s “50 most beautiful people in the world” by People magazine, Barad’s good looks and fashion sense often lead to comparisons between the Mattel executive and one of the company’s most famous products, the Barbie doll. In fact, Barad’s first jobs were in the beauty field. While in college, Barad took a part-time job as a beauty consultant for Love Cosmetics. Later, she became a traveling representative for Coty Cosmetics, training department-store sales staff.
5 2
J i l l
She sent unsolicited proposals for marketing campaigns to the company’s executives, which led to a management position. In less than three years, Barad was promoted to brand manager for the entire Coty line. When Barad married in 1979, she quit Coty to move to Los Angeles, where she became an advertising executive for the firm of Wells, Rich, and Green. One of her biggest clients was the Max Factor cosmetics company. She left the agency when she was pregnant with her first child, staying at home for a few years. Barad joined the Mattel toy company in 1981, after presenting an idea for selling makeup for little girls. While her proposal was not developed, it led to her job in Mattel’s marketing department. In the mid-1980s Mattel suffered a financial crisis when its Masters of the Universe product line dropped in popularity. At a time when the company was looking to reduce inventory and lay off employees, Barad accepted a transfer to product development. This move may have been the key to her longevity at Mattel, although it also earned her criticism for being disloyal to her coworkers and boss. In her new position, Barad soon demonstrated her ability to generate viable new concepts as well as to enhance existing products. She was responsible for the expansion of the Hot-Wheels toy car line, for negotiating financial deals with key companies like Disney and McDonald’s, and for the revitalization of Barbie products. Under her guidance, the Barbie product line grew to account for half of Mattel’s revenues in 1992. That same year, Barad was made president of the Girls and Activity Toys Division at Mattel. In addition to improving other products and developing new ones, Barad became a key player, alongside Mattel CEO John Amerman, in negotiating purchases and partnerships that greatly improved the company’s fortunes. After 15 years with Mattel, she became CEO of the company in January 1997, when Amerman retired. Consequently, Barad became the only woman to head a Fortune 500 company. As CEO of Mattel, Barad will be working to expand the company. At the time of her ascension, Mattel’s growth was slipping, and a merger with competitor Hasbro toys was abandoned. Business Week reported that Barad counteracted these developments by expanding the company’s overseas business, saying, “The business is there for the taking.” She will also preside over Mattel’s continued push to produce multimedia software and video games, including products that break away from the adventure and combat themes that dominate the market. Barbie products are on the forefront of this campaign. The most popular of the computer programs has been the Barbie Fashion Designer, which allows users to create 15,000 outfits for Barbie that can be viewed in 3-D, and then printed out on special fabric and assembled without sewing. Although some critics question whether these toys simply reinforce sexist stereotypes, Barad sees such products as resources that have been de-
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
B a r a d
Chronology: Jill Barad 1951: Born. 1973: Graduated from Queens College, New York City, with a degree in English and psychology. 1981: Joined Mattel, Inc. as a product manager. 1982: Named marketing manager of Barbie dolls. 1988: Barbie doll sales climbed to over $1 billion. 1990: Became president of Mattel USA. 1991: Elected to Mattel’s board of directors. 1992: Became president and chief operating officer of Mattel, Inc.
nied to her sex. She told Time, “Equal tools mean equal opportunity . . . . You can explore and create on the computer in boundless ways. I want girls to have those skills at their fingertips.” Some of the most successful products to be introduced by Barad are the Heart Family, P.J. Sparkles, and L’il Miss Makeup. The L’il Miss Makeup doll, which utilizes a color-change technology that allows a little girl to “apply” makeup using cold water on a sponge or “remove” it with warm water, was a project that was particularly important to Barad, since it introduced cosmetics to little girls. Barad also worked with Amerman to make Mattel more than a doll company, with the acquisition of FisherPrice, Inc. and Kransco (the Frisbee and Hula-Hoop manufacturer.) She also participated in negotiations for a product agreement with Walt Disney Co. The Disney partnership was identified by Brandweek’s John McManus as one of several influential alliances that are expected to impact advertising on network television due to Disney’s ownership of ABC/Capital Cities. As Kim Masters noted in Working Woman, “Barad’s rise hasn’t been without controversy—whether because of others’ jealousy, lingering sexism or her personal style. Her admirers say she has prevailed through a combination of charm, talent, and underlying toughness; detractors say Barad worked her way up the ladder with a false smile, cutting out anyone who got in her way.” Certainly, Barad operates in a manner that defies all obstacles. She summed up her professional philosophy for Masters thus: “There’s no such thing as ‘can’t.’”
S t u d e n t s
5 3
J i l l
B a r a d
As a boss, Barad tries to inspire her team by reinforcing images of their successes rather than focusing on their failures.
Social and Economic Impact Undoubtedly, Barad is best known for taking the Barbie doll from an old reliable seller to one of the hottest products on the toy market. Barad masterminded the Barbie “brand expansion” that included many new, and often costly, products. Now there are some 100 different Barbie dolls on sale each model year—costumed for careers such as doctor, business executive, pilot, and astronaut. There are also Barbies in designer clothes, kidsize Barbies, and a Gold Jubilee anniversary Barbie that sold for up to $1000. Over the course of eight years, Barad tripled Barbie sales. In 1988, Mattel reached $1 billion in sales and in 1997, the company topped $4.6 billion. Eighty percent of all sales are generated by its four main brands: Hot-Wheels, Fisher-Price, Disney, and Barbie. A much sought after executive, Barad limits her board membership to three outside boards: BankAmerica, Pixar, and Microsoft. Finally, Barad’s continual success has allowed her to act as a role model to young girls. Her high profile career has served as a reminder of what women can and, indeed, do achieve in the business world.
5 4
B u s i n e s s
Sources of Information Contact at: Mattel, Inc. 333 Continental Blvd. El Segundo, CA 90245 Business Phone: (310)252-2000 URL: http://www.mattelmedia.com
Bibliography Carlat, Larry. “Queen of the Aisles.” Brandweek, 12 February 1996. Current Biography Yearbook. New York: H.W. Wilson Co., 1995. Donlon, J.P. “A Doll’s House.” Chief Executive, September 1997. “The Fifty Most Beautiful People in the World.” People Weekly, 9 May 1994. Greenwald, John. “Barbie Boots Up.” Time, 11 November 1996. Hoover’s Online. August 1998. Available from http://www.hoovers. com. Lubove, Seth. “Barbie Does Silicon Valley.” Forbes, 16 September 1994. Masters, Kim. “It’s How You Play the Game.” Working Woman, May 1990. Sellers, Patricia. “Women, Sex, and Power.” Fortune, 5 August 1996. Who’s Who in America. New Providence, NJ: Marquis Who’s Who, 1996. Who’s Who in American Women. New Providence, NJ: Marquis Who’s Who, 1996.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
P. T. Barnum Overview P. T. Barnum called himself the “Prince of Humbugs,” in reference to the many outrageous stunts and exhibits that were part of his exploits as a showman. His tours, museums, lectures, and biography made him famous and wealthy long before he entered the circus business. He eventually formed the innovative Barnum and Bailey Circus in the 1880s.
(1810-1891) Barnum and Bailey Circus
Personal Life P. T. Barnum was born on July 5, 1810, to parents Philo F. Barnum, a farmer and storekeeper, and Irena (Taylor) Barnum. When Philo died, his son was just 15 years old and was forced to find the means to support his mother and five brothers and sisters. At 19, Barnum married Charity Hallett, with whom he would father four daughters. Following Charity’s death when Barnum was 64, he married 24 year-old Nancy Fish. After trying his hand at various jobs, including store clerk, lottery agent, and grocer, Barnum bought the newspaper in his home town of Bethel, Connecticut, a weekly called the Herald of Freedom. Over the course of several years, he was arrested three times for libel and once spent 60 days in jail. In 1834 Barnum moved to New York City to become a shopkeeper, a job he held for about a year.
Career Details Barnum was transformed from shopkeeper to showman when he discovered an elderly black woman,
5 5
P . T .
B a r n u m
seum was a source of tremendous financial success for Barnum. Some of his most popular attractions were human freaks, such as the Siamese twins Chang and Eng; Anna Swan, the tallest girl in the world; Annie Jones, the bearded lady; and 26-inch-tall “General Tom Thumb.” Equally important to the success of the museum were the stunts and advertising that Barnum created to publicize his exhibits. For example, General Tom Thumb was actually five-year-old Charles Stratton from Bridgeport, Connecticut. In 1842, Barnum contracted with the boy’s parents to exhibit him. Despite the fact that Barnum had discovered a truly extraordinary child, he still decided for publicity purposes to embellish the story and generated hype that the boy was “General Tom Thumb,” an 11 year-old who had just arrived from England. The publicity played well and Barnum, Stratton, and Stratton’s parents traveled across the United States and toured in England for almost three years.
Phineas Taylor Barnum.
(Public Domain.)
Joice Heth, who claimed to be George Washington’s nurse. A promoter in Philadelphia had not had much financial success when he tried to present Heth as the president’s 161-year old nurse. On August 6, 1835, Barnum paid $1,000 for the rights to exhibit Heth for 10 months. Under Barnum’s management, Heth was promoted by sensational advertisements and toured the country telling her supposed memories of the president’s childhood. When ticket sales to the exhibit finally started to fade, Barnum sparked new interest in a manner he often employed; he sent anonymous letters to the newspapers declaring the show was a hoax. One story he circulated claimed that Heth was not even a human, but an automaton, constructed of whalebone, India rubber, and numberless springs. Her so-called memories, the letter declared, were imaginary conversations actually told by the exhibitor who was a ventriloquist. People returned to see if they could figure out the truth of the matter. Upon Heth’s death, an autopsy showed that she was actually around 80 years old. Barnum claimed that he was the victim of a hoax. Having witnessed the public’s taste for the outrageous and improbable, Barnum sought an opportunity to satisfy such interests on much larger scale. In 1841, he scraped together the means to buy John Scudder’s American Museum, which housed conventional exhibits of stuffed animals and wax figures. Barnum transformed the place, turning it into a place of entertainment. The mu-
5 6
B u s i n e s s
Despite the nature of his human exhibits Barnum was not simply entertaining the uneducated masses. With Tom Thumb as his calling card, he was received by heads of state including President Lincoln and England’s Queen Victoria. Barnum’s European tours were tremendously successful, as were his lectures such as “The Science of Money Making, and the Philosophy of Humbug.” In his most “legitimate” endeavor, bringing Swedish soprano Jenny Lind to tour the United States, Barnum made a fortune for himself and for the singer. He acted as her manager from 1850-1852. Although Barnum is famous for developing the Barnum and Bailey Circus, this business was something of a postscript to his career. He formed his first circus in 1871, at the age of 61, promoting it as “the greatest show on earth.” He transformed the typically small, wagonbased show into a railroad-travelling, three-ring, electrically lit extravaganza. In 1881, he merged with his main competitor, James A. Bailey, to form Barnum and Bailey’s Circus, which became the most popular circus in the country.
Social and Economic Impact Barnum understood that people enjoy being fooled if they are knowing participants in the ruse. As he once said, “My dear sir, the bigger the humbug, the better the people will like it.” For Barnum not only wanted to make money with his shows, he also appears to have enjoyed the excitement of making each “discovery” more outrageous than the previous one. To this end, Barnum’s advertising claims were far more incredible than the actual events he promoted. For example, a Grand Buffalo Hunt proved to be a racetrack filled with listless animals that he imported from Boston. The American Museum display called the “Feejee Mermaid”, purported to have been caught off the Feejee (Fiji) Islands, was actually a fish body topped with a fake human head.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
P . T .
Barnum also made his own life the subject of public scrutiny, albeit in the form of an autobiography designed to entertain as much as inform. Published in 1855, The Life of P.T. Barnum, Written by Himself, was repeatedly revised by the showman. He claimed sales of a million copies for the work, and, presumably with the hope of even greater exposure, he later placed the book in the public domain. The showman’s obsession with publicity was so strong that, when he became seriously ill at the age of 81, he asked a New York newspaper to run his obituary in advance so that he could read it himself. Two weeks later, he died at his home. Barnum’s exaggerated claims constantly ran the risk of public exposure as fraud, but the showman was not daunted by negative press. As he told the New York Tribune in 1877, “I don’t care much what the papers say about me, provided they will say something.” Barnum also used two seemingly disastrous events, both fires at the museum that practically gutted it, to generate more publicity for his business. The financial success of Barnum’s many endeavors made him one of the country’s earliest millionaires. He was forced into bankruptcy in 1856, however, a number of his performers came to his aid. P. T. Barnum still fascinates the American public with his contradictory ways. While his display of human freaks is judged as demeaning according to current values, he was most often a friend to his cast of “curiosities,” many of who became rich in his employ. Barnum continues to be the focus of numerous exhibits and biographies, which celebrate the contributions he made to American culture and examine the fascinatingly complex character of P. T. Barnum.
B a r n u m
Chronology: P.T. Barnum 1810: Born. 1834: Moved to New York City. 1835: Began traveling with a woman who claimed to be 161 years old. 1841: Started operation of the New York City museum. 1844: First international tour with “General Tom Thumb.” 1855: The Life of P. T. Barnum, Written by Himself is published. 1871: Formed his first circus. 1881: Formed Barnum and Bailey Circus. 1891: Died.
Hart, James D. The Oxford Companion to American Literature. New York: Oxford University Press, 1995. Kunhardt, Philip B., Jr., and Philip B. Kunhardt, and Peter W. Kunhardt. “For an America That Loved Freaks.” New York Times Magazine, 20 August 1995. McCain, Diana Ross. “P.T. Barnum’s Early Years.” Early American Life, February 1996.
Sources of Information
“P. T. Barnum, Master Showman of the 1800’s, Is the Star of an Exhibition.” New York Times, 9 March 1996.
Bibliography
Publisher’s Weekly, 14 August 1995.
Berendt, John. “Notes on Hype.” Esquire, November 1993. Dictionary of American Biography. New York: Charles Scribner’s Sons, 1964.
Raffel, Burton. Politicians, Poets, & Con Men: Emotional History in Late Victorian America. Hamden, CT: Archon, 1986.
Dictionary of the Arts. New York: Facts on File, 1994.
Tresniowski, Alex. “P.T. Barnum: America’s Greatest Showman.” People Weekly, 2 October 1995.
Farnham, Alan. “America’s Original Huckster.” Fortune, 5 February 1996.
The World Almanac Biographical Dictionary. New York: World Almanac, 1990.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
5 7
Eddie Bauer (1899-1986) Eddie Bauer, Inc.
Overview Eddie Bauer’s name is a familiar presence in mailboxes, shopping malls, and closets. Moreover, the Bauer name is tagged to a billion-dollar company boasting more than 500 stores nationwide and over 30 stores abroad as well as an enormous worldwide mail-order business and online catalog store. It all started with the invention of lightweight goose down and stitched products, such as vests, jackets, and sleeping bags. Eddie Bauer is synonymous with high-quality products and high customer satisfaction.
Personal Life Eddie Bauer was born on October 19, 1899, on Orcas Island, in Washington’s Pacific Ocean inlet, Puget Sound. His parents, Jacob and Mary Bauer, were Russian-born immigrants of German ancestry who grew and sold Italian plums. Bauer’s father taught him how to be a skilled fisherman, hunter, and outdoorsman. However, when Bauer was 14, his parents separated. He and his mother moved to Seattle to live with his aunt. There Bauer found part-time work at Piper and Taft, a sporting goods store. Six years later, after completing a twoyear, part-time course in business practice, he opened his own store—Eddie Bauer’s Tennis shop—which specialized in re-stringing tennis rackets. In 1927, Bauer married Christine “Stine” Heltborg, who shared his love of the outdoors. In 1929 their son Eddie Christian Bauer was born.
5 8
E d d i e
B a u e r
Career Details Bauer was a popular and well-known expert fisherman, hunter, and marksman in the Pacific Northwest. In 1920, this popularity helped Bauer succeed in his early sporting goods business where he began tying dry flies made out of high-quality goose feathers for local fisherman. Unsatisfied with the performance of the wool clothing he had worn on fishing trips, Bauer used feathers to develop a new kind of insulated clothing—downinsulated outerwear. His patented product was Skyline, a quilted jacket lined with goose down. Later, he patented and produced the first down-filled jackets, coats, sleeping bags, and other lightweight, weather-resistant, and warmth-retaining outdoors equipment. His apparel gained immediate acceptance with hunters and fishermen, but it was another unlikely group who bought his products: aviators and pilots. In the brutally cold temperatures of high altitude flying, Eddie Bauer’s products helped to keep pilots warm. He produced thousands of his down-filled garments for the U.S. government during World War II. Because he routinely labeled all the items he sold to the military with a tag bearing his name, pilots from all over the world sought him out after the war ended to obtain their own downfilled garments. When Bauer saw the flood of interest, he asked the government for an address list of the men he had helped clothe during the war. The government cooperated, and in 1946 Bauer used the list to create his mail-order business by designing a mail-order catalog of all his products, and then mailing one to each person on the list. For the next 22 years, Bauer continued to be active in all aspects of the expanding business and in developing the growth of national outlets for his products, as well as refining and expanding his catalog. Bauer also continued to design, develop, test, and patent a variety of innovative sporting products until his retirement in 1968.
Pioneer of the goose-down garment industry, Eddie Bauer. (AP/Wide World Photos, Inc.)
Oddly, because Bauer used such simple business practices in a business that had become enormous and unwieldy, Bauer also had to face the challenge of dealing with wild ups and downs of cash flow—the money that sustains daily business operations—even when he was making huge sums of money. If his stores did well, often his mail-order enterprise slowed, and money had to be diverted to pay down debts in various areas of the enterprise. The challenge of modernizing his business style was a great one for Eddie Bauer, and it remained a struggle.
However, what made Eddie Bauer a success? Throughout the book The Legend of Eddie Bauer, a personal and business history of the Bauer corporation, author Robert Spector made it clear that Bauer’s winning personality, energy, and integrity were the key elements to the Bauer’s successful business style. He aimed to please and most often did, guaranteeing everything he manufactured with no exceptions. His guarantee was in writing and became famous: “Every item we sell will give you complete satisfaction, or you may return it for a full refund.”
Bauer’s great success came as a result of his creation of down and quilted garments. Using goose-down exclusively as the basis of all his lightweight, heat-retaining garments revolutionized the outerwear segment of the apparel industry.
Yet, Bauer’s successful products were not created without a personal cost to him. He was exhausted by long hours of work and by the ongoing pain caused by an early sports injury. He frequently experienced what he called “unbearable pain” and was bedridden, often for days, because of the pain. Nevertheless, he persisted in the expansion of his business.
Quilted-down apparel, from vests, jackets, hunting jackets, sleeping bags, blankets, and more, allowed Bauer to obtain sixteen different design patents, and enabled him to enjoy a virtual monopoly on the entire quilted-down-filled materials business. Quilted-down clothing eventually gained worldwide acceptance, and Bauer’s items were consistently used and praised by
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Social and Economic Impact
5 9
E d d i e
B a u e r
tomers with high-quality furniture, tableware, decor products, and linens. By 1997 Eddie Bauer had also opened 50 outlet stores.
Chronology: Eddie Bauer 1899: Born. 1920: Opened first store in Seattle. 1922: Established unconditional guarantee. 1927: Married Christine Heltborg and began women’s apparel clothing line. 1936: Produced the first goose down insulated jacket. 1937: Designed original DownLight vest. 1945: Issued first mail-order catalog. 1968: Retired—partner William Niemi and son Eddie Christian take over. 1971: General Mills bought Eddie Bauer and expanded to 60 retail stores. 1986: Died.
In the 1990s Eddie Bauer also further expanded its product line to include A/K/A Eddie Bauer, a men’s dress apparel line plus for men and women: an updated line of sportswear, shoes, and accessories; Eddie Bauer Travel, an outdoor and adventure travel program; and EBTek, which included Eddie Bauer’s patented Premium Goose Down as well as other popular outdoor fabrics like GoreTex and Polartec 200. Eddie Bauer did not live to see this huge national, international, and virtual expansion. He died in 1986 at the age of 85. The Eddie Bauer creed, “To give you such outstanding quality, value, service, and guarantee that we may be worthy of your high esteem,” has lived on, but more than that has endured. He has left a legacy that will carry the Eddie Bauer name well into the next century.
Sources of Information
sportsmen, mountain-climbers, and adventurers from the Arctic and Anarctic regions to the peaks of the Himalayas. In addition, Bauer brought something new to life: lightweight clothing made from a light fabric that brought warmth, comfort, and ease of movement to those who wore it. After his retirement in 1968, Bauer’s son Eddie Christian pursued the next successful phases of the Bauer product revolution: the change to computerassisted mail-ordering and billing, the refocus to casual apparel, and in 1988 the purchase of Eddie Bauer by Spiegel, Inc. This purchase resulted in aggressive expansion, and by 1989 there were a total number of 100 Eddie Bauer stores nationally. Two years later, Eddie Bauer again expanded, this time in its product line, by creating Eddie Bauer Home. These stores provided cus-
6 0
During this period, Eddie Bauer began to expand abroad and from 1993 through 1998, Eddie Bauer opened over 20 stores in Japan, seven stores in German, and two stores in the United Kingdom. In 1996, Eddie Bauer launched its “virtual” online catalog.
B u s i n e s s
Contact at: Eddie Bauer, Inc. 15010 N.E. 36th St. Redmond, WA 98052 Business Phone: (425)882-6100 URL: http://www.eddiebauer.com
Bibliography Eddie Bauer, Inc. “Eddie Bauer Company History.” Redmond, WA, 1998. Available from http://www.eddiebauer.com Facts on File World News Digest, 1986. Halter, Jon C. “Eddie Bauer Guide to Backpacking.” Boy’s Life, July 1984. Skorupa, Joe. “In Search of Eddie Bauer.” Popular Mechanics, February, 1994. Spector, Robert. The Legend of Eddie Bauer. Lyme: Greenwich Publishing Group, 1994. Steinberg, Steve. “The Eddie Bauer Guide to Family Camping.” Consumer’s Digest, May-June 1983.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
John Jacob Bausch Overview John Jacob Bausch, a German immigrant, came to the United States in 1849 and, in 1853, started one of the first optical companies in Rochester, New York. This company became the international company Bausch & Lomb Incorporated, a maker of contact lenses and related products. Bausch stocked his first store with $62.00 he borrowed from his friend, Henry Lomb, who later became his partner.
(1830-1926) Bausch & Lomb Incorporated
Personal Life John Jacob Bausch was born July 25, 1830, in Gross Suessin, Wurttemberg, Germany. He was one of seven children born to George Bausch, a baker, and Annie Schmidt. Annie died when John was six. Bausch immigrated to America in 1849 and married Barbara Zimmerman six months later. They had three sons, Edward, Henry, and William. Bausch was married a second time in 1902 to Caroline Zimmerman. As a young man, Bausch learned the optical trade and the trade of wood turning from his older brother, who had served apprenticeships in both occupations. Bausch was more interested in the grinding and polishing of lenses, and at the age of 18, he heard of a job in an optical shop in Berne, Switzerland. He traveled there by stagecoach, and received the job and began work for $.36 a day. Because of the poor economy and political unrest in Switzerland, Bausch decided to go to America and immigrated in April of 1849. Landing in New York City
6 1
J o h n
J a c o b
B a u s c h
croscopes, telescopes, magnifiers, and field glasses. He also began grinding lenses by hand. The partners struggled for seven years, during which time Lomb lived at Bausch’s home, and both had other jobs. Still they made no profit and by this time Bausch owed Lomb $1000. When the Civil War began and Lomb went into the army, he sent Bausch part of his pay as a soldier, which carried the business through four years. The two remained friends and partners throughout a series of ventures until Lomb’s death in 1909.
John Bausch.
During this time, a turning point was reached when Bausch noticed a piece of vulcanized rubber while walking down the street. He had an idea that this was good material for making frames. Until then frames were imported from Europe and were made of horn or metal and sawed by hand. Volcanite frames were a great deal less expensive than other frames and more durable as well. He began to make frames out of the new material and was thus one of the pioneers in manufacturing plastics. These frames became so popular that Bausch and his two sons had to work seven days a week, often into the night, to make enough frames to meet the demand. When Lomb came back from the war, Bausch paid off his debts and had a bank balance of $800.
(AP/Wide World Photos, Inc.)
after a tempestuous sea journey, the ship’s passengers were told New York was overcrowded and were immediately advised to travel west. They went to Buffalo, where Bausch worked at odd jobs for a few months and then headed for Rochester to try to find optical work. Instead he found work as a wood turner for a dollar a day.
Career Details
6 2
Bausch became less interested in the retail store and turned it almost entirely over to his younger brother, Edward E. Bausch, who had come to New York State with another brother, George. Bausch now bought power equipment for grinding and polishing lenses. From the India Rubber Comb Company, he secured the exclusive rights to manufacture optical instruments out of vulcanite and thus formed the Vulcanite Optical Instrument Company, incorporated in 1866. Later he changed the name to Bausch & Lomb Optical Company. The business required Lomb to move to New York, where he stayed for 10 years.
Seven weeks after his marriage, Bausch hurt his hand in a buzz saw and had to have two fingers amputated. He was incapacitated for four months and was unable to go back to wood turning. It was then that he decided to start his own optical business. He obtained some optical materials from his brother and set out as a peddler of spectacles. He managed to sell the goods in six months and then he finally obtained some space in a shoemaker’s store. During most of the winter, they used old shoes for fuel. Along with odd jobs, he was able to make four dollars a week.
Bausch told an interviewer that it was only in 1890 that the business began to make any real money. By that time he was 60 years old he had been in business for 37 years. In 1893, the Zeiss Works of Jena developed a new type of binoculars, and Bausch & Lomb acquired the American rights to these patents. The Bausch & Lomb instruments became the standard for the United States’ Army and Navy. The company continued to expand, opening offices in Chicago in 1896; Boston in 1903; San Francisco in 1904; and London in 1908. In that year, the company incorporated in New York. Bausch also acquired a manufacturer of fire-control instruments, George N. Saegmuller.
In 1853 Bausch established a modest optical shop in the Reynolds Arcade in Rochester. After a year of struggling, Bausch borrowed $62 from his friend, Henry Lomb, with the promise of taking him on as a partner if the business took off. With this loan, Bausch expanded the business. He traveled back to Germany to obtain materials, rented a better store, and stocked his shop with a variety of products such as spectacles, thermometers, mi-
After the death of Henry Lomb in 1909, Bausch continued to expand the business and began to develop equipment for “testing” eyes for vision and disease. During the latter part of World War I the company’s products were sold almost exclusively to the military. Dr. Arthur L. Day, director of the Carnegie Institute in Washington, supplied several scientists to assist in the project of producing glass to be used in range finders, binocu-
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J o h n
J a c o b
lars, telescopes, periscopes, and other instruments for the armed forces. In 1915 Bausch introduced motion picture lenses for the new movie industry. In 1918 at the end of the war, the company had 6,000 employees and sales of more than $14 million. John Jacob Bausch lived to the age of 96—long enough to see the business he had started from scratch as a poor immigrant grow to be the largest optical company in the world.
B a u s c h
Chronology: John Jacob Bausch 1830: Born.
Social and Economic Impact
1848: Went to work in an optical shop in Switzerland.
When Bausch died in 1908, the company was producing more than 20 million lenses annually. One of its most successful products was Ray-Ban sunglasses. Bausch & Lomb went public in 1938, won an Oscar for its Cinemascope lens in the 1950s, and made it onto the Fortune 500 list in 1975. Since the 1970s it has been a leader in contact lenses, medical products, and research, having acquired several other companies in the 1960s through the 1990s.
1849: Immigrated to America. 1853: Established an optical shop in Rochester, New York. 1865: Started making optical frames from vulcanized rubber. 1866: Incorporated the Vulcanite Optical Instrument Company (later renamed Bausch & Lomb Optical Company). 1893: Acquired the American rights to a new type of binoculars.
Sources of Information
1896: Expanded the business by opening offices throughout the United States.
Contact at: Bausch & Lomb Incorporated 1 Bausch & Lomb Pl. Rochester, NY 14604-2701 Business Phone: (716)338-6000 URL: http://www.baucsh.com
1912: Developed equipment for testing eyes. 1915: Introduced motion picture lenses for the young movie industry. 1926: Died.
Bibliography Eisenhart, Martin Herbert. J. J. Bausch, 1830-1926: American Pioneer. Newcomen Society of England, 1948. Fucini, Joseph J. and Suzy Fucini. Entrepreneurs. Boston: G. K. Hall, 1985. Hoover’s Handbook of American Business 1997. Austin, TX: Hoover’s Business Press, 1997.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Randall, Michael, “Do You Think That Luck Is Against You?” American Magazine, September 1922. Who Was Who in America. Chicago: A. N. Marquis, 1943.
S t u d e n t s
6 3
L. L. Bean (1872-1967) L. L. Bean, Inc.
Overview Leon Leonwood Bean, best-known as L. L. Bean, became known worldwide for his mail-order catalog focused on equipment and clothing for the serious outdoorsman. With the invention and patenting of a simple rubber-soled, leather-top shoe in 1911, Bean gradually began marketing his shoe, the “Maine Hunting Shoe,” to an increasingly large audience of people, through the mail. L. L. Bean, Inc. has become the world’s largest mail-order company, with over 150,000 orders per day, totaling sales of $1 billion a year. Hunting, fishing, camping, as well as casual outdoors dresswear, are the primary items sold.
Personal Life Leon Leonwood Bean was born on November 13 1872, in Greenwood, Maine, one of six children born to Benjamin Warren Bean, a farmer and horse trader, and Sarah Swett. His parents died when he was only 12 yearsold. Thereafter, he, his brothers, and his one sister lived with relatives in South Paris, Maine. Late in his adolescence he went to live with his uncle in rural West Minot, Maine. Early in life, Bean developed a passion for hunting and fishing, and for the outdoor life. Even though Bean’s formal education ended at the eighth grade, he eventually turned this passion into a career. In 1892 and 1893, Bean took commercial courses at the Kent’s Hill Academy, in Maine. These courses indicated to the young Bean how he might blend his love for the outdoors, with
6 4
L .
L .
B e a n
business. Bean later spent a semester at the Hebron Academy, in Maine. Until the age of 40, Bean maintained, his life was uneventful, except for his marriage to his first wife Bertha Porter in 1898. Together they had three children and moved around often as Bean worked at a variety of jobs to support them. Bean lived a long life and worked at developing his business, for the most part, after the age of 40. Unlike his first wife, who died young, in 1939, Bean lived to the age of 95. He married his second wife, Claire Boudreau, in 1940, and lived with her until his death. By 1960, when Bean was in his late 1980s, he was still only semi-retired, but he had moved away from his business and the hard winters of Maine, and had settled in Miami Shores, Florida for his last years. He died there on February 5, 1967.
Chronology: L. L. Bean, Inc. 1872: Born. 1911: Designed the “Maine Hunting Shoe.” 1912: Began selling the “Maine Hunting Shoe.” 1917: Opened manufacturing headquarters in Freeport, Maine. 1918: Granted American and Canadian patents for shoe. 1934: Incorporated into L. L. Bean, Inc. 1967: Leon Gorman took over as head of L. L. Bean, Inc.
Career Details Bean spent most of his first 40 years in Maine, loving the life of an outdoorsman. In his frequent moves around the state, he worked as a farm hand, an itinerant soap-peddler, and later, as a business partner with his brother Otho who ran a small store operation in Freeport, Maine. At the same time, Bean was able to pursue his love of the outdoors and continue hunting and fishing. Because both his work and his leisure kept him outdoors, Bean was always, he recounted, getting his feet wet in the marshlands of Maine. Because of the structure of the shoes of the time, he always had problems keeping his feet warm. Warm feet were crucial to outdoor life. After a variety of efforts at shoemaking, he designed the first modern lightweight, warm, dry boots. They had leather uppers, to keep them light, sewed onto heavy rubber overshoe bottoms, to keep the boots dry. He came to call them: the “Maine Hunting Shoe,” and began selling them to others in 1912. Bean was pleased with the fact that he had invented shoes for the sportsman that kept out water and retained warmth. He eventually patented these shoes, and they became his entryway into business. Bean found his first audience for these revolutionary shoes by obtaining the names of licensed Maine hunters, both in and out of the state. Bean then sent each of them his first mail-order catalog, which amounted to little more than a three page brochure, extolling the virtues of these new shoes, and guaranteeing 100 percent satisfaction or a full refund.
1967: Died.
now included outdoor and casual clothing items, as well as fishing and hunting equipment, and canoeing and camping gear. Bean adopted Freeport, Maine, as his home town and continued to expand his mail-order business. The business was incorporated on July 1, 1934. During World War II, Bean served as a consultant to design boots for the Army and Navy. His company received several contracts for military versions of his hunting boots, and other Bean products. By 1960, Bean was clearly winding-down his own career as the Chief Executive Officer (CEO) of L. L. Bean, Inc., and he was now spending more time in Miami Shores, Florida, at his winter home. His worldrenowned name remained with the L. L. Bean Corporation, and by 1967, Bean’s grandson, Leon Gorman, had become the CEO of this billion dollar operation, with Bean himself spending less and less time involved in daily business activities.
Social and Economic Impact
By 1917 business was so good that Bean could finally afford to open his manufacturing headquarters on the main street of Freeport, where it remained in operation until 1962. In 1918, Bean received American and Canadian patents for his hunting shoe. By the early 1920s, Bean’s catalog had been greatly expanded. He
Bean always expressed his own philosophy of life in a simple home-spun style, and his customers responded positively not only to his products, but to the old-fashioned style and character of the L. L. Bean Corporation. Their prescription for success was: “Sell good merchandise at a reasonable profit, treat your customers like human beings, and they’ll always come back for more.”
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
6 5
L .
L .
B e a n
Much of what Bean practiced in business during the 20th century seemed “old-fashioned” to many, but in a fast-paced and growing industrial culture, that illusion of an earlier, less complex time was increasingly attractive to his many customers. Bean’s unwittingly seductive style was to maintain his old-fashioned operations, even though, by the 1930s, the business operations were large, complex, and increasingly multi-national. Through his life, Bean maintained a kind of simple Yankee trapper philosophy and resisted potentially unmanageable expansions in his operation. His customers increased as the outdoors became to increasingly represent a good way for the whole family to “get away from it all.” As American life became more complex, crowded, and mobile, the Bean strategy was to represent a simple, natural, and even sentimental view of American life to his customers, a view Bean truly believed in. Furthermore, he believed in a straight-forward, honest, fair-profit business practice, that included the “100 percent moneyback if dissatisfied for any reason” guarantee. Bean spent long hours of daily, customer-personalized work. His mail-order catalogs, most of which he wrote himself, maintained a warm personal style in handling all business orders. This style of communicating with his customers earned L. L. Bean, Inc. annual sales of $2 million through the 1950s and 1960s. L. L. Bean, Inc. continues as a family enterprise, with world-wide operations, one of the world’s largest mail-order concerns, with sales approaching, during the 1990s, $1 billion per year. Phone representatives continue to report daily orders of 150,000, which include expanding sales via the Internet web-site that L. L. Bean, Inc. maintains, as well as through expanded outlet stores world-wide. The main store in Freeport, has been open
6 6
B u s i n e s s
for business 24 hours a day and 365 day a year since 1951. Bean, at age 40, had an idea for developing and selling a new kind of warm shoe for the outdoors. He developed a corporation in 1934, which, by the 1990s was the world’s largest mail-order concern, with sales at $1 billion annually. In 1995, the company reported 150,000 orders per day and $4.5 million in customer sales annually. The growth of L. L. Bean, Inc., along with the love and reverence the name conjures, has been an extraordinary success, reaching far beyond the dreams of its founder.
Sources of Information Contact at: L. L. Bean, Inc. Casco St. Freeport, ME 04033 Business Phone: (207)865-4761 URL: http://www.llbean.com
Bibliography “Bean Sticks To His Backyard.” Economist Magazine, 4 August 1990. Berman, Phyliss. “Trouble in Beanland.” Forbes Magazine, 6 July 1992. Brubach, Holly. “Mail Order America.” New York Times Magazine, 21 November 1993. Dictionary of American Biography, Supplement no. 8. New York: Charles Scribner’s Sons. London: Collier MacMillan Publishers, 1988. “Gumshoe.” Gentleman’s Quarterly, October, 1992. “Obituary.” New York Times, 7 February 1967.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Scott Beck Overview Scott A. Beck along with two partners acquired Boston Chicken in 1992. With Beck as CEO, the chicken restaurant and carryout franchise, renamed Boston Market, underwent the fastest growth of any restaurant chain in the country. In 1998, however, Beck tendered his resignation after the company’s stocks plunged for a year. Despite the company’s financial setbacks, Boston Market’s success as a home cooked meal franchise changed both the fast-food restaurant and supermarket industries.
(1959-) Boston Chicken, Inc.
Personal Life Beck was born in Chicago, Illinois in 1959. His father, Lawrence, was the cofounder of a high-tech waste management firm. Beck attended two colleges over a 13 year period before receiving his undergraduate degree from Southern Methodist University. Beck is married and has three daughters. Among corporate executives he is uncharacteristically religious, claiming he goes to church virtually every Sunday and strives, he has said, to serve God. “I think my primary purpose in life is to be a steward of what God has given me in talent, time, stamina, and I’m driven to do the best I can with those things,” Beck said in an interview with Nation’s Restaurant News. When not working, his favorite activity is spending time with his family; his personal hero is Winston Churchill. When he was young, Beck spent several summers working at his father’s company, Waste Management,
6 7
S c o t t
B e c k
Career Details Upon purchase of the Colorado-based Boston Chicken Inc., Beck became chairman and chief executive, while Nadhir and Shearer, his longtime business associates and friends were vice chairmen. In the first three years of their association with the chicken business, the chain experienced almost unprecedented growth, from 175 outlets in 1993 (28 of them operated by the company) to 525 in 1995. Not surprisingly this rapid expansion brought renewed attention to a business—rotisserie chicken chains—that seemed ailing at best. Boston Chicken had found a niche, that of home meal replacement.
Scott Beck.
(AP Photo/HO.)
Inc. and learned a great deal about business from talking to his father and his father’s partners. In 1985 Beck invested in Blockbuster with his father, when the company had only one store. The two acquired a sizeable stake in the business, sensing there would be a strong consumer demand for this service. This was the same intuition, which would draw Beck to Boston Chicken six years later. In the case of Blockbuster, their instincts proved sound, and within a few years, the business had grown into a national enterprise. In 1989, Beck sold his 104-unit Blockbuster franchise back to the company. As part of the sale, he became chairman and chief operating officer of the video chain; he also received $120 million in stock. Beck used the capital to join with two partners, Jeffrey J. Shearer and Saad J. Nadhir. Beck had initially met Shearer, who had been with Steak & Ale for 14 years three years earlier, after Beck’s financial consulting firm, Pace Management, was hired for financial services. Nadhir had been a longtime friend and business associate. Shortly after their meeting, Shearer left Steak & Ale and went to work for Beck at his franchise company, Blockbuster Midwest. It was Nadhir who first foresaw the potential of what was then Boston Chicken. He was driving through Boston one night in 1991 and was surprised to see people lined up to get into the then-virtually-unknown restaurant. When the three men bought Boston Chicken in the Spring of 1992, the chain then had only 33 outlets.
6 8
B u s i n e s s
The idea behind home meal replacement is that consumers who longed for home cooked meals, but were too busy to cook them, could go to Boston Market and buy items that were fresh and either ready-to-eat or nearly prepared. Beck was a pioneer in this market, using research that tuned into consumers’ shopping habits at the supermarket. At a 1997 conference, Beck described consumers who were buying fewer items and insisting on fresh products. Determined to deliver the meals that consumers wanted, but with no precedent to follow, Beck became a trailblazer in this new field of fast food. In an interview for Nation’s Restaurant News he said, “We’re learning on a daily basis. We’re serving fresh, convenient meals in a fast-food environment, and there’s not a model by which to do that.” Beck and his partners managed to reach the market that they identified by offering freshly prepared side dishes along with chicken that was rotisserie roasted, rather than being fried in pieces. During their early years with the company, Beck concentrated on the company’s infrastructure, while Nadhir focused on both company operations and consumer trends. The two shared a common space with other members of the executive workforce. “It’s a team approach and a team attitude that have worked here,” Beck has said when he has been given credit for the success of Boston Market. Beck’s team philosophy is reflected in the various programs that he implemented within Boston Market to gather data and feedback. The Performance Measurement System attempted to monitor feedback from every facet of the Boston Chicken chain, including from customers, shareholders, employees and management. The Boston Notes system allowed executives, employees and executives to share ideas. Another of Beck’s ideas was the establishment of flagship stores. These stores serve as a central location for the preparation of foods for nearby Boston Market stores. Beck hoped that this new idea of centralization would decrease labor and other costs for the individual satellite stores. Beck’s ideas about franchise management were different than any that had been implemented in the restaurant business before. He took what he had learned about retail through his success at Blockbuster and applied it
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S c o t t
B e c k
to the restaurant world. In many ways he was successful, demonstrated by his fast growing company and Boston Market’s establishment as the leader in homemeal replacement. Beck’s company broke records when its stock prices more than doubled in its first day of trading in 1996. It was when he strayed from his focus on home meal solutions and the retail aspects of the business that Beck and his company began to be criticized. When Boston Market began to focus on their lunch menu and on diversifying their menu, critics wondered if the restaurant had lost sight of its original and most successful market. The company began to lose money and as Boston Market restaurants spread rapidly across the country, the company’s stock began to fall. Beck and Nadhir resigned in May 1998 following a 16-month period during which Boston Market stock lost nearly 90 percent of its value. In an interview with Nation’s Restaurant News in June 1998, Beck blamed himself for the company’s demise. He said, “We should have stayed at the retail end of it, the prepared food and packaged food for people to buy and take home, maybe with some groceries . . . . but we strayed from our core home-meal-replacement strategy. It was my mistake. What I’m talking about is leadership.” Beck also admitted that he missed the retail business, preferring it to the restaurant business.
Social and Economic Impact Even though Scott Beck blamed himself for his lack of staying focused before his resignation, he is known as a pioneer in the field of home-meal replacement. The success of this concept has forced both the fast food and supermarket industries to take notice. A June 1998 Time magazine article commented, “Credit Boston Market (formerly Boston Chicken) with fomenting the HMR decade. The company . . . transformed the notion of fast food by serving the kind of fare one would expect to come piping hot out of the kitchen oven but instead comes right out of a ready-to-eat or ready-to-heat package.” Beck and his coworkers studied consumers and identified a group of people that were longing for fresh homemade food that could be prepared with little or no fuss. Since Boston Market began there have been many similar companies who, have been focussing on the new consumer group that Beck recognized. The display of the fresh food by Boston Market has also been imitated by other chains. The magazine Chain Store Age Executive described Beck’s influence on the supermarket world saying, “Beck and his company woke up the supermarket industry to the fact that many of their customers no longer have the time to prepare their own meals, no matter how much they yearn for the home-cooked dinners mother used to make.” Supermarkets and convenience stores responded with what the magazine called the “most significant
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Chronology: Scott Beck 1959: Born. 1985: Invested in Blockbuster video stores. 1989: Beck becomes vice chairman of Blockbuster. 1992: Purchased Boston Chicken with partners; Beck named Chairman and CEO. 1993: Boston Chicken went public. 1995: Boston Chicken announced record revenues. 1997: Boston Chicken revenues down sharply; company cuts-back staff. 1998: Beck resigns from Boston Chicken.
change in many years in the way they market food.” Many supermarket and convenience store chains have begun to offer home-meal solutions. The trend of offering more prepared foods has extended to offering a variety of other goods, such as flowers and plants, and services, such as dry-cleaning. Due to Beck’s strong retailing skills and his identification of a new market quick, homemade meals are within reach of the hurried consumer.
Sources of Information Contact at: Boston Chicken, Inc. 14103 Denver W. Pkwy. Golden, Colorado 80401-4086 Business Phone: (303)278-9500 URL: http://www.bostonchicken.com
Bibliography “Beck: BCI Turning Around by Refocusing on Human Resources.” Nation’s Restaurant News, 27 October 1997. “Boston Chicken CEO Wants to Rule Meal-Solutions Roost.” Supermarket News, 16 June 1997. “Boston Chicken Heads Roll.” CNNfn, 1 May 1998. Available from http://www.cnnfn.com/hotstories/companies/9805/01/boston/ index.htm “Fears Come Home to Roost For Boston Chicken Speculators.” The Dallas Morning News, 11 June 1997. “Joy of Not Cooking.” Time, 1 June 1998.
S t u d e n t s
6 9
S c o t t
B e c k
Melcher, Richard A. “Does Scott Beck Have Another Winning Recipe?” Businessweek, 13 December 1993.
“Scott Beck: Chairman, Chief Executive, Boston Chicken, Golden, Colorado.” Nation’s Restaurant News, January, 1995.
Papiernik, Richard L. “Ex-Boston Chicken Chief Says Chain Veered Too Far Off HMR Path.” Nation’s Restaurant News, 29 June 1998.
“Scott Beck and Saad Nadhir: Entrepreneurial Partners Balance Each Other as They Clide Along the Cutting Edge” Nation’s Restaurant News, 9 October 1995.
Romeo, Peter. “What’s So Special About Boston Chicken?” Restaurant Business, 10 April 1994.
“Scott Beck and Saad Nadhir.” Nation’s Restaurant News, 9 October 1995.
“Scott Beck.” Chain Store Executive with Shopping Center Age, September 1997.
7 0
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Alexander Graham Bell Overview Alexander Graham Bell invented one of the most common instruments in use today, the telephone. With his supporters, he founded Bell Telephone, which has become one of the world’s most successful corporate conglomerates, American Telephone & Telegraph Co. (AT&T). He was also an outstanding teacher of the deaf and a prolific inventor of other devices.
(1847-1922) Inventor
Personal Life Alexander Graham Bell was born on March 3, 1847, in Edinburgh, Scotland. His father, Alexander Melville Bell, taught deaf-mutes to speak and wrote text books on correct speech. His mother, Elisa Grace Symonds, was a portrait painter and an accomplished musician. Known as Aleck in his early years, Bell received his primary education at home from his mother. Aleck also had natural musical talent and studied music. He could play by ear and improvise at the piano from childhood and continued to play throughout his life. His fine ear helped him in his later work with the human voice. At the age of 14, Aleck showed his inventive spirit when he combined a nail brush with a paddle and made a rotary-brushing wheel that removed the husks from wheat for a flour mill. Encouraged by their father, Aleck and his older brother later designed and built a speaking machine with a mouth, throat, nose, maneuverable tongue, and a bellows lung. The boys worked long hours perfecting the machine and learned how the sounds of a voice are produced. The apparatus actually produced human-like sounds.
7 1
A l e x a n d e r
G r a h a m
B e l l
to speak. When Aleck was 15, he and his two brothers started helping their father demonstrate Visible Speech. While the boys waited outside, audience members suggested difficult sounds which were written in symbols on a blackboard. When the boys returned to the room, they could always reproduce the sounds from the symbols on the board, even Russian words, for example, or the sound of a yawn. Aleck studied at Edinburgh University in 1864 and later at University College, London. When Grandfather Bell died in 1865, Aleck’s family moved to London. From 1868-70, Aleck assisted his father at University College teaching the deaf Visible Speech. After Aleck’s two brothers died of tuberculosis, Melville Bell decided to take his remaining family to Canada’s healthier climate. In 1870, the Bells settled in Brantford, Ontario. In 1871, Alexander Graham Bell began his professional career as an educator, inventor, and scientist in Boston, Massachusetts. On July 11, 1877, 30 year-old Alexander Graham Bell married his student, 19 year-old Mabel Hubbard, the deaf daughter of his partner Gardiner Hubbard. For their wedding, Aleck gave Mabel 1,497 shares of Bell Telephone stock and kept only 10 shares for himself. The stock made the Bells wealthy. But because they sold a large portion early on Bell did not become as rich as other entrepreneurs like John Rockefeller. During their 45 year marriage, Bell’s wife helped him through difficult periods in his career. She managed the family finances and up to 40 employees to support his experiments and prevented Bell from withdrawing completely from society. Later in his career, Bell limited his social activities in order to do the necessary thinking work for his various inventions. His daily routine included sleeping until 10 or 11, walks with Mabel, meals, dictation, and work in the lab up until three or four in the morning. For more than 25 years, he spent weekends in total seclusion on his houseboat at his summer home on Cape Breton Island, Nova Scotia.
Alexander Graham Bell tests a new telephone invention. (U.S. National Aeronautics and Space Administration.)
In 1860, Aleck spent a year with his grandfather in London. He gave Aleck lessons in elocution, Shakespeare, and the treatment of speech effects, and refined the boy’s country manners and dress. When Aleck enrolled soon after as a student-teacher at Weston House, a boy’s school near Edinburgh, his students had no idea that the London gentleman was only 15 years old. Aleck taught music and speech and, in turn, received instruction in other subjects. Aleck’s father had invented “Visible Speech,” symbols for all spoken sounds used in teaching deaf people
7 2
B u s i n e s s
In 1882, Bell became a naturalized United States citizen. Always curious about the world, Bell and his wife traveled extensively even in their 70s. Alexander Graham Bell died on August 2, 1922. On the day of his funeral all AT&T telephone lines fell silent for one minute.
Career Details While teaching Visible Speech in London, Bell became deeply interested in the study of sound and the mechanics of speech. As Edwin S. Grosvenor and Morgan Wesson wrote in Alexander Graham Bell, “Aleck sketched how the mouth produces sounds and used tuning forks to measure tones of different parts of speech. Impressed by the young man’s original research, leading phonetician Alexander Ellis referred him to the work Hermann von Helmholtz had done with electrical tuning forks. Mistakenly thinking that the German scientist had transmitted vowel sounds electronically, Aleck then be-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
A l e x a n d e r
G r a h a m
B e l l
gan to study electricity.” He came to believe that it would be possible “to talk by telegraph some day.” Bell joined the Boston School for the Deaf—the first such school in the world in 1871. Shortly afterwards, he became a professor of vocal physiology and speech at Boston University and also tutored private pupils. Boston, an important center for commerce and culture, proved a fertile location for Bell’s creative talents. In 1873, Bell began experimenting with different technologies to investigate the transmission of sound over wires. In particular, he worked on the harmonic telegraph—a device that could send several messages simultaneously over a single wire. To transmit the human voice, Bell also experimented with vibrating membranes and an actual human ear. Financial backing for his work came from Gardiner Hubbard and Thomas Sanders, the father of one of his deaf pupils. Early in 1874, Bell met Thomas A. Watson, a young machinist and technician, at a Boston electrical shop. Watson brought the necessary electrical engineering expertise to Bell’s experiments and became the inventor’s indispensable assistant. The two men spent endless hours experimenting. In the summer of 1874, Bell formed the basic concept of the telephone. He used a varying but unbroken electric current to transmit the varying sound waves of human speech. But no one believed the telephone would be anything more than a toy, and Hubbard insisted that the inventor focus his efforts on the harmonic telegraph. Bell complied, but when he patented one of his telegraph designs in February 1875, he discovered Elisha Gray, a professional inventor, had patented a multiple telegraph just two days earlier. Greatly discouraged, Bell consulted Joseph Henry, a physicist who invented the first electromagnetic telegraph. He urged Bell to pursue his idea of speech transmission. Consequently, Bell and Watson continued to work on the harmonic telegraph but with the telephone still in mind. Accidentally, in June 1875, an intermittent transmitter produced a steady current and transmitted sound. Bell had proof that his 1874 idea worked, and he quickly sketched a design for an electric telephone that Watson then built. The partners experimented all summer, but failed to transmit voice sounds. That fall, Bell began to write the patent specification. Hubbard finally filed for the patent on February 14, 1876—just hours before Gray appeared at the same patent office to file an intent to patent his own telephone design.
Chronology: Alexander Graham Bell 1847: Born. 1869: Began teaching deaf students in London. 1874: Elected president of National Association of Teachers of the Deaf. 1876: Received U.S. Patent for his telephone. 1881: Financed Science magazine. 1884: Opened school for hearing and hearing-impaired children. 1897: Elected president of National Geographic Society. 1907: Organized Arial Experiment Association. 1911: Designed 100 science experiments for children. 1914: Coined the term “greenhouse effect.” 1919: Developed world’s fastest ship with Casey Baldwin. 1922: Died.
After a year of refining his telephone, Bell and his financial backers, Hubbard and Sanders, founded the Bell Telephone Company on July 9, 1877. Later that year, the first telephone was installed in a private home. While on his honeymoon in summer 1877, Bell introduced the telephone to England and France and one year later, the first subsidiary, the New England Telephone Company, was organized. One decision important to the success of the Bell Telephone Company was to lease telephones instead of selling them. Leased telephones could be easily replaced as improved models were developed. This concept helped spread telephone technology and standardize equipment, an important factor for high quality service and the eventual financial success of Bell Telephone.
Bell’s patent, U.S. Patent No. 174,465, was granted on March 7, 1876, four days after his 29th birthday. On March 10, the first message transmitted by telephone passed from Bell to Watson in their workshop: “Mr. Watson, come here, I want you!” Three months later, Bell’s invention became a star attraction at the International Centennial Exposition in Philadelphia, the largest fair in American history. Despite this progress, Bell was still broke, desperate for money to apply for patents overseas and even begging lunch money from Watson.
Although the phone company grew rapidly, Bell left its day-to-day operations to others. He remained active in the company, however, as the principal defender of his telephone patents. Bell Telephone encountered early competition from the Western Union Telegraph Company. Bell had offered to sell his invention to Western Union for $100,000, but the company had refused. Later however, Western Union employed two prominent inventors, Thomas A. Edison and Elisha Gray, to work against Bell. Western Union’s actions nearly ruined Bell Telephone financially before a patent infringement suit
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
7 3
A l e x a n d e r
G r a h a m
B e l l
was filed. The courts upheld Bell’s patent and in 1879 Western Union had to agree to stay out of the telephone business. Altogether, the Bell Telephone Company was involved in 587 lawsuits, five of which went to the Supreme Court; Bell won every case. A convincing argument was that no competitor claimed originality until 17 months after Bell’s patent. After returning to the United States from England in 1879, Bell continued his work as an inventor. In 1880, he won the French government’s Volta Prize for his telephone. With the $10,000, he established the Volta Laboratory for research, invention, and work for the deaf. Among the new devices Bell invented were the graphophone for recording sound on wax cylinders or disks; the photophone for transmitting speech on a beam of light; the audiometer for measuring hearing ability; the telephone probe used in surgery before X-rays; and the induction balance for detecting metal within the human body. Bell also remained interested in education of the deaf. With the profits from the Columbia Gramophone Company’s commercialization of his phonograph records, Bell established the Volta Bureau in Washington to study deafness. In 1890, he founded the American Association to Promote the Teaching of Speech to the Deaf, renamed the Alexander Graham Bell Association for the Deaf. In the 1880s Bell became involved with organizations and publications that introduced the results of scientific research to a broader public. In 1882 he and Hubbard acquired Science magazine. Despite significant losses in its first years, they were convinced it would be successful. In 1888, 33 prominent scientists, explorers, and authors responded to the partners’ invitation to start a group to be called the National Geographical Society. After Hubbard’s death, Bell took over its presidency in 1899 and helped establish the society and its magazine, National Geographic. After 1895, Bell’s primary interest was the possibility of flight. He built gliders capable of carrying human beings, supported pioneering aviation experiments, and helped organize the Aerial Experiment Association in 1907. In his 70s, Bell continued reading, studying, and working long hours on various projects. He designed a hydrofoil boat that moved across the water on a cushion of air, and worked on air conditioning, a sheep breeding project, an early iron lung, solar distillation of water, and sonar detection of icebergs. Many of his experiments involved energy conservation. He created devices that used the waste heat in chimneys and lamps as well as rooftop devices to collect heat from the sun.
Social and Economic Impact Bell’s invention of the telephone changed the world significantly. His patent for the “electric speaking telephone” was the most valuable single patent ever issued.
7 4
B u s i n e s s
It opened a new age in communication between people and businesses, as well as in communication technology. The Bell Company built the first long-distance line in 1884, connecting Boston and New York. Today, millions of phone calls are made daily, connecting the most remote places all over the world. Bell’s vision of transmitting voice messages from one place to another made advanced communication devices—wireless and cellular phones, pagers, and personal communication systemspoasible. Bell also contributed to the development of other key technologies. Decades before the radio, Bell’s “photophone” used light waves to transmit sound, the basic principle of today’s fiber optics technologies. So advanced was the photophone, that improvement was impossible until the invention of the laser in 1957 (this helped overcome transmission interference over longer distances). Bell’s support of scientists interested in aviation led to the development of the hydrofoil boat, which set the world water speed record in 1918, and a biplane, which recorded the first flight in Canadian history. The organizations and publications Bell helped to establish are powerful forces today. By the 1980s AT&T, which emerged from Bell Telephone, controlled virtually all telephone traffic in the USA. Although Congress has since passed laws deregulating long-distance service and ending AT&T’s monopoly, the company still employed 128,000 people in 1998. Science magazine is still the official organ of the American Association for the Advancement of Science, a group with over 143,000 members in 1998. The National Geographic Society, known for its award-winning nature broadcasts and high quality monthly magazine, has millions of members throughout the world. According to Grosvenor & Wesson, “One of Bell’s lesser known invention-the nonprofit society promoting membership nationally through a popular magazine-would serve as a model for publications such as Smithsonian, National History, Audubon, and National Wildlife.” Inspired by his two daughters and nine grandchildren, Bell remained interested in education throughout his life. He founded a kindergarden for deaf and hearing children. Later, Bell supported the ideas of educator Maria Montessori, which stressed schoolchildren’s interests rather than forcing them to memorize, and designed experiments that taught basic science principles. The Bells founded the Montessori Educational Association, funded its magazine, Freedom for the Child, and opened Canada’s first Montessori school. Far ahead of his time on many things, Bell even foresaw the environmental problems the world is grappling with today. By 1917, he worried about what would happen when coal and oil resources were used up and encouraged engineering students to develop new sources of energy. He also wondered about the effects of burning fossil fuels on the atmosphere. Bells answer is quoted by Grosvenor and Wesson: “While we would lose some of
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
A l e x a n d e r
the sun’s heat, we would gain some of the earth’s heat which is normally radiated into space,” Bell wrote. “We would have a sort of a greenhouse effect . . . . The net result is that the greenhouse becomes a hot-house.”
G r a h a m
B e l l
Byers, Paula K., and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography, 2nd ed. Detroit: Gale Research, 1998 Delaney, Arthur A. “Alexander Graham Bell: Canadian-American Hero,” Stamps, 20 January, 1996. Flatow, Ira. They All Laughed . . . . New York: HaperCollins Publishers, 1992.
Sources of Information
Grosvenor, Edwin S., and Morgan Wesson. Alexander Graham Bell: The Life and Times of the Man Who Invented the Telephone. New York: Harry N. Abrams, 1997.
Bibliography American Association for the Advancement of Science. “General Information.” Washington, DC: American Association for the Advancement of Science, 1998. Available from http://www.aaas. org/aaas/geninfo.html. AT&T web site. “AT&T: A.G. Bell Net Grahams.” New York: AT&T, 1998. Available from http://www.att.com/agbell/ netgrahams.html.
“Happy Birthday, Alexander Graham Bell.” Newsbytes, 4 March 1997. “Birth of the Society.” National Geographic Washington, DC: National Geographic, 1998. Available from http://www.nationalgeographic.com/society/ngo/birth/. World of Invention. Detroit: Gale Research, 1994.
Brogan, Tom. “Alexander Graham Bell.” Canadian Geographic, March-April 1997.
“Yahoo! Finance Home. AT&T Corporation.” Santa Clara, CA: Yahoo! Inc., 1998. Available from http://biz.yahoo.com/p/t/t.html.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
7 5
Lyle Berman (1942-) Grand Casinos, Inc.
Overview Lyle Berman is the chairman of the board of Grand Casinos Inc., which develops, builds, and manages casinos. He is also the chairman and CEO of Rainforest Cafe, an innovative concept combining restaurant and retail shopping with an environmental flair, including live birds and lush plants.
Personal Life Lyle Berman was born around 1942 and raised in Minneapolis, Minnesota. The son of Theresa and Nathan Berman, he graduated from the University of Minnesota in 1964 with a degree in business administration. Berman and his wife, Janis, live in Wayzata, Minnesota, and have four children. In October of 1995, the B’nai B’rith, a Jewish organization, honored him with the Great American Traditions award, and in April of 1996 he was named the recipient of the Gaming Executive of the Year award. In 1996 Berman donated $2 million to his alma mater, the University of Minnesota, to create the Berman Family Chair in Jewish Studies and Hebrew Bible in the school’s College of Liberal Arts.
Career Details Berman started his career working in his family’s leather business, Berman Buckskin. The company flourished with his ideas, eventually opening 27 stores. The family sold the operation in 1979 to W. R. Grace, but
7 6
L y l e
Berman continued as president and chief executive officer. Under his direction, the business grew to include over 200 branches across the country. In 1987 Berman bought out the company and the next year, sold it to Melville Corporation for millions, which made it part of Wilson’s: The Leather Experts chain. In 1996 Berman and Wilson’s management bought back the entity from Melville Corporation. With plenty of business experience behind him, Berman was semi-retired when he went in another direction in 1991, helping to found Grand Casinos, Inc., for which he began serving as CEO. Investing $3 million, he pledged to develop and manage casinos for a Minnesota Native American tribe, the Mille Lacs Band of Ojibwe. In a little over five years, Grand Casinos had grown to include 13,000 employees and owned or operated seven casino resorts in the United States. Berman’s first casino was built on Lake Mille Lacs, about 90 miles northwest of Minneapolis/St.Paul, but it immediately proved to be too small to handle the number of customers it attracted. He put Grand Casinos stock on the public stock market and raised funds for a building five times the size of the original. “A lot of my friends thought putting a casino up in rural Minnesota was crazy,” he remarked to Richard S. Teitelbaum in Fortune. “But I knew the power of a slot machine.” The company is now listed on the New York Stock Exchange Berman then opened two casinos in Mississippi: Grand Casino Gulfport, opened in May of 1993, the largest casino to operate between Las Vegas and Atlantic City; and Grand Casino Biloxi, the largest floating casino in the world. In 1996 it opened the third of Mississippi’s three largest casinos, the Grand Casino Tunica. As of 1997 Grand owned and operated these three casinos, plus two casinos on Indian lands in Louisiana, and the Mille Lacs and Hinckley casinos on reservations in Minnesota. To set Grand Casinos apart from other casinos, Berman’s theory was to offer more extras, like golf, restaurants, and hotels. “We want to become known as the biggest casinos with the best amenities,” he noted, according to Wall Street Transcript Digest.
B e r m a n
Chronology: Lyle Berman 1942: Born. 1979: Berman family sold chain of leather stores. 1987: Bought back leather retailers. 1988: Sold leather stores for a tidy profit. 1991: Cofounded Grand Casinos Inc. 1994: Appointed CEO of Stratosphere Corp. 1995: Named chairman of the board of Innovative Gaming Corporation of America. 1995: Received B’nai B’rith Great American Traditions Award. 1996: Named Gaming Executive of the Year. 1996: Donated $2 million to University of Minnesota.
However, Berman suffered a blow in 1996 when Stratosphere stock plunged, affecting Grand Casinos, which owned about 42 percent of the project. He was caught in a controversy when shareholders learned that while he was selling them on the idea, he was secretly selling his own shares, perhaps indicating that he knew the casino was doomed, he vehemently denied all of the allegations. Berman continued to be optimistic about the project, but nevertheless, it declared bankruptcy and Berman resigned from the board of directors in July of 1997.
Stratosphere, a giant entertainment/casino complex in Las Vegas, was another way in which Grand Casinos was continuing to build its dynasty. This project included a 100-story, 1,149-foot free-standing observation tower, the tallest such structure in the country. David Spanier in the Independent claimed that “it pierced the skyline like a white rocket.” The tower offered a 360-degree revolving restaurant and a roller coaster which zoomed over 900 ft in the air around the outside of the tower.
Rebounding from the failure of Stratosphere, Berman soon became involved with a new entertainment venture as chairman and CEO of the Rainforest Cafe. This intriguing concept blended entertainment, retail, and a “rainforest” theme, complete with waterfalls, lush plant life, colorful live tropical birds, and bird keepers to give talks about the various species for the benefit of patrons and passers-by. It operates under the registered trademark motto, “A Wild Place to Shop and Eat.” As of May of 1998, there were 15 such ventures in the United States and three in Mexico and England, with a number of new stores planned, including expansion into Canada, Hong Kong, and Singapore. Unlike Stratosphere, stocks were healthy in the first year of operation. Also in early 1998, Hilton Hotels was conducting talks with Berman to possibly purchase Grand Casinos, which had seen a sales growth of 24 percent from 1996 to 1997.
B u s i n e s s
S t u d e n t s
Meanwhile, in 1995 Berman was named chairman of the Innovative Gaming Corporation of America, a video game developer and distributor. Grand Casinos was the firm’s largest shareholder, owning about 17 percent. Berman had also been chief executive officer of the Stratosphere Corporation since July of 1994 and in 1996 he took over as its chairman as well.
L e a d e r
P r o f i l e s
f o r
7 7
L y l e
B e r m a n
Bibliography
Social and Economic Impact Not long ago, gambling was the almost exclusive domain of Las Vegas, Nevada; Atlantic City, New Jersey; and Reno, Nevada; unless illegal back-room operations, private poker games, and church bingo were counted. Casinos started cropping up on Indian reservations in numerous states after a law passed in 1988 making them legal. As the popularity of casinos increased, more and more people saw that there were substantial profits to be made. Soon, various state and local governments around the nation gave the green light to put up casinos, seeing them as a sure bet for raising muchneeded cash. These added and updated venues have transformed the reputation of gambling. From the glitzy Vegas establishments to the heart of the Midwest, gambling has a new image. Retiree bus trips make frequent stops to these more down-to-earth establishments, but the range of demographics that can be found gambling is not limited to seniors. Moreover, there is an escalating number of gamblers: casinos brought in twice as many visitors in 1993 compared to 1990, according to Corporate Report-Minnesota, and more and more cities saw these numbers as a good reason to add casinos to their business communities. With this rise has come a bevy of social problems, including gambling addicts who rack up thousands in debt. However, a great majority enjoy casinos as just another diversion. Berman was at the forefront of this new gambling frenzy with the Grand Casinos chain, which brought slot machines and games to rural reservations and added family fun to Las Vegas, which was previously marketed as adults-only. In 1993, Grand Casinos’ 40 percent share of the profits from the Mille Lacs and Hinckley casinos was $10.7 million, an increase of 16 percent from the $9.2 million it took in 1992. By 1997, Grand Casinos sales revenue was over $607 million, with a net income of over $66 million. With Berman’s leadership of the fast-growing Rainforest Cafe, valued at around $500 million, it looks like he has yet another winner in the entertainment business.
“CEO Interview-Lyle Berman, Grand Casinos, Inc.” Wall Street Transcript Digest, 7 March 1994. “CEO Interview-Lyle Berman, Grand Casinos, Inc. (GRND)” Wall Street Transcript Digest, 10 May 1993. Dorn, Bill. “Berman Maps Out a Gambling Strategy.” Corporate Report-Minnesota, May 1994. Fenster, J. M. “Nation of Gamblers.” American Heritage, September 1994. “Grand Casinos, Inc.” Hoover’s Online, 17 June 1998. Available from http://www.hoovers.com. Grand Casinos, Inc. “Management Profile: Lyle Berman.” Minnetonka: Grand Casinos, Inc., 1998. Available from http://www. grandcasinos.com. Grand Casinos, Inc. “Welcome to Grand Casinos.” Minnetonka: Grand Casinos, Inc. Available from http://www.grandcasinos. com. Hallonquist, Sarah. “New Endowed Chair at U. Minnesota Stresses Biblical Inquiry.” University Wire, 20 October 1997. Kurschner, Dale. “Performance Anxiety.” Corporate Report-Minnesota, November 1996. Lowry, Tom. “Partner Rift, Problems Bring Stratosphere Back to Earth.” USA Today, 30 July 1996. “Lyle Berman Appointed Chairman of Innovative Gaming Corporation of America.” PR Newswire, 18 December 1995. Millman, Chad. “Cruisin’ for a Bruisin.” Sports Illustrated, 3 April 1995. Oslund, John J. “FYI/Hilton and Grand?” Star Tribune, 1 April 1998. Popkin, James. “America’s Gambling Craze.” U.S. News & World Report, 14 March 1994. “Rainforest Cafe Announces Preliminary Fourth-Quarter Results.” Business Wire, 5 January 1998. Rainforest Cafe, Inc. “Locations.” Hopkins, MN: Rainforest Cafe, Inc. Available from http://www.rainforestcafe.com. “Rainforest Cafe, Inc. Reports First Quarter Earnings of $0.16 Per Share.” Business Wire, 4 May 1998. Serwer, Andrew E. “Welcome to the New Las Vegas.” Fortune, 24 January 1994. Spanier, David. “Gambling.” Independent, 27 June 1996.
Sources of Information
“Stratosphere Announces Resignation of Directors.” Business Wire, 31 July 1997.
Contact at: Grand Casinos, Inc. 130 Cheshire Lane Minnetonka, MN 55305 Business Phone: (800)566-4763 URL: http://www.grandcasinos.com
7 8
“Stratosphere Corp. Elects Lyle Berman as New Chairman.” Business Wire, 22 July 1996. Teitelbaum, Richard S. “Winners: America’s 100 Fastest-Growing Companies.” Fortune, 17 April 1995.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Susan Vail Berresford Overview Susan V. Berresford is the president of the Ford Foundation, the second-largest philanthropic organization in the United States with about $9 billion in assets. It gives grants and loans to individuals and institutions that promote democratic values, fight poverty and injustice, increase international cooperation, and advance human achievement.
(1943-) Ford Foundation
Personal Life Susan Vail Berresford was born on January 8, 1943, to Richard Case and Katherine Vail (Marsters) Berresford Hurd. She is quiet about her childhood, so biographical accounts begin with her college years. Berresford attended Vassar College from 1961 to 1963, then graduated cum laude in 1965 from Radcliffe College with a bachelor of arts in American History. During her summer break from school in 1962, Berresford worked with the United Nations Volunteer Services in New York City, and in 1964, she served as a secretary to historian Theodore H. White. Her immediate goal after graduation, she told the New York Times, was to “engage directly with antipoverty work.” Berresford married David F. Stein and they have one son, Jeremy Vail Stein, but their union ended in divorce. She is known as a slender, quietly elegant woman who works long hours. Colleagues note her intelligence, her attention to detail, willingness to listen, and down-toearth nature.
7 9
S u s a n
V a i l
B e r r e s f o r d
In 1995, she was made executive vice president and chief operating officer (COO) of the foundation. She was elected the first female president of the organization, effective April 3, 1996, replacing Franklin I. Thomas, the first African American to head the agency.
Chronology: Susan Vail Berresford 1943: Born. 1962: Worked with United Nations Volunteer Services. 1965: Hired at Neighborhood Youth Corps, New York City. 1967: Began working for Manpower Career Development Agency. 1970: Started at Ford Foundation in the national affairs division. 1972: Became program officer at Ford Foundation. 1980: Promoted to officer in charge of women’s programs for the Ford Foundation. 1981: Named vice president for the U.S. and International Affairs programs at Ford Foundation. 1989: Took over as vice president of the program division in charge of worldwide programming for Ford Foundation. 1995: Became executive vice president and chief operating officer (COO) of the Ford Foundation. 1996: Elected the first female president of the Ford Foundation.
Career Details After graduating from Radcliffe, Berresford did pursue her goal of social improvement. She became a program officer with the Neighborhood Youth Corps in New York City in 1965, and stayed there until 1967, when she took a job as a program specialist for Manpower Career Development Agency, also in New York. The next year, she was promoted to program specialist there, and then spent a couple of years as a freelance consultant and writer in Europe and the United States. Berresford joined the Ford Foundation in 1970 as a project assistant in the national affairs division, and in 1972 became a program officer in that area. She served in that post until 1980. In 1980 Berresford was promoted to officer in charge of women’s programs for the Ford Foundation. The next year, she became vice president for the U.S. and International Affairs programs, a position she held until 1989, when she took over as vice president of the program division in charge of worldwide programming.
8 0
B u s i n e s s
Some critics were initially skeptical of promoting an “insider” to president at Ford. As Karen W. Arenson stated in the New York Times, “To critics who viewed Ford . . . as a sleeping giant in need of shaking up, wedded to many of the same projects it supported 15 years ago, the appointment did not seem a prescription for change.” But Berresford instituted a number of important changes at the foundation. She brought in department heads from international offices as well as some outsiders to help generate new ideas. She reorganized grant-giving around three major focus areas. She also began to emphasize communications, establishing it as a new department in order to strengthen public relations and advertising. This emphasis on communications was Berresford’s most significant innovation at the Ford Foundation. Previously, the foundation had kept a low profile, but Berresford wanted to push the organization into the spotlight. “The new Ford will most likely be more conspicuous, with more attention to press coverage of its programs and positions,” commented Karen W. Arenson in the New York Times. The new president also touted programs for women. “Feminism is now a theme interwoven in everything we do,” claimed Berresford in an article in Working Woman. Feminist leader Gloria Steinem supported Berresford’s new appointment. “It’s more important than naming a woman Cabinet member of president of a corporation,” Steinem remarked in Working Woman, “because the Ford Foundation can initiate and support social change here (United States) and internationally.” On April 24, 1997, Berresford announced that $50 million would be put forth to pursue the Ford Foundation’s priorities. According to Business Week, the foundation was dedicating $20 million to “create or expand institutions that lend and invest in low-income communities in the United States and overseas;” $15 million to “seed and strengthen foundations in such fields as economic development, women’s rights, and the arts;” and $15 million to “revitalize college-level research and teaching on understudied places, languages, and cultures.” Berresford also aimed to increase the amount of non-U.S. grants to 50 percent (previously at 40 percent) and to hire more African American, Asian American, and Latin American staff.
Social and Economic Impact Berresford has guided the Ford Foundation through a period of major change. Founded in 1936 by auto baron Henry Ford and his son, Edsel, the private non-profit organization began as a local Michigan philanthropy ded-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S u s a n
icated to the broad purpose of improving human welfare. In 1950 it became a national and international organization, with its assets composed almost entirely of Ford Motor Company stock from the two men’s estates. From 1956 to 1974, the foundation got rid of its Ford stock and spread itself over a range of investments, and in 1976 Henry Ford II quit the board, severing all connections between the Ford family and the foundation. Today, Ford is the largest organization of its kind in the country. The Ford Foundation’s objectives are to reduce poverty and injustice, strengthen democratic values, promote international cooperation, and advance human achievement. Grants for these purposes are given in three focus areas, which Berresford has outlined: Asset Building and Community Development, Peace and Social Justice, and Education, Media, Arts, and Culture (EMAC). Asset Building and Community Development focuses on fighting poverty by helping people and communities build assets and give them future options, which includes bank-like programs to assist low-income individuals and areas. Peace and Social Justice promotes democracy and freedom, and helps fund organizations that work for civil rights and fair laws. EMAC funds the arts and cultural institutions and promotes awareness of various cultures in hopes of building strong international relationships. As of mid-1997, the Ford Foundation had assets of about $9 billion, making it larger in terms of finances than 99 percent of all American businesses, and had provided $8 billion to about 9,000 institutions and 100,000 individuals around the globe. The money comes from a diversified investment portfolio. The organization dispenses about $400 million annually and employs almost 600 people—400 in the New York office and about 200 in 16 offices overseas. During the 1960s, the Ford Foundation functioned mainly as a springboard for liberal ideas but relied on the government to institute them. Such programs as the War on Poverty, the development of public television, and Head Start—a preschool enrichment program for disadvantaged children-were supported by Ford but implemented through government initiative and tax dollars. But with waning support for government spending in these areas, the Ford Foundation has had to change tactics. With Berresford in the lead, the Ford Foundation is positioning itself as a leader in socially responsible activism. Since government is drastically cutting funds for
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
V a i l
B e r r e s f o r d
social programs and services, the private sector, especially nonprofit groups, has had to find new ways to promote social goals. Instead of relying on tax funds, Ford is now exploring ways to tap into community resources to fund its programs. It gave $2.5 million, for example, to help an Oregon bank develop environmentally responsible lumber and fishing businesses. And its “individual development accounts” provides matching funds to those saved by low-income individuals to buy a house, pay for tuition, or open a business. Such grassroots enterprises have earned the enthusiasm of political conservatives as well as liberals and helped to dispel the notion that Ford only promotes liberal causes. With Berresford’s guidance, experience, and insight, the foundation will undoubtedly continue to thrive and promote its goals.
Sources of Information Contact at: Ford Foundation 320 E. 43rd St. New York, NY 10017-4816 Business Phone: (212)573-5000 URL: http://www.fordfound.org
Bibliography Arenson, Karen W. “At Ford Foundation, a New Chief and a New Style.” New York Times, 14 February, 1996. Collingwood, Harris. “A Woman at the Wheel of the Ford Foundation.” Working Woman, April 1996. Coy, Peter. “Fewer Giveaways, More Self-Reliance.” Business Week, 12 May 1997. Ford Foundation. “The Ford Foundation.” New York, NY: Ford Foundation. Available from http://www.fordfound.org. “Ford Foundation.” Hoover’s Online, 26 March 1998. Available from http://www.hoovers.com. “Ford Foundation to Host Unique Meeting of Corporate Leaders to Discuss the Benefits of Integrating Work and Personal Life.” Business Wire, 14 September 1997. “Franklin Thomas Set to Leave Ford Foundation.” Jet, 23 January 1995. Mercer, Joye. “The Ford Foundation Shifts Its Focus and Structure.” The Chronicle of Higher Education, 15 August 1997. Who’s Who in America, 51st edition, 1997. New Providence, NJ: Marquis Who’s Who, 1996.
S t u d e n t s
8 1
Jeff Bezos (1964-) Amazon.com, Inc.
Overview Pioneer retailer on the World Wide Web, Jeff Bezos has proven that a fortune can be made by convincing people to rethink the way they shop. With Amazon.com, Bezos has created the world’s largest bookstore of available titles with virtually no inventory or property costs. Browsing for a book will never be quite the same again with the online ease and convenience that Amazon provides. Bezos caught the online wave at the right time and must compete with the many imitators who wish to similarly succeed in selling products over the Internet.
Personal Life Jeff Bezos was born in Albuquerque, New Mexico in 1964. His father is an Exxon executive, and Bezos was brought up in affluence and privilege. Until he was 16, Bezos spent his summers rounding up herds and fixing windmills on his grandfather’s ranch in tiny Cotulla, Texas. Although he did not pursue a career as a cowboy, there is something about the lure of the frontier that caught Bezos’ imagination and spurred his interest in the untapped potential of the Internet. From an early age, Bezos wanted to be an entrepreneur. He attended Princeton University, where he graduated in 1986 with a Bachelor of Science degree in electrical engineering and computer science (summa cum laude and a member of Phi Beta Kappa). He is married to an aspiring novelist, MacKensie, and shares his home with a Labrador retriever, named Kamala after a minor “Star Trek” character. Relocating from New York City
8 2
J e f f
to Seattle to create Amazon.com, Bezos set out to found a company that could take advantage of the 230 percent annual growth in Internet usage. When the company went public in 1996, Bezos’s net worth was valued at more than $500 million. Amazon is growing at a rate of 3,000 percent a year, and Bezos expects to reach $1 billion in annual sales by the year 2000. When Amazon sold its millionth book, Bezos fulfilled his promise to personally deliver it: a Princess Diana biography to Tokyo. Bezos works in a somewhat rundown section of Seattle, Washington, in a small office with a desk he made of a door nailed to two-by-fours as legs; he built all his company’s desks according to this model in Amazon’s early days. As he proudly declares, “We spend money only in areas where it matters to our customers.” Analytical and methodical, Bezos is also enthusiastic and tireless in promoting his company and the potential of the Internet to change the way people buy. Ironically, however, Bezos confesses to buying about half of his books in regular stores where the browsing helps fulfill a social function.
B e z o s
Chronology: Jeff Bezos 1964: Born. 1986: Graduated from Princeton University. 1986: Hired by Fitel. 1988: Hired by Bankers Trust, Co. 1990: Promoted to vice president. 1990: Hired by D.E. Shaw & Co. 1992: Promoted to senior vice president. 1995: Started Amazon.com. 1997: Amazon.com went public. 1998: Amazon.com sold its millionth book.
Career Details When Bezos graduated from Princeton he headed to Wall Street. Interested in a job with a high-tech start-up company, he joined Fitel, a new company that coupled high tech with high finance by creating software for tracking international stock trades. Under the management of David Shaw, whom Bezos credits for teaching him a great deal about becoming a good manager, Fitel had only 11 employees when Bezos joined the firm. In 1988 Fitel was sold to a Japanese firm, and Bezos joined the Bankers Trust Company, which leads the development of computer systems that helped manage more than $250 billion in assets. In 1990, Bezos moved to D.E. Shaw & Co. where he helped build one of the most successful and technically sophisticated quantitative hedge funds on Wall Street, becoming the company’s youngest vice president in 1992. The genesis for the creation of Amazon.com began in the Spring of 1994 when Bezos was struck by the amazing annual growth of Internet usage. Nothing was growing as quickly, and Bezos began to explore the idea of creating a business that would tap into that growth. He decided on Internet retailing and methodically prepared a ranked list of the leading products that could best be sold over the Internet. Books led the list because there are so many items and no existing traditional bookstore could possibly offer 2.5 million titles as Amazon.com does. The largest bookstore carries fewer than 200,000 titles. Settling on his product, he next considered a location for his business. Bezos carefully and methodically examined his options. He needed a location near a major book wholesaler, within reach of a pool of high-tech talent to make on-line sales work, and in a small-population state, to avoid sales tax when products were
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
shipped across state lines. Narrowing it down to the western United States, Bezos eventually chose Seattle, Washington. In choosing a name for his company, Bezos was equally precise and analytical. He wanted a name that started with the letter A to head any alphabetical list, would be short and easy to spell, would be internationally recognizable, and most importantly, would convey a sense of size that his company would offer as the largest bookstore in the world. He finally settled on Amazon.com, after the largest river in the world. Bezos launched Amazon.com in June 1995. Early investors who put up $30,000 in 1994 would be holding Amazon stock worth $4.5 million at the end of 1997. The company, with 600 employees, ships books at a rate of about $150 million a year, which equals approximately 30 traditional chain bookstore superstores. The secret behind Amazon’s amazing quick growth is that the vast majority of books ordered are then purchased from book wholesalers’ warehouses, which allowed Bezos to start his company with little capital and does not require large investments in real estate or inventory. Despite his company’s successful growth, analysts predicted that Amazon.com could not survive once the other bookstore giants such as Barnes & Noble and Borders copied Bezos’s simple idea. So far, however, the analysts have been proven wrong. Bezos is confident that his company has an advantage over the others because Amazon.com is technologically based and focused exclusively on-line. Other companies that are real-estate based, he predicts, will have a harder time successfully accomplishing both Internet and traditional retailing.
S t u d e n t s
8 3
J e f f
B e z o s
Success will depend, according to Bezos, on customer satisfaction and ease of service, which Amazon.com is determined to provide. Eventually, Bezos anticipates moving onto other information-based products such as CDs and videos. Although Amazon.com has achieved remarkable success in dominating the online book market, the company lost $30 million in 1997 and expects to lose the same amount in 1998 before showing a small profit in 1999. Bezos has invested his profits in expanding his business, following the principle of GBF: “Get Big Fast.” Long-term success, according to Bezos, will depend on becoming one of the few “brands that matter.” As he has said, “There are always two or three or four brands that matter. With the lead we have today, we should be the number one player.” Jeff Bezos is a pioneer in on-line retailing who has played an important role in helping to transform the way people shop today. Although skeptics have dismissed the financial viability of conducting large businesses on the Internet, Bezos has shown how it can be done by anticipating what his customers want and skillfully using the best technology to re-imagine the book business. Bezos realized that the Web could offer what a traditional bookstore could never deliver: a “stock” of more than 2.5 million titles. Customers can sample reviews and follow links to other books by the same author or to other books on comparable subjects. Convenience and service, the Amazon.com specialty, are factors that could substantially alter retailing.
inventory, but with considerable focus on his market and the demands of on-line retailing, Bezos almost immediately challenged the largest bookstore giants. Information is the Internet’s greatest attribute, and Bezos has shown how his customers’ need for books can be satisfied in a radically different way. Amazon.com has also established new benchmarks in the publishing industry, while raising the level of customer service. Amazon has caused publishers to lower inventory and centralized distribution. The industry can also advance order certain books and pre-sell some titles by getting feedback from readers about what their favorite authors should publish. For the customer, Bezos through Amazon.com has cut prices up to 40 percent on special featured books, has customized book selections, has created reader forums, and has provided interactivity between readers and authors. In response to changes in book retailing, traditional bookstores have also changed what they sell, stressing more reasons to visit their stores, such as coffee and pastries, poetry readings, and book signings.
Sources of Information Contact at: Amazon.com, Inc. 1515 2nd Ave. Seattle, WA 98101 Business Phone: (206)622-2335 URL: http://www.amazon.com
Bibliography Business Week, 13 January 1997.
Social and Economic Impact
Fortune, 9 December 1996.
Bezos, in creating a business plan and implementing it with Amazon.com, showed how an upstart company can quickly become an industry leader in the hightech age. Without the need for great initial investment or
8 4
B u s i n e s s
Gentlemen’s Quarterly, March 1998. Newsweek, 28 April 1997. Publishers Weekly, 5 January 1998.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Nicholas Biddle Overview A talented administrator and pragmatic businessman, Nicholas Biddle developed the Bank of the United States into a prototype of the modern central banking system. Using the power of the Bank to expand and contract the money supply, he played a prominent role in bringing order to the chaotic American marketplace and creating a stable currency.
(1786-1844) Bank of the United States
Personal Life A member of one of early America’s most aristocratic families, Nicholas Biddle was born January 8, 1786, in Philadelphia. His parents were Charles Biddle, a successful merchant and vice president of the Supreme Executive Council of Pennsylvania, and Hannah Shepard, the daughter of a North Carolina merchant. In 1810, Nicholas Biddle met and eventually married Jane Craig, whose father’s estate was one of the largest in Philadelphia. Biddle was a precocious student whose parents took a keen interest in his education. He was admitted to the University of Pennsylvania at the age of 10 and three years later transferred to Princeton University as a sophomore. He graduated from there as valedictorian (the top-ranked person in his class) in September 1801 at the age of only 15.
Career Details In the fall of 1804, Biddle joined General John Armstrong as a member of the American legation (diplomatic mission) to France, where he worked on claims resulting
8 5
N i c h o l a s
B i d d l e
loans and bank notes in circulation and one-third of the total bank deposits and specie (gold and silver). Although he tried to remain neutral in the presidential race between John Quincy Adams and Andrew Jackson in 1828, Biddle came under fire amid allegations that some branches had exercised improper influence by refusing loans to Jackson’s supporters. Biddle’s defensive handling of the accusations only made the situation worse. In addition, Jackson harbored a strong personal prejudice against banks that was based not only on a general resentment of the power they wielded but also on his own unfortunate dealings with them. All of this caused the relationship between the Bank and the government to deteriorate rapidly following Jackson’s election to the presidency.
Nicholas Biddle.
Uncertain about the Bank’s future, Biddle decided to ask for it to be rechartered in 1832 (which was four years earlier than necessary). Because it was an election year, he hoped that Jackson would not dare oppose the request for fear of losing popularity. Biddle had miscalculated, however. Jackson not only vetoed the recharter, he also publicly denounced the Bank of the United States as a monopoly that was under too much foreign influence. In spite of the goodwill Biddle had managed to create for the Bank, public opinion soon turned around to favor Jackson’s point of view.
(Archive Photos, Inc.)
from the Louisiana Purchase. After spending about a year in that post, he toured Europe and Greece and then served in London as secretary to James Monroe, who was at that time the U.S. minister to Great Britain. It was during his lengthy stay overseas that Biddle gained valuable insights into the problems and techniques of international finance. Biddle returned to the United States in September 1807. Three years later, in October 1810, he was elected to the Pennsylvania legislature. The highlight of his term came when he mounted an eloquent defense of the first Bank of the United States, which was facing a hostile attempt to deny its charter to operate. He declined renomination until 1812, when he returned to the legislature to support U.S. involvement in the War of 1812. In 1818, Biddle was defeated in a race for the U.S. Congress. He was subsequently passed over by thenPresident Monroe for appointment to office because of their differing political views. However, after mismanagement of the second Bank of the United States prompted the removal of its president, Biddle was named one of five directors of the troubled institution. Four years later, in 1822, Biddle assumed the presidency of the Bank. During his tenure, he dropped the restrictions his predecessor had imposed upon branch operations. The enlargement of credit operations stimulated the economy, which was still suffering from the effects of the Panic of 1819. Biddle increased the Bank’s profits and eventually gained complete control over its operations. Under his guidance, the Bank expanded to 29 branches. It also controlled one-fifth of the country’s
8 6
B u s i n e s s
Bolstered by his supporters, Jackson resolved to destroy the Bank. He directed the removal of almost $10 million in government deposits that were then placed in state institutions dubbed “pet banks.” Biddle responded by curtailing loans. Though such a move may have been necessary to protect the Bank, the restriction of credit dealt a serious blow to the U.S. economy. Bankruptcies multiplied, while wages and prices declined. Jackson made the crisis worse by declaring that the government would no longer accept branch drafts issued by the Bank for the payment of taxes. In 1836, Biddle was forced to secure a charter from the Pennsylvania legislature to operate as a state bank. The loss of a central bank to provide order, combined with the overheating effect of government deposits in state banks, led to frenzied speculation and the Panic of 1837. Banks across the country—including Biddle’s new United States Bank of Pennsylvania—were forced to suspend payment of specie for the redemption of notes. Biddle was still the most prominent banker in the nation despite his ongoing battles with Jackson, he played an important role in trying to shore up the U.S. banking system. He managed to resume specie payments in August 1838 and also intervened heavily in the cotton market to prevent its collapse. With order seemingly restored, Biddle resigned from his post in March 1839. That summer, however, the world was again plunged into financial chaos. Falling cotton prices and mismanagement by the Bank’s directors led to a second suspension of specie payments in October 1839. The Bank continued to operate, but its situation grew more and more unstable. Finally, in February 1841 it collapsed, taking Biddle’s personal fortune with it.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
N i c h o l a s
B i d d l e
The Bank’s failure made Biddle the target of many lawsuits during the final years of his life. In 1842 he was arrested on charges of criminal conspiracy. Although he was eventually found innocent, he continued to be plagued with other legal problems until his death in 1844.
Chronology:
Social and Economic Impact Biddle was a brilliant administrator who maintained complete control over the Bank of the United States. Unfortunately, his political instincts were less astute. Because he recognized the value of a central bank to the nation’s economy, he believed that all reasonable citizens recognized it as well. But his naivete proved disastrous. Despite his failures, Biddle remains an imposing figure in American history. He understood the potential of the American economy and formulated a method for realizing it. With his background in international finance and relations, Biddle felt that a powerful central banking system would establish American prosperity and make the country stronger and more secure. Although the American economy survived the crisis of 1839, it then experienced a period of exuberant economic growth characterized by wild speculation and uncertainty. By the late 1800s, the ruthless and sometimes illegal business activities of the so-called “robber barons” (including such notables as John D. Rockefeller, Jay Gould, and Cornelius Vanderbilt) had prompted calls for reform. One such change involved reestablishing a central banking system very similar to Biddle’s bank. But the struggle continues among policymakers to establish a system of “managed” economic growth without curtailing freedom or the fiercely independent spirit that characterizes American entrepreneurs.
Nicholas Biddle 1786: Born. 1801: Graduated as valedictorian from Princeton University at age 15. 1804: Worked in France as member of American legation. 1810: Elected to Pennsylvania legislature. 1818: Appointed director of Bank of the United States. 1822: Became president of Bank of the United States. 1836: Rechartered Bank of the United States as United States Bank of Pennsylvania. 1841: United States Bank collapsed. 1844: Died.
Govan, Thomas Payne. Nicholas Biddle: Nationalist and Public Banker, 1786-1844. Chicago: University of Chicago Press, 1959. Hammond, Bray. Banks and Politics in America from the Revolution to the Civil War. Princeton, New Jersey: Princeton University Press, 1957. McFaul, John M. The Politics of Jacksonian Finance. Ithaca, New York: W.W. Norton and Co., 1968. Temin, Peter. The Jacksonian Economy. New York: W.W. Norton and Co., 1969.
Sources of Information Bibliography Caterall, Ralph C.H. The Second Bank of the United States. Chicago: University of Chicago Press, 1903.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Wilburn, Jean Alexander. Biddle’s Bank: The Crucial Years. New York: Columbia University Press, 1967.
S t u d e n t s
8 7
Edwin Binney (1866-1934) Binney & Smith Inc.
Overview A pioneer in the manufacture of carbon black, EdwinBinney was a founder of Binney & Smith, better known today for its Crayola products used by millions of children. Smith’s innovations made black automobile tires, electric light carbons, and many other technological advances possible. He was also active in many natural gas companies, was instrumental in the development of parts of the state of Florida, and was a noted philanthropist.
Personal Life Born at Shrub Oak, Westchester County, New York, Smith was a son of Joseph Walker and Annie Eliza (Conklin) Binney. His father was an English stockbroker who emigrated to the United States in 1860, later founding an early lamp black factory near Peekskill, New York. Smith went to work at an early age and attended public schools in Peekskill and New York City. On October 16, 1887, in Brooklyn, New York, he married Alice Stead of London, England, with whom he had four children: Dorothy, Helen (whose husband, Allan Kitchel, succeeded Binney as president of Binney & Smith), Mary, and Edwin Jr. Binney enjoyed spending time in the state of Florida, where he owned large orange groves in St. Lucie County. He was an important force in the opening of the east coast port of Ft. Pierce in 1930. He enjoyed deep sea cruising, fishing, hunting, and designing sail and motor boats. Binney was known not only for his impeccable business sense but also for his integrity and good will. Dur-
8 8
E d w i n
ing the Depression of the 1930s, for example, Binney & Smith gave destitute local farmers work hand-labeling boxes of crayons, a tradition that continued for many years. While his partner Smith spent much of his time traveling and selling, Binney was known as a quiet man who used his time to diversify the company at home. Binney died in Gainesville, Florida, on December 17, 1934, while visiting a grandson at the University of Florida.
B i n n e y
Chronology: Edwin Binney 1866: Born.
Career Details Following his father’s lead, Binney also became associated with the carbon black and lamp black business in Wellsville, New York. For a time he was a traveling salesman for a paint company. He later joined his cousin Charles Harold Smith in a very successful firm which manufactured lamp and carbon black for paint, printing ink, oil cloth, and enameled leather. Later developments included the manufacture of carbon black for stove and shoe polishes, coloring paper, pencils and crayons, and ink for high-speed printing presses. By the first part of the nineteenth century, Binney and Smith had reorganized into the Pigment Division (for carbon black and related products) and the Crayon Division. The Pigment Division introduced carbon black as an ingredient for reinforcing rubber automobile tires and as a component of electric light carbons. Later introduced was a superior version of hydrocarbon gas black, which was manufactured in Pennsylvania. In 1902 the firm of Binney & Smith was officially incorporated with main offices in New York City and subsequent branch offices in Philadelphia, Pennsylvania; Cleveland and Akron, Ohio; London; Paris; and Copenhagen. In Easton, Pennsylvania, Binney & Smith bought a water-powered stone mill to begin extracting the area’s large slate supplies. The slate was used to make school pencils. The company also manufactured school and industrial crayons, blackboards, and dry colors. Binney & Smith also introduced dustless school chalk and improved their school crayons by adding color pigments and making them smaller than their industrial counterparts. The name “Crayola” was created by Edwin Binney’s wife Alice, who combined the French word craie (chalk) with ola (oleaginous—for the petroleum-based paraffin in the crayons). The first box contained eight pieces and sold for five cents.
1882: Began work with Charles Harold Smith in lamp and carbon black manufacture. 1885: Entered firm of Binney & Smith. 1887: Married Alice Stead. 1902: Binney & Smith incorporated. 1914: Created Columbian Carbon Company. 1920: Became president of Columbian Carbon. 1930: Became president of Binney & Smith. 1930: Port of Ft. Pierce, Florida, opened. 1934: Died.
Binney was also, at various times, president of the Ft. Pierce (FL) Financing and Construction Company, Sebs Chemical Company, and Teton Gas Products Company; vice-president and director of the Coltexo Corporation, the Peerless Carbon Black Company and other carbon companies, Southern Gas Line, Inc., Piney Oil & Gas Company, and other oil and gas companies. Binney was a philanthropist whose most notable donation was Binney Park in Old Greenwich, Connecticut, where he maintained a family home. The park was constructed on former swamp land and included expansive, landscaped green areas as well as a lake. The city later enlarged the park by purchasing additional acreage. The Binney family was also responsible for the construction of a parish house adjoining the First Congregational Church in Old Greenwich. Binney was a member of many professional and civic organizations, including the Sons of the American Revolution, the Natural Gas Association, the Yachtsmen’s Association of America, the New York Zoological Society, the Navy League of the United States, the Riverside (CT) Yacht Club, the Innis Arden Golf Club (Old Greenwich, CT), and the Congressional Country Club (Washington, D.C.).
Binney and Smith exchanged the presidency and vicepresidency of their company each year until Smith died in 1931, when Binney took over the presidency and held it until his death. In 1914 along with Smith, Charles Henry Heim, Felix Frederick Curtze, and Nathaniel Burrows Bubb, Binney negotiated the consolidation of seven carbon black companies into one, the Columbian Carbon Company. Until his death, Binney served as voting trustee, vice-president, and director of the company, which was important to the development of the natural gas industry.
Today, the name Binney & Smith is almost entirely associated in the public’s mind with Crayola drawing and
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Social and Economic Impact
8 9
E d w i n
B i n n e y
art supplies. No school child begins a new school year without a box of Crayola crayons, packed in boxes with as many as 96 assorted colors. In February, 1998, the 40th birthday of the 64-crayon box was celebrated with the reintroduction of the original packaging and the donation of memorabilia to the Smithsonian Institution. More than 100 billion crayons have been manufactured at the company’s plant in Easton, Pennsylvania, with over 2,600 people employed in its worldwide operations. Packaging is printed in over a dozen languages. Edwin Binney’s original vision, however, was not to create art supplies but to provide improved uses for common substances. He learned techniques for making better lamp black (the product of burning liquid hydrocarbons such as kerosene) and carbon black (the product of incomplete combustion of natural gas), which were both in high demand during the late nineteenth and early twentieth centuries. Carbon black in particular became indispensable to the manufacture of automobile tires and thus boomed in sales as more and more cars crowded early highways. B.F. Goodrich Company was the first to change its traditionally white tires to black, discovering that the carbon black made the tires more durable. Binney also supervised the refinement of lamp black to make carbons for electric lights with less than two percent ash, thus making electrification more accessible to millions of Americans. Binney was a major force, moreover, in the development of natural gas and gasoline resources. Binney & Smith at one time was the largest producer of natural gas in the United States, selling it to industries all over the world. In addition, at a time when the state of Florida was becoming a mecca not only for tourists but also for permanent residents and businesses, Binney participated in
9 0
B u s i n e s s
development efforts there. He was a director of the Ft. Lucie County Bank and also chairman of the board of the Fort Pierce Port Commission. He contributed substantial funding for the opening of the Ft. Pierce harbor, which became the only port at that time for the more than 300 miles between Miami and Jacksonville, and later erected a large storage facility at Ft. Pierce to house citrus fruits awaiting shipping. In short, Edwin Binney seemed to be in the right places at the right times with the right products and ideas, in a period when America saw no limits to its economic expansion. Much more than just the developer of the popular Crayola, Binney was an entrepreneur whose vision encompassed the economic possibilities of a growing nation.
Sources of Information Contact at: Binney & Smith Inc. 1107 Broadway New York, NY 10010-2582 URL: http://www.crayola.com
Bibliography “Crayola: A Colorful History.” http://www.crayola.com/history.
1998.
Available
from
“Crayola Trivia.” Available from Binney & Smith Inc., Easton, PA. “History of Binney and Smith.” Available from Binney & Smith Inc., Easton, PA. National Cyclopedia of American Biography. New York: James T. White & Co., 1936. Kitchel, A.F. The Story of a Rainbow. Binney & Smith Inc., 1961. Who Was Who in America. Chicago: A.N. Marquis Co.,1943.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Cathleen Prunty Black Overview Cathleen Black, as president of Hearst Magazines, oversees 16 high-profile titles, including Cosmopolitan, Esquire, Harper’s Bazaar, Popular Mechanics, and Redbook. She worked her way up the ladder in publishing, beginning in advertising sales for New York and Ms., and becoming publisher of New York and then USA Today. She served about five years as the CEO of the National Newspaper Association of America, an important lobbying group, then she took over at Hearst Magazines. Her determination and talent have made her an important figure to working women and a major force in the field of publishing.
(1944-) Hearst Magazines
Personal Life Black was born on April 26, 1944, in Chicago, Illinois, to James Hamilton Black (a food company executive) and Margaret Harrington Black. She has one brother and one sister. Black grew up in a home where current events were openly discussed, so she was exposed to newspapers from a very young age. Black also had ample opportunities to explore the rich array of arts and entertainment available in her home town. At age 14, Black was deeply affected when her father lost his eyesight. Not one to give up easily, he overcame this disability. He changed careers and became an investor, continuing to be productive in the face of adversity. “We both have a strong determination to succeed,” Black remarked to Paul Farhi in the Washington Post. “We both have outgoing, forceful personalities. I owe him a lot.”
9 1
C a t h l e e n
P r u n t y
B l a c k
female. Though she sold plenty of ads, she was not given the chance to work on the larger accounts, which usually went to men. After she complained, she received a raise but still earned less than two of her male coworkers. Black left Travel & Leisure in 1970 to join the advertising department at New York magazine, staying only two years. In 1972 she took over as advertising manager for the recently launched feminist magazine, Ms. She remembered that it was difficult to sell ads for the publication because feminism was so controversial at the time. Many women as well as men felt threatened by the movement, but Black was able to set a reassuring tone. With her relaxed demeanor and dedication to her work, she managed to convince advertisers that working women were a good market, because they had financial power. She was promoted to associate publisher in 1975.
Cathleen Black.
(AP Photo/HO.)
Black graduated from Aquinas Dominican High School and went on to get her bachelor of arts degree from Trinity College in 1966. While job hunting, she had an interview at the large advertising firm of J. Walter Thompson. She knew the job was not for her when the interviewer dismissed her question about the executive training program. He “practically tweaked my cheek. He said, ‘Why would a cute little thing like you be interested in the training program?’” she related to Kristin Choo in the Chicago Tribune. Black would later break through the “glass ceiling” that was in the path of so many ambitious women. Black is married to Thomas Harvey, an attorney. They have a son and daughter, and make their home in New York City. The five-foot, eight-inch Black has been described as upbeat and perky; she works out to maintain her slim figure. She is on the board of directors at the Hearst Corporation, IBM, and the Coca-Cola Company, and has a number of honorary degrees.
Career Details After her disappointing experience at J. Walter Thompson, Black decided to go into publishing and moved to New York City. There, her first job was selling advertisements over the phone for Curtis Publishing. After that, she moved on to sell ads at Holiday magazine, and in 1969, took a similar job at Travel & Leisure. Here, she again encountered prejudice because she was
9 2
B u s i n e s s
After proving her worth at Ms., Black was recruited to go back to New York magazine as advertising director. She took the job in 1977 with the understanding that if she increased business, she would be named publisher within a year and a half. The timing could not have been worse. Advertisers were scared because Australian-born media mogul Rupert Murdoch had just bought the periodical. Due to Murdoch’s reputation for emphasizing exploitational articles, many predicted that New York’s content would begin to slant more toward sex and violence. Black overcame this perception, sold the ads, helped the periodical turn a profit, and in 1979 became the first female publisher of weekly consumer magazine. She was chosen Outstanding Woman of Communications in 1982 for her contributions to publishing. Black’s business prowess had been gaining attention, and in 1983, the chief executive officer (CEO) of Gannett Newspapers, Allen H. Neuharth, offered her the position of president at the innovative national newspaper USA Today. The following year, 1984, Black was made publisher and later joined its board of directors. The newspaper offered a revolutionary look and focus: it printed short, easy-to-read stories with a broad interest, used bright colors on the section heads and fullcolor photos, and boasted more graphically interesting layouts. During Black’s eight-year tenure at USA Today, its circulation reached 1.8 million—second only in the country to the Wall Street Journal. “To have taken (USA Today) from the infant stage to a mature product is something I take great pride in,” Black commented to Paul Farhi in the Washington Post. “Every cynic wouldn’t have given us a prayer to make it to our first birthday.” In May of 1991, Black left Gannett to become the president and CEO of the American Newspaper Publishers Association (later renamed Newspaper Association of America.) Farhi noted that the group enjoyed “considerable political heft, given that the 1,400 members of her organization control the nation’s editorial pages.” The association vowed to meet the $600,000 annual salary that Black had earned at Gannett, even though
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
C a t h l e e n
P r u n t y
B l a c k
the person she replaced had drawn a salary of only $240,000. Black therefore became one of the highestpaid lobbyists in Washington, D.C., with a salary reaching $885,000 by 1995—a figure that caused some controversy among members. As CEO, Black’s main duties were as a spokesperson and lobbyist. She spent $2.8 million in lobbying efforts, tackling topics such as First Amendment rights, telecommunications, taxes, and environmental issues. She also merged six separate trade groups into one under the new name of the Newspaper Association of America. When she took over the organization, newspaper profits were in decline due to falling circulation and lower ad sales. But Black told Mark Fitzgerald in Editor & Publisher upon her departure in 1995, “Now the association is in strong shape: Membership is up 35 percent, it’s totally reorganized and focused on the right issues. In many ways, I feel I have done what I came to do.” Some smaller papers were upset that Black seemed to concentrate her energy on representing the larger daily papers, and others complained that she raised dues too high. Others, however, applauded Black’s improvements in the group’s structure. One person impressed with her accomplishments was Hearst president and CEO Frank Bennack, Jr., who had recruited her for the position in the first place. He asked her to join the media conglomerate as president of Hearst Magazines. In 1995, Black took over as the first woman president of Hearst Magazines. In this position, she became responsible for the world’s largest publisher of monthly magazines, with 16 titles in the United States and 95 international editions sold in more than 100 countries. The family-owned Hearst Corporation magazines divison includes Cosmopolitan, Esquire, Harper’s Bazaar, Marie Claire, Motor Boating & Sailing, Popular Mechanics, Redbook, Sports Afield, and Town & Country. The wellestablished firm had been printing some of its periodicals for over 100 years. Black initially told Ann Marie Kerwin in Inside Media that the Hearst position was “a plum job. The company is well-positioned for where we are in terms of a very competitive and challenging marketplace. It seems to me they are doing the right thing. They have a whole new media division. They have a number of interactive home pages already started. But most importantly, the titles that they represent are some of the finest, exciting franchises that exist, literally, in the world.” Despite her enthusiasm, though, Black immediately faced two major challenges: pressure from advertisers in the wake of an ad rate increase combined with rate base cut and the burden of lagging circulation. Kraft, for one, pulled $30 million of its food ads and $20 million of its tobacco ads.
Chronology: Cathleen Prunty Black 1944: Born. 1966: Began selling ads at Holiday magazine. 1970: Joined advertising staff of New York magazine. 1972: Became advertising director of Ms. magazine. 1975: Promoted to associate publisher of Ms. magazine. 1977: Became associate publisher of New York magazine. 1979: Promoted to publisher of New York magazine. 1984: Assumed duties as publisher of USA Today. 1991: Appointed CEO of the Newspaper Association of America. 1996: Named president of Hearst Magazines.
negotiated a lower rate with them while maintaining their hard-line presence in public. And Donald Van De Mark on the CNNfn website asked Black if Hearst was discounting or giving away ad pages, which Black denied. Though total number of pages were down in 1996 from 1995, Black maintained that the magazines were financially healthy, telling Van De Mark in 1997, “We’re running over 13 percent ahead in revenue and we’re running 8 percent ahead on volume or in terms of advertising pages.” The New York Times in 1997 reported that ad revenue under Black’s leadership improved at a surprising rate. In addition to her work with advertisers, Black also launched a number of new titles during her reign, including Bob Vila’s American Home, Mr. Food’s Easy Cooking, and Healthy Living magazines.
Social and Economic Impact
Black defended the company’s new ad rate policy, telling Jeff Gremillion in Mediaweek, “The bottom line is that it was a very successful and very important, strategic long-term move for Hearst.” Gremillion, however, reported that at least one agency claimed that Hearst had
Black first entered the workforce during a period of great social change in America. A significant issue was the push for women’s rights. Traditionally, women were expected to stay home or to take jobs such as nurse, secretary, or teacher. Women in the workforce had few options for advancement to positions of power in business, since top jobs were usually held by men. But Black persisted in her ambitions and overcame these obstacles to assume a position of great responsibility.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
9 3
C a t h l e e n
P r u n t y
B l a c k
Black’s stint at Ms. was difficult at first, with companies reluctant to buy ads in the magazine because they mistakenly believed that feminists were political radicals. Black worked hard to dispel this negative stereotype and succeeded in generating much-needed ad revenues for the publication. Due to her dedication at Ms. and her subsequent leadership at New York, she helped promote positive images of feminism. Black also proved that women are capable of leadership roles and blazed the trail for others after her. Black helped establish USA Today as a publication that would revolutionize the newspaper industry. Initially, many journalists and critics were skeptical of the publication’s brightly colored pages, national focus, and shorter stories in simple language. Some even derisively dubbed it “McPaper” and predicted that it would never work. Consumers, though—especially business travelers—enjoyed the publication, and its circulation soared. This led some writers and editors to complain that USA Today’s popularity would compromise journalistic standards and eat into the profits of local papers. But eventually, most newspapers began to copy the USA Today format, printing fullcolor photographs and jazzing up layouts in order to compete for the more visually-oriented customers. Even the “Gray Lady,” the New York Times, added color late in 1997.
9 4
Sources of Information Contact at: Hearst Magazines 959 Eighth Ave. New York, NY 10019 Business Phone: (212)649-2000 URL: http://www.hearstcorp.com
Bibliography “Before Hours.” CNNfn, 12 November 1997. Available from http://www.cnnfn.com. Brady, James. “On Cathie Black’s Watch, a host of Changes for Hearst.” Advertising Age, 16 September 1996. Colford, Paul D. “INK: New Gender at Men’s Club/Cathleen Black Joins the Higher Echelons of Hearst.” Newsday, 7 December 1995. Current Biography. January 1998. New York: H. W. Wilson Co., 1998. Farhi, Paul. Washington Post, 13 May 1991. Fitzgerald, Mark. “NAA President to Join Hearst.” Editor & Publisher, 2 December 1995. Gremillion, Jeff. “Hearst’s Fall Color: Basic Black.” Mediaweek, 14 October 1996.
As CEO of the Newspaper Association of America, Black increased membership and reached the goals of the group which improved the newspaper industry in a variety of ways. In addition to important lobbying efforts, she claimed that over 100 new papers were started during the time she was in charge. As the first woman to head one of Hearst’s divisions, she turned around sluggish ad sales and breathed new life into what some thought was becoming a stuffy and old-fashioned business. Hearst Magazines, the biggest player in periodicals today with more than $1 billion in annual revenues, now sets the standard for other publishers.
Gremillion, Jeff. “Hearst Goes Up for Rebound; Black Touts Strong First-Quarter Ad-Page Growth at Several Titles.” Mediaweek, 28 April 1997.
Black’s rise to president of Hearst Magazines was an important step for women as well as for publishing. A Newsday headline went so far as to say, “New Gender at Men’s Club,” alluding to the fact that Hearst typically had been known as an “old boys’ club,” where women were excluded from positions of power. Thanks to Black’s motivation, she has made impressive gains for women in American society, and her insight and leadership skills have undoubtedly improved many facets of the publishing world.
Kerwin, Ann Marie. “Paint It Black.” Inside Media, 13 December 1995.
B u s i n e s s
Hays, Constance L. “Magazine Chief Shakes Things Up at Hearst.” New York Times, 2 June 1997. Hearst Corporation. “Hearst Magazines.” New York: Hearst Corporation, 1998. Available from http://www.hearstcorp.com. “Hearst Corporation.” Hoover’s Online, 17 June 1998. Available from http://www.hoovers.com. Kerwin, Ann Marie. “Hearst’s Black Aims for Higher Profile.” Advertising Age, 28 April 1997.
Manly, Lorne. “Leading the Charge at Hearst.” Folio: The Magazine for Magazine Management, 15 September 1996. Taft, William H. Encyclopedia of Twentieth-Century Journalists, New York: Garland Publishing, Inc., 1986. Who’s Who of American Women, 20th ed., 1997-1998. New Providence, NJ: Marquis Who’s Who, 1996.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
William Edward Boeing Overview William Edward Boeing was an aviation pioneer and supplier of the B-17, B-29, and B-52 airplanes to the United States military. The powerful company he built through mergers and acquisitions eventually included manufacturing, supplier operations, and a passenger airline service. By the mid-1930s, the U.S. government had begun antitrust action, causing the company to be broken up. Boeing was very displeased by this action and withdrew from active participation in his company. At this time, he pursued his interests in deep-sea cruising, fishing, and raising thoroughbred horses and cattle. To pursue his leisure activities, he purchased the Aldarra Farms estate in Fall City, Washington, in 1946. Upon the purchase of Aldarra Farms, Boeing donated his mansion in Seattle to the Children’s Orthopedic hospital. In the fall of 1956, after struggling with failing health for several years, he died aboard his yacht Taconite in the Puget Sound waters of Washington state.
(1881-1956) The Boeing Company
Personal Life William Edward Boeing was born October 1, 1881, in Detroit, Michigan. The only son of Wilhelm and Marie (Ortman) Boeing, the family was wealthy and owned substantial timber and mining interests in Michigan and Minnesota. His German-born father died when he was eight years old, leaving him to be raised by his Austrian-born mother. While growing up he attended private schools in the United States and West-
9 5
W i l l i a m
Bill Boeing.
E d w a r d
B o e i n g
(AP/Wide World Photos, Inc.)
ern Europe. His college career at the Sheffield Scientific School at Yale University lasted three years before he left without graduating in 1902 to start a lumber business in the Pacific Northwest. In 1908 he established a permanent residence in Seattle. Around 1910, Boeing became interested in aviation and in 1915 he learned to fly at Glenn L. Martin’s flying school in Los Angeles. Soon thereafter, he purchased his first aircraft, a Martin seaplane. Eventually his aviation interests led him to found his own aircraft manufacturing company. On September 27, 1921, he married Bertha Porter Paschall, and the couple had one child.
9 6
B u s i n e s s
Career Details In 1916, William Boeing and Conrad Westervelt, an officer in the U.S. Navy, established the Pacific Aero Products Company. This was soon to become the Boeing Airplane Company. Initially they built experimental seaplanes under the name B and W. During World War I, they were awarded a contract to build Curtiss flying boats for the United States military. Armistice was reached before any of the boats were completed and the contract was canceled, however. The resultant lack of work left his company, like others in the industry, in difficult financial times. To increase revenue, the Boeing
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
W i l l i a m
firm built furniture and sea sleds. The company built, in 1919, a flying boat, the B-1, which carried mail for several years between Seattle and Vancouver, British Columbia. The competition from war surplus planes, however, resulted in production being scaled back. With the move to private carriers by the Post Office, Boeing began to produce commercial transport planes. In addition, they were fortunate to receive orders for reconditioning army planes. The company’s first major manufacturing contract came in 1920 to build 200 Thomas-Morse MB3 fighter planes. This deal was reached under a new system that allowed aircraft manufacturers to bid on each other’s designs for military orders. In July 1927, Boeing Air Transport began flying mail and passengers on its M40 plane between San Francisco and Chicago. Still, the company’s major business during the 1920s was derived from the production of fighter planes for the army. In a move to integrate transport and manufacturing activities, Boeing along with Fred Rentschler, president of aircraft engine maker Pratt & Whitney, and his brother Gordon, president of National City Bank, created the United Aircraft and Transport Company. Merging firms included Pratt & Whitney, Hamilton Standard Propeller, and the Stearman, Chance, Vought and Sikorsky supplier operations. The new operation also provided passenger service to New York, the Pacific Northwest, and San Diego. This combination became the most far-reaching and profitable aviation operation of its time. United enjoyed continued success as a commercial airline. The company also produced the Monomail 200, which introduced the all-metal, low wing design and was further updated to the innovative twin-engine 247, in 1933. This plane was so superior to others that the competition had to quickly play catch up to survive. The all-metal, lowwing design was also incorporated into Boeing’s military aircraft, including the B-9. Boeing became less involved with aircraft design as he began handling the company’s chief executive duties. During the Hoover administration, Boeing with reservations agreed to the Postmaster General’s plan to use air mail contracts to create a stable and financially sound postal system. The company had continued to be a supplier to the Post Office but when allegations of improper business conduct surfaced, under the Franklin D. Roosevelt administration, Boeing canceled all airmail contracts. After investigation of the industry by a U.S. Senate committee, Congress passed the Air Mail Act of 1934. One of its major directives was to separate the manufacturing and transport activities of the industry. United Aircraft and Transport was divided into Boeing Aircraft, United Aircraft, and United Airlines.
E d w a r d
B o e i n g
Chronology: William Edward Boeing 1881: Born. 1916: Founded Pacific Aero Products Company (soon renamed Boeing Airplane Company). 1920: Won first major order from United States military for 200 MB-3 fighter planes. 1921: Married Bertha Porter Paschall. 1929: Merged company to form United Aircraft and Transport. 1934: Introduced B-17 plane for U.S. military. 1934: United was divided into Boeing Aircraft, United Aircraft, and United Airlines. 1938: Introduced B-29 plane for U.S. military. 1956: Died after several years of failing health.
The antitrust activity left Boeing quite embittered and led him to resign from active participation in the company. Ironically, in the same year he was awarded the Guggenheim Medal for successful pioneering in aircraft manufacturing and air transport. During the late 1930s, the Boeing Company capitalized on technological innovations and expanded operations in anticipation of war. In 1938, the company employed 2,960 persons expanding to 28,840 at the time of the Japanese attack on Pearl Harbor. The United States military used three Boeing planes during the war: the B-17 (designed in 1934), the B-29 (designed in 1938), and the Kaydet trainer. Both the B-17 Flying Fortress and B-29 Superfortress were instrumental in winning the war. The B-29 carried the first atomic bomb dropped on Japan. During the 1950s, the company continued to prosper focusing on the expanding commercial airline travel market with the Boeing 707 passenger plane. Since then the Boeing 727, 747, and, most recently, 777 passenger airplanes have been popular with commercial airlines. Military orders during the Cold War also continued to contribute to the company’s success and resulted in the development of the B-52 jet bomber.
The breakup of the United Aircraft and Air Transport marked one of the major antitrust actions in the history of the United States. William Boeing argued that attempts to limit the scope of his activities and his ambitions were illegal, unfair, unnecessary and against the best interests of the nation.
William Edward Boeing’s innovations in aircraft design and manufacturing set the standard for both military
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Social and Economic Impact
9 7
W i l l i a m
E d w a r d
B o e i n g
and commercial aircraft use. The company continues to be the world’s largest commercial aircraft manufacturer and a leading producer of military and specialized aircraft as well. Historically, its development of bomber planes for the United States military played a key role in winning World War II and the United States remaining a dominant superpower. The company’s passenger planes have also proved reliable and are in use around the world.
Bibliography Bondi, Victor, ed. American Decades 1940-1950. Detroit: Gale Research, 1995. Byers, Paula K., and Suzanne Bourgoin, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1998. Garraty, John Arthur, ed. Dictionary of American Biography. Charles Scribner’s Sons, 1980. Who’s Who in American History. Chicago: Marquis Who’s Who, 1966.
Sources of Information Contact at: The Boeing Company 7755 E. Marginal Way S Seattle, WA 98108 Business Phone: (206)655-2121 URL: http://www.boeing.com
9 8
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Richard Branson Overview Richard Branson is the self-made British billionaire who began Virgin Records and Virgin Atlantic Airways, among a host of other enterprises. He chairs the Virgin Group, which is the umbrella over Virgin Interactive, Virgin Megastores, Virgin Cola, and other divisions. Branson is also noted for the adventurous spirit he brings to both his work and his personal life. He has embarked on record-setting boat trips and hot air balloon escapades to boost publicity as well as for his own enjoyment. Due to his entrepreneurial spirit and enormous wealth, he is known as the “Bill Gates of Britain.”
(1950-) Virgin Group
Personal Life Richard Branson was born July 18, 1950 in Surrey, a London suburb, to Ted and Eve Branson. Branson’s father, like his grandfather and great-grandfather, was a lawyer, and his mother was a former ballet instructor, glider pilot, and flight attendant. This combination undoubtedly made an impression on her young son, who would grow up to head a music label and airline, and develop a love of hot air ballooning and sky diving. Branson’s parents encouraged him to set high goals for himslf; in fact, his mother used to tell her friends that her son would become prime minister of England some day. As a boy, Branson was an avid athlete who often put more time into sports than studies. Bored with school, Branson set his sights on business as an adolescent, growing Christmas trees and breeding birds. His father, however, wanted him to study
9 9
R i c h a r d
B r a n s o n
Richard Branson.
(Reuters/Benoit Doppagne/Archive Photos.)
for college entrance exams and sent him to an exclusive boarding school. At age 15, Branson introduced Student, a liberal current events and culture magazine that he edited and published while attending Stowe. Before long, luminaries such as Jean-Paul Sartre, Alice Walker, and Robert Graves were submitting writings, and Branson landed interviews with famous figures such as actress Vanessa Redgrave, writer James Baldwin, and psychoanalyst R. D. Laing. When Branson dropped out of school at age 16 to devote himself to the periodical, his headmaster reportedly told him, “Branson, I predict that you will either go to prison or become a millionaire.” Branson’s first marriage in 1972 to American Kristen Tomassi ended in divorce. He later met Joan Tem-
1 0 0
B u s i n e s s
pleman, with whom he had a son, Sam, and a daughter, Holly, they married in 1989. Though he affects a swashbuckling persona and flirtatious attitude, Branson is reportedly a devoted family man. In fact, one British poll named him, after Mother Theresa, the person most suitable to rewrite the Ten Commandments. Branson has a home in the Holland Park section of London and a country home in Oxfordshire, where he entertains the likes of Margaret Thatcher, Mick Jagger, and Boy George. In 1968, Branson founded the Help Advisory Centre, which gives counseling on birth control and sexually transmitted diseases. He is also involved in a number of other causes, including Parents Against Tobacco and AIDS education. In the late 1980s, Prime Min-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
R i c h a r d
B r a n s o n
ister Margaret Thatcher named him chair of UK 2000, an environmental group.
Career Details Though Branson began his career as a free-wheeling liberal journalist with Student,, his hippie days were numbered. “I never had any interest in being a businessman,” Branson commented in Business Week. “I started out wanting to edit this magazine. But the business side became all-important, and I realized that if I didn’t get all that sorted out, I wouldn’t be able to be an editor.” To help raise funds, he began selling advertising. Operating without an office or a phone, he would use a pay phone and convince operators that the slot took his coins but did not provide a connection. This way, he saved money and connected to potential clients without them hearing change clinking into the phone. Though Student got off to a good start, ad revenues were lagging by the late 1960s. Inspired by the enormous success of a record ad that had run in the magazine, Branson started a mail-order music company to keep his magazine afloat. He and friend Nik Powell thus began Virgin Records in 1970. The discount record firm was the first such business in England and was an immediate hit. Branson decided to shut down the magazine and concentrate on his new business. When a postal strike threatened Virgin’s mail-order profits, Branson and Powell opened their first record shop on Oxford Street in London. As Virgin Records became profitable, Branson and Powell were fined about $90,000 for tax evasion. Branson spent a night in jail, and his parents mortgaged their home to post his bail. “One night in jail teaches you that sleeping well at night is the only thing that matters,” Branson remarked to Echo Montgomery Garrett in Success. “Every single decision since has been made completely by the book.” To pay the fines, Branson and Powell expanded their chain of stores. In 1971, Branson began working with his cousin, Simon Draper, to organize Virgin’s own record label. With Branson supplying the business know-how and Draper handling the artistic decisions, they built a studio in 1971 and in 1973, recorded the first original album on the label. Mike Oldfield’s 49-minute song “Tubular Bells” was a hit in Britain, selling over 7 million copies. The haunting instrumental effort was later used in the film The Exorcist, bringing instant acclaim to the fledgling firm that would later become the sixth largest record label in the world. Virgin Records shot further into the limelight in 1977 when it signed the rowdy British punk rock band the Sex Pistols, dropped from two other labels due to their outlandish behavior and radical music. The risk paid off, gaining Virgin a reputation for signing up-andcoming acts. After a brief dry spell, in 1982 Virgin signed
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Chronology: Richard Branson 1950: Born. 1965: Began publishing Student magazine. 1970: Cofounded Virgin Records mail-order business. 1971: Virgin Records built first studio. 1973: Virgin Records produced first original album. 1977: Virgin Records signed alternative rock-band the Sex Pistols. 1984: Founded Virgin Atlantic Airways. 1986: Broke transatlantic speed record for powerboats. 1987: Made first transatlantic hot air balloon voyage, with Per Lindstrand. 1991: Became first, with Per Lindstrand, to cross Pacific Ocean in a hot air balloon. 1992: Sold Virgin Records to Thorn EMI for $1 billion. 1997: Virgin entered ventures with CBS, Kinko’s, and Royal Bank of Scotland.
The Culture Club, with its eccentric lead singer Boy George, who became a pop icon for the 1980s. The band sold millions, and Virgin continued to sign groups with an unmistakable “Eighties” sound, including the Human League and UB40. In 1984, businessman Randolph Fields approached Branson to ask for help starting up a new airline. Fields proposed an all-business class operation flying from London to New York and offered Branson a 75 percent stake in return for financing. Eager to branch out from the music business, Branson ignored his advisers’ initial objections and went ahead with the deal. Branson opened Virgin Atlantic Airways in June of 1984, flying passengers from London’s Gatwick Airport to Newark, New Jersey, for the discount ticket price of $189—far below competitors’ prices of $579. Virgin even offered such frills as champagne, live bands, and seat-back video screens. To gain attention for his new venture and establish a thrilling image for the airline, Branson began performing publicity stunts. In 1985, Branson tried to break the transatlantic powerboat speed record but crashed and sank just 150
S t u d e n t s
1 0 1
R i c h a r d
B r a n s o n
miles from his destination. The next year, he set out again and broke the world’s record in the summer of 1986 with a time of three days, eight hours, and 31 minutes. In 1987, he almost died when he pulled the wrong ripcord while skydiving. Also that year he embarked on the first transatlantic hot-air balloon ride with Swedish aeronaut Per Lindstrand. Though they made it across the ocean, they crashed, landing in a group of Royal Navy seamen who came to their aid. In 1991 the pair were the first to cross the Pacific by hot air balloon. They landed about 1,800 miles from their intended touch-down and were stranded in the Northwest Territories of Canada on a frozen lake for about six hours.
1 0 2
million for charities after the princess’s death. Virgin also has holdings in bridal shops, radio, railroads, interactive video games, and modeling.
Social and Economic Impact
Meanwhile, Branson’s Virgin Records in the 1980s grew by four times its size in four years. In 1987, Branson decided to expand Virgin into the United States. He sold the stock for an immediate profit but then took a loss when the market crashed in October of 1987. He pulled back and made the company private again, but in March of 1992 sold the division to Thorn EMI for about $1 billion, making him one of the richest men in the world at this time.
With the start-up of Virgin Records, Branson was simply trying to get into a business that he knew could turn a profit. Little did he know that a few decades later he would be one of the richest and most influential men in the world, with a hand in an array of global businesses. Thanks in part to his willingness to take a risk on new bands, he helped popularize punk rock and new wave music and made his company into a global conglomerate. When Julie Baumgold in Esquire asked how he built such an empire, he replied, “I immerse myself in getting the business set up and am very involved the first three or four months, get good people to run it and give them a stake in the company and a lot of freedom, and then step back and move on to the next.”
Meanwhile, in 1983, Branson had launched Virgin Vision, a film and video distributor. This company later evolved into Virgin Communications. Branson formed Virgin Airship & Balloon in 1987 and began opening Virgin Megastores the following year. Also in 1988, he opened Virgin Hotels, continued to build recording studios, and added a new music division, Virgin Classics. In 1991 Virgin Publishing was formed, combining W. H. Allen, Allison & Busby, and Virgin Books.
As of 1998, Virgin and its various divisions employed about 15,000 people in 22 countries. Though the stock is not public, estimates claim that Branson is probably worth almost $3 billion. Though his holdings are gigantic and varied, Branson prefers to operate each as its own small company. He told Echo Montgomery Garrett in Success, “Once people start not knowing the people in the building, and it starts to become impersonal, it’s time to break up a company.”
Mergers and joint ventures with firms around the globe abounded. In 1994 Virgin Retail Group formed Virgin Cola, Ltd. to produce and sell food and beverages under the Virgin brand name. That same year, Virgin Trading Company, in cooperation with William Grant & Sons, entered an agreement to market Virgin Vodka in Britain. Virgin Atlantic in 1995 partnered with Malaysia Airlines to fly from London to Kuala Lumpur and Australia. In March of 1995, the conglomerate introduced Virgin Personal Financial Service as a joint venture with Norwich Union to sell low-cost financial services; that same year, Virgin went in with a few others to buy MGM Cinemas.
Indeed, Branson’s unconventional management style emphasizes his employees. He socializes with them, asks them to call him by his first name, and encourages them to have fun at their jobs. “If you can motivate your people,” he explained to Manfred F. R. Kets de Vries in Across the Board, “you can get through bad times and you can enjoy the good times together. If you fail to motivate your people, your company is doomed not to perform well.” Branson enjoys promoting and recognizing good people—on one occasion, for example, he rewarded the organizational skills of a cleaning woman by promoting her to management.
In 1997, Virgin formed several important partnerships. In July, Virgin entered an agreement with Kinko’s, the copy shop and office services business, to open stores in Britain and France. Also in September, Virgin Century Television partnered with CBS, and Virgin bought 55 percent of the London Broncos rugby team, with Branson becoming chairman of the team. In October, Virgin joined with The Royal Bank of Scotland to launch Virgin One, a banking service that offered combined savings and borrowing.
Virgin Atlantic Airways, Branson’s crown jewel, was flying almost a quarter of all passengers between London and New York by 1995. Virgin’s personalized service and abundance of amenities set it apart from other airlines. “America’s airlines are too big,” Branson told David Sheff in Playboy. “They get worse as they get bigger . . . . They have these sprawling routes, and they have become impersonal, and, for the passengers, depressing.” He takes pride in not making customers wait in long lines, and enjoys offering free limousine service to business class travelers.
In late November of 1997, Virgin Group was responsible for producing the commemorative album Diana, Princess of Wales Tribute, which raised over $100
Branson, worth about $3 billion, is one of the biggest businessmen in Britain, and his Virgin brand is getting more and more ubiquitous. An article in the Sunday Tele-
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
R i c h a r d
graph noted that a person could “board a Virgin Atlantic flight in New York, relax on board with a Virgin V2 CD and a glass of Virgin cola, land in Britain, take a Virgin Railways train, bump into a supermodel form Branson’s agency, Storm (possibly even Kate Moss or Elle McPherson), catch a movie with her at a Virgin Cinema, send her off to the one-stop wedding shop Virgin Bride to book a Virgin travel honeymoon . . .” the list continues. Needless to say, Branson has indeed left his mark on British business, and since the 1980’s, with his spiraling number of mergers and joint ventures, has had a large hand in world economy as well.
B r a n s o n
“Comment: Can He Keep It Up? Profile Richard Branson.” The Sunday Telegraph, 11 January 1998. Contemporary Newsmakers, 1987. Detroit: Gale Research, 1987. Current Biography Yearbook, 1995. New York: H. W. Wilson Co., 1995. “Head of Virgin Was Asked Over Lunch What It Would Take for Him to Pull Out of the Race for Glittering Prize.” The Daily Telegraph, 14 January 1998. In Play. “CEO of Virgin Airlines” (interview by John Metaxas). CNNfn (CNN financial network), 25 February 1998. Available form http://www.cnnfn.com. “In the Courts: I Was Not Jumping to Any Conclusions, Says Branson.” Independent, 20 January 1998. Kets de Vries, Manfred F. R. “The Virgin Iconoclast.” Across the Board, February 1996.
Sources of Information Contact at: Virgin Group 120 Campden Hill Rd. London W8 7AR England URL: http://www.virgin.com/
Sheff, David. “Richard Branson: The Interview.” Forbes, 24 February 1997. Sheff, David. “The Virgin Billionaire.” Playboy, February 1995. Stackel, I. M. “An Interview with Richard Branson.” South Florida Business Journal, 22 January 1993.
Bibliography Arias, Ron. “Adventure: Balloonatic Richard Branson Puts His Faith in Hot Air.” People, 15 June 1987. Baumgold, Julie. “Born-Again Virgin.” Esquire, August 1996. “Branson Accused of Being Cowardly and a Liar.” Independent, 15 January 1998. “British Tycoon Wins Libel Case Against GTech.” Los Angeles Times, 3 February 1998.
Virgin Group. “Virgin Corporate History.” London: Virgin Management, Ltd., 1998. Available from http://www.virgin.com. Virgin Group. “Virgin Press Releases.” London: Virgin Management, Ltd., 1998. Available from http://www.virgin.com. Wastell, David. “Blair in Row over Branson Knighthood.” The Sunday Telegraph, 14 June 1998.
Business Week, 30 June 1986.
Who’s Who in America. New Providence, NJ: Marquis Who’s Who, 1996.
Cavuto, Neil. “Virgin Atlantic Chairman Interview.” The Cavuto Business Report (Fox News Network), 25 February 1998.
Yates, Andrew. “Branson May Float Airline.” Independent, 11 May 1998.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
1 0 3
Christina Brown (1953-) The New Yorker
Overview Christina Hambly Brown was the former editor-inchief of the British magazine Tatler before moving to the United States to take over as editor-in-chief of Vanity Fair magazine at the age of 30. She mixed a little controversy with a target population of yuppies and got booming magazine sales at both publications. Her success led to her being named as the editor-in-chief of the distinguished The New Yorker in 1992. Brown has a record of success in magazine publishing where she continues to demonstrate an ability to dramatically increase magazine sales.
Personal Life Christina Hambly Brown was born on November 21, 1953, in Maidenhead, England. Her father, George Hambly Brown, worked as a film producer and her mother, Bettina (Kohr) Brown, worked as a writer and had once worked as the press agent for legendary British actor Sir Laurence Olivier. She and her brother, Christopher, were raised in the upper-middle-class village of Little Marlow in Buckinghamshire, England. The home was filled with love and support for the children but also contained an excitement brought by the family’s close association with the motion picture community. Brown attended St. Anne’s at Oxford University in 1971, intending to follow the career path of her mother and become a writer. She was well on her way when she won the 1973 award given by the London newspaper, The Sunday Times, for her play “Under the Bamboo Tree.” She graduated from Oxford University in 1974 and decided to enter the magazine business.
1 0 4
C h r i s t i n a
B r o w n
In 1978 Brown moved in with her future husband, Harold Evans, whom she married on August 20, 1981. He later became head of Random House Publishing. The couple have two children: a son, born in 1986, and a daughter, born in 1990.
Chronology:
Career Details
Christina Brown
After graduating from college in 1974, Brown worked as a freelance journalist and contributed articles concerning various issues in the United States to the noteworthy British publications The Sunday Times, Punch, Sunday Telegraph, and New Statesman. Her concise writing style earned her the 1978 Young Journalist of the Year Award given by Punch magazine. In 1979 Brown was involved with publishing a magazine as well as writing for one. That year, Gary Bogard gave her the job as editor-in-chief of the respected British magazine Tatler, which had been founded in 1709. Bogard had recently purchased Tatler and was determined to make the old publication new and on the cutting edge. His appointment of Brown was a gamble as she had never worked in this capacity before and was relatively new to the magazine industry.
1953: Born. 1971: Attended St. Anne’s at Oxford University. 1974: Graduated from Oxford University. 1979: Became editor-in-chief of Tatler. 1984: Became editor-in-chief of Vanity Fair. 1988: Named Editor of the Year by Advertising Age. 1992: Became editor-in-chief of The New Yorker. 1997: Sold 807,935 issues of The New Yorker in six months.
This hunch paid off and within the next four years, sales of Tatler quadrupled. Brown demonstrated a talent for writing and editing and an ability to generate publicity. Brown realized quickly that free media coverage is more effective than expensive advertising. This shaped her attitude and she would continually give journalists something to write about, not caring what was said about it later. This attitude was to prove very successful for Brown. Brown blended cultivated sass, intelligence, and a tongue-in-cheek attitude that ensured that Tatler would become successful. She also came to the attention of millionaire publisher S. I. Newhouse, Jr., who was head of the Condé Nast magazine empire. Newhouse bought the now widely successful Tatler in 1982 and offered Brown her next job. Newhouse and his brother Donald were also coowners of the large media conglomerate, Advance Publications, and they tried in 1983 to revive an old media property, Vanity Fair magazine. Vanity Fair was founded in 1913 and was considered romantic and sophisticated in its day. It shut down, however, in 1936 due, in large part, to the worldwide economic depression of the 1930s. Although there was a great deal of media fanfare at Newhouse’s decision to bring Vanity Fair out of retirement, the magazine had poor advertising sales and attracted few
readers. Adding to Vanity Fair’s poor showing in the early 1980s were critics who criticized its apparent lack of editorial focus and treated it as an expensive Newhouse joke. In January of 1984 Newhouse offered the job of editor-in-chief of Vanity Fair to Brown. She accepted the position, replacing Vanity Fair’s editor Leo Lerman. She soon set about making changes in the magazine to make it more attractive to readers. She insisted that the magazine have good taste while also whetting the readers appetite for more so that they would purchase the next issue. It took more than a year for Brown’s changes to take effect, but eventually readership soared and the advertising dollars started rolling in. Brown took Vanity Fair’s circulation from 200,000 in 1984 to 750,000 in 1990. Brown discarded Vanity Fair’s previous image of an oldtime conservative magazine that only occasionally covered Hollywood and celebrities. Brown instead used the magazine to cater to the interests and tastes of the yuppie or “me” generation of the young urban professional. She successfully exploited the consumer’s drive for wealth, status, and celebrity. Her version of Vanity Fair became famous for stories about then—Soviet Premier Mikhail Gorbachev and long intellectual pieces. She punctuated these high-brow pieces with fluff stories about movie stars and celebrities. In 1986 Vanity Fair was cited as the “hottest” publication by the magazine trade journal Adweek, and in 1988 Brown was named as Editor of the Year by Advertising Age magazine. Just as she had done at Tatler, Brown generated huge amounts of free publicity through a series of seemingly outrageous acts. She used nude photos of actress Demi Moore on the cover twice, once when she was near the end of a pregnancy in 1991. She featured Claus von Bum-
B u s i n e s s
S t u d e n t s
Brown showed that she was more than up to the task, and she immediately began to change the old stuffy style of the magazine into one that would inject more irreverence into certain topics in British life, such as the monarchy. Her approach was not based on hard research or experience, but rather a hunch that she played on.
L e a d e r
P r o f i l e s
f o r
1 0 5
C h r i s t i n a
B r o w n
low clad in leather while he was fighting charges of attempted murder in the death of his wealthy socialite wife. By the time Brown left Vanity Fair in 1992, the circulation was nearly one million, and she found herself at the brink of personal stardom. Because of her success at Vanity Fair, Brown was destined to move on to bigger things. Newhouse was so enamored of Brown’s success that he put her in charge of another of his magazines, The New Yorker, in July of 1992. The New Yorker was a more respected magazine and one some would call an institution in the publishing world, yet its style had become predictable. As might have been expected, Brown brought controversial changes to the magazine changes that are still being evaluated several years later. Newhouse had purchased The New Yorker in 1985 and had put Robert Gottlieb in charge in 1987. But the magazine, founded in 1925, was still floundering in debt and needed a serious rebirth to avoid folding. Newhouse hoped that his appointment of Brown as only the magazine’s fourth editor in its history could save his $168 million investment and make The New Yorker as profitable as Vanity Fair. Newhouse had angered New York’s respected and faithful news readers with his decision to give Brown the job and appoint Graydon Carter, the founder of Spy magazine, to Brown’s position at Vanity Fair. Many of the critics felt that Brown would turn The New Yorker into a trashy tabloid instead of the well-informed publication that they had come to trust. Many also felt that Brown’s previous successes had been due to her readers’ lack of discrimination when it came to their publications. Brown initially worried about her new position as the first woman in charge of the The New Yorker and the staff changes that she knew would come. She realized that The New Yorker was one of the most highly respected literary magazines in the United States, and she stated that she did not want to completely change the magazine, just alter it a bit to make it more successful. After a teary farewell to her Vanity Fair staff, Brown set out to make The New Yorker a more successful publication. Brown started at The New Yorker using the same techniques that made her a success in her other posts. She started the previously unheard of practice of using color on editorial and opinion pages and, in 1995 drew criticism from traditionalists both from within The New Yorker and from beyond its walls when she invited controversial television star Roseanne Arnold to contribute a literary piece on American women. Brown also began the practice of consolidating overhead business costs, such as printing and marketing, with the Condé Nast parent company. It was predicted that in 1998 alone, this practice would save the publication $1 million a month. With these controversial moves, Brown has indeed made The New Yorker a more popular and profitable publication. Circulation of the magazine increased 31 percent from 616,800 issues sold in 1992 to 807,935 issues
1 0 6
B u s i n e s s
sold in the last six months of 1997 this was an average of 48,655 issues on the newsstand per month, which was the highest newsstand sales since 1975. Brown’s wellpublicized issue featuring the late Princess Diana sold 140,000 copies on the newsstand, making it the highest selling single issue in 30 years. Even though The New Yorker still loses more than $12 million a year, it is substantially less than the $32 million deficit that Brown inherited when she took over the magazine in 1992. Brown still has more work to do in order to make the publication as successful as Vanity Fair, but industry sources predict that The New Yorker will see its first profit by the year 2000.
Social and Economic Impact Interviewed in the Washington Journalism Review in November of 1989, Brown said: “My kind of editing comes very much from the tradition of the eclectic magazine which mixes culture, arts, business all those things with an overriding point of view.” She blends all this and more into The New Yorker to keep it current and attractive to readers. Brown brings an irreverent attitude to stuffy subjects, which can “really make a lot of waves.” In doing so, she garners a lot of attention and media coverage. Brown’s business style, however, is wrapped up in selling magazines using this very same free publicity whenever it is available and then doing outrageous things in her magazine to garner even more of that same free media attention. This circle of free advertising as well as Brown’s tongue-in-cheek style of writing has brought her from a small traditional magazine in England to one of the largest and most respected magazines in the United States, The New Yorker.
Sources of Information Contact at: The New Yorker 350 Madison Ave. New York, NY 10017 Business Phone: (800)365-0635
Bibliography “A New Editor for Vanity Fair.” Newsweek, 16 January 1984. “The Big Time! 8 Who Got Where Only Men Got Before.” Cosmopolitan, May 1994. “How Tina Brown Moves Magazines.” New York Times Magazine, 5 December 1993. Huhn, Mary. “Is New Yorker’s Tina Brown Casting About for a New President?” New York Post, 13 June 1998. Joseph, Regina and John Motavalli. “Tina Brown’s ‘Shock of the New’: Changes Galore at the New Yorker.” Inside Media, 17 February 1993. “Tina Brown.” Encyclopedia of World Biography. Detroit: Gale Research, 1998.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Helen Gurley Brown Overview Author and editor Helen Gurley Brown rose through the ranks of business from secretary to executive, with many of her achievements coming while she was unmarried and at a time when women were not common as business executives. Through her position as editor of Cosmopolitan magazine and her several books on single life, Brown defined the lifestyles of single people for an entire generation.
(1922-) Cosmopolitan
Personal Life On February 18, 1922 Helen Gurley was born in Green Forest, Arkansas, to Ira and Cleo Gurley. Both schoolteachers, they raised Brown in modest surroundings in Little Rock. Ira Gurley died accidentally when Brown was only ten years old. A few years later, Helen’s sister contracted polio, and the family was forced into an even more austere lifestyle. During this time, she also grew to dislike her home life, which she later described as “ordinary, hillbilly, and poor,” and she sought to escape what she perceived as the crudeness of her neighbors and relatives. Brown attended Texas State College for Women from 1939 to 1941 then moved to Los Angeles to begin a career as a secretary. In 1959, she married David Brown who was a motion picture producer with 20th Century-Fox.
Career Details In 1941 Brown took the first of what was to be a string of 17 secretarial jobs in Los Angeles. This first job
1 0 7
H e l e n
G u r l e y
B r o w n
vertising was remarkable. Yet, she looked to accomplish what she termed “the one big important thing.” In 1962 Helen Gurley Brown took what she had learned as a single working woman and wrote a book that was to change her career. Sex and the Single Girl caused an immediate sensation when published in 1962. It was simultaneously praised and condemned for its honesty and its portrayals of the realities of single life and the sexual activities of young unmarried women. Termed by some critics as “tasteless,” it nevertheless remained on the best-seller lists into 1963, and it obviously provided information and guidance to an audience of young single women who craved it. With this book, Brown’s career both changed and blossomed.
Helen Gurley Brown.
(The Library of Congress.)
was for an announcer at radio station KHJ. While working at the station, she attended Woodbury Business College and studied secretarial skills. Later, Brown characterized both the job and her performance as “dreadful,” but she not only supported herself, she also provided support to her family on her salary of $6 a week. Among the following secretarial jobs were stints with Music Corporation of America (MCA) and the William Morris Agency. Brown learned that working for a glamorous company did not mean there was glamour for the employees or that the work was more rewarding. She later recalled how at one company, the secretaries were not allowed to use the lavish front entry and were required to use a back stairway to gain access to the office. Brown was working for the advertising agency Foote, Cone & Belding in 1948 when she got her first break in the advertising business. Letters that she sent to her boss while he was out of town on business led to an opportunity to write ad copy for the agency. Brown won two of her three Francis Holmes Advertising Copywriting Awards while with Foote, Cone & Belding as she discovered and developed a talent for writing advertising copy. She remained with this agency until 1958 and continued in advertising until 1962. Happily married at age 37 and involved in her career, she had worked, supported herself and struggled with the problems of single life and the issues of women in the work place. At that time, few women had the opportunity to excel in the corporate world, and Brown’s success in ad-
1 0 8
B u s i n e s s
Brown began receiving fan letters from women asking her advice and addressing topics from her book. Writing a syndicated newspaper column called “Woman Alone” was not enough, and both Brown and her husband thought a market existed where a larger audience could be reached. The Browns worked together developing a plan for a magazine they tentatively named Femme. The couple wrote a prospectus and drew up a format including suggested articles and submitted the package to publishers. After a succession of failures with these submittals, they approached the Hearst Corporation. Hearst saw in the proposal an opportunity to rescue an existing property, and the Browns were given the chance to take over Cosmopolitan. Helen Gurley Brown began what would become the career she is most recognized for in 1965, when she became the editor-in-chief of Cosmopolitan. Under Brown, Cosmopolitan proved to be popular with increasing numbers of women. A rather different type of magazine sales strategy was pursued—almost all sales were via newsstands, and the publisher was spared the problems and expense of subscriptions. Advertising revenues were high, and the magazine was profitable with sales to career-oriented single women. The magazine provided advice and insight to augment their growing tastes and to reinforce their independent lifestyles. Fashion and workplace advice along with articles on relationships struck a chord with readers, and under Brown’s direction circulation increased from 700,000 to 2,800,000. Brown has stated that her husband, David, wrote cover blurbs and approved articles even while maintaining his career as a motion picture producer. However, Brown herself wrote a featured column in each issue entitled “Step into My Parlor,” and her comfortable, sympathetic, and personal style is still a trademark. Additional books by Brown have continued her presence in the marketplace and added to her success as a spokesperson for single and working women: Sex and the Office (1965); The Outrageous Opinions of Helen Gurley Brown (1967); Helen Gurley Brown’s Single Girl’s Cookbook (1969); Sex and the New Single Girl (1970); and
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
H e l e n
Having It All (1982). Two of the books, Sex and the New Single Girl and Having It All were updates to her original success, Sex and the Single Girl. In 1993 she published a book targeted at women over the age of 50, The Late Show. In 1996 Bonnie Fuller was named Brown’s successor as editor-in-chief of Cosmopolitan, while Brown retained the responsibilities of editor-in-chief of the magazine’s international publishing operations. She oversaw her final domestic issue in February 1997.
Helen Gurley Brown has had a prolonged and profound influence on the changing sexual mores in modern American society. She not only wrote about an area of great interest and importance, single and working women, she had lived the life she wrote about. Social attitudes were changing in America during the post-World War II era and through the sexually liberating times of the 1960s. Brown’s writings, from Sex and the Single Girl through her columns and leadership at Cosmopolitan, exercised great influence over the thinking of women. Brown also contributed greatly to the growing understanding that work outside the home can be a source of pride and accomplishment, both personally and financially, for women. Although she continued to insist men were an important part of women’s lives, which put her at odds with more radical feminists, Brown did much to contribute to the liberation of women from the traditional role as homemaker. Brown remained childless and advocated the once-radical view that a woman could achieve satisfaction through her own efforts and not only through the joys of child-rearing. Her life is an example of the success a hard-working woman can achieve. An avowed workaholic, Brown achieved much through hard work and dedication. She advanced through several secretarial positions to make opportunities for herself in advertising and parlayed success in writing into an opportunity to be editor-in-chief of a popular national magazine. She espoused the virtues of the working woman but did not turn her back on men, as she showed in her partnership with her husband. Brown has won numerous awards during her career, including three consecutive Francis Holmes Achievement awards for her work in advertising during the 1950s. Among her journalism honors is a Distinguished Achievement Award from the University of Southern California in 1971, an editorial leadership award from the American newspaper Women’s Club of Washington, D.C., in 1972, and a Distinguished Achievement Award from Stanford University in 1977. She was inducted into the Publisher’s Hall of Fame in 1988, and in 1997 was the recipient of a Financial World Career Achievement Award.
L e a d e r
P r o f i l e s
B r o w n
Chronology: Helen Gurley Brown 1922: Born.
Social and Economic Impact
B u s i n e s s
G u r l e y
f o r
1941: Moved to Los Angeles to begin a career as a secretary. 1948: Became first woman copywriter at Foote, Cone & Belding. 1959: Married David Brown. 1962: Wrote Sex and the Single Girl. 1965: Became editor-in-chief of Cosmopolitan. 1988: Inducted into Publisher’s Hall of Fame. 1993: Published The Late Show. 1997: Oversaw her final issue of Cosmopolitan.
Sources of Information Contact at: Cosmopolitan 224 West 57th St. New York, NY 10019
Bibliography Brown, Helen Gurley. Having It All, New York: Simon & Schuster, 1982. Brown, Helen Gurley. “Having It All.” McCalls, March, 1993. Brown, Helen Gurley. Sex and the Single Girl, New York: Random House, 1962. Brown, Helen Gurley. “What the Women’s Movement Means to Me.” Ms., July, 1985. Falkof, Lucille. Helen Gurley Brown: The Queen of Cosmopolitan, Ada, OK: Garrett Educational Corp., 1992. Kornbluth, Jesse. “The Queen of the Mouseburgers.” New York, 27 September 1982. Mason, Margaret. “Still the Cosmo Girl.” Washington Post, 19 March 1993. Rothenberg, Randall. “The Cosmo Girl at Twenty-Five: She Still Wants It All.” New York Times, 21 April 1990.
S t u d e n t s
1 0 9
William Cullen Bryant (1794-1878) New York Evening Post
Overview William Cullen Bryant enjoyed one of the longest and most influential careers in American journalism, but the New York Evening Post editor was really a poet at heart and achieved literary fame while still in his 20s. A leading personality in his day, Bryant’s leadership of one of the most widely read populist newspapers in American history was noted for his dedication to liberal politics. His editorials were widely read and reflected trends in American thought that would later gain constitutional protection. Vernon Louis Parrington, in Main Currents in American Thought (a tome written in the 1920s but never completed), called him “the father of nineteenthcentury American journalism as well as the father of nineteenth-century American poetry.”
Personal Life William Cullen Bryant was born into a conservative Massachusetts family of Puritan beliefs—though his father, a physician, had broken from tradition and was of the far more liberal Unitarian faith. Bryant’s grandfather, however, was a strict, tradition-minded farmer of Calvinist faith. Calvinism, founded by a sixteenth-century French theologian, was unique to Protestant sects with its doctrine that souls are born either good or bad. Whatever religious differences plagued the Bryant family, they were united in their devotion to Federalist politics. As the late eighteenthcentury political party of Alexander Hamilton, Federalists believed in the need for a strong centralized government, one that supported industry, wealthy merchants, and landowners; the Federalists were also pro-British.
1 1 0
W i l l i a m
C u l l e n
B r y a n t
The Bryants were fixtures in the western Massachusetts town of Cummington. By all accounts Bryant was a gifted child and began writing poetry at a young age. When he was 13, one of his first poems was published under somewhat sensational circumstances. It was a satirical piece on Thomas Jefferson, who was president at the time. Jefferson had founded a party to oppose Hamilton and the Federalists that later became the Democratic Party. He also declared a ban on trade with England because of political tensions. Bryant’s poem, The Embargo, or Sketches of the Times, skewered the president and the act and was published by his father, then a Massachusetts state legislator. Yet in his adulthood, Bryant leaned increasingly toward liberal politics, and these and other early politicalthemed works were not included in later collections of his work. He enrolled in Williams College in Williamstown, but left after a year. Bryant had wished to attend a larger “name” school, like Yale, but one of his biographers theorized that the Bryant’s could not afford the steep tuition of an Ivy League college. He did, however, begin studying law with an established attorney not far from Cummington, as was the custom in the day for a legal education. In 1815, Bryant was admitted to the bar at the age of 20. When he was 26, Bryant married Francis Fairchild; by then he was already established as both a lawyer and talented American poet. Their first child, Frances, was born in 1822 and another daughter, Julia, arrived almost 10 years later. In 1825 the family moved to New York City when Bryant decided to make writing his primary career. His daughter Frances Bryant would later marry a journalist who worked for her father at the newspaper. From 1844, the family’s base was a house they called Cedarmere, near Roslyn on Long Island’s Hempstead Harbor. It was a place where Bryant could enjoy the rural landscape and take long walks in the forest, one of his favorite pastimes. On his estate he planted numerous exotic trees and plants, some carried back from his extensive travels. The family frequently sailed to Europe, and from his time both abroad and in North America he penned two travelogues. On one sojourn in Italy, his wife became sick there and he treated her with homeopathic remedies, in which he was a firm believer. Bryant’s wife died in 1866. He survived her by another 12 years, and even in his 70s was known for to climb the 10 flights of stairs to his editor’s office in New York. A figure of national renown at the age of 80, on his birthday in 1874, the editor and poet was honored with a Tiffany-made silver vase embellished with details from his life. The object was then placed in the permanent collection of Metropolitan Museum of Art. After a fall in May of 1878, the venerated writer, still helming the Post, suffered a stroke and died on June 12, at the age of 83. His papers are at the New York Public Library. His family home, Cedarmere later became the William Cullen Bryant Library in the 1970s, and his childhood home in Cummington is a National Historic Landmark.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
William Cullen Bryant.
(The Library of Congress.)
Career Details Bryant spent several years as a lawyer beginning in 1816 until his move to New York City. He had a practice first in a village called Plainfield, and later another in Great Barrington. He reportedly disliked the legal profession immensely; he often had to work long hours, and would be troubled when he witnessed injustice in the court system and could not correct wrongs done to those whom he believed innocent. He had never given up his early literary ambitions. In 1811, when he was just 17, he began a long poem that would bring him great acclaim a few years later when he finally revised it and sought a publisher. That poem was “Thanatopsis,” taken from the Greek term for “view of death.” It was a classical language which Bryant had studied, as was the custom of the day. Perhaps the most remarkable feature of “Thanatopsis,” according to the Encyclopedia of World Biography, “is its anti-Christian, stoical view of death.” Exploration of such abstract ideas in literary works was becoming popular in the culture of Western civilization at the time, and death was a common theme for poets of this era in England. Bryant was also greatly influenced by English Romantic poets, especially William Wordsworth and Samuel Taylor Coleridge. “Thanatopsis,” published in 1817, launched Bryant as a new and important American writer. The established U.S. literary figure Washington Irving was so impressed by Bryant’s talents that he helped broker a deal for the work to be published in England, where it met with fa-
S t u d e n t s
1 1 1
W i l l i a m
C u l l e n
B r y a n t
Chronology: William Cullen Bryant 1794: Born. 1808: Published first book, The Embargo. 1811: Began studying law with Elias Howe. 1817: Published famous poem “Thanatopsis.” 1821: Married Frances Fairchild. 1825: Moved to New York and began editing New York Review and Atheneum Magazine. 1829: Became editor of New York Evening Post. 1855: Threw paper’s editorial weight behind the newly formed Republican party.
But it was Bryant’s 50 year career at New York Evening Post that elevated him to not just a literary figure but to a position of influence and authority in American business. The paper had been founded in 1801 by Alexander Hamilton, and Bryant was hired as assistant editor in 1826; three years later he was made editor in chief. As such, he was able to guide the paper into a place in liberal politics; its editorial focus would reflect the great changes of the United States during the mid-nineteenth century. Bryant championed liberal causes and was a firm believer in “laissez-faire,” a doctrine that held an economic system functioned at its best when left alone by government rules and regulations. In his editorials, Bryant spoke up for the fledgling labor union movement and workers’ right to strike, both of which were quite radical ideas in the 1830s and 1840s. He also wrote disapprovingly, though not antagonistically, of the institution of slavery in his Post editorials. Because of this view, he grew dissatisfied with Democratic politics (the Democratic Party was a stronghold in the southern states), and became involved in the founding of the Republican Party in 1855.
1870: Began another career as a public speaker.
Social and Economic Impact
1878: Died.
vorable reception. The first full volume of Bryant’s poetry, Poems, was published in the United States in 1821. Around 1823, he won a contract with the United States Literary Gazette to provide 100 lines of verse per month. Other successes included the publication of his essays in the North American Review and Miscellaneous Journal. When he and his family moved to New York in 1825, his first job outside practicing law was as cofounder of the New York Review and Atheneum. He and his partner could not make the magazine thrive, however, and it folded after just a year. Still, Bryant’s reputation as a man of “letters” was growing. In 1826 he gave a series of memorable lectures at the New York Athenaeum Society, later published in full, and he continued to write poetry. He also published nine volumes in all, including The Fountain and Other Poems in 1842, The White-Footed Deer and Other Poems in 1844, and Thirty Poems in 1864. He penned tales of his journeys, such as Letters of a Traveler; or, Notes of Things Seen in Europe and America published in 1850, and in his advanced years translated two classics of ancient Greek literature, the Iliad 1870, and the Odyssey, 1871-72, which he worked on in his spare time after the death of his wife in order to keep his mind occupied. In this era Bryant also became a sought-after speaker, and delivered eulogies at the funerals of novelist James Fenimore Cooper and Samuel F.B. Morse, a leading figure in the development of telegraph communications.
1 1 2
B u s i n e s s
Though his literary reputation fell in the years after his death, Bryant was one of the first American poets to achieve international renown. The themes of nature central to his poetry were part of an early literary movement that would later bring other U.S. notables such as Ralph Waldo Emerson and Henry David Thoreau to fame. Bryant was friends with many prominent writers of the day, including Irving and Cooper (The Last of the Mohicans) and both Emerson and Walt Whitman wrote approvingly of Bryant’s literary efforts. The posthumous decline of Bryant’s literary reputation was sometimes pinned to what critics termed a lack of passion in his verse, but Bryant appeared to apply his heart to polital matters. In his editorials, he opposed the expansion of slavery in the American West as the territories entered statehood. This was known as the “Free Soil” movement, and he gave the Free Soil Party of 1847 to 1848 enthusiastic editorial support in the Evening Post. “The federal government represents the free as well as the slave states,” Bryant wrote in one editorial, “and while it does not attempt to abolish slavery in the states where it exists, it must not authorize slavery where it does not exist.” In 1860, the Evening Post endorsed Abraham Lincoln and his Republican candidacy. Bryant had met Lincoln the year before when the Illinois senator arrived to speak in New York City; Bryant escorted him to the rally and introduced him before a crowd of 1,500. In one editorial, Bryant declared: “The Evening Post means to do all the good it can during the coming presidential canvass. It means to elect Lincoln. It means to oust the present most corrupt of administrations, and install an hon-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
W i l l i a m
est administration in its stead.” When the Civil War began in 1861, Bryant became an advocate for the total abolition of slavery—which he had not espoused prior to this—and called for its end in his paper. During the war years, the paper’s circulation doubled. A poet at heart, Bryant and his transition into journalism reflected the growing importance of newspapers in a still-young democracy. As urban populations increased during the early decades of the nineteenth century, so did access to a free public education, and literacy rates rose. During Bryant’s tenure at the Post, newspapers began to play an expanded role in the political experiences of the average American. Mainstream papers like the Post offered readers a decidedly liberal viewpoint, but in some instances Bryant’s editorial stance brought difficulty to the paper as a business enterprise. The paper sometimes lost lucrative advertisers, as well as subscribers of more conservative opinions, but it was a favorite of New York City’s working classes and was known for its debunking of new economic theories. Throughout his tenure as editor, Bryant stuck to his laissez-faire beliefs and argued against protective tariffs and other indications of government interference. He was also a great critic of speculative investments, which were a new trend in U.S. economic life in the era.
C u l l e n
B r y a n t
ment of taste and dignity of character before unequaled in U.S. journalism. The lucidity of his comment and the keenness of his humanitarian criticism set (Bryant) apart from shriller contemporaries, and made him a power for sanity in a scurrilous generation.”
Sources of Information Bibliography Byers, Paula K., and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography. 2nd ed. Detroit: Gale Research, 1998. Dictionary of American Biography. New York: Charles Scribner’s Sons, 1928-1936. Dictionary of Literary Biography. Detroit: Gale Research, Inc., 1985. Dictionary of Literary Biography, Detroit: Gale Research, Inc., 1987. Nevins, Allan. The Evening Post: A Century of Journalism. New York: Boni & Liveright, 1922. Nineteenth Century Literary Criticism, Detroit: Gale Research, Inc., 1984.
Bryant, wrote Parrington in Main Currents in American Thought, “reflected in the Evening Post a refine-
Tomlinson, David. “William Cullen Bryant.” Dictionary of Literary Biography, Detroit: Gale Research, Inc., 1979.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
1 1 3
Warren Buffett (1930-) Berkshire Hathaway Inc.
Overview Warren Buffett is regarded as one of America’s most brilliant investors and was one of its richest men in the late twentieth century. The subject of a cult of personality among satisfied investors, Buffett has been variously dubbed “St. Warren,” the “Wizard of Omaha,” and the “Corn-Fed Capitalist,” among other nicknames. Despite his vast fortune, he is often seen wearing a rumpled suit and lives in Omaha, Nebraska, in the same house he bought in 1958 for $31,500. Outside of his business concerns, Buffett has professed interest in funding a foundation devoted to halting population growth worldwide and to reducing nuclear proliferation.
Personal Life Warren Edward Buffett was born in Omaha, Nebraska, on August 30, 1930, the son of Howard Homan and Leila (Stahl) Buffett. His father was a stockbroker who was later elected to the U.S. House of Representatives. Buffett, quoted in a 1995 Time article, said he had always “wanted to be very, very rich.” As a boy, he was often taken by his father to his workplace, where he had an opportunity to learn the stock market business at a very early age. Before he was even a teenager Buffett was doing such routine duties at his father’s office as chalking in stock prices on the main blackboard in the office and charting the performance of various stocks. In 1942, when Buffett was 12 years old, he and his parents moved to Fredericksburg, Virginia, where they lived while his father served in Congress.
1 1 4
W a r r e n
B u f f e t t
By the age of 16, Buffett was clearly a prodigy in the area of mathematics and statistics. He enrolled at the University of Pennsylvania, where he focused on mathematics and statistics, and then moved to the University of Nebraska to finish his degree. He graduated at age 20 with a bachelor’s degree, then entered Columbia University’s graduate school of business, where he obtained a master’s degree in business.
Career Details Buffett has claimed that his career started when his father exposed him to the stock market business as a child and taught him the basics of investing. He has declared that the great turning point in his life and career came when he met his mentor in business, Benjamin Graham. In 1954, after having worked at his father’s brokerage business in Omaha, Buffett joined Graham’s Wall Street investment firm, Graham-Newman Corporation. Buffett was already a genius at mathematics and statistical analysis when he met Graham, but Graham had a theory about the investment market that Buffett has used during most of his career. The Graham theory involved what Graham called “value investing.” The core idea was that people picking stocks to invest in should buy shares of stock that are valued cheaper than the company’s worth on paper, in conventional auditing terms. It was a simple theory, but required diligence and ambition to practice. Buffett’s mathematical and statistical talent plus ambition enabled him to excel at finding out what companies were undervalued. He had to ignore everything published about a company, including its annual reports, go back to the “raw data” of the company, and make his own patient analysis, starting from scratch. He personally analyzed every stock in which he invested, and has consistently avoided markets he did not understand or knew little about. During this period Buffett married Susan Thompson, fathered two of his three children, and earned $140,000 in New York before he was 25. In 1956, when Graham shut down his firm on Wall Street, Buffett left New York, returned to Omaha, raised $105,000, and started an investment partnership. By the time Buffett ended the partnership in 1969, it had grown at an annual compounded rate of 29.5 percent and had a value of $105 million. Buffett next turned his focus to Berkshire Hathaway, a Massachusetts textile mill, and bought several additional companies. Although he closed the textile manufacturing business in the mid-1980s, Buffett kept the name for the holding company he continued to head in the late 1990s. During the 1980s Buffet also developed what became known as the “white knight” strategy of investing, where he saved certain businesses from being bought out by competitors. He stepped in to save the business by infusing it with the money it needed to fend off takeovers, but he also demanded in return that his investment pay off well. He arranged to get a preferred
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Warren Buffet.
(AP/Wide World Photos, Inc.)
stock that always carried a healthy dividend, whether the company did well or not. Buffett made a great deal of money by pursuing this strategy. By this point in his career, Buffett had become a multi-billionaire and a kind of celebrity because he was so talented at making money. Many have sought his advice, but he has given interviews only rarely. His lifestyle remained immensely modest, especially for a man known to be one of the richest men in America. In the mid-1990s he still lived at the Omaha home he had bought in 1958 for $31,500, with his girlfriend and former housekeeper, Astrid Menks, 17 years younger than Buffett. His wife, from whom Buffett had long been separated, lived in California; but, if she outlives Buffett, she will take over the Buffett company after his death, since she is the secondlargest shareholder of Berkshire Hathaway. One of Buffett’s most dramatic successes was his brief stint as chairman of the investment firm Salomon Inc., one of the world’s largest investment services. Through Berkshire he had acquired a 12 percent minority interest in the firm in 1987—one of his white knight investments. In 1991 it was revealed that senior staff had engaged in illegal trading of government securities, and there was an apparent attempt to cover up the scandal once Salomon management learned of it. In addition, it grew evident that the company’s finances were perilously dependent on a heavy debt load. The resulting management shake-up brought in Buffett, already a director at Salomon, as the firm’s chairman. Simultaneously, Salomon was on the brink of bankruptcy because the U.S. Treasury Department penalized it with a
S t u d e n t s
1 1 5
W a r r e n
B u f f e t t
Chronology: Warren Buffett 1930: Born in Omaha, Nebraska. 1954: Joined Benjamin Graham’s investment firm on Wall Street. 1956: Established Buffett Partnership Ltd. in Omaha. 1969: Dissolved successful partnership. 1991: Became interim chairman of Salomon Brothers brokerage firm. 1998: Net worth estimated at $23 billion.
ban on participating in federal securities auctions. The same day the crippling ban was announced, Buffett pleaded successfully with authorities at the Treasury and the Federal Reserve to reverse the ban. This critical victory saved Salomon from financial collapse; and both Buffett’s management decisions and his high esteem in the investment world quickly stabilized Salomon’s market position, which was heading into a free fall until he stepped in. Though he withdrew as chairman less than a year later, Buffett reduced Salomon’s debt and, more importantly, helped restore confidence in Salomon. His investment in Salomon paid off in 1997 when the firm was sold to the Travelers Group for $9 billion. Of that amount, Berkshire Hathaway’s share was worth about $1.9 billion, more than twice his initial investment a decade earlier. Though he has been described as a quiet person with a Midwestern simplicity, Buffett is recognized as a brilliant and sophisticated personality. He has consciously shunned New York and Los Angeles, and yet every time the famous “Oracle of Omaha” has spoken, it is reported that everyone in the financial world listens to him.
Social and Economic Impact Warren Buffett’s investments have held significant sway over a number of large U.S. companies and even whole industries. He has built up a major position in the insurance industry, which accounted for about two-thirds of Berkshire’s 1997 revenues, by purchasing such companies as GEICO Corporation and General Re. Other fully owned subsidiaries include the H.H. Brown Shoe Company, International Dairy Queen, and See’s Candies. Buffett has also purchased long-standing minority stakes
1 1 6
B u s i n e s s
in American Express, Coca-Cola, the Washington Post, and Gillette. In a surprise 1998 move, however, Buffett invested heavily in silver—capturing over a third of the world market—because he thought it was undervalued. This was an uncharacteristic choice for Buffett because commodity investments are usually regarded as more speculative and short-lived than his conservative longterm approach deems appropriate. At the close of the twentieth century, Buffett was well known as a billionaire capitalist who made his own fortune. He is famous for such eccentricities as wearing rumpled suits and drinking five Cherry Cokes a day. He has declared himself an agnostic, and has arranged that after his death his money is to be used to establish a philanthropic foundation that will work to halt population growth worldwide and to fight nuclear proliferation. Buffett has also said, in the entrepreneurial spirit, that he intends to leave his three children just $5 million apiece out of his more than $10 billion. He explained this decision in a 1988 interview with Esquire: “I think kids should have enough money to be able to do what they want to do, to learn what they want to do, but not enough money to do nothing.” In Berkshire Hathaway’s 1989 annual report, Buffett wrote: “We do not wish to join with managers who lack admirable qualities, no matter how attractive the prospects of their business. We’ve never succeeded in making a good deal with a bad person.” In applying the investment strategy he developed with Graham, Buffett has always done his own company analyses. He is known by this hands-on style, and is perhaps the only billionaire who has always figured his own income taxes. Buffett has been one of the most successful capitalists of the twentieth century. Using his analytical skills, he has invested in other people’s ideas, inventions, and organizations, and through them has amassed great personal wealth. In 1991 a Wall Street Journal reporter described Buffett as “a standard bearer for long-term investing, the perfect antidote to the get-rich-quick schemers of Wall Street.”
Sources of Information Contact at: Berkshire Hathaway Inc. 1440 Kiewit Plz. Omaha, NE 68131 Business Phone: (402)346-1400 URL: http://www.berkshirehathaway.com
Bibliography Loomis, Carol J. “Buffett’s Wild Ride at Salomon.” Fortune, 27 October 1997. Lowenstein, Roger. Buffett: The Making of an American Capitalist. New York: Random House, 1995. Silverman, Gary, and Andrew Osterland. “Buffett’s $22 Billion Hedge.” Business Week, 6 July 1998.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Daniel Hudson Burnham Overview Daniel Burnham was a chief architect of nineteenthcentury America who helped rebuild Chicago after it burned down in the mid-nineteenth century. He was not a “modernist” but was a master of practical architecture and made early contributions to the development of the skyscraper. Even though his work was influenced by European ideas, his maxim “think big” and his innovations in the new field of urban and regional planning served the early needs of the U.S. industrial revolution.
(1846-1912) Burnham and Root
Personal Life Daniel Hudson Burnham was born on September 4, 1846, in Henderson, New York near New York City. He was the son of Edwin and Elizabeth (Weeks) Burnham. His mother was a homemaker, and his father was a middle-class businessman working as a wholesale merchant of medical supplies. In 1855, Burnham’s family moved to Chicago, Illinois. Burnham’s childhood seemed unremarkable and he was indifferent to the public school he attended in Chicago. But he excelled in one area: freehand drawing. Burnham graduated from high school in 1866, after he had received some tutoring in Bridgewater, Massachusetts from a private tutor. As he grew into his teen years, his interest in architecture and his talent for drawing became increasingly evident to others. When Burnham turned 22 years-old he applied to Harvard University and Yale, but he was not accepted by either of the colleges and he became confused about
1 1 7
D a n i e l
H u d s o n
B u r n h a m
mark. Because of his enthusiasm for the profession and his good drafting skills, Burnham went on in 1872 to a position as draftsman at the firm of Carter, Drake, and Wight. There, Burnham met John Wellborn Root, a fellow draftsman at the firm. Root and Burnham soon became friends and in 1873, when Burnham was only 27 years old, they created a partnership and established their own architectural firm. Root was creative and versatile while Burnham was practical and made sure the business stayed profitable. The men’s preferences in design were complimentary as well. While Root preferred the older Romanesque styles, Burnham favored the later neoclassical styles of architecture. It was a good partnership and appeared at almost the perfect time. In 1871 a huge fire had devastated the city of Chicago. There were many buildings and structures to be re-built and renewed, and between 1873 and 1891, the new firm designed 165 private residences and 75 buildings of various other types.
Daniel Burnham.
(The Library of Congress.)
his future. He spent a year as a clerk in a retail store and then went to Nevada in 1868 for a year to prospect for gold. After returning from Nevada, he ran unsuccessfully for an Illinois state senate seat in 1870. He became dissatisfied with all these false starts in life, and his father, who believed in his talents as a draftsman of some kind, helped him to get an interview with one of Chicago’s leading architects, William Le Baron Jenney. Burnham took a job as an apprentice in Jenney’s architectural firm after interviewing with him. At the age of 30, in 1876, Burnham married Margaret Sherman, the daughter of a wealthy stockyard executive. They had a long marriage and produced three sons and two daughters, all born within the first decade of their marriage. Two sons, Hubert, and Daniel Jr., eventually became architects themselves and joined their father’s firm. Burnham remained active in his career until his death at age 66. He died while on a research study in Heidelberg, Germany, on June 1, 1912 and is buried in Graceland Cemetery in Chicago.
Career Details Burnham found his career rather accidentally, after trying and failing at a variety of kinds of work as a young man. His introduction to the architecture profession, through his job in William Le Baron Jenney’s office, turned him toward the career in which he would make his
1 1 8
B u s i n e s s
Burnham designed buildings in what was considered the old style, influenced more by European tradition than newer tastes. This style was often cramped and busy, with exterior decorations that echoed ancient Greek and Roman constructions. But Burnham was responsible for some important structural innovations. In 1881, in response to the challenge of space restrictions in the crowded downtown area, he began to build taller buildings. His Montauk Building built in Chicago, (10 stories high) is considered the first real skyscraper. The Montauk Building had fireproofed iron beams and was the first to utilize floating-raft foundations to make it more stable. Yet, it was not quite a modern building. It had masonry walls with cast-iron columns—already almost obsolete—and looked like a European building. The Montauk Building was a great success for Burnham and he followed it up with the 11 story Rookery building in 1886. The Rookery’s floor plan—a hollow rectangle—was copied in other commercial buildings in Chicago. The Rookery still used old-fashioned load-bearing masonry walls, but also employed lighter walls supported at ground level by cast-iron columns with wrought-iron spandrel beams. Between 1889 and 1891, Burnham worked on the design for the Monadnock Building in Chicago. It was 16 stories high and became the tallest building in the world at the time to have exterior load bearing walls. In fact, in was only surpassed in total height by the Masonic Temple Building in Chicago, which had 22 stories. In 1891, Root died unexpectedly and the business was left in Burnham’s hands. By this time, their firm had designed over 200 buildings in Chicago as well as buildings in some 50 other cities. Burnham hoped to continue the company’s successes and changed the name of the firm to Daniel H. Burnham. In 1893, Burnham achieved a kind of triumph, the design and building of the World’s Columbian Exposi-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
D a n i e l
tion in Chicago. The giant fair, which commemorated the 400th anniversary of Columbus’s sailing to America, would include buildings and landscaping in an integrated design. Root had originally been named consulting architect for the project with Burnham serving as chief of construction, but after Root’s death, Burnham continued to oversee the project. Working with other leading architects, including famed landscape architect Frederick Law Olmstead, Burnham oversaw some 20,000 workers and a construction budget of over $20 million.
Daniel Hudson Burnham 1846: Born.
In 1893, Burnham received honorary architectural degrees from both Harvard and Yale University, two schools that earlier had denied his entrance as a student. He was elected to be president of both the American Institute of Architects and the Armenian Institute of Architects. He was also given a membership in the exclusive Country Club of New York. In 1896, Burnham changed the name of his design firm yet again to simply D.H. Burnham and Company.
1912: Died.
Burnham’s 1901 Washington D.C. plan was perhaps his most extensive and lasting. In an attempt to reclaim Pierre Charles L’Enfant’s 1791 plan for the city, Burnham reclaimed the Mall and introduced a plan for the construction of the buildings around the Capitol and the White House. He also introduced a series of interconnected parks reportedly inspired by Andre Le Notre’s Baroque design for King Louis XIV’s Versailles Palace in France. Burnham was also commissioned to design a new Union Station for the nation’s capitol in 1903. When it was finished in 1907, it had a central focus on a triple
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
B u r n h a m
Chronology:
The Exposition’s design was deeply classical, influenced by the French architectural school that dominated the Western world, the Ecole des Beaux-Arts of Paris. The Beaux-Arts school incorporated the principles of ensemble, strong axes and axial planning. This kind of architecture, not American in style, relied on the forms of Roman and Greek classicism. Burnham called the Exposition his plaster dream city, but critics called it the “White City” because of his overuse of stucco throughout the project. Though critics complained that Burnham’s creation was imperialistic and too academic, and failed to set a new, more “American” tone, the project made a profit and earned Burnham an international reputation.
Burnham’s success with the Columbian Exposition set the stage for what some consider his most important work, his involvement with the City Beautiful movement, which responded to the problems of expanding urbanization by employing principles of organization and design. Burnham worked on plans for several cities based generally on Napoleon’s master design for the architecture of Paris. Burnham consulted on plans for new Civic Centers for San Francisco and Cleveland and created plans for Detroit and Washington, D.C. He continued work that he had begun in 1897 for Chicago’s lakefront, and, at one point, consulted with William Howard Taft, then Secretary of War, regarding a plan to rebuild and modernize Manila and Baguio in the Philippines.
H u d s o n
1872: Began his career as a draftsman. 1873: Cofounder of Burnham and Root. 1881: Designed The Montauk Building. 1886: Designed The Rookery. 1889: Designed Monadnock Building. 1893: Designed buildings for World’s Columbian Exposition. 1901: Designed new layout for Washington D.C. 1909: Created Plan of Chicago.
arched entrance which led to a mammoth barrel-arched waiting room. Working alongside Edward H. Bennett in 1909, Burnham produced his most famous plan. Called the Plan of Chicago, it was a response to the World’s Columbian Exposition in Chicago and called for the large-scale and organized planning of the city. With orderly groupings of buildings, parks, and transportation arteries, Burnham hoped to save Chicago from, as he wrote later, “chaos incident to rapid growth.” The plan addressed four different areas of urban life: dwelling, work, transportation, and recreation. The plan called for a city and county park system, the construction of wide boulevards radiating outwards from a civic center, a ring system of boulevards throughout the city, bi-level drives alongside the Chicago River, and the preservation of the land along lake Michigan. In response to the plan, the Chicago Plan Committee was created to implement this design. The creation of Humboldt, Garfield and Columbus Parks as well as the Forest Preserve District are all a result of Burnham’s vision. By the time of Burnham’s death in 1912, he had designed or helped to design over 100 major projects throughout the world. But by this time, American architecture had turned in a new direction. The work of architects such as Louis Sullivan and Frank Lloyd Wright brought Modernism to prominence. Through the 1920s and 1930s, this style dominated American architecture and influenced design for the new century.
S t u d e n t s
1 1 9
D a n i e l
H u d s o n
B u r n h a m
Social and Economic Impact
Sources of Information
Though Burnham’s work has been faulted as too European and too alien from America’s forms, he developed many of the major structural designs incorporated in later buildings. His steel-skeleton building frame, which employed a few major load-bearing supports within masonry walls, made it possible for taller and taller buildings to be made and eventually paved the way for the super skyscrapers that have become a familiar part of the urban landscape. Burnham is also given great credit as one of the first architects in America to call for sweeping and comprehensive city planning, which aimed to make cities more livable by placing commercial areas, housing, and parks in sensible relationships. “Make no little plans,” he said, “for they have no magic to stir men’s blood . . . Make big plans, aim high . . . ”
1 2 0
B u s i n e s s
Bibliography Hines, Thomas S. Burnham of Chicago: Architect and Planner. New York: Oxford University Press, 1974. Hitchcock, Henry R. Architecture: Nineteenth and Twentieth Centuries. New York: Penguin Books, 1977. Hoffman, Donald. The Architecture of John Root. Baltimore: Johns Hopkins University Press, 1973. Moore, Charles. Daniel H. Burnham, Architect, Planner of Cities. Boston: Houghton Mifflin Co., 1921. Reps, John W. The Making of Urban America: A History of City Planning in the United States. Princeton: Princeton University Press, 1965.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Adolphus Busch Overview A German immigrant to the United States, Adolphus Busch started his career with a small brewing supply company and went on to found one of the largest and most successful breweries in the United States.
(1839-1913) Anheuser-Busch, Inc.
Personal Life Adolphus Busch was born July 10, 1839, in Mainz, Germany, and was the second youngest of 22 children born to Ulrich Busch and Barbara (Pfeiffer) Busch, Ulrich’s second wife. Ulrich was a prosperous merchant, innkeeper, and landowner and Adolphus was educated in some the finest schools in Europe. He went to the Gymnasium at Mainz, the academy at Darmstadt, and the high schools of Brussels. After finishing school, Busch worked in a brewers’ supply company that was owned by his father and in a mercantile house in Cologne. Busch led a comfortable life in Germany. He was well educated and his family was wealthy, but Busch decided to immigrate in 1857. Accompanying some relatives Busch arrived in New Orleans, traveled up the Mississippi River, and settled in St. Louis, Missouri, where he worked on a steamboat and in the wholesale supply house of William Hainrichschofen. When his father died, Busch used his inheritance to establish a brewers’ supply business, Adolphus Busch & Co., with his brother Ulrich. One of Busch’s customers was Eberhard Anheuser, a soap maker who had acquired the rather unsuccessful Bavarian Brewery by default. On March 7, 1861, brothers Adolphus and Ulrich married
1 2 1
A d o l p h u s
B u s c h
Busch was a man who was involved in all aspects of his business. For example, he was involved with agriculture—better hops produced a better beer—and helped to create the Crop Improvement Bureau in Chicago. He developed innovative methods to brew, bottle, transport, and advertise his beer. Furthermore he devised the first refrigerated rail cars to keep the beer cold during delivery. While Busch was a brewer of beer, he preferred wine and champagne. He died, when he was 74 years of age, as a result of cirrhosis of the liver, at his residence in Langenschwach, Germany on October 10, 1913, before Prohibition was instituted in the United States. Adolphus Busch’s body was placed in a mausoleum in Bellefontaine Cemetery in St. Louis. His funeral was an extremely extravagant event attended by thousands of loyal employees. The eulogy was given by Charles Nagel, secretary of commerce and labor in the Taft cabinet, and it took 25 trucks to carry all of the flowers sent in his memory.
Career Details Adolphus Busch.
(UPI/Corbis-Bettmann.)
Anheuser’s two daughters, Lilly and Anna, in a double ceremony. Also in 1861, Adolphus enlisted in the Union Army and served his duty during the American Civil War as a corporal. After the war, he returned to his wholesale business. In 1864, he was convinced by his father-in-law, Eberhard Anheuser, to join the management of his brewery. Busch proved to be a good salesman, made improvements in the brewery, and turned the small, struggling brewery into a successful one. In 1867, Busch became an American citizen. During their marriage, Aldophus and his wife, Lilly, had 14 children, nine of whom lived to adulthood. Busch, through his entrepreneurial talents and good business sense, became a very wealthy and generous man. He entertained many celebrities including William Howard Taft, Theodore Roosevelt, and Enrico Caruso. In his lifetime he built all of his children mansions; had several other business ventures; contributed heavily to many institutions, disaster relief causes, and political campaigns. He contributed to the relief funds for the victims of the 1906 earthquake in San Francisco, flood victims of the Dayton, Ohio flood in 1913, and to Harvard and Washington universities. He also contributed to the Louisiana Purchase Exposition in 1904 and gave large sums of money to presidential and congressional candidates who were anti-Prohibition. Busch, along with other brewers, supported William Howard Taft in the 1908 presidential election. The opponent, William Jennings Bryan condemned taverns and bars as places of ill repute.
1 2 2
B u s i n e s s
Busch worked in his own business and for his father-in-law until 1869, at which time he sold his interest in his brewers’ supply house and bought out William D’Oench’s half ownership of Eberhard Anheuser’s Bavarian Brewery. The company was restructured with Anheuser as president and Busch as secretary. Now a full partner, Busch plunged into his work with enthusiasm and took more responsibility for the day-today operations of the brewery along with selling the beer to other areas of the country. Most of the beer was sold to areas where a large number of Germans had settled. His technical proficiency became apparent when he developed a network of rail side icehouses to keep his brew cool en route to neighboring communities. This demand led to the development of refrigerated rail cars. Busch was an enthusiastic and creative promoter of his beer. He made friendships with tavern owners and merchants along his business routes. His “calling card” was a small jackknife with the E. Anheuser & Co. logo on the handle, and at one end of the knife was a picture of Adolphus Busch that could only be seen if one looked through a peep hole. The knives also doubled as corkscrews since bottled beer at that time was corked rather than capped with metal. The delivery wagons driven around town were fancy green and red wagons pulled by gleaming, high stepping Clydesdale horses. He also offered public tours of the brewery. Busch commissioned the artist, F. Otto Becker, to paint Custer’s Last Fight, which depicts the Little Big Horn Massacre in 1876. In 1896 Busch had reproductions made of this painting, and distributed them to the establishments that served his beer this consequently made that particular battle scene a popular part of Western Americana. Busch also demonstrated a keen understanding of market preferences. Around 1875, he collaborated with
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
A d o l p h u s
the St. Louis Restaurateur, Carl Conrad, and developed a new light beer to suit the tastes of those who did not care for the heavier, sweet brews that their company produced. While traveling in Germany, Conrad had tasted a remarkable beer and had brought the recipe back to St. Louis. The new beer, which they named Budweiser, was naturally carbonated due to a European brewing method known as Kraeusening, a process whereby fermentation is induced a second time. Budweiser was an immediate success. But Conrad and Busch had to go to court to keep the name, because Budweiser was already an established brand of beer made in the former Budweis, Bohemia, presently the Czech Republic. When Conrad and Busch applied for a U.S. trademark in 1907, the Bohemian brewery tried to sue Anheuser-Busch. The dispute was settled in 1911 with the agreement that the name Budweiser could only be used in the United States and Latin America. Using a method developed by Louis Pasteur, he discovered a means of bottling the beer to keep it fresh and to retain its carbonation for long periods of time. This enabled the brewery to distribute the beer nationwide. Busch was the first American brewer to pasteurize beer and the first brewer to establish a national brew. He eventually exported the beer to Mexico, Cuba, England, and Singapore. A well known advertising symbol that came from Budweiser beer was the ubiquitous “Budweiser Girl” who appeared on trays, plaques, postcards, and posters. In 1879, the company was renamed the AnheuserBusch Brewing Association, and when Eberhard Anheuser died in 1880, Busch became company president. Carl Conrad, Busch’s Budweiser partner was also the bottler and distributor for Anheuser-Busch until 1883, when he went bankrupt. Busch bought Conrad’s interest thus becoming Budweiser’s exclusive brewer, bottler, and distributor. By 1901, the Anheuser-Busch Company had become the nation’s largest brewery, surpassing its rival, Pabst, with an annual production rate of 1 million barrels of beer. Busch continued as president of the company for 33 years. The brewery expanded, stretching out 70 acres along the Mississippi River. In addition to his brewery, Busch assumed the presidency of the South Side Bank and the Manufacturers Railroad Company; bought coal mines in Illinois; and bought the Louis & O’Fallon Railroad to transport the coal. He founded the Adolphus Busch Glass Manufacturing Company, the St. Louis Refrigerator Car Company, and the Busch Sulzer Brothers Diesel Engine Company, which produced the first diesel engine in 1898. He also had a controlling interest in six hotels, including the Adolphus in Dallas, and five other breweries. In addition to all of this Busch also had interests in some 30 other businesses in the United States and Europe.
B u s c h
Chronology: Adolphus Busch 1839: Born. 1857: Immigrated to the United States. 1859: Establish Adolphus Busch & Co. 1865: Joined Anheuser & Co. brewery as a salesman. 1867: Became a U.S. citizen. 1875: Introduced pasteurization of beer. 1879: Established Anheuser-Busch Brewers Association. 1880: Became president of Anheuser-Busch.
eled back and forth between his homes in St. Louis, Missouri; Pasadena, California; Cooperstown, New York; and his lodge, which he called “Villa Lilly”, in Langenschwalbach, Germany.
Social and Economic Impact At the time of his death, Busch’s personal wealth was estimated to be $60 million. His heirs still have substantial interests in what has become one of the world’s most successful breweries. Anheuser-Busch is currently the top domestic brewer, surpassing Miller, Stroh, Coors, and Pabst. Internationally the company is also at the top of the list, followed by Heineken, Miller, Kirin, and Kronebourg. The company produces approximately 35 brands of beer, including well-known brands as Budweiser, Michelob, Red Wolf, Busch, and King Cobra Malt Liquor. These beers are only ones sold under the Anheuser-Busch name in the United States. The list does not include beers like Roscoe Red (English), Elephant Red, Rio Cristal, or custom brews for restaurants.
In his final years, Busch left much of the operation of the Brewing Association to his son August. He trav-
The Anheuser-Busch company has the most extensive distribution networks in the industry, bringing beer to its customers through its 900 independent wholesalers and 11 company owned wholesale operations. Its contribution to the American economy can not be discounted: in 1996, Anheuser-Busch spent $534 million on advertising alone. Its brand name labels, like Budweiser, have become synonymous with American popular culture.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
1 2 3
A d o l p h u s
B u s c h
Bibliography
Sources of Information
Anheuser-Busch Historical Archives. St. Louis, Missouri.
Contact at: Anheuser-Busch, Inc. One Busch Pl. St. Louis, MO 63118 Business Phone: (314)577-2000 URL: http://www.anheuser-busch.com
Dictionary of American Biography. New York: Charles Scribner’s Sons, 1944. Fucini, Joseph J. and Suzy Fucini. Entrepreneurs: The Men and Women Behind Famous Brand Names and How They Made It. Boston: G.K. Hall & Co., 1985. VanDoren, Charles, ed. Webster’s American Biographies. Springfield, MA: G & C Merriam Co., 1974.
1 2 4
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Nolan Bushnell Overview Nolan Bushnell is one of the most active entrepreneurs of his time. Nicknamed “King Pong” after the hugely successful table-tennis video game he invented in 1972, Bushnell has founded more than 20 companies, including Pizza Time Theaters and their most famous creation, Chuck E. Cheese. For all of his success in establishing companies, Bushnell had a spotty record of long-term corporate growth. Several of his companies failed and he earned a reputation for losing interest in those that did succeed. Despite this, he remained one of the great creative forces in Silicon Valley’s competitive atmosphere.
(1943-) PlayNet Technologies
Personal Life Nolan Bushnell was born in Ogden, Utah in 1943. His father, a cement contractor, died when Bushnell was 15 years old. Bushnell stepped in to complete his father’s remaining contracts, earning his first exposure to the business world. As a teenager, Bushnell worked part-time in an amusement park, eventually becoming a manager. Bushnell had gotten his creative start several years earlier. As he told interviewer Tenaya Scheinman with The Tech Museum of Innovation, “The spark was ignited in Mrs. Cook’s 3rd grade class when I was assigned to do the unit on electricity and got to play with the science box. I went home and started tinkering and never stopped.” At times Bushnell’s experiments ignited more than a few sparks. In the same interview, he told of the time that he nearly set his family home on fire with a liquid fuel rocket mounted on a roller skate.
1 2 5
N o l a n
B u s h n e l l
Nolan Bushnell demonstrates the Commodore CDTV Interactive Multimedia Player, which combines the features of a home computer, a video game player, and a CD player. (AP Photo/Mark Lennihan.)
Bushnell attended college at the University of Utah, where he earned an engineering degree in 1968. In college, he played tournament chess and tournament Go, a Japanese strategy game. Go would later play a key role in his professional life. He spent his rare free time playing with computers and was introduced to computer graphics by one of his professors. While he says he was a good high school student, he did not do as well in college. Between his budding business ventures, his job at the amusement park, and his fraternity, Bushnell’s grades suffered. Bushnell married twice and has eight children. He enjoys spending time with his children and he plans to
1 2 6
B u s i n e s s
spend time alone with each of them in Europe. Bushnell has given each of his children their own computer because he firmly believes in promoting computer literacy.
Career Details Bushnell originally wanted to work for the Disney Company, because he considered it, in his words, “A cool place to work.” Disney was not interested. Instead, he became the games manager with Lagoon Corporation in
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
N o l a n
Salt Lake City. After two years, he moved to California and became an engineer in the Advanced Technologies section of Ampex Corporation. His keen interest in games grew when he learned of a game developed at MIT called Spacewar. The game was popular among engineering students, but Bushnell saw larger, commercial possibilities. In 1971 he created his first game, Computer Space. It failed largely because it was too complex. Bushnell told New York Times Magazine, “All my friends loved it. But all my friends were engineers. The beer drinkers in the bars were baffled by it. I decided what was needed was a simpler game.” That “simpler game” would be Pong. He financed his research by leasing pinball machines and through consulting work. But he was unable to sell his idea to a single amusement company. Undaunted, Bushnell decided to form his own company to manufacture the game. With his partners, Ted Dabney and Larry Bryan, and an initial investment of $500, the company was launched under the name Syzygy. That name, however, was already taken and they eventually turned to one of Bushnell’s favorite games, Go, for inspiration. The name they chose, Atari, means “prepare to be attacked” in Japanese—a smart choice considering the astounding success their Pong game would have. Within two years, over 100,000 copies of Pong—an electronic version of table tennis—were sold, primarily for bars and nightclubs. The video game phenomenon was born. But Atari was unable to keep up Pong’s popularity. Demand was so great that competitors quickly produced their own versions of the game, and counterfeit versions dotted the market. Other problems soon surfaced. The company was frequently short of cash, harming its ability to meet demand and to create other games. By 1974, Pong sales began to slide. Atari’s follow up, a race car game called Gran Trak 10, was slow in development and took a long time to gain popular acceptance. In the meantime, the financial woes of the company continued to mount. Bushnell told Time magazine that “The machine was selling for $995 and costing $1,100 to build. We were shipping a $100 bill out the door with every unit.” Bushnell knew that Atari could survive only if it continued to build more and different products. He looked to arcade games and home video games. The company soon plunged into the home game market largely because, as Bushnell told Business Week, “(they) turned out to be ready first.”
B u s h n e l l
Chronology: Nolan Bushnell 1943: Born. 1971: Debuted “Computer Space” video game. 1972: Founded Atari. 1972: “Pong” released. 1976: Sold Atari to Warner Communications. 1978: Opened Pizza Time Theaters (Chuck E. Cheese). 1981: Founded Catalyst Technologies. 1984: Resigned from Pizza Time. 1996: Joined Aristo International (now PlayNet Technologies).
one crisis after another.” He left the company after a bitter argument over the marketing of Atari’s innovative, new computer system, a “programmable” video set-up that allowed users to change games by inserting different cartridges into the system. Bushnell’s next venture was Pizza Time Theaters. He developed the concept while still at Atari. At an industry show in 1974, he purchased an animal costume for $800. He brought it back to his engineers and asked them to make it sing and talk—his first move into robotics. When development on the new robotic entertainer—named Chuck E. Cheese—was completed, Atari was a part of Warner, who showed little enthusiasm for the project. Only one Pizza Time Theater was allowed to open. Bushnell believed that the idea had tremendous potential, so in 1978, he purchased the rights to the project from Warner and set out on his own.
Once again, demand outstripped Atari’s ability to supply, and Bushnell decided that his only option was to merge Atari with a larger company. In 1976 he sold Atari to Warner Communications for $28 million dollars. Bushnell agreed to stay with the company, but not for long. As he told Tenaya Scheinman, “I was exhausted. Atari was an all-consuming entity. And part of it was this chase for capital, this quest for payroll. So to sell the company was in some ways a relief. Literally I felt like I had lost it all almost every other month. It seemed like
Bushnell wanted his new company to rival McDonald’s and Disneyland and he began to rapidly expand. The restaurants allowed customers to play video games, watch movies, or view a show put on by such robotic entertainers as Madame Oink, Harmony Howlette, or the proto-type Chuck E. Cheese while waiting for their food. In its first year of operation, Pizza Time earned $347,000. By 1982, revenues mounted to more than $99 million. But the good times were about to end. As the video game market collapsed, interest in Bushnell’s restaurants faded. On top of that, the chain earned a reputation for poor food, bad service, and high prices. To stem the tide of financial losses, the robots were reprogrammed to appeal
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
1 2 7
N o l a n
B u s h n e l l
to a more adult crowd, but it was too late. Bushnell resigned in 1984 and soon afterwards Pizza Time Theaters filed for bankruptcy. But Bushnell was not out of business. In 1981 he formed Catalyst Technologies, a company that gave financial and other support to start-up companies. It financed a number of ventures, including one called Androbot. Androbot attempted to develop robots for home use, and Bushnell predicted every home would have at least one by the year 2000. For a time, it seemed like Bushnell had gone on to the next “big thing.” As John C. Dvorak wrote in Computer Shopper magazine, “Bushnell was a master of the media, and all the trade magazines were talking about Androbot, particular its TOPO and B.O.B products. The TOPO robot was essentially a remote-control robot that functioned on commands delivered by an Apple II computer. B.O.B. (Brains on Board) was supposed to function as an independent device and bop around the house all by itself.” The enterprise failed. The robots often broke down and were too expensive for home use. Bushnell put the company up for sale in 1985. But Bushnell continued to seek new opportunities. The internet’s growth and possibilities prompted Bushnell to join with Aristo International in 1996. The idea was to develop interactive stands for hotels, bars, and restaurants that would allow patrons to play games (alone or in teams connected across the internet), send email, order concert tickets, or play digital recordings using either coins or charge cards. Aristo changed its name to PlayNet Technologies in 1998, and asked Bushnell to become its chairman. He declined, preferring to remain director of strategic planning.
being the guy with the machete hacking his way through the jungle never to go that way again. And it’s nice to put the team together, get it running, get the structure in place, get finances working, then leave it and sort of pet it every once in a while.” Companies he founded, like Atari and Pizza Time Theaters, both went through hard times after he left them, but they survived under new management. Bushnell even took his children to Pizza Time after he left. As he told Joyce Gemperlein, “They say, you owned this and you sold it? That was really lame!” Bushnell never lost his interest in children or in learning. Early in life, he wanted to be a teacher but his grades and other interests had always prevented that. Instead, he took on a project to reform the education system. His idea was to reinvent the schools, much as he reinvented home entertainment. He told Joyce Gemperlein, “I think that if properly structured, kids can learn at 200 to 300 times the current speed. So that they can go to school for a couple of hours in the morning and the rest of the time they can be working on projects, having fun.” Bushnell believed this technological approach to education would be more important than biotechnology in the next century.
Sources of Information Contact at: PlayNet Technologies One Maritime Plaza, 29th Fl. San Francisco, CA 94111 Business Phone: (415)217-3600
Bibliography Dvorak, John C. “What Ever Happened to . . . Androbot?” Computer Shopper, July 1997.
Social and Economic Impact Nolan Bushnell revolutionized the entertainment industry. With Pong, he brought arcade-style games into the home and paved the way for a number of other companies to design, build, and market video games for personal use. With Pizza Time Theaters, he took the video game concept a step further, combining it with his passion for robotics and food to create an entertainment experience for the entire family. While his early successes launched the video game revolution, Bushnell developed a reputation for losing interest in the companies he founded. As Bushnell told Tenaya Scheinman, “I’ve always got to force myself into completion. I really like
1 2 8
B u s i n e s s
Gemperlein, Joyce and Scheinman, Tenaya. “The Revolutionaries: An Interview with Nolan Bushnell.” San Jose, CA: The Tech Museum of Innovation, 1997. Available from: http://www.thetech. org/revolutionaries/bushnell. Martin, Richard, “Comebacks: Cooking Up Second Chances for Glory.” Nation’s Restaurant News, 23 September 1996. Contemporary Newsmakers. Detroit: Gale Research, 1985. “Nolan Bushnell.” Gamespot, Inc, 1998. Available from http:// www.gamespot.com. “On Line with Nolan Bushnell.” VARBUSINESS, July 1994. “PlayNet Technologies 10-Q.” Washington, DC: Securities and Exchange Commission, 1997. Available from http://www.sec.gov.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Ely Callaway, Jr. Overview Ely Reeves Callaway, Jr. became a famous entrepreneur during the ‘Third Act’ of his life. Past age sixty, after having made fortunes in two different businesses, textiles and wine-making, his Third Act included creating The Callaway Golf Company, Inc., and manufacturing perhaps the most famous line of golf clubs in the world: the Big Bertha, made of oversized hickory wood, reinforced with a revolutionary tungsten-titanium rod core. Callaway’s genius for selling good products, using a story line, didn’t falter. He claimed he named his new golf clubs after the famous World War I cannon that could drop a shell on a target six miles away. He said he had re-invented the golf club by using gun-barrel production techniques and new exotic metals. Beginning this company in the seventh decade of his life, by 1994, when he was age seventy-five, Callaway’s golf company had become the largest of all his competitors, with an annual revenue, in 1996, of $678 million.
(1919-) The Callaway Golf Company, Inc.
Personal Life Ely Reeves Callaway, Jr. was born June 3, 1919 in La Grange, Georgia. He came from a background of wealth and influence, with a family history tracing back to fifteenth century England. This allowed Callaway to grow up comfortably in the small community where most of his relatives owned most of the businesses, and Callaway began playing golf at local country clubs at the age of ten. Later, doing well in his education, he went on to graduate in 1939 from Emory University with a baccalaureate in American History.
1 2 9
E l y
C a l l a w a y ,
J r .
curement Agency, in apparel procurement for military troops. Reaching the rank of Major by the age twenty-four, Callaway became the Army’s sole procrement officer for cotton clothing. During war-time, Callaway had learned virtually everything about the cotton apparel industry. In 1945, Callaway left the Army and rose quickly to high positions in the textile industry, based on his wide war-time knowledge of textiles and his many personal contacts built during World War II. He joined the textile firm of Deering, Milliken and Company in Atlanta. Later, he moved to New York City where he accepted a position with Textron. Textron was soon purchased by the world’s largest textiles manufacturer, Burlington Mills and in 1968, Callaway was named as that company’s president and director. He abruptly quit in 1973 when he was not made a full Chief Executive Officer (CEO) at Burlington Mills. He walked away swiftly from Burlington Mills, not looking back, a multi-millionaire by that time, and told INC. Magazine that he had only one bad week or so, “grieving.”
Ely Callaway, Jr.
(AP/Wide World Photos, Inc.)
During his life Callaway was married four times and has three children from his first marriage: Reeves, Nicholas and Lisa. His current wife, Lucinda Villa Callaway, was the only one he married who was over the age of thirty. Callaway is a self-described life-long Democrat in his politics. He eats “only healthful food,” according to Inc. Magazine, and was described by them when interviewed, as a man who was lean, dignified, and aristocratic in bearing. His social activism has been long-standing, with ongoing trusteeship roles with the United Negro College Fund, the New York Council of Boy Scouts, the Menninger Foundation, and Hampshire College.
Career Details From his youth in that small community, Callaway appeared to assume he would succeed in business, and in life. According to one story of him, written in Town and Country magazine, a friend was quoted as saying that: “Ely’s talent . . . was primarily as a human motivater . . . he had a gift for finding the right kind of people and turning their creative talents loose. He also had an uncanny sense of what the public wanted.” In June of 1940 Callaway joined the army as a Reserve Officer, and quickly rose to the rank of a commissioned officer. He remained in the United States during World War II, working with the Army’s Centralized Pro-
1 3 0
B u s i n e s s
Callaway moved to California soon after he left Burlington Mills, where he had purchased 150 acres of land in the San Diego/Palm Springs area, some years beforehand, which he had started cultivating and bottling wine that went from good to great. The Callaway Vineyard and Winery grew to a world-class enterprise in four short years, and the wine, with his personal connections in New York, was soon being served in such elegant restaurants as the Four Seasons and ‘21’. In 1981, he sold the wine business for a $9 million profit to Hiram Walker Corporation, which has continued to make Callaway wines as he had made it. Still restless for work at the age of 60, Callaway looked for new opportunities. Returning to his favorite pastime, the game of golf, he gradually began, as he told INC. Magazine, to ‘re-invent’ the 250-year-old golf club. He sought to make it more user-friendly, assuming that if the club was easier to swing, with a larger face-surface, that one might play a better game of golf. In Palms Springs, California, in 1983, Callaway found a small company in financial trouble that was making a fine golf club; the club was old-fashioned looking, with a big hickory shaft, with a titanium-metal rod core. Callaway quickly invested $2.5 million, bought out the company, gave it his name, and his great courage of promotion. With some refinements to the club, he came out with, and promoted a new golf club, the Big Bertha, which might be seen as the equivalent of an oversize tennis-racket for golfers. As he did with his wine business, he carefully marketed his upscale golf-clubs, and equipment, to upscale players of the game. He made sure, for instance, that President William Clinton, President George Bush, The British Prince Andrew, and a variety of celebrity golfers, like Sean Connery and Jack Lemmon, as well as most of the important golf-playing CEO’s in America used his clubs and talked about them.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
E l y
C a l l a w a y ,
J r .
In a short time, by 1994, his company/corporation was offered publicly on the New York Stock Exchange and had gained world dominance in golf clubs, exceeding Spalding, Wilson, Taylor-Made, and MacGregor. Callaway has continued to pursue Research and Development of his golf products, including an upcoming new line of golf balls, and in 1997, at age seventy-eight, was still on the job everyday. He told INC. Magazine, “In order to be successful, you can’t be afraid to fail: fear of losing is what inhibits most people.”
Chronology: Ely Callaway, Jr. 1919: Born. 1939: Graduates from Emory University.
Social and Economic Impact
1940: Joins the Army.
Callaway was quoted in the July 17, 1995 Los Angeles Times, describing his business style this way: “I’m a merchant, someone who recognized a need for an improved product, then created it. But it must be a consumer product that was demonstrably superior to the competition, and pleasingly different. Then, I marketed the hell out of it.” Quoted once again, from the Los Angeles Times, July 17,1995, Callaway said, of his business strategy: “The funny thing was...there was no grand vision of three careers and big fortunes. I just started out one little step at a time and hoped it worked. Luck was a big piece of it. Not so much good luck but the absence of bad luck.” His strategy was, in his own eyes, part luck and part “marketing the hell out of it.” This strategy has worked as he was quoted as the highest paid executive in the state of California in 1995 with an annual salary of over $1.8 million. When he was involved in textiles, Callaway went to the top and became director of the world’s largest fabric mills; Burlington. As a vintner, Callaway developed a variety of California wines-in an unlikely area of southern California where they continue to be made today, regarded as world class in quality. As the CEO of Callaway Golf Company, Inc., he had improved the quality of an “antique” sports tool, the golf club, and by bringing to the club a high technology challenge, had opened up again a competitive industry in golf-related products.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
1968: Becomes president of Burlington Mills. 1973: Founds The Callaway Vineyard and Winery. 1981: Sells The Callaway Vineyard and Winery. 1983: Promotes new golf club, the Big Bertha. 1994: Gains world dominance in golf club sales. 1994: Entrepreneur of the Year by Inc. Magazine.
Sources of Information Contact at: The Callaway Golf Company, Inc. 2285 Rutherford Rd. Carlsbad, CA 92008 Business Phone: (619)931-1771
Bibliography Dean, Paul. “At the Fore Once Again.” Los Angeles Times, 17 July 1995. Dodson, James. “Iron’s Man.” Town and Country Magazine, May 1994. “Callaway’s Way.” Golf Week, 14 August 1993.
S t u d e n t s
1 3 1
Andrew Carnegie (1835-1919) Carnegie Steel
Overview The wealthiest man of his time, industrialist Andrew Carnegie is best known today for the monumental philanthropic projects he established after his retirement. Having made millions in the steel industry during the late 1800s, Carnegie dedicated his fortune to the educational and philanthropic causes he considered to be the proper beneficiary of capitalist profit.
Personal Life Carnegie’s early life fostered both his ambition and his radical attitude toward wealth. He was born in Dunfermline, Scotland, in 1835, the oldest child of Margaret and Will Carnegie, a handloom weaver. His parents instilled in Andrew a strict work ethic and a belief that wealth carries with it social responsibilities. When steampowered machines made handlooms obsolete around 1847, weavers in Scotland agitated for economic reforms, but there was little hope of success. At the urging of his socially-ambitious wife, Will Carnegie moved his family to the United States in 1848. They settled in Allegheny, Pennsylvania, near Pittsburgh, where Will Carnegie struggled to support his family. Young Andrew immediately began factory work, earning $1.20 per week as a bobbin boy in a textile mill. Soon he obtained a better job as a messenger in a telegraph office. Andrew memorized addresses and names to speed up his errands and was quickly promoted to telegraph operator. In 1853 he became assistant to Thomas Scott, superintendent of the company’s western division.
1 3 2
A n d r e w
By 1855 when Will Carnegie died, Andrew was the sole financial support for his mother and younger brother, Tom. He was only 20 years old. Although there was no opportunity for formal education, Andrew studied as much as he could at the free public library and learned double-entry bookkeeping at night school. He became an avid reader, a sophisticated lover of music, and a theatergoer with a passion for Shakespeare (he knew the Bard’s work so well he could recite entire scenes from memory). By 1859, the young Carnegie was financially secure enough to move with his mother to the upscale suburb of Homewood. In 1864, Carnegie was drafted into the Union Army, but he paid a replacement soldier $850 to serve for him, a widely accepted practice at the time. Carnegie was greatly influenced by his strongwilled mother, who was proud of her son’s success and paraded in front of her former townspeople when she and Carnegie visited Dunfermline in 1881. Because of Margaret’s disapproval, Carnegie put off marriage to Louise Whitfield, whom he had met in 1870, until after his mother’s death. In 1886 Carnegie came down with typhoid, and suffered a serious relapse when he learned of his brother’s death. A month later, when Margaret died, Carnegie was still so ill that his mother’s coffin was lowered from her bedroom window in order to keep her death a secret from her son. Carnegie married Louise Whitfield in 1887, and in 1897 their daughter Margaret was born. That same year Carnegie bought Skibo Castle in Scotland, where he spent about half of each year until he retired in 1901. In 1916, Carnegie bought Shadowbrook, an estate in Lenox, Massachusetts, where he died in 1919.
Career Details Much of Carnegie’s success came from his extraordinary ability to recognize and exploit the opportunities being created by industrialization. During his 12 years with the Pennsylvania Railroad, he developed the managerial skills and personal relationships that would help him in his later business ventures. He learned how the railroad industry worked and introduced such innovations as keeping the telegraph office open 24 hours a day and burning railroad cars after accidents to clear the tracks quickly. During the Civil War, he organized the military telegraph system for the North and gained additional insights into the industry. Seeing the commercial potential of sleeping cars on trains, Carnegie invested $217.50, which he obtained through a bank loan, in the Woodruff Sleeping Car Company. Within two years, he was receiving an annual return of about $5000, more than three times what he was earning at the railroad. Carnegie also became a silent partner in several small iron mills and factories. By 1863 his annual income was $42,000.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
C a r n e g i e
Chronology: Andrew Carnegie 1835: Born. 1848: Emigrates with family to United States; settles near Pittsburgh. 1856: Invests in railroad sleeping cars. 1861: Invests in oil and other companies. 1865: Retires from railroad; founds Keystone Bridge Company. 1872: Visits Bessemer steel plants in England. 1875: Opens his first steel plant, Edgar Thomson Works, in Braddock, PA. 1881: Assumes control of Frick Coke Company. 1883: Buys Homestead Works steel mill. 1889: Publishes “Gospel of Wealth.” 1899: Forms Carnegie Steel from his several steel companies. 1901: Sells out to Morgan, becoming richest man in the world. 1919: Dies at estate in Lenox, MA.
In 1865, Carnegie retired from the railroad and founded the Keystone Bridge Company, which used iron rather than wood in the construction of bridges. Tom Scott loaned Carnegie half the $80,000 needed for this investment. Two years later, Carnegie founded the Keystone Telegraph Company, which received permission from the Pennsylvania Railroad to string telegraph wires across their poles. This proved so valuable that Keystone merged with the Atlantic Telegraph Company and tripled its investors’ return. Between 1865 and 1870, Carnegie traveled between the United States and England selling U.S. railroad and bridge company bonds. He may have sold as much as $30 million in bonds and made as much as $1 million in commissions. By 1870 Carnegie realized that steel would inevitably replace iron in the expanding market for building products. He withdrew from his other investment activity to concentrate on steel manufacturing. With his own capital, he built his first blast furnace that year and another in 1872. He persuaded some of his Pittsburgh business acquaintances to join him in steel manufacturing and with them formed Carnegie, McCandless, and
S t u d e n t s
1 3 3
A n d r e w
C a r n e g i e
Company (later known as Carnegie Steel). The company employed the innovative Bessemer method, which Carnegie had witnessed on a visit to Bessemer’s steel plants in England in 1872. This process, which forces compressed air through molten iron to burn out excess carbon and other impurities, significantly cut the cost of converting iron into steel. In 1875 Carnegie opened his first steel plant in Braddock, Pennsylvania, naming it after the president of the Pennsylvania Railroad, Edgar Thomson. The plant’s first order, for 2,000 steel rails, was placed by the Pennsylvania Railroad. Carnegie also introduced open-hearth steel production to his plants, which lowered the costs and increased sales and profits. Carnegie consistently invested his profits back into the company to make improvements, cut operating costs, and drive out competition. By 1878 the company was capitalized at $1.3 million and it continued to grow, making Carnegie the dominant steel manufacturer in the country. In the 1880s Carnegie acquired a majority interest in the H. C. Frick Company, which produced coke—a component in the manufacture of steel. Carnegie and Frick made a formidable business team, with Carnegie overseeing expansion, installation of cost controls, and modernization of plants while Frick controlled day-today management. In 1883, Carnegie bought the Homestead Works to produce steel structural members for elevated railways and skyscrapers-products in increasing demand in growing urban centers. Despite a harsh national depression from 1893-1896, the Carnegie Company, following Carnegie’s command to “Take orders and run full,” held prices down, kept skilled workers on the payroll, and earned profits. By 1890, Carnegie’s take-home pay was $25 million per year. A decade later, Carnegie Steel’s annual profits were $40 million. Carnegie had always fought cartels, but by the 1890s he was beginning to encounter increasing competition from newly-formed corporations headed by J. P. Morgan and the Moore Brothers. These corporations wanted to impose stability on the steel industry by controlling prices and by limiting competition through pools and cartels. At first, Carnegie refused to bargain with these corporations, but by 1901 he wished to retire from business and devote himself to family life and philanthropy. J. P. Morgan bought Carnegie’s controlling interest in Carnegie Steel for $500 million and restructured the business to create U.S. Steel Corporation. Carnegie’s personal share in the buyout was $225 million, making him the wealthiest man in the world.
Social and Economic Impact Carnegie played a significant role in building and modernizing American industry. He utilized not only the vast natural resources of the continent that provided the
1 3 4
B u s i n e s s
raw materials of manufacturing, but also a huge labor pool—new immigrants—eager for employment. Carnegie was quick to appreciate new technology, and although he did not invent his own innovations, he brought to his plants technological improvements that dramatically increased productivity and profits. With no public regulation of business during this era, Carnegie took advantage of the freedom to set hours, wages, and business practices as he saw fit. By emphasizing efficiency of production, he kept costs low and expanded markets for steel products. Steel became a pillar of the American economy, driving manufacturing and providing the materials needed for continued western expansion and rapid urban growth. Carnegie’s business practices also affected the position of struggling workers. In an era that lacked laws that protected workers’ rights, Carnegie was not antiunion. In 1886, he published an article in Forum Magazine defending workers’ right to form a labor union, and the following year he intervened to force his partner, Henry Clay Frick, to settle a strike that Frick had wished to break. But by increasing efficiency in his plants, Carnegie made labor conflicts inevitable because efficient production required fewer workers. In 1892, when the union contract at the Homestead mill expired, the workers organized a strike. Carnegie was on vacation in Scotland and at first directed Frick to honor the strike. When Frick made it clear that he intended to smash the union, Carnegie remained silent. On July 6, 1892, 300 Pinkerton Agents entered the area to break the strike, and a bloody battle ensued. Five strikers and three Pinkertons were killed, and scores were injured on both sides. For the next two months, the plant operated under military protection from the state militia, until the union finally called the strike off. This event soured labor toward Carnegie; his company was to remain nonunion until the mid-1930s. Carnegie’s success at business revolutionized the steel industry and helped the United States become an industrial leader. However, his impact on American society through philanthropy would outlast the industrial age. Carnegie followed the vision he set out in The Gospel of Wealth and dedicated his retirement to the proper distribution of his fortunes for the public good. He strongly supported education and the arts. In 1891 he founded a concert hall in New York City. He generously provided funds to cities interested in building public libraries. Most notably, in 1901 he gave the New York public library $5.2 million to open its first public branches. In total he donated over $50 million to build 2,800 public libraries in the United States and Great Britain. His belief in the free access to books is evident in an excerpt from his address at the dedication of the Carnegie Library of Pittsburgh in 1895: “It is the mind that makes the body rich. There is no class so pitiably wretched as that which possesses money and nothing else. Money can only be the useful drudge of things immeasurably higher than itself . . . My aspirations . . . have
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
A n d r e w
contributed to the enlightenment and the joys of the mind, to the things of the spirit, to all that tends to bring into the lives of the toilers of Pittsburgh sweetness and light. I hold this the noblest possible use of wealth. The taste for reading is one of the most precious possessions of life, and . . . I should much rather be instrumental in bringing to the working man or woman this taste than mere dollars. It is better than a fortune.” Carnegie also supported higher education and efforts for world peace. In 1898, he advocated for independence for the Philippines, which the United States had purchased from Spain for $20 million after capturing the islands during the Spanish-American War. Carnegie offered to donate that price for the islands to purchase their freedom, but this bid was unsuccessful. Carnegie also established the Carnegie Endowment for International Peace in 1910, and provided funds for the construction of the Central American Court of Justice in Costa Rica, destroyed later that year in an earthquake. Carnegie donated money to universities in his native Scotland, and in 1900 founded the Carnegie Institute of Technology (which later became Carnegie-Mellon University) in Pittsburgh. In 1902 he founded a scientific research institution called the Carnegie Institution in Washington, D.C. and in 1905 he established the Carnegie Foundation for the Advancement of Teaching. Six years later Carnegie allocated $125 million to the Carnegie Corporation of New York for educational advancement through schools, libraries, research, and publication. By the time of his death in 1919 Carnegie had succeeded in distributing over $350 million-in all, 90 percent of his fortune.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
C a r n e g i e
Sources of Information Bibliography The American Experience, 1998. Available from http://www.pbs. org/wgbh/pages/amex/carnegie/index.html Byers, Paula K. and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography, Detroit: Gale Research, 1998. Carnegie, Andrew. The Autobiography of Andrew Carnegie. Boston: Northeastern University Press, 1986 (1920). Carnegie, Andrew. “Address at Dedication of The Carnegie Library of Pittsburgh.” 1998. Available from http://www.clpgh.org/ exhibit/neighborhoods/oakland/oak_n77.html Carnegie Denied: Communities Rejecting Carnegie Library Construction Grants, 1898-1925. Westport, CT: Greenwood Press, 1993. Hoyt, Austin. The Richest Man in the World: Andrew Carnegie. Screenplay, documentary film for The American Experience produced for WGBH-TV, Boston, 1997. Kitman, Marvin. “The Marvin Kitman Sunday Show: Rich Lessons from Carnegie.” Newsday, January 26, 1997. Krause, Paul. The Battle for Homestead, 1880-1892: Politics, Culture, and Steel. Pittsburgh: University of Pittsburgh Press, 1992. Royle, Trevor. The Companion to Scottish Literature. Detroit: Gale Research, 1983. Tompkins, Vincent, ed. American Decades 1900-1909. Detroit: Gale Research, 1996. Wall, Joseph Frazier. Andrew Carnegie. New York: Oxford University Press, 1970. Wall, Joseph Frazier, ed. The Andrew Carnegie Reader. Pittsburgh: University of Pittsburgh Press, 1992.
S t u d e n t s
1 3 5
Hattie Carnegie (1889-1956) Hattie Carnegie, Inc.
Overview During the 1930s, Hattie Carnegie was one of America’s top fashion designers. She propagated the “ little black dress” for daytime wear, trained a new generation of designers, and made her creations available to the middle class by selling ready-to wear clothes for modest prices.
Personal Life Hattie Carnegie was born Henrietta Kanengeiser, the second of seven children in Vienna in 1889. After a fire destroyed their home in the suburbs of Vienna, her father, Isaac Kanengeiser, took the family to the United States. They moved to the Lower East Side of New York City, where Hattie attended public school. Hattie’s father, an artist and designer, worked in New York’s garment industry, and introduced her to the fashion world. When Hattie was 13, her father died and she was forced to leave school. To help support the family, she started working for Macy’s. However, following her true passion, she designed hats for neighborhood women in her spare time. Soon after, Hattie got a job trimming hats in a millinery workroom and worked as a millinery model. She changed her name from Kanengeiser to Carnegie, in admiration of the wealthy Andrew Carnegie. Carnegie was married three times. After two short marriages in 1918 and 1922, she finally married John Zanft in 1927. Called “an East Side boy himself” in Current Biography 1942, John was “the love of her life since she was thirteen years old.” However, while her husband spent
1 3 6
H a t t i e
C a r n e g i e
most of his time on the west coast working for the movie industry, Carnegie worked mainly in New York and Paris. After her business had grown, Carnegie provided all her brothers and sisters with important positions. One of her sisters, for example, was a director of her company, one brother was secretary and treasurer, while another brother was in charge of the main wholesale department in New York. Hattie Carnegie was a tiny, slender, and very attractive woman. She loved clothes and always dressed in the most current mode, but never wore hats. Carnegie enjoyed giving dinner parties and going out for dinner or dancing, and she had a weakness for gambling. She also collected antique furniture, modern paintings, and old porcelains. Her outstanding work was recognized by two awards: the Neimann-Marcus Award in 1939 and the Coty American Fashion Critics’ Award for “consistent contribution to American elegance” in 1948. Hattie Carnegie died on February 22, 1956 in New York City.
Hattie Carnegie.
Career Details Carnegie started her career as a milliner. In 1909, she started her first business. Encouraged by Rose Roth, a friend and neighbor who was a seamstress, she opened a shop on East Tenth Street called “Carnegie-Ladies Hatter.” Rose made dresses; Hattie designed hats, modeled the rather expensive clothes and took care of customers. The shop’s success enabled Carnegie and Roth to incorporate with $100,000 in capital in 1913 and they moved to West 86th Street, close to fashionable Riverside Drive. The New Yorker stated, “The shop was on a corner of Broadway, with a delicatessen on one side and a Chinese restaurant on the other, and pungent cooking fumes invaded the place as rich women flocked in.” After World War I, Carnegie bought out her partner, founded Hattie Carnegie, Inc., and became its president and major stockholder. The shop soon became popular among followers of fashion and was a tremendous success. In 1919, Hattie Carnegie made her first buying trip to Paris and became devoted to Paris fashion. She moved her business to the fashionable Upper East Side of New York in 1926. By 1929, the company’s sales had reached $3.5 million a year. Throughout the 1920s and 1930s, Carnegie made several trips a year to Paris. She returned with many examples of Paris’ latest fashions and blended French style with comfort, a combination that matched the taste of many fashion-conscious Americans. Carnegie’s designs were described in Who’s Who in Fashion 1988 as “youthful and sophisticated, never faddy or extreme. She was noted for suits with nipped waists and rounded hips, especially becoming to smaller women, embroidered, beaded evening suits, at-home pajamas, long wool din-
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
(The Library of Congress.)
ner dresses and theater suits. Beautiful fabrics and excellent workmanship were hallmarks, anything but the best was abhorrent to her.” Most Americans, however, were not able to afford Carnegie’s original designer clothes. During the Depression, even many rich customers had problems paying their bills. In 1932, her corporation filed a famous lawsuit against New York mayor James J. Walker and his wife for $12,059, the balance due on a $20,059 bill. Adapting to the new market situation, Carnegie launched a less expensive ready-to-wear line, which she first sold in her New York retail shop. Eventually, she introduced a new wholesale line, Spectator Sports, with ready-to-wear copies of Carnegie clothes sold for as little as $50 a piece. In order to make her modestly priced clothes more available to the average consumer, she decided to break from her practice of selling her clothes exclusively at her own shop. However, only one department store in a city was able to buy her creations. Thus, she avoided becoming her own competition and, at the same time, preserved the exclusiveness of Carnegie products. Inspired by the Parisian houses of haute couture, Hattie Carnegie showed her collections to customers four times a year at her wholesale department at 711 Fifth Avenue. The wholesale branch of her business soon became the most profitable one. By the 1940s, Carnegie oversaw a multi-million dollar business and had established herself as one of the country’s top designers. Society beauties as well as famous actresses who wore her clothes in their films were
S t u d e n t s
1 3 7
H a t t i e
C a r n e g i e
them, made Hattie Carnegie one of the most famous and influential fashion designers of her time in the United States. Her creations were widely copied by the designers of popular-priced clothes and, therefore, had an influence over haute couture as well as popular wear.
Chronology: Hattie Carnegie 1889: Born. 1909: First shop opened. 1913: Founded Corporation with Rose Roth. 1919: First buying trip to Paris. 1930s: Introduced first wholesale line Spectator Sports. 1932: Filed lawsuit against New York mayor James L. Walker. 1940: Established as top designer in the United States. 1956: Hattie Carnegie Inc. had over 1000 employees. 1956: Died.
on her customer list. Hattie Carnegie’s firm consisted of the retail shop in New York, two resort shops, two wholesale businesses, and several factories. As her business grew, she added accessories, perfumes, chiffon handkerchiefs, silk hose, and a line of cosmetics, competing with products by Elizabeth Arden and Helena Rubinstein. Hattie Carnegie did not believe in the cult of personality that dominated much of the high-fashion world. She did not care for personal publicity, and believed that no single individual was crucial to the success of her business. Once her head designer, hoping to strike out on his own, left with her entire collection. Within three weeks she had designed and produced a whole new collection for the new season. A collection usually consisted of 100-150 models. Carnegie spent long hours doing the work she loved, but, as stated in Notable American Women, “disliked shop talk and avoided associating with business people. She made no attempt to educate women to fashion, resented ugly customers, and hated fashion lunches, newspaperwomen, and fashion experts. Preferring her employees to be stylish, good looking, and blonde, she was fiercely loyal to those she liked.” By the time of her death in 1956, Carnegie’s business was worth over $8 million.
The “little Carnegie suit” was a basic item in a woman’s wardrobe. She later modified it for the U.S. Army’s Women’s Army Corps uniform. She also created a modernized habit for the Carmelite nuns. Her film work included the clothes for Constance Bennett in the 1932 movie Two Against the World and for Joan Fontaine in the film Born To Be Bad in 1950. Carnegie’s booming firm drew young designers throughout the 1930s, and she showed a great feeling for discovering talent, and trained a generation of fashion designers that determined American style for decades. Among others, Norman Norell, Claire McCardell, Paula Trigere, Pauline De Rothschild, James Galanos, and Jean Louis, learned their craft under her tutelage. According to Who’s Who in Fashion 1988, Hattie Carnegie is said to have been the first American custom designer with a ready-to-wear label. Introducing the practice of selling her creations for modest prices in department stores, she led the foundation of a million dollar fashion industry. In 1956, more than a thousand employees worked for her company. Hattie Carnegie proved to be able to design clothes without being able to sketch, cut, or sew-by explaining her ideas to the people who set them into practice. She also showed that women could not only dress women, but also had all it took to succeed as business leaders.
Sources of Information Bibliography Bauer, Hambla. “Hot Fashions by Hattie.” Collier’s. 16 April 1949. Bondi, Victor, ed. American Decades 1930-1939. Detroit: Gale Research, 1995. Current Biography Yearbook. “1942.” New York: H.W. Wilson Co., 1942. Leavitt, Judith A. American Women Managers and Administrators. Westport, CT: Greenwood Press, 1985. Maloney, Russell. “Hattie Carnegie.” Life, 12 November 1945. “Profiles: Luxury, Inc.” New Yorker, 31 March 1934. Sicherman, Barbara, and Carol Hurd Green, eds. Notable American Women, The Modern Period. Cambridge: Harvard University Press, Belknap Press, 1980.
Social and Economic Impact Her ideas of simple, beautiful clothes which enhance, but do not overpower the woman who wears
1 3 8
B u s i n e s s
Stegemeyer, Anne. Who’s Who in Fashion. New York: Fairchild Publications, 1988.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Steve Case Overview Steve Case is one of the pioneers of online services. Through his market-leading America Online, he was actively involved in the transformation of dial-up computer networking services from obscurity to a mass-market, multibillion-dollar industry. When Case launched Quantum Computer Services, the forerunner to AOL, in the mid-1980s, it was largely a text-based information and discussion forum. Advancements in graphical operating systems by the likes of Microsoft provided Case with the foresight to develop a graphical and user-friendly interface for his service, innovations that helped propel AOL to become the world’s largest provider of consumer online services.
(1958-) America Online, Inc.
Personal Life Case lives in Fairfax, Virginia, and is divorced from his wife, Joanne, to whom he was married for 11 years. The couple has three children. He enjoys reading social history and political science. Case was born on August 21, 1958 in Honolulu, Hawaii. His father was a corporate lawyer, his mother a teacher. He has an older brother, Dan, an older sister, Carin, as well as a younger brother named Jeff. Case was an enterprising boy and was involved in a number of ventures with his younger brother throughout the boys’ childhood. When Case was six years old, the two of them opened a juice stand charging customers two cents a cup; many gave them a nickel and told the boys they could keep the change. For Case, it was an
1 3 9
S t e v e
C a s e
album of some of the best musical offerings. He also became the lead singer in two rock bands, both musically fashioned after two relatively obscure new-wave groups, The The and The Knack. In 1980 Case graduated with a B.A. from Williams and went to work in the marketing department of Procter & Gamble. He left the company after two years, having realized he was not comfortable working for such a well-established corporation.
Career Details It was in his next job with the Pizza Hut arm of PepsiCo that Case first began to explore the personal computer. He was hired to work in new pizza development, which entailed traveling the country in search of innovative pizza toppings. He devoted his nights on the road to learning about the portable computer. He had bought a Kaypro CP/M personal computer and subscribed to The Source, one of the earliest online services. He was especially intrigued by the chance to talk with people around the world, which the service provided. Case’s fascination with the world accessible by computer was the first step in what would become his lifelong passion. Regarding the pizza company position, however, Case once said in an interview with the Washington Post, “I learned a lot about the big corporation experience, and that was good. But a lot of it was about leveraging business and not about innovating . . . It was all incremental rather than breaking new ground.
Steve Case.
In 1983 Case was introduced to a start-up business, Control Video Corporation, by his older brother, Dan, at an electronics show in Las Vegas. Dan, an investment banker, was excited about the company’s first product, a service that delivered Atari video games to personal computers. Case was offered the job of marketing assistant, only realizing later that he had entered the company as the video gaming industry was dying. Control Video let most of its employees go but retained Jim Kimsey as chief executive officer. Kimsey, a former venture capitalist, retained Case to help him develop new capital.
(Archive Photos, Inc.)
early lesson in high margins in business. Later, the brothers opened a company to sell products through a catalog and door-to-door. The two also shared a newspaper route. While Case was a student at the Punau School, a private college-preparatory school in Honolulu, he wrote album reviews for the school newspaper. Although the position didn’t pay, it did get Case on the mailing lists of several different record companies. He began receiving free concert tickets and promotional albums. Case then attended Williams College in Williamstown, Massachusetts, where he was a political science major. While in school, Case ran the student entertainment committee, which organized campus concerts and produced an
1 4 0
B u s i n e s s
In 1985 Case and Kimsey began a new company, Quantum Computer Services, Inc., which provided online services for users of Commodore computers, then a leading brand of home computers. Quantum quickly grew, and two years after the company was started, Case worked out an arrangement with Apple Computer, Inc. to provide his online service for Apple’s operating system and developing software for both the Macintosh and the Apple II. Soon, Quantum was signing similar deals with other companies, including Tandy Corporation and IBM, which was then the industry leader. While this was undoubtedly progress, the company’s overhead costs were prohibitively high, eating through the $5 million capital the company had received. In 1991 Quantum was renamed America Online—AOL, for short—and Case
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S t e v e
C a s e
was appointed CEO, to replace Kimsey, who then became company chairman. AOL stock went public in March 1992, at $1.64 a share. The stock offering garnered $66 million for the company. Case then focused his energies and the increased company revenues on usurping the two established leaders of online services—Prodigy and CompuServe. He developed a strategy for market dominance that included alliances with companies which would benefit AOL, dropping membership prices below those of the major competitors, and shipping out huge quantities of diskettes to potential clients, offering them a free trial period for the service. Membership began to grow, jumping appreciably each month, until by the end of 1993, it had surpassed the 600,000 mark. The company had a difficult time keeping up with such rapid growth, foreshadowing the service problems that would plague it for the next few years. That same year, Case warded off two attempted buyout offers—the first from Microsoft cofounder Paul Allen. Allen, who had already left Microsoft, had purchased a 24.9 interest in AOL and had attempted to secure a seat on its board of directors. The second buyout offer came from Microsoft head, Bill Gates, who would subsequently go on to develop his own online service, bundling it with his company’s other popular software titles. Case continued to explore new marketing strategies and either purchased or forged alliances with companies that would further its foothold in the online services marketplace. These included content agreements with the New York Times, Time, and NBC. He also developed a distinctive, user-friendly framework for his service, which was both intuitive and graphics intensive. By the fall of 1994, Case was beginning to establish a way to link his service with the World Wide Web, an increasingly popular arm of the Internet. Until then, AOL was essentially a closed network, meaning that subscribers could only interact with content provided by AOL, its vendors, or other AOL subscribers, rather than the provider-independent content associated with the Internet. The company first bought Advanced Network Services, Inc., which was experienced in building the fiber optic support needed to access the Internet. The December 1994 acquisition of BookLink Technologies and the following purchase of Global Network Navigator provided the means for AOL customers to browse the Internet with graphic browsing software from BookLink, which competed with Netscape’s Navigator browser.
Chronology: Steve Case 1958: Born. 1980: Graduated with B.A. from Williams College. 1985: Cofounded Quantum Computer Services, Inc. with Jim Kimsey. 1991: Quantum renamed America Online. 1992: Became AOL’s CEO. 1994: Acquired Booklink Technologies. 1994: AOL subscriber count passed 1 million. 1997: AOL subscriber count passed 10 million. 1998: Stepped down as AOL president while remaining chairman and CEO.
AOL, Netscape, which many inside AOL management favored, had given AOL a chilly reception. Presiding over the largest single base of web users, Case was especially wary of signing an agreement with Microsoft, which had recently debuted its Microsoft Network, a competitor to AOL. Thus, in 1996 he pulled off pair of stunning and controversial deals in which he formed a nonexclusive alliance with Netscape to use its browser, but made Microsoft’s Internet Explorer the primary one used with AOL services. While some Netscape executives characterized these actions as “slimy,” these agreements proved favorable to AOL.
As fierce competition heated up between the two leading web browser vendors, Microsoft and Netscape, Case came under significant pressure to choose one of the independent browsers for use on AOL. Until that point AOL subscribers were mostly restricted to using AOL’s proprietary software from BookLink, which lacked the performance and features of the leading browsers. While Microsoft had made heavy overtures to
During this period, AOL continued to grow at an unprecedented rate, outpacing all its competitors in the number of new users. By 1994, AOL had more than 600,000 members; by March of the next year, membership exceeded to 2 million and continued to rise meteorically until, by August 1996, it tripled to more than 6 million. Two months later, Case announced that AOL would begin to charge a flat monthly rate of $19.95 for unlimited access to its service. Prior to the institution of this system, customers were billed a monthly charge of $9.95 for their first five hours, plus $2.95 for every additional hour spent online. Customers complained, however, that under the original rate system, the company was rounding online usage time up to the next minute, rather than basing billing calculations on a per-hour monthly rate. In addition to changing the rate structure, Case offered AOL users a free hour of online time to compensate for the perceived unfairness.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
1 4 1
S t e v e
C a s e
To manage help manage AOL’s sprawling services, in 1996 Case brought in Bob Pittman, founder of MTV and reputed as a successful brand manager, to improve the company’s customer service and better establish AOL as a consumer brand. This decision was seen as a partial retreat by Case on some of his earlier strategies. Pittman succeeded in stabilizing AOL by reducing subscriber growth to sustainable levels and improving AOL’s customer service reputation. For his efforts, Case rewarded Pittman in 1998 with a promotion to president and chief operating officer of AOL. Under this arrangement Case relinquished his title as president while remaining chairman and CEO.
Sources of Information Contact at: America Online, Inc. 22000 AOL Way Dulles, VA 20116 Business Phone: URL: http://www.aol.com
Social and Economic Impact Case’s important contribution to the information age was his vision of a mass-market online service, a vision that was translated into reality within a decade. Case understood—perhaps better than any of his counterparts at other online service vendors—how to obtain and market unique content that was broadly popular and accessible. His aggressive marketing strategies of mailing out millions of free disks to consumers and offering free intro-
1 4 2
ductory service helped create the largest service of its kind. More importantly, Case was an adaptive leader in the rapidly changing online services business; he was able to embrace new technologies and new business models as they presented a competitive advantage. The result was a multibillion-dollar powerhouse, headed by a man who just turned 40 in 1998, in the still young online services industry.
B u s i n e s s
Bibliography “Online with Steve Case.” Broadcasting & Cable, 24 October 1994. “Steve Case.” Current Biography Yearbook, 1996. “AOL CEO Steve Case.” Forbes, 7 October 1996. “America Online’s Case Open to Cable.” Multichannel News, 13 June 1994.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Stephen Chao Overview Stephen Chao’s career took as many twists and turns as the television shows he created. From his start as a reporter for the National Enquirer to his quick rise and fall at Fox Television, to his recent appointment as copresident of the USA Network, Chao transformed the television industry. Known for creating such shows as America’s Most Wanted, Studs, and Cops, Chao earned a reputation for controversy and unconventional behavior that has riled some while winning the praise of others.
(1956-) USA Network
Personal Life Chao was born into a middle class family in Ann Arbor, Michigan. His maternal grandfather had been a prominent official in pre-revolutionary China and served for a time as that nation’s economic minister to the United States. It’s possible that he influenced his grandson more than he knew. Chao noted in an interview with Sallie Hofmeister of the Los Angeles Times that “My grandfather was endlessly involved in what he called social investigation and spent a lot of time trying to find out whether there was cannibalism in China. I consider myself a social investigator with a National Enquirer curiosity, although I hope I use some editing filters in my work.” Chao’s grandmother contributed to his future creative leanings as well. “My grandmother was this Chinese lady who came to America late in life with a heavy accent—a straight and proper woman who responded to nothing in American culture except the WWF (World Wrestling Federation) and (wrestler) Bobo Brazil. She liked the theater of it.”
1 4 3
S t e p h e n
C h a o
Rejected by the studios and through with the Enquirer, Chao wound up in New York working as a fund raiser for movie producer Dino De Laurentis. It was not what he hoped it would be. But Chao learned that international media mogul Rupert Murdoch was in the market for a Hollywood studio. Chao was soon hired by the mergers and acquisitions department of Murdoch News Service. He was one step closer to fulfilling his goal of working in Hollywood. After two years with Murdoch News Service, Chao got the break he was looking for. Murdoch purchased Fox studios and wanted to expand its reach from movies into television. Chao was asked to become part of the creative team that would make it happen at the newly created Fox Television network.
Stephen Chao.
(AP/Wide World Photos, Inc.)
Chao’s parents divorced when he was eight years old, and along with his mother and siblings, he relocated to New Hampshire in the early 1960s. Chao was an excellent student. He earned a scholarship to the exclusive Phillips Academy in Exeter, New Hampshire, and eventually entered Harvard, where he majored in classical studies. He graduated cum laude in 1977 and went on to earn an MBA from the Harvard Business School after a twoyear stint as a reporter for the National Enquirer. Chao is married to Irina Chao and has two sons.
Career Details Chao developed an interest in movies after leaving Harvard, and tried—unsuccessfully—to land a job with a Hollywood studio. In the meantime, he worked as a reporter for the National Enquirer, covering such topics as celebrity infertility problems, UFO sightings, and funerals. Chao loved the fame his position gave him, and, while the Enquirer was often criticized as a sensational tabloid, Chao believed it was an important social phenomenon. Chao did not give up his goal of working in Hollywood, however. As he told New York magazine in 1993, his interest in the business was not the kind of “Story where I creep into the theater and dream about the nickelodeons.” Instead, Chao “Remembers seeing Road Warrior six times. It was, to me, totally original— visually, emotionally, contrily [sic], everything! I had no idea this could be done on film.”
1 4 4
B u s i n e s s
Chao’s new job, under Fox president Barry Diller, was to develop innovative, low-cost shows for the startup network. His first attempts were less than successful. Short-lived programs such as The Ron Reagan Show, a talk show hosted by the son of former President Reagan, the children’s show Dr. Science, and the game show King of the Mountain are typical of Chao’s early Fox work. While these shows failed to catch on with viewers, Chao was only just beginning to test the creative waters. It was not always smooth sailing for the new network executive. Chao once got Fox president Barry Diller so angry that Diller threw a videocassette tape across the room, denting the wall. Chao framed the dent and even convinced Diller to autograph it. The two often clashed, but the clashes produced some of the most innovative and controversial television programming on the air. Chao’s first success was America’s Most Wanted, a program featuring dramatic recreations of violent crimes that asked viewers for their assistance in catching the criminals. The show had problems gaining acceptance from Fox executives because it was unlike any other show on television. But it cost so little to produce—two thirds less than typical network shows—and it was so popular that Chao got the recognition he was looking for. Chao’s next success was Cops, a documentary-style program in which a cameraman follows on-duty police officers through some of the more violent neighborhoods in the country. Though some criticized the series for its violence and apparent moral indifference to the persons shown, Chao saw matters differently. He told New York magazine, “To me, there isn’t a lesson. We’re just showing something that is. It’s not coded with music and narration and writing and directing. It’s just edited, in a really simple way. It’s pure, and you derive you’re own lessons.” Following these shows, he developed Studs. Chao’s late-night take on the old “Dating Game” program featured young men and women—both usually beautiful— discussing dating and sexual fantasies in what Chao called “silly” language. While controversial, the program was a huge hit, making more than $20 million a year. Fox chief Rupert Murdoch, however, who was uncom-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S t e p h e n
C h a o
fortable with its format and content, abruptly cancelled the show two years after its debut. Chao’s brash style quickly landed him in trouble— and on the street. Soon after his promotion to president of Fox News in 1992, Chao was among the speakers at a conference for Fox executives and guests in Snowmass, Colorado. Chao spoke on “The Threat to Democratic Capitalism Posed by Modern Culture.” He focused on how television programs tended to be less critical of violence than they were of nudity and sexuality. To punctuate his point, Chao hired a male stripper to perform on stage. Rupert Murdoch, seated in the front row along with his wife, Anna, and former Defense Secretary Dick Cheney, fired Chao almost immediately. Chao then traveled with his family and even worked briefly at a McDonald’s in Redondo Beach, California, before a brief return to the Fox movie division to develop film ideas. In 1993, Chao formed his own production company, Stephen Chao, Inc., to develop movie and television shows. He was soon hired by his former Fox boss, Barry Diller, to consult on the development of Q2, a high-end counterpart to Diller’s successful home shopping channel, QVC. Q2 was scheduled to start broadcasting in 1994, but Diller sold out his interest in QVC before production on Q2 could begin. Chao explored other opportunities as well. In 1995, he began developing a late-night talk show for MCA television called “HelloGoodnight.” The program, considered for launch in 1996, never materialized. Later in 1996, Chao began consulting with a Venezuelan media concern, Cisneros Television Group, to produce up to a dozen channels for its satellite network. But Chao was destined to be reunited with his old mentor and former boss, Barry Diller, once again. In February, 1998, Diller purchased the USA Network and its sister channels, the SciFi Channel and the Home Shopping Network from Universal Studios. Chao was hired as president of programming and marketing, along with Stephen Brenner, president of operations, to replace USA Network founder Kay Koplovitz, who was pushed out by Diller. At USA, Chao was in charge of some of the television shows that touched his family early on, particularly the WWF, one of the network’s highest rated weekly shows. In addition, USA produces a number of its own movies, such as its adaptation of Herman Melville’s Moby Dick, and highly rated shows like La Femme Nikita, Highlander: The Series, Baywatch, and the controversial Jerry Springer Show. Chao believes USA has received a bad rap for its programming. As he told the Los Angeles Times, “Based on its ratings, it couldn’t be doing so badly.”
Chronology: Stephen Chao 1956: Born. 1977: Graduated cum laude from Harvard. 1977: Writer for the National Enquirer. 1983: Joined News Corp. 1992: President of Fox News. 1992: Fired from Fox Network. 1993: Formed Stephen Chao, Inc. 1993: Began development of Q2. 1996: Developed programming for Galaxy Latin America. 1998: Hired as president of USA Network.
Times “I’m not into gratuitous and sleazy stuff. It always comes from a point of view you’ve never seen.” Some, like Barry Diller, call Chao “one of the most interesting people I know,” with “an instinctive, contrarian program sensibility.” Rupert Murdoch, too, held Chao in high regard. On the night he fired Chao, Murdoch afterwards called him his “best lieutenant.” Others, however, are not so complimentary. Critic Gerald Howard wrote in the Nation magazine that Chao, along with other, mostly Ivy League-educated media personalities, was a producer of “Stupid.” “Stupid,” according to Howard, is what happens when “It is much easier and more lucrative to pander to your audience, push their buttons, confirm their prejudices, congratulate them on their limitations,” than to “feel simpatico (sympathy) with their characters and product and audience.” For better or for worse, Chao redefined television programming. Shows like America’s Most Wanted, Cops, and Studs spawned imitators on other networks, and his early successes helped establish Fox as a potent rival to the big three television networks for viewers and advertising dollars.
Stephen Chao has earned substantial praise and criticism for his many creations. Chao told the Los Angeles
Chao’s early success and methods continued to shape his outlook on television—even the sort of shows he wanted his children to watch. Chao contended that most programs were overproduced, lacking the real-life situations and energy that he tried to instill in his own shows. There were some exceptions. He told the Los An-
B u s i n e s s
S t u d e n t s
Social and Economic Impact
L e a d e r
P r o f i l e s
f o r
1 4 5
S t e p h e n
C h a o
geles Times that he admires the NBC program Homicide: Life on the Street because of its simple look and realism, and the highly rated Comedy Central cartoon South Park for its “rare form and pure voice.” He also said “he’d rather his two boys watch the unfiltered version of The Jerry Springer Show (a USA Network production) than the 11 p.m. news.”
Bibliography Freeman, Michael. “Stephen Chao Developing Talk Show for MCA.” Mediaweek, 6 October 1995. Hofmeister, Sallie. “Quirky Programming Whiz Puts Spin on USA Networks.” Los Angeles Times, 1998. Available from http:// www.latimes.com/HOME/NEWS/BUSINESS. Howard, Gerald. “Divide and Deride.” The Nation, 20 December 1993. Lafayette, Jon. “Chao Take Programming Ideas to Another America.” Electronic Media, 4 November 1996.
Sources of Information
Shapiro, Eben. “Tabloid-TV Veteran Chao Named Top USA Networks Programmer.” Wall Street Journal, 20 April 1998.
Contact at: USA Network One HSN Dr. St. Petersburg, FL 33729 Business Phone: (813)572-8585 URL: http://www.usanetwork.com
1 4 6
Notable Asian Americans. Detroit: Gale Research, 1995. The Asian American Almanac, Detroit: Gale Research, 1995. “Stephen Chao To Source Product and Produce Shows for Q2.” PR Newswire, 2 September 1993.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Arthur Cinader Overview During the 1980s and 1990s, J. Crew grew into one of the most successful mail-order clothing companies in North America. But there is no real Mr. or Ms. Crew— the name is an invented one. What is not illusion, however, is the rich, playful image the catalog projects and that the images are a direct link to J. Crew’s founding family: the Cinaders. Arthur Cinader founded the company in 1983, and soon afterward daughter Emily Cinader Woods came aboard, eventually rising to the post of chief designer. Rarely does a direct-mail business evolve into what is almost a designer line, but in less than two decades the Cinaders have nearly succeeded in accomplishing just such a feat.
(1927-) J. Crew Group Inc.
Personal Life Arthur Cinader founded J. Crew with assets derived from a decades-old family business. In 1947 Mitchell Cinader, Arthur’s father, founded a catalog called the Popular Club Plan. It offered goods that appealed to households of moderate income and included easy payment plans. The clothes and home furnishings were marketed by sales representatives, called “secretaries”, who worked much in the same way Avon sales people operated—distributing frequent catalogs and taking orders. With the growth of the company, the Cinader family invested elsewhere, and for a time Arthur Cinader managed a bank in New Mexico owned by the family. As a young man, he was known for his irreverent sense of fashion and possessed the resources to indulge it. He met his wife while skiing in Switzerland and during the baby-
1 4 7
A r t h u r
C i n a d e r
Chronology: Arthur Cinader 1927: Born. 1947: Popular Club Plan founded. c. 1960: Daughter Emily Cinader born. 1983: Founded J. Crew. 1989: First J. Crew store opened. 1990: Sales reached $400 million annually. 1993: Entered European market. 1995: J. Crew mailed 70 million catalogs annually to homes. 1997: Sold company to Texas Pacific Group for $560 million.
boom era they became parents to children Arthur Jr., Maud, Abigail, and Emily. Daughter Emily Cinader grew up to attend the University of Denver, where she earned a degree in marketing in the early 1980s. Around that same time the family sold off some holdings to finance the launch of a catalog-clothing company geared toward the upscale market. All the Cinader offspring became involved in the family business in some capacity: Arthur Jr. held an executive post at the J. Crew plant, Maud became a photographer for catalog, and Abigail modeled, as did Maud’s infant daughter in the mid-1990s.
Career Details In the early 1980s, the number of people buying goods from catalogs was increasing at a steady rate. The Maine firm L. L. Bean was the best-known of the bunch, selling durable outdoor gear to suburbanites; Talbots and Lands End were also popular. Cinader founded J. Crew in 1983 as a lower-priced version of designer Ralph Laurens old-money look, which was wildly popular at the time. Providing classic looking clothing for babyboomers, who were suddenly earning healthy salaries in the economic boom of the decade, would prove lucrative to Lauren, J. Crew, and a number of other retailers. During their first year in business, J. Crew sold $4 million worth of goods.
1 4 8
B u s i n e s s
The first few catalogs featured gear from other clothiers, such as Boston Traders and Ray Ban. There were only a few actual J. Crew items. That changed with the arrival of Emily Woods, Cinader’s daughter. Beginning as an assistant buyer, she worked her way through various departments in the company and was exceptionally proficient in designing new apparel. Her inspiration was simple, “The premise was to make the kinds of clothes I really wanted to wear but just couldn’t find,” Woods recalled in a Harpers Bazaar interview. “Back then,” she said, “T-shirts all had writing on them or were 50 percent polyester.” The classic, put-together, yet casual look became the backbone of the J. Crew line, and appealed to millions. Within a few years Emily was the company’s chief designer. In the late 1980s, the company offered anywhere from 14 to 18 catalogs per year, and mailed each of those to approximately 3 million households. The J. Crew line appealed to a demographic segment that was urban-dwelling, had some college education, and a household income of around $62,000. Though the clothing line was extremely successful at this point, the company itself did encounter rough patches. It was really three divisions: J. Crew, the Popular Club Plan, and Clifford & Wills, a direct-mail business launched in 1984. All three became The J. Crew Group in 1988. For the 1989 fiscal year, it was estimated that over half the group’s $320 million in sales was derived from the J. Crew catalog and retail operations. In the mid-1980s two top executives left the company and began Tweeds, a successful catalog competitor. In response, J. Crew launched an upscale career line for women called Collection. The line offered much pricier clothing, but did not do as well as expected and the company was forced to issue a major holiday catalog, which it had never done before. The Cinaders next move was to open J. Crew stores, a transition which many direct-mail analysts noted was an extremely risky proposition. Yet the first J. Crew store opened in 1989 at South Street Seaport in New York City and launched a new era for the company. The sleek, well designed stores reflected the J. Crew look and several more were opened around the country over the next few years. With a few minor exceptions, the new venture was a success. Overall catalog sales fell off in the early 1990s, and companies like J. Crew were faced with increased costs as mailing rates rose in the early 1990s. By 1997 there were 47 stores and nearly as many factory outlet stores, a necessary evil in the catalog business. Outlet stores do not feature the same sleek woodand-steel look of the upscale J. Crew stores, and only exist to sell off unsold clothing. Most are located far from urban centers, in the vast, almost-rural outlet mall centers. “I’m not happy if I hear a good customer say that they went shopping at an outlet store when she could have been shopping from the catalog,” Woods told Sara Fiedelholtz in WWD.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
A r t h u r
J. Crew’s success has been credited to the Cinader and Woods duo. As Woods told Fiedelholtz, “He and I are a great team. We balance each other really well.” But father and daughter ran a tight ship, and often had difficulty keeping the top executives on board. Cinader oversaw the business and operations end of the company, was extremely knowledgeable about computers, and had a reputation as a workaholic. He was chiefly responsible for the catalog copy which, with its eyecatching layout, broke all the rules in the industry. It had a much fresher look than its competition. “It conveys an image both urban and estate,” explained Diane Cyr in Catalog Age. “Its jewel-toned layouts, single-image pages and imaginatively cropped photos have inspired legions of stylistic imitators.” In the 1990s, J. Crew’s clothing line took on a sexier look as well, which also fit in with the times. Woods was credited with the new look, and her skill in sensing and providing what women like herself want to wear has won her praise from high quarters. With the company’s growth in the 1980s, J. Crew relocated from New Jersey to a hip corner of Manhattan, in Chelsea. “The open, unvarnished space enabled Cinader to move freely from department to department,” wrote Cyr, “creating an atmosphere characterized by some as discussion-oriented and ahead of its time, and by others as controlling and loony bin.” Not surprisingly, Cinader rarely gave interviews to the media, but once admitted to the New York Times, that he liked to conduct informal market research. Cinader said, “I do a lot of skiing and talk to many people on ski lifts. I call this my ski-lift research. When I talk with someone, I will almost always find a J. Crew customer. We never meet a college student who doesn’t know J. Crew very well.”
C i n a d e r
Social and Economic Impact J. Crew has won praise for taking the idea of L.L. Bean, combining it with the look of Ralph Lauren, and pricing it affordably for the average-income shopper. Furthermore, the firm has successfully expanded into retail operations, not a simple feat. The company offers not just clothes, but seems to sell its devotees an envied lifestyle. “We did focus groups, and people would say they wanted their lives to be like the J. Crew catalog,” noted Ray Slyper, a former marketing executive for the company, in Catalog Age. Not surprisingly, the J. Crew look has translated well overseas. J. Crew has customers in Europe and thriving stores in Japan. Like their competitors Eddie Bauer and Banana Republic, they also plan to enter the home furnishings field to help create a total J. Crew world for their customers. Arthur Cinader took a small catalog business and turned it into a multi-million dollar fashion phenomenon. He successfully developed a retail arm while maintaining the catalog presence, and became a household name that epitomized quality casual apparel.
Sources of Information Contact at: J. Crew Group Inc. 770 Broadway St. New York, NY 10013 Business Phone: (212)209-2500 URL: http://www.jcrew.com
Bibliography Browne, Alix. “From Main Street to Prince Street.” Harpers Bazaar, November 1996.
In 1997 Cinader and Woods sold off 88 percent of the company in a leveraged buyout by the Texas Pacific Group for $560 million; sales that year had reached $828 million. In the 1990s, the Cinader profits on sales had ranged from $12 million to $14 million. Cinader, now 70 years old, retired but stayed on as a consultant. Woods kept 12 percent of the stock, and began looking for a new operating partner. She took on the title of chair and CEO, and signed a five-year contract with Texas Pacific to run the company.
Cyr, Diane. “King Arthurs Crew.” Catalog Age, January 1997.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Fiedelholtz, Sara. “Emily Woods: J. Crews Steady Captain.” WWD, 1 September 1993. Kleinfield, N. R. “Even for J. Crew, the Mail-Order Boom Days Are Over.” New York Times, 2 September 1990. Moin, David, and Sidney Rutberg. “The Book on J. Crew.” WWD, 11 December 1997. Rutberg, Sidney. “J. Crew Founders Get Big Bucks in Texas Pacific Deal.” Daily News Record, 12 December 1997.
1 4 9
Liz Claiborne (1929-) Liz Claiborne, Inc.
Overview Liz Claiborne combined her design talent and managerial skills to build Liz Claiborne. Inc., a billion dollar fashion corporation that specializes in career clothes for working women. Realizing that the increasing numbers of women entering the workforce in the early 1970s would need stylish but affordable wardrobes, Claiborne founded her company in 1976. Her strategy was an instant success, and by 1986 the company broke into the Fortune 500 list of largest industrial companies in the United States. Liz Claiborne, Inc. is the first company on the list to have been founded by a woman.
Personal Life Elisabeth Claiborne, widely known as Liz, was born on March 31, 1929, in Brussels, Belgium. Her parents, Omer Villere and Louise Carol Claiborne, were United States citizens from New Orleans. Omer Villere worked as a banker in Belgium, where Liz spent the first 10 years of her life. Claiborne learned to speak French before learning English and remembers being “dragged around to museums and cathedrals” in Europe by her father, who instilled in her a love of painting and a sophisticated aesthetic taste. Claiborne’s mother taught her to sew at an early age and emphasized the importance of personal appearance. Though the family was happy in Belgium, they chose to return to the United States to escape the imminent Nazi invasion in 1939 and settled in New Orleans. Because her father did not consider formal education es-
1 5 0
L i z
C l a i b o r n e
sential for his daughter, Claiborne never graduated from high school. In 1947, at her father’s insistence, she returned to Europe to study painting in art schools in Brussels, Belgium and in Nice, France. Though she knew she would never become a painter, Claiborne appreciated the visual training this experience gave her. “I’m glad I had that training,” she told an interviewer, “because it taught me to see; it taught me color, proportion, and many other things that I don’t think I would have learned in design school.” Claiborne’s Roman Catholic family was strongly opposed to her plans to work in the fashion industry, but the young Claiborne was determined. She entered and won a design contest sponsored by Harper’s Bazaar. She then persuaded her parents to let her move to New York City, where she moved in with an aunt and began looking for work. Claiborne worked for various fashion houses in New York City and continued to develop her design talent. In 1950, she married Ben Schultz, a book designer. They had one child, Alexander G. Schultz. After her son’s birth, Claiborne returned to work, becoming one of the relatively few mothers in the workforce during the 1950s. Claiborne’s first marriage ended in divorce, and on July 5, 1957 she married Arthur Ortenberg, a design executive at the Rhea Manufacturing Company of Milwaukee. Since her husband’s business concerns were not always dependable, Claiborne assumed the role of breadwinner. Though she was eager to start her own business, she could not afford to take that risk until her son and her two stepchildren finished college. Finally, in 1975, Claiborne left her job at Youth Guild, the junior dress division of Jonathan Logan, and launched Liz Claiborne, Inc. the following January. With her husband and friends Leonard Boxer and Jerome Chazen, Claiborne built her company into a fashion empire. After 13 years, they retired from day-to-day operation of the business in June 1989 to concentrate on personal and social interests, including environmental projects and a campaign against domestic violence. Claiborne, who enjoys swimming, running, and photography, has stayed involved with the fashion business by teaching and by guiding new division directors in the corporation. Claiborne was named Designer of the Year in 1976 by the Palciode Hierro, Mexico City and Designer of the Year in 1978 by the Dayton Company of Minneapolis. The Marshall Field Company awarded her its Annual Distinguished In Design award in 1985, the same year that she received the One Company Makes a Difference Award from the Fashion Institute of Technology. In 1986 she received an award from the Council of Fashion Designers. She received a Gordon Grand Fellowship from Yale University in 1989, and a Junior Achievement Award from the National Business Hall of Fame in 1990. The following year Barnard College awarded her the Frederick A. P. Barnard award, and she was named to
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Liz Claiborne.
(Reuters/Mark Peterson/Archive Photos.)
the National Sales Hall of Fame. Claiborne received an honorary doctorate from Rhode Island School of Design in 1991.
Career Details Claiborne began her career doing sketches for Tina Lesser, one of the few sportswear designers at the time. To her surprise, Claiborne was also expected to model for Ms. Lesser, and to wear her hair (which she had just cropped short) in a bun at the back of her head. Claiborne remembers Lesser as an imaginative and demand-
S t u d e n t s
1 5 1
L i z
C l a i b o r n e
with production. The company was swamped with orders from the beginning, and by September of that year the company was showing a profit. Sales in the first year exceeded $2 million.
Chronology: Liz Claiborne 1929: Born. 1947: Attended art schools in Europe. 1960: Began work as chief designer for Youth Guild, Jonathan Logan. 1976: Launched Liz Claiborne, Inc. 1980: Named Entrepreneurial Woman of the Year. 1986: Liz Claiborne, Inc. listed in Fortune 500. 1987: Elected chairman of board and chief executive officer. 1988: Opened first First Issue chain store. 1989: Retired from active management of company.
ing boss with very definite ideas about how clothing should be constructed. But she also recognized talent, and Claiborne enjoyed working for her. Claiborne moved on to Ben Rieg, a company that designed more tailored outfits. Next she took a job as Omar Kiam’s assistant at his Seventh Avenue shop and then worked for two years at the Junior Rite Company. After joining the Rhea Manufacturing Company of Chicago (where she stayed for only a year but met her second husband, Arthur Ortenberg), Claiborne worked with Dan Keller of New York from 1955 to 1960. These varied jobs gave Claiborne the breadth of experience she wanted in the early part of her career, and helped to make her known as a top designer of dresses. In 1960 Claiborne joined Youth Guild, the junior dress division of Jonathan Logan. For 15 years she was chief designer for that division, but she grew increasingly frustrated at her inability to persuade management there to develop mix-and-match coordinated sportswear for the new wave of career women. As a working mother, Claiborne knew that career women needed attractive, practical, and affordable wardrobes but had few choices available. Determined to tap this emerging market, Claiborne left Youth Guild in 1975 to found her own company. Claiborne started her company with $50,000 in personal savings and $200,000 from family and friends. She was head designer and president; her husband, with experience in textiles and business administration, was secretary and treasurer; and friend Leonard Boxer helped
1 5 2
B u s i n e s s
The company specialized in affordable sportswear, such as casual pants, skirts, knickers, tattersall shirts, cowlneck sweaters, ponchos, and jackets. Designs and materials were coordinated so the pieces could be worn together in various combinations. Claiborne was especially pleased that her prices were kept affordable: her sweaters were initially priced at $36, her pants at $45, and her jackets at $80. In the next few years, she expanded her line with tunics, full skirts, and loose-fitting vests, which were appropriate for either home or office. By 1978, sales had skyrocketed to $23 million. Two years later, Claiborne was named Entrepreneurial Woman of the Year, the first from the fashion industry to win this honor. Claiborne continued to build on this success by diversifying. She adding a petite sportswear line in 1981 and a dress division in 1982. The next year, she added a unit for shoes. Though a girls’ division, introduced in 1984, was disappointing and was phased out three years later, other moves proved successful. In 1985, Liz Claiborne, Inc. bought the Kaiser-Roth Corporation, which produced accessories such as scarves, gloves, hats, handbags, and belts. A new “Lizwear” label also appeared that year featuring jeans, and a men’s sportswear line, “Claiborne,” was launched. A perfume line, “Liz Claiborne,” was introduced jointly with Avon Products and was also a great success, although the venture ended in an out-ofcourt settlement in 1988. By 1996, the company’s brand names included Dana Buchman, Crazy Horse, The Villager, Russ Toggs, Lizsport, and Liz Claiborne. Central to Claiborne’s success has been her appreciation of the needs of her typical customer—the “Liz lady.” This customer is not interested in the newest trends, but prefers more classic designs. She is also pressed from time, and does not want to go from store to store in search of the perfect outfit, or to buy clothes that require timeconsuming maintenance. To address these concerns, Claiborne concentrated on color-coordinated separates that make it easy for customers to put together complete outfits without having to leave the store. Marketing skill also played a significant part in Claiborne’s success. She insisted that her designs be displayed in stores in such a way that customers could put together outfits without having to ask for a salesperson’s help. She also listened to store buyers’ concerns and, to keep inventory fresh, developed six lines of clothes a year instead of the traditional four. She hired traveling fashion consultants to help retail staff with displays and employed marketing experts to track industry trends through her unique computerized system, System Updated Retail Feedback. In 1988, Claiborne moved into retailing with the opening of a clothing chain, First Issue, intended to compete with The Limited, The Gap, and Banana Republic.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
L i z
By 1985, Liz Claiborne, Inc. reached $500 million in wholesale sales, and in 1986 retail sales reached $1.2 billion, ranking the firm 437th among the top 500 largest industrial companies in the United States, according to Fortune’s annual list. It was the youngest company to make it onto the list, and the first one founded by a woman. By 1989, the company controlled about a third of the $2 billion market in better women’s sportswear and sold its products in 3,500 stores. Claiborne and her husband stepped down from active management in 1989 to focus on environmental and social issues. They remain, however, as members of the board of directors. Claiborne has been a guest lecturer at the Fashion Institute of Technology and the Parsons School of Design, and is a board member of the Council of American Fashion Designers.
Social and Economic Impact
C l a i b o r n e
ernment, announced that it no longer would buy clothing made in Burma. Broader social issues are also important to Claiborne. In 1981, the company established the Liz Claiborne Foundation to oversee its charitable activities. These include human services, education, health, arts, and the environment. The Foundation also matches employee contributions to organizations in these categories. The company launched a domestic violence prevention program, Women’s Work, in the early 1990s. This program has conducted research and engaged in ad campaigns to raise awareness about the causes and prevention of family violence. The Foundation also supports the Wilderness Society, the Greater Yellowstone Coalition, and the Nature series on public television.
Sources of Information
Claiborne’s designs revolutionized women’s work attire by offering attractive and affordable alternatives to the conservative “dress-for success” suit (a woman’s version of the conservative men’s business suit). Women appreciated the fact that a Claiborne wardrobe simplified their busy lives; the clothing was comfortable, easy to shop for, and easy to care for. Because the outfits were reasonably priced, women could afford to update their wardrobes each season. So popular were Claiborne’s designs that she became known as “the working woman’s best friend.”
Contact at: Liz Claiborne, Inc. 1441 Broadway New York, NY 10018 URL: http://www.claiborne.com
Claiborne has also addressed concerns within the garment industry as a whole. Though most of her company’s clothing is manufactured overseas, Claiborne and her husband have been sensitive to problems in the U.S. textile industry. Claiborne maintains that it is no longer practical to manufacture clothing in the United States because making apparel is labor intensive, and using such skilled labor in this country is too expensive. She defends the industry’s use of foreign manufacturing, explaining in an article in the Washington Post that, “Sewing machines are the simplest machines to run. It is natural for emerging nations to latch on to this kind of production.” Claiborne and her husband became involved with research projects to modernize outdated textile production in North and South Carolina, where they funded a modest grant to study the effect of new textile technology and to retrain textile workers. In 1994, the Company, concerned about human rights abuses by the Burmese gov-
Feldman, Elaine. “Fashions of a Decade: the 1990s,” Facts on File. New York, 1992.
Who’s Who in America. New Providence, NJ: Marquis Who’s Who, 1996.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Bibliography Better, Nancy Marx. “The Secret of Liz Claiborne’s Success.” Working Woman, April 1992. Contemporary Newsmakers. Detroit: Gale Research, 1987. Current Biography Yearbook, 1989. New York: H.W. Wilson Co., 1990.
Grigsby, David W. and Michael J. Stahl. Strategic Management Cases. Boston: PWS-Kent, 1992. Liz Claiborne, Inc. Company Profile. Available http://www.efund.com/Liz_Claiborne_Profile.html.
from
Liz Claiborne Women’s Work Program. Available from http://www.prcentral.com/c96lizc.htm. Martin, Richard, ed. Contemporary Fashion. Detroit: St. James Press, 1995. Morgenson, Gretchen. “The Feminization of Seventh Avenue.” Forbes, 11 May 1992. Morris, Michele. “The Wizard of the Working Woman’s Wardrobe.” Working Woman, June 1988.
1 5 3
Jim Clark (1944-) Netscape Communications Corporation
Overview James H. “Jim” Clark, the founder of two extraordinarily successful Silicon Valley computer software companies, is a classic example of a visionary entrepreneur. While still a professor at Stanford University in 1981, he founded Silicon Graphics, today a billiondollar computer workstation company. In December 1994, Clark cofounded the revolutionary Netscape, which immediately became the Internet’s dominant online browser. In September 1997, he was listed 15th among Forbes’s “Technology’s Richest 100” with an estimated wealth of $597 million.
Personal Life A native of Texas, Jim Clark received a bachelor of science degree in physics in 1970 and a master of science degree in physics in 1971 from Louisiana State University in New Orleans. As a graduate student, he was awarded the Research Society of America’s 1971 Annual Gold Medal. In 1974, he completed a Ph.D. in computer science at the University of Utah. His doctoral thesis, the first implementation of what is today known as “virtual reality,” focused on building special purpose hardware for 3-D graphics applications. In 1995 Clark received an honorary doctorate of science degree from the University of Utah. From 1974 to 1978 Clark was an assistant professor at the University of California at Santa Cruz, and in 1979 he became associate professor at Stanford University. He lectures widely on technology and business develop-
1 5 4
J i m
C l a r k
ments in the computer field at major conferences and universities throughout the world. Clark received the Research Society of America’s Annual Gold Medal in physics in 1970, the Annual Computer Graphics Achievement Award in 1984, and the Arthur Young and Company, and Venture magazine’s Entrepreneur of the Year award in 1988. In the spring of 1996, Clark, who likes to sail and fly planes, announced that he would work with veteran yachtsman Paul Cayard to create a state-of-the-art racing yacht to win back the America’s Cup for the United States at the turn of the century. Clark and his wife Nancy live in Woodside, California, and have two children.
Career Details At Stanford, Clark and six graduate students worked on ways to enliven computer images with threedimensional graphics. When no existing computer companies were interested in the technology the group developed, Clark and his students, using venture capital, started their own computer workstation company, Silicon Graphics, Inc. (SGI) in Mountain View, California. The company’s 3-D graphical systems appealed first to architects and engineers for use in designing buildings, cars, and rocket engines, but soon became essential to filmmakers and animators. Silicon Graphics computers were used, for example, to create the dinosaurs in Jurassic Park and the special effects in countless other films. The workstations also were used by defense and aerospace contractors to train jet pilots and tank personnel. Silicon Graphics thrived and began to move into chip development for video game and interactive television markets, but Clark was frustrated in his attempts to accelerate the company’s plans to make low-cost, highvolume hardware to connect with the burgeoning information highway. In a highly controversial move, Clark replaced his entire management team in 1984. SGI’s profits continued to grow, from $5 million in 1984 to approximately $550 million in 1991. In March 1994, ready to move on, Clark resigned as chairman of the company. For several months following his resignation from SGI, Clark contemplated investing in a number of business ventures. As he studied the computer technology field, he became fascinated with the Internet. He was especially intrigued with NCSA Mosaic, an exceptionally popular World Wide Web browser software prototype that had been developed by a team of student and staff computer programmers at the University of Illinois and distributed free on the Internet. In a now-legendary e-mail message, Clark, 50, contacted Marc Andreesen, Mosaic’s 23-year-old creator and asked if he would be interested in forming a company to create a commercially viable improved version of the Mosaic browser. In April 1994, Clark invested about $3
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Jim Clark.
(Reuters/HO-Netscape/Archive Photos.)
million in the new firm, which began life with three employees with offices in Mountain View. The new company originally was called Mosaic Communications Corporation but, after the University of Illinois contested the use of the name, the fledgling firm was rechristened Netscape Communications. By December 1994, Netscape had released its revolutionary browser, Netscape Navigator. Almost immediately, the new browser became the industry standard. Within only one or two months, Netscape claimed 70 percent of the browser market. It offered users speed, sophisticated graphics, and a special encryption code that secured their credit card transactions on the Web. From the first, the new browser faced virtually no competition. With Netscape’s Navigator freely available to the public via downloading from the Internet, how does the company make a profit? It charges fees to create and maintain web servers for the sophisticated software businesses. The fees range from $1,500 to $50,000 for server versions of Navigator, depending on the complexity of a company’s home page and the range of services provided to its customers. For businesses designed to conduct much of their business on the Internet, Netscape provides databases of online customers and the ability to secure credit card transactions. Netscape also offers users the option of purchasing the software and thereby receiving customer service. The company continues to race to keep ahead of industry giant, Microsoft, which introduced its own
S t u d e n t s
1 5 5
J i m
C l a r k
Chronology: Jim Clark 1944: Born. 1974: Completed Ph.D. in computer science at the University of Utah. 1981: Founded Silicon Graphics, Inc. (SGI). 1994: Resigned from SGI and formed Netscape Communications Corporation. 1995: Netscape stock jumped from $28 to more than $74 a share in one day. 1995: Developed Netscape Navigator, an Internet browser program.
Leaving SGI was a risky move for Clark, who left behind 40,000 shares of stock. His idea to create a company based solely on the Internet was virtually unheard of at the time he started Netscape. As recounted in Industry Week, Clark recalled, “It seemed a little crazy. No one thought you could build a business around the Internet, but my instincts were if there were 25 million people using it, there was a business to be built.” Giving away the software to Netscape Navigator also proved to be a revolutionary idea. “People knew then that I was certifiably nuts—starting this company, hiring a bunch of students, and now giving the software away,” Clark said. From the beginning, Clark has served as chairman of Netscape. His role, as the company established itself as a phenomenal success in well under two years, he has been able to put the management team together. Netscape’s chief executive officer is James Barksdale, whom Clark recruited from McCaw Cellular, AT&T’s wireless services division, to head the company. With Barksdale in charge of day-to-day management, Andreesen can continue to come up with new ideas and Clark can look for new frontiers to conquer.
1995: Stepped down as chief executive of Netscape but remained chairperson of the board. 1996: Founded Healtheon Corporation, an Internetbased health care service.
browser, Internet Explorer, in 1995. Explorer also can be freely downloaded and comes bundled with the Microsoft Windows operating system. Although Netscape remains at the head of the pack, Explorer had pulled almost even by early 1998. Netscape was the first browser to introduce Java, the programming language that animates web sites. It has also expanded its product line to include software that runs inside internal corporate networks. In June 1996, Clark launched another successful company—Healtheon Corporation, which online offers information services to help insurance companies and employers better manage their paperwork. Healtheon reported $13.4 million in sales for 1997, a 21.6 percent growth from the previous year.
Contact at: Netscape Communications Corporation 501 E. Middlefield Rd. Mountain View, CA 94043-4042 Business Phone: (650)254-1900 URL: http://www.healtheon.com
Bibliography Aronoff, Craig E., and John L. Ward. Contemporary Entrepreneurs. Detroit: Omnigraphics, 1992. Bottoms, David. “Jim Clark: The Shooting Star @ Netscape.” Industry Week, 18 December 1995. Current Biography. New York: H. W. Wilson, 1997. Dunlap, Charlotte. “Netscape’s Clark on the NC, Internet and Resellers.” Computer Reseller News, 10 June 1996. Egan, Jack. “Striking It Rich on the Net.” U.S. News & World Report,15 January 1996. Fortune, 10 July 1995. Gilder, George. “The Coming Software Shift.” Forbes, August 1995.
Social and Economic Impact When Netscape made an initial public stock offering of 3.5 million shares on August 9, 1995, an unprecedented stock frenzy ensued. Investors bought the stock in record numbers. Opening at $28 a share, the stock closed at $74, making Netscape’s market value $2.3 billion in just one day. With Netscape’s continuing strong showing on the stock market, Clark, Andreesen, and many of the company’s employees have become very wealthy.
1 5 6
Sources of Information
B u s i n e s s
Girishankar, Saroja. “Once Upon a Time, a Man Unlocked the Web.” Communications Week, 29 January 1996. Kaplan, David A. “Nothing But Net.” Newsweek, 25 December 1995/1 January 1996. “Technology’s Richest 100.” Forbes, September 1997. Who’s Who in America. New Providence, NJ: Marquis Who’s Who, 1995. Who’s Who in Finance and Industry. New Providence, NJ: Marquis Who’s Who, 1993.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Lilia C. Clemente Overview From the beginning of her career, Clemente has taken the position that global investing offers the best way for investors to reduce risk and enhance returns. Her firm, Clemente Capital, Inc., has offices in Beijing, Manila, Seoul, and New York City. It aggressively seeks attractive companies in more than 30 markets in which to invest. As a global strategist, Clemente plays an active role in Clemente Capital’s investment committee, where investment decisions are made for the firm’s public and private pension fund clients, private individual accounts, and other accounts. She is an ardent feminist who attributes her success to, as she puts it, the three G’s: God, genes, and grunt work. The breakneck pace at which she works has led some critics to refer to her as the “Philippine Tigress,” but she is also known for using her charm rather than abrasiveness to accomplish her goals of pursuing advantageous investments around the world.
(1941-) Clemente Capital, Inc.
Personal Life Lilia Calderon Clemente, a diminutive woman with inexhaustible energy who was described in Asiaweek as the “wonder woman of Wall Street,” was born in Manila, Philippines, on February 21, 1941. Her father, Jose Calderon, was a prominent lawyer who helped draft the country’s 1973 and 1987 constitutions. In 1972, he spent two months in jail due to his opposition to the government of Ferdinand Marcos. Her mother, Belen Farbos Calderon, taught psychology at the University of Philippines, served as governor of the province of Nueva Vis-
1 5 7
L i l i a
C .
C l e m e n t e
Inc. and a quiet, introverted balance to Clemente’s dynamic whirlwind. Clemente is active in many civic groups and foundations, particularly those with an interest in AsianAmerican affairs. With her husband, she has set up a scholarship fund to help promising Filipino students complete college. She is also a board member of the Securities Industry Association (SIA). Her autobiography, Growing Up In World Street, was published by Japanese publisher Shufonotomo in 1990.
Career Details Clemente began her career by spending three years as an investment analyst and portfolio manager responsible for covering metals, steel, retailing, and consumer industries at CNA Financial Corporation. In 1969, at the age of 28, she was appointed as the director of investment research and assistant treasurer at the Ford Foundation. She was the first woman and youngest officer in the Foundation’s history. For the next seven years, she served as manager of the Foundation’s research staff and spurred the globalization of its $3 billion portfolio by investing $150 million into the Japanese market.
Lilia C. Clemente.
In 1976, at the age of 35, Clemente left the Ford Foundation and, with $25,000 of her own funds, founded Clemente Capital, Inc. The business had one secretary, rented furniture, and operated out of a small office on Park Avenue in New York City. It concentrated initially on economic and business consulting with an emphasis on the Pacific Basin. The firm’s first major success was its contract to provide global investment management services to Mitchell Hutchins, the asset management subsidiary owned by Wall Street giant Paine Webber, Inc. Clemente spearheaded Hutchins’ successful launch into global investing with the Paine Webber Atlas Fund. In 1985, that fund was ranked number one among all global funds. (Courtesy of Lilia C. Clemente.)
caya on the island of Luzon, and was the first woman to hold a seat on the Manila Stock Exchange. The oldest of seven children, Clemente graduated from the University of the Philippines in 1960 with a degree in business administration. At the age of 19 she left for the United States to study economics and international trade at the University of Chicago. She graduated in 1969 with a master’s degree in economics and an advanced business degree. In Manila in 1962, she married Leopoldo Clemente, who had received a master’s degree in business administration from Northwestern University in Chicago. In addition to being partners in life, the two are also business partners. He is the president and chief investment officer of Clemente Capital,
1 5 8
B u s i n e s s
In 1986, Clemente Capital, Inc. reorganized its business to focus on managing money with a global emphasis and subsequently listed two closed-end mutual funds on the New York Stock Exchange: The Clemente Global Growth Fund in 1987 and The First Philippine Fund in 1989. The Clemente Global Growth Fund focuses on securities in small and medium-sized companies in the United States, Germany, and Japan, and on blue chips in the Philippines, Thailand, and Mexico. This fund has faced many challenges. According to Richard Phalon, in Forbes, early in 1989 Thomas B. Pickens, III, and the Sterling Grace group attempted to take over the fund. Phalon reported that, although it initially appeared that the takeover would be successful, the challengers had not given enough consideration to the strong ties that Clemente had with her Japanese investors. When approached by the Grace-Pickens group, the Japanese made it clear they were opposed to hostile takeovers.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
L i l i a
In April 1996, the board of directors for Clemente Capital, Inc. made Wilmington Trust Company, the eighth-largest personal trust company in the United States, the Global Growth Fund’s strategic partner for domestic investments. The board took action when the fund failed to benefit from the long U.S. bull market and was being buffeted by volatility in emerging markets. A year later, after fundamental adjustments in its portfolio, the fund outperformed its benchmark, the Financial Times Actuaries World Index, for the first quarter of 1997. The fund’s problems were not over, however, in September 1997, with the firm’s total investments at $63 million, Forbes, termed the fund a “consistent laggard” because of its continuing below-average performance, and reported that shareholders had approved a motion urging new management. The First Philippine Fund, by contrast, has enjoyed strong growth and is worth over $100 million. It was created on the eve of the attempted coup against the government of Philippine president Corazon Aquino. Clemente’s foresight had kept most of the fund in U.S. Treasury bonds, and its loss as a result of the attempted coup was only 13 percent. In the first six months of 1991, it invested an estimated $33 million in the Manila stock market. In 1997, The First Philippine Fund was ranked as the number one fund in closed-end fund performance by Lipper Analytical Services and received a four-star rating by Morningstar. The fund, with $126 million in assets in September 1997, invests exclusively in Philippine companies. In 1992, Clemente initiated the Cathay Clemente Holdings, Ltd. Fund, which invests in new Chinese companies. To help business along in China, she established an office of the Manila-based Asian Securities Institute in Beijing.
C .
C l e m e n t e
Chronology: Lilia C. Clemente 1941: Born. 1960: Graduated from the University of the Philippines. 1962: Married Leopoldo Clemente in Manila. 1969: Graduated from the University of Chicago. 1976: Founded Clemente Capital, Inc. 1987: Founded The Clemente Global Growth Fund. 1989: Founded The First Philippine Fund. 1990: Wrote Growing Up In World Street. 1992: Founded Cathay Clemente Holdings, Ltd. Fund. 1994: Pledged $5 million to upgrade telecommunications in Southern Mindanao.
that Clemente’s company manages, which include the Freedom Global Fund, the First Philippine Fund, the Freedom Global Income Plus Fund, and the Sentinel Global Fund.
Sources of Information
Social and Economic Impact Through her firm grasp of economic realities and her ability to spot emerging markets, Clemente has changed the ways in which other investors see and invest in these often overlooked emerging markets. Her company’s investments in developing countries not only has improved the living standards and economic opportunities in these nations, but it has also brought them closer to the rest of the world, as the global market has expanded past national borders once thought impenetrable. Her small company has reaped the benefits of these investments and she now controls over $450 million. The company oversees staff in more than 15 countries and conducts business in 18 languages.
Contact at: Clemente Capital, Inc. 152 W. 57th St., 25th Fl. New York, NY 10019 Business Phone: (212)765-0700 URL: http://www.clementecapital.com
Bibliography Clemente Capital. Fact Sheets, Biographical Information, September 1997. “Closed-end Fund Survey.” Forbes, 8 September 1997. “Lilia Calderon Clemente.” Heritage, September 1990. Phalon, Richard. “The Japanese Connection.” Forbes, 3 April 1989.
In 1994, Clemente pledged $5 million to help upgrade the telecommunications network of Southern Mindanao in the Philippines. The financing for this investment came from the Philippine Strategic Investment Fund. This is but one of the many dozens of smaller funds
Tiglao, Rigoberto. “Stealthy Bull: Mutual Fund is Biggest Investor on Manila Bourse.” Far Eastern Economic Review, 1 August 1991.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Zia, Helen, and Susan B. Gall, eds. Notable Asian Americans. Detroit: Gale Research, 1995.
1 5 9
Bennett R. Cohen (1951-) Ben & Jerry’s Homemade, Inc.
Overview Bennett R. Cohen’s name makes up one-half of what may be the worlds most beloved ice cream brand. Ben & Jerry’s Homemade, Inc. celebrated its 20th anniversary in 1998, and some pundits may note that its longevity comes despite Ben and Jerry themselves—two childhood pals from Long Island who have attempted to bring their laid-back, liberal values to their corporation.
Personal Life Cohen, divorced with one son, was born in the New York City borough of Brooklyn in 1951. He met Ben & Jerry cofounder Jerry Greenfield in gym class in a public school in Merrick, Long Island. Both were admitted outcasts and bonded over their shortcomings as enforced athletes. Cohen graduated from Calhoun High in Merrick in the late 1960s, and enrolled in Colgate University, but left school his sophomore year. He studied instead pottery and other crafts at Skidmore College, and later at an institution called University Without Walls.
Career Details “From the time I was in my teens until I turned 30, I talked to my father about things I planned on doing. He talked me out of them.” Cohen told Marian Christy of the Boston Globe. As a result, Cohen never really decided upon a career goal, and instead took jobs that were interesting learning experiences. “I learned that there are
1 6 0
B e n n e t t
Ben Cohen talks to the press in Waterbury, Vermont.
R .
C o h e n
(Reuters/Corbis-Bettmann.)
two kinds of bosses, good and bad, and that I worked harder for the boss who trusted me,” he told Christy. He had numerous, and varied, jobs on his resume: in high school he had driven an ice-cream truck, and during his young adult years he worked in a bakery, drove a taxi, guarded a racetrack, flipped burgers at McDonalds, and was even a staff member in the emergency room of Bellevue Hospital in New York City.
under, they would simply become cross-country truck drivers. From the start, Cohen staffed the counter and took care of the financial side, while Greenfield made the ice cream. They both loved to create new flavors, however. As a kid, Cohen used to mix cookies and candy into his ice cream, and from its earliest days in business Ben & Jerry’s gained a cult following for their delicious and bizarre concoctions.
Cohen’s casual attitude, artistic abilities, and sense of duty eventually led him into a steady job as a crafts teacher at a camp near Saratoga Springs, New York. He had lost touch with his old friend Jerry Greenfield, who had earned a degree from Oberlin College but then met with rejection when he applied to medical school. The pair rekindled their friendship when Greenfield was working in a New York City research laboratory, and decided to open a business together. Cohen had some experience making ice cream at the camp with his students, and he and Greenfield decided that this was a product that almost everybody liked, and did not require expensive equipment to produce.
Their store was extremely popular in Burlington, but Cohen and his partner were admittedly incompetent when it came to finances. After many late nights poring over accounts and receipts, they hired a Burlington bar owner, Fred Chico Lager, to help out. Lager helped the company expand into ice-cream packing operations, and Cohen began delivering the pints to local stores in his Volkswagen station wagon. They opened more stores in New England, and eventually went national with their product and their franchise in the 1980s. Greenfield dropped out of the business for a time when his wife went to college, and by 1985 Cohen was tired of running a very successful company. He tried to sell Ben & Jerry’s Homemade, but had a change of heart, when Greenfield returned to share the burden.
Cohen and Greenfield combined their $8,000 in savings, borrowed another $4,000, took a Penn State University’s correspondence course in ice-cream-making, and began looking for a location. They liked the college town of Burlington, Vermont, and it lacked an ice cream parlor. With these two requirements, they leased an old gas station there and opened Ben & Jerry’s Scoop Shop in May of 1978. They vowed that if their business went
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
It was at this point that Cohen and Greenfield decided to make the business work according to their principles, instead of altering their values to suit the profitdriven nature of business. It was a radical idea. When they purchased nuts for their ice creams from South America, or blueberries from Maine, they looked to trade
S t u d e n t s
1 6 1
B e n n e t t
R .
C o h e n
Dreyers Grand, offered Cohen and Greenfield a large sum of money to sell Ben & Jerry’s in early 1998, but they declined. The pair still hold 40 percent of voting stock.
Chronology: Bennett R. Cohen 1951: Born. 1963: Met Jerry Greenfield in gym class. 1978: Opened Ben & Jerry’s Scoop Shop in Vermont. 1981: Opened First franchise. 1985: Established Ben & Jerry’s Foundation. 1987: Published Ben & Jerry’s Homemade Ice Cream and Dessert Book. 1992: Opened first store in Russia. 1995: Retired from CEO position 1998: Declined offer buyout with Greenfield.
directly with the indigenous peoples in the area who often harvested such crops, instead of buying from a corporation in the middle who pocketed most of the profit. In 1992, they launched a Partnershop with a Harlem shelter for homeless men; the store was staffed by residents and its earnings went back into the shelter. Cohen has taken the occasional sabbatical. He returned the first time and began the 1 percent for Peace campaign in the 1980s, which urged the U.S. federal government to redirect one percent of its budget to positiveminded projects. After a another year off in 1993, he announced plans to look into beginning a graduate business school based on the Ben & Jerry’s ethos. Cohen resigned as CEO in June of 1994, but remains board chair and still invents new flavors for the famed roster, which includes such experiments as Holy Cannoli! and SMores. Standards in the list remain Chocolate Chip Cookie Dough, Cherry Garcia, and New York Super Fudge Chunk. When he stepped down, the company announced a campaign to replace him they named Yo! I Want to be CEO! Participants were invited to submit in an essay of 100 words or less why they would be the ideal ice-cream company executive. Cohen devotes a great deal of his time to Businesses for Social Responsibility. He is a founding member of this organization, whose aim is to challenge the way companies do business, and show how profits and ethics are not mutually exclusive areas. A major ice-cream purveyor,
1 6 2
B u s i n e s s
Social and Economic Impact In 1981, Time magazine began a cover story on ice cream with an opening sentence stating that Ben & Jerry’s was the best—in the world. Since then, its cult following has expanded to include not just East-Coast cognoscenti but residents of Israel and the Netherlands; its pints can be purchased in hundreds of thousands of American supermarkets and convenience stores. But its founders have become role models for entrepreneurs interested more in enriching their communities than their bank accounts. Cohen and Greenfield call their strategy values-led capitalism. Since the mid-1980s, the Ben & Jerry’s Foundation has received 7.5 percent of the ice cream company’s pre-tax profits; a nine-member advisory board of employees chooses projects and charities that will receive the largesse. They have done much to publicize concerns about Bovine Growth Hormone (BGH), used in the milk industry, and for many years purchased from a Vermont dairy that did not use the chemical. Ben & Jerry’s employees may indeed be the happiest workers in the state of Vermont (the companys headquarters have remained in Burlington). It is consistently cited as one of the best companies in America for which to work, and offers workers high wages, generous benefits, and three pints of ice cream to take home for every full workday. Though the ice-cream business has witnessed ups and downs in the 1990s, the company has found community service projects for the workers and kept them on the payroll.
Sources of Information Contact at: Ben & Jerry’s Homemade, Inc. 30 Community Dr. South Burlington, VT 05403-6828 Business Phone: (802)651-9600 URL: http://www.benjerry.com
Bibliography Christy, Marian. “Ben & Jerry: Heres the Scoop.” Boston Globe, 26 June 1991. Gershon, George. “The Art of Taking Time Off.” Inc. February 1993. Ben & Jerry’s. 14 July 1998. Available from http://www.benjerry.com
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Colonel Sanders Overview Raised in poverty, Kentucky Fried Chicken founder Harland Sanders—better known as Colonel Sanders— achieved extraordinary success at an age when most people choose to retire. Before that, he had struggled for decades with various small business ventures. Only one had really panned out, and even it ultimately fell victim to fate. Then he combined his cooking skills and marketing savvy to launch a product that figured prominently in the phenomenal growth of fast-food enterprises during the 1960s and beyond. Almost single-handedly, Sanders turned his pressure-cooked, “finger-lickin’ good” chicken, seasoned with a blend of his “11 secret herbs and spices,” into a multimillion-dollar business that revolutionized the American restaurant industry.
(1890-1980) Kentucky Fried Chicken
Personal Life The oldest of three children, Harland Sanders was born on September 9, 1890, on a farm near Henryville, Indiana. His father died when Harland was six, leaving his mother behind to make ends meet with whatever jobs she could find. While she was off working, her children were often home alone for days at a time and had to scrounge around for their own food, which they also prepared themselves. Thus, Sanders was already focused emotionally on food by the age of seven, when he “was excelling in bread and vegetables, and coming along nicely in meat,” as he once told William Whitworth in a New Yorker profile. Sanders was raised according to the strict teachings of conservatism and religious fundamentalism. From an early age he learned self-reliance and developed a love
1 6 3
C o l o n e l
S a n d e r s
Col. Harland Sanders standing in front of a Kentucky Fried Chicken store. (Courtesy of KFC Corporation.)
of work, a suspicion of welfare, and an intense dislike of vice. “Mom didn’t spare the rod if we disobeyed her,” he recalled in the New Yorker. When Sanders was 12, his mother remarried. Because her new husband disliked the children, they were all sent away to live elsewhere. Young Harland went to work as a farmhand in Indiana, earning about $15 a month. He quit several years later and then held a series of menial, low-paying jobs. His formal education ended in the seventh grade, but later in life he obtained two degrees from correspondence schools. Sanders’ first marriage lasted 39 years and produced three children before it ended in divorce. In 1948 he mar-
1 6 4
B u s i n e s s
ried Claudia Ledington and remained with her until his death in 1980. He was described in the New Yorker profile as a “perfectionist” in matters of business. A firm believer in hard work, he expected the same from his franchise owners and insisted that they maintain the high standards he had developed for his product. Sanders was also known for his quick temper and sometimes crude language. Sanders was given the honorary title of “Colonel” from the governor of Kentucky in 1936 and received the Horatio Alger Award from Norman Vincent Peale in 1965. He established the Harland Sanders Foundation during the 1970s and donated much of his wealth to
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
C o l o n e l
S a n d e r s
churches, hospitals and institutions such as the Salvation Army and the Boy Scouts. Also in his later years, he adopted 78 orphans from overseas. In 1974, Sanders published a memoir, Life as I Have Known It Has Been Finger Lickin’ Good. Believing his children should earn their own way in the world, he announced plans to leave his entire estate to charity after his death. He died of pneumonia in Louisville, Kentucky, on December 16, 1980.
Chronology: Colonel Sanders 1890: Born. 1929: Opened filling station in Corbin, Kentucky, and was soon providing meals for truckers.
Career Details For most of his life, Sanders worked a variety of low-paying jobs to support himself and his family, including as a painter, streetcar conductor, salesman, and ferryboat operator. He also spent a year in the army and a couple of years with various railroad companies. It was during the time he worked on the railroad that Sanders took a correspondence school course and earned a law degree from Southern University that allowed him to work as a Justice of the Peace in Little Rock, Arkansas. In 1929, Sanders opened a gas station in Corbin, Kentucky. Before long he was providing home-cooked meals to the truck drivers who stopped by to fill up their tanks. His specialties were the Southern-style favorites he had learned from his mother such as ham, fried chicken, fresh vegetables, and biscuits. His meals eventually became so popular that he closed the filling station to open a restaurant he named Sanders’ Cafe. An endorsement by the influential food writer Duncan Hines in his book Adventures in Good Eating encouraged Sanders to expand his cafe to seat nearly 150 people while retaining the homey atmosphere of the original establishment. He also schooled himself in the finer points of running his business by taking an eight-week course in hotel and restaurant management at Cornell University in upstate New York. Fried chicken was a staple on the cafe’s menu, but Sanders was not happy with the typical cooking methods. Pan-frying was time-consuming, and deep-fat frying produced chicken that did not meet his high standards. In 1939, Sanders experimented with the newly invented pressure cooker and came up with a process that produced moist and tasty fried chicken in only eight or nine minutes. He also experimented with seasonings and eventually perfected a blend of 11 herbs and spices that produced the results he wanted. This secret recipe was used on all of the chicken prepared at Sanders’ Cafe and is still used today in Kentucky Fried Chicken franchises. So popular was Sanders’ Cafe that in 1935 Kentucky governor Ruby Laffoon made Sanders an honorary colonel in recognition of his contributions to the state’s cuisine. By 1953 the business was valued at $165,000, and its owner seemed headed for a comfortable retirement. But fate intervened when a new interstate highway
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
1939: Experimented with pressure cooker to perfect chicken recipe. 1956: Launched Kentucky Fried Chicken concept by selling chicken recipe to franchisees. 1964: Sold Kentucky Fried Chicken to John Y. Brown, Jr., and Jack Massey. 1970: Resigned from board of directors of Kentucky Fried Chicken. 1980: Died.
diverted traffic away from Sanders’ Cafe and customers no longer sought out the quaint restaurant. Sanders was forced to sell off everything at auction, obtaining only $75,000 for his once-thriving business. After paying off his debts, he had nothing left but a small Social Security pension. But the 66-year-old Sanders was not about to quit. Instead, he worked out a plan. He remembered that several years earlier he had sold his chicken recipe to a restaurant in Utah. Their success had greatly impressed other restaurant owners, who offered to pay Sanders $.04 for every chicken they cooked using his special method. So he decided to expand on this idea. Armed with his pressure cooker and a supply of his secret seasonings, Sanders took to the road and set out to establish a franchise. He cooked his chicken for restaurant owners and then for customers. If they liked it, he offered the restaurant a deal that guaranteed him $.04 for every chicken cooked according to his recipe. Sanders signed up only five franchises in his first two years. But by 1960, just four years after he had launched his plan, more than 200 establishments in the United States and Canada were offering “Kentucky Fried Chicken” to eager customers. Sanders soon stopped traveling to concentrate on managing his growing business. One of the first people to sign on with Sanders was businessman Pete Harman of Utah. He created the marketing strategies that helped the enterprise survive its first few years. The take-out bucket was especially success-
S t u d e n t s
1 6 5
C o l o n e l
S a n d e r s
ful; before it was introduced, the chicken was only available as a menu item for consumption in the restaurant. Harman’s company also came up with the name “Kentucky Fried Chicken” and its famous slogan, “finger lickin’ good.” By this time, Sanders had developed a distinctive look that suggested the genteel Southern life. He wore a white suit and shirt with a black string tie, sported a white goatee, and carried a cane. The Colonel’s image quickly became his company’s trademark as the public began to link his gentlemanly appearance with Kentucky Fried Chicken. Meanwhile, Sanders was actively involved in running his new business from the office building he had constructed behind his home. He did his own bookkeeping, and his wife mixed up and mailed batches of the secret spice mixture to franchisees. By 1963 there were more than 600 Kentucky Fried Chicken outlets. As for the 73- year-old Sanders, he was earning $300,000 a year and supervising 17 employees. But Sanders found such success exhausting. The popularity of his chicken, he remarked to a Newsweek reporter, “was beginning to run right over me and mash me flat.” Although he had previously turned down several offers to buy his business for fear the quality of the food would suffer under new owners, he finally agreed to sell in late 1963. The buyers were Nashville millionaire Jack Massey and his partner, John Y. Brown, Jr., a young, would-be entrepreneur who was eager to apply modern sales and management strategies to Kentucky Fried Chicken. Thus, on January 6, 1964, in a move that Nation’s Restaurant News claims Sanders later regretted, he signed a contract turning over the U.S. part of his business to Massey and Brown. (He retained ownership of Kentucky Fried Chicken in Canada.) Under the terms of their agreement, he received $2 million in addition to a lifetime annual salary of $40,000 for publicity and advisory work. (This amount was later increased to $75,000.) Sanders was also guaranteed a spot on the Kentucky Fried Chicken board of directors until 1970. Under Brown’s leadership, Kentucky Fried Chicken (now known simply as KFC) experienced astronomical growth. Aggressive advertising and marketing campaigns catapulted the business from 600 franchises in 1964 to 3,500 in 1971. Outlets were converted from sit-down restaurants to take-out establishments. At the time it was purchased by Heublein, Inc., in 1971, the company posted sales of $700 million, making it one of the biggest investment successes of the 1960s. R.J. Reynolds Industries bought the company in 1982, and four years later it changed hands once again when PepsiCo Inc. acquired it for $840 million. In 1997 PepsiCo spun off KFC with its two other restaurant chains, Taco Bell and Pizza Hut, to form Tricon Global Restaurants, Inc. As of 1996, there were more than 5,000 KFC franchises in the United States and 4,500 overseas, with worldwide sales exceeding $7.3 billion.
1 6 6
B u s i n e s s
Social and Economic Impact Harland Sanders’ work ethic, along with his creative approach to doing business, made him one of the pioneers of a new industry. Before he established his chicken franchises, there really was no such thing as fast food in the United States. But Sanders realized that Americans during the 1940s and 1950s were increasingly on the move and needed places to eat while traveling that were clean and convenient with speedy, dependable service and quality food. His accomplishments in fast-food franchising paved the way for similar businesses to grow and thrive to the point where they are now a central part of American life. For example, Dave Thomas, the founder of Wendy’s International, began his career with a Kentucky Fried Chicken franchise in Columbus, Ohio. Sanders employed innovative marketing techniques to expand his business. His very image as a Southern gentleman proved to be an extraordinarily successful sales tool. “Before the Colonel,” noted Thomas, “there was never an image in the food industry. I think the Colonel really provided that. He was really a personality.” Indeed, Sanders appeared in commercials for the company as late as 1979, the year before his death. So effective was his distinctive image that a 1994 advertising campaign used a look-alike actor to impersonate him in a series of new, folksy television spots. Sanders relied on several other brilliant marketing strategies. By calling his product “Kentucky Fried Chicken” instead of merely “fried chicken,” he made it seem special. Furthermore, he added mystery and interest by calling attention to the “11 secret herbs and spices” in his coating recipe. “He came up with a special flavor that was addictive,” observed John Y. Brown. “He was the first trendsetter to have a real differentiation in taste in the field.” Sanders liked to remain personally involved in sales and promotion. Whenever a new franchise opened, he wanted to be there to hand out coupons and speak on local radio and television. Thomas recalled, “The Colonel was right out there with us in rain or snow. There wasn’t anything in the restaurant he wouldn’t do.” Franchise owners appreciated Sanders’ loyalty and interest and repaid him by working hard and making the business grow. Quality was always an issue with Sanders. Employees remember him bursting into kitchens to check up on them and show them how to do things properly. Harman Management chairman Jackie Trujillo, who first met Sanders when she worked as a carhop at a Harman’s in Salt Lake City, said, “He used to visit us often. Service, quality and cleanliness was No. 1. He never backed down from that.” One of his favorite sayings was “if you’ve got time to lean, you’ve got time to clean.” In short, declared Brown, “Nobody can really touch the Colonel when it comes to creating a concept that was
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
C o l o n e l
ahead of its time.” Sanders was a true pioneer in a business who tapped into Americans’ growing desire for mobility and easy living. The fast- food industry he helped create has now become a way of life, not only in the United States but in a substantial part of the rest of the world as well.
S a n d e r s
Bibliography Contemporary Authors. Detroit: Gale Research, 1981. Contemporary Authors. Detroit: Gale Research, 1985. Gill, Brendan. “Better Late Than Never.” Sales and Marketing Management, September 1996. Kaelble, Steve. “It Could Have Been Indiana Fried Chicken.” Indiana Business Magazine, November 1996. Kramer, Louise. “Col. Harland Sanders.” Nation’s Restaurant News, February 1996.
Sources of Information
Moritz, Charles, ed. Current Biography Yearbook 1973. New York: H.W. Wilson Co., 1973.
Contact at: Kentucky Fried Chicken 1441 Gardiner Ln. Louisville, KY 40213 Business Phone: (502)874-8300 URL: http://www.triconglobal.com
B u s i n e s s
L e a d e r
P r o f i l e s
Moritz, Charles, ed. Current Biography Yearbook 1981. New York: H.W. Wilson Co., 1981. Ruditsky, Howard. “Leaner Cuisine.” Forbes, 27 March 1995. Whitworth, William. Interview. New Yorker, 14 February 1970.
f o r
S t u d e n t s
1 6 7
Scott Cook (1952-) Intuit Inc.
Overview Scott Cook, along with Tom Proulx, founded Intuit Inc., the company best known for the personal finance software Quicken. Intuit was one of the first companies to develop user-friendly programs with manuals written in “plain English,” and revolutionized online bill-paying and home banking. Intuit has also developed web sites for various financial services, through which customers can compare mortgage rates and buy car insurance.
Personal Life Scott Cook was born in Glendale, California, in 1952. He obtained his bachelor of arts degree in economics and mathematics from the University of Southern California, and then received his MBA from Harvard University. He is on the board of directors for Broderbund Software, the Asia Foundation, and the Intuit Scholarship Foundation, as well as the online bookseller Amazon.com, which he joined in 1997. He is also a member of the Young Presidents Organization, an international association of corporate executives dedicated to promoting education.
Career Details Cook began his career at Proctor & Gamble, a huge manufacturer of household products, where he worked as a brand manager and in other marketing positions. He then went to Bain & Company, a corporate strategy consulting firm, where he managed consulting assignments
1 6 8
S c o t t
in the banking and technology areas. After watching his wife tediously write out bills one day, Cook figured that there must be a way to use technology to streamline the process. With the marketing savvy he had picked up at Proctor & Gamble, and his knowledge of banking and technology, he set out to find a solution. Teaming up with Tom Proulx, a computer programming student still in college at Stanford University, he began work on a new software program that would allow users to organize their finances by computer. Although about 30 different accounting products had already been introduced for home computers, they took longer to use than doing everything by hand—and they were expensive. Moonlighting while still at his consulting job, Cook fine-tuned his idea, getting feedback from potential customers by conducting surveys and initiating product tests. He discovered that customers did want software for organizing their personal finances, but it had to be easy to use. Cook and Proulx formed the company Intuit, Inc. in 1983, named as a shorthand version of the word “intuitive,” which indicated that their products would be just that. Cook was named president, CEO, and chairman of the board for the new firm. Intuit released the first version of Quicken software in 1984. The program cut in half the time it took the average person to pay bills and balance checkbooks. Cook strengthened Intuit with his strong marketing skills. It was one of the first firms to actively seek market input for software. Intuit hired product developers to watch people—not product testers—use the products in the “real world” of their own homes (this was called the “follow-me-home” program). The company was also a leader in writing simple-to-read software manuals at a time when technical jargon was rampant. After launching Quicken, Intuit later offered a similar accounting program for small businesses, called QuickBooks, which it introduced in 1992. Intuit also merged with Chipsoft, maker of TurboTax, in 1993, which allowed users to prepare their own income tax returns on their home computer. Soon, Intuit was the leading manufacturer of personal financial software. Quicken took a couple of years to fully catch on, but Cook relied on an old technique to sell his new product. Intuit was the first to run television commercials for directly ordering the new product from the company. Cook also placed advertisements in magazines such as PC Magazine and Byte, raising revenues to $33 million by 1990. With sales soaring, Cook decided that Intuit needed savvy businesspeople to help lead its growth. Instead of recruiting consultants, he sought venture capitalists to invest in the firm and join the board. “You get a lot of attention from people when you have a few million bucks of theirs,” Cook noted in Fortune. Four such venture capitalists then joined Intuit, purchasing 20 percent of the company. In 1994, Cook stepped down as president and CEO of Intuit but remained chairman of the board.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
C o o k
Chronology: Scott Cook 1952: Born. 1983: Cofounded Intuit Inc. 1983: Began serving as Intuit president, CEO, and chairman of the board. 1984: Shipped first release of Quicken software. 1995: Intuit and Microsoft called off expected merger. 1997: Intuit introduced online bazaar of financial services. 1998: Opened Online Financial Exchange. 1998: Became chairman of the Executive Committee of the Board.
By 1995, Intuit and software giant Microsoft were flirting with a merger. Quicken held 70 percent of the personal financial software market in mid-1995, whereas Microsoft Money, the number two package, had only 22 percent. Cook’s vision was to expand into electronic banking, allowing customers to access their accounts 24 hours a day. However, he found out that banks were interested in teaming with Intuit with or without Microsoft, and then the antitrust division of the Justice Department blocked the merger, which would have led to a potentially lengthy trial. Microsoft bowed out and paid Intuit $46.3 million to end the deal. Intuit had been offering Quicken users the option of paying bills electronically since 1990, after forging a deal with CheckFree, but fewer than 10 percent of the customers used the service. In 1994, the company purchased National Payment Clearinghouse (renamed Intuit Services Corporation) as part of its plan to spearhead its own electronic banking service, and later teamed with various institutions to let consumers do their banking online. As of July, 1995, 17 banks in addition to Smith-Barney and American Express had joined Intuit’s program to offer online banking to Quicken users, allowing people to pay their bills online without writing checks, to transfer money, and to keep track of balances. BankNow was a joint venture with the online service provider America Online (AOL). Though Intuit’s online banking operation failed and was sold to CheckFree in September of 1996, Cook continued to pioneer home banking with the introduction in 1998 of Open Financial Exchange (OFX), a computer
S t u d e n t s
1 6 9
S c o t t
C o o k
language that became the technical standard in online banking. Microsoft and Checkfree became partners in the venture, which connects home financial software users with their bank computer systems, allowing them to pay bills and make investments. In 1997, Cook also made plans to branch out from software to institute an online variety of financial services on the web. “Just like booksellers and CD stores, Intuit would get a cut of every product sold through its site,” explained Kourosh Karimkhany for Reuters Business Report. “But Intuit’s line of work would be much more lucrative: the commission on a $500,000 life insurance policy is much bigger than the cut on a $10 paperback.” Cook told Karimkhany, “We believe there’s a huge business opportunity in providing the marketplace where buyers can meet sellers of financial services.” Intuit continued to expand its business with its purchase of 19 percent of the search engine Excite, and its establishment of a financial news site, CNNfn, within the CNN web site. In August of 1998 Cook stepped down from his duties as chairman of the board to become chairman of the Executive Committee. He remains active in the firm full-time, and his ideas and guidance continue to be a valuable asset to Intuit.
Sources of Information Contact at: Intuit Inc. 2535 Garcia Ave. Mountain View, CA 94043 Business Phone: (650)944-6000 URL: http://www.intuit.com
Bibliography “Amazon.com Appoints Steve Cook to Its Board of Directors.” Business Wire, 16 January 1997. Clark, Drew. “Intuit Chief: Standards Needed to Give Consumers a Choice.” American Banker, 10 April 1997. Dodge, John. “Cook: Intuit Has a Dream, With or Without Microsoft.” PC Week, 27 March 1995. Dumaine, Brian. “A New Remedy for Growing Pains.” Fortune, 4 April 1994. Epper, Karen. “Scott Cook Takes His Turn Taking Heat from the Banks.” American Banker, 20 May 1996.
Social and Economic Impact Intuit’s introduction of Quicken, TurboTax, QuickBooks, and other software revolutionized the way people manage their personal finances. These products have helped millions of users streamline their home and office bookkeeping, and made it much easier for people to do their own taxes. Its OFX program may revolutionize the way banking services are conducted in the future. After all, it took 15 years for consumers to get comfortable with automatic tellers, or ATM bank machines. With Intuit’s entry into online financial services, the company’s goal is to be a “middleman” offering a broad array of product choices. The site will enable buyers to apply for mortgages, health insurance, life insurance, auto insurance, and home insurance online, making it possible to shop around for these services at all hours. Previously, calls and visits to sales offices had to be done during office hours: precisely when most people were on the job themselves. Intuit, by opening up this area of commerce to online shoppers, is a major player in a new era of convenience and flexibility. At the end of their fiscal year in July of 1997, Intuit had sales of $598.9 million, up 11 percent from 1996, with a net income of $68.3 million. In 1998, the CNN web site (http://cnn.com) cited an Associated Press report that claimed Intuit held 82 percent of the $225 million personal software market, whereas Microsoft only held less than 3 percent. A Business Wire article in June of 1998 also reported that Intuit held 80 percent of small business accounting software, with 2 million people us-
1 7 0
ing its QuickBooks product. With the past success of Intuit’s product line and the continuing involvement of the visionary Cook, chances are good that the company will continue to grow and stay at the forefront of new services and products in the area of personal finance.
B u s i n e s s
Hamm, Steve. “The Young & the Fearless.” Business Week, 27 October 1997. “Intuit Announces Two Million Registered QuickBooks Users; Product Line Continues to Maintain Record 80% Market Share.” Business Wire, 16 June 1998. “Intuit Introduces New At-Home Banking Software.” All Things Considered (NPR), 11 June 1996 (radio program transcript). Intuit, Inc. “Corporate Background.” Mountain View, CA: Intuit, Inc., 1998. Available from http://www.intuit.com. Intuit, Inc. “Executive Profiles.” Mountain View, CA: Intuit, Inc., 1998. Available from http://www.intuit.com. “Intuit, Inc.” Hoover’s Online, 16 June 1998. Available from http://www.hoovers.com. Karimkhany, Kourosh. “Intuit to Set Up Online Financial Bazaar.” Reuters Business Report, 7 March 1997. Kim, James. “Microsoft, Intuit Decide Not to Merge.” USA Today, 22 May 1995. Kutler, Jeffrey. “Intuit Chief says IBM Consortium Speaks to His Point.” American Banker, 12 September 1996. Palmer, Jay. “Quickening Pace: Intuit Tries to Parlay Its Best Brand Name into a Thriving Internet Venture.” Barron’s, 8 December 1997. Radigan, Joseph. “Scott Cook Considers His Next Move.” US Banker, November 1996. Streeter, Bill. “A Cook’s Tour of Electronic Commerce.” ABA Banking Journal, October 1995. “Surfing Silcon Valley.” CNN Interactive, 26 February 1998. Available from http://cnn.com.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Joan Ganz Cooney Overview Joan Ganz Cooney, president of Children’s Television Workshop for more than two decades, was instrumental in transforming children’s television and preschool education in the United States in the late twentieth century. As the originator of Sesame Street, Cooney conceived and developed an acclaimed educational television program that would eventually reach an estimated 235 million viewers each week in more than 85 countries.
(1929-) Children’s Television Workshop
Personal Life Joan Ganz Cooney was born on November 30, 1929, in Phoenix, Arizona, the daughter of Sylvan C. Ganz, a banker, and Pauline R. Ganz. Her father was Jewish and her mother Catholic, and Cooney was raised in her mother’s faith. She attended parochial elementary schools and then continued her education at North Phoenix High School, where she played tennis and participated in dramatics. In 1970, she told a reporter for the Phoenix Arizona Republic that her life had been changed by a high school teacher whose class discussions on issues such as poverty and race relations awakened her to the importance of social activism. Another important influence was Father Kellogg’s Christophers, whose message, Cooney explained, was that “if right thinking people don’t get into mass communications the other kind will.” Cooney attended the Dominican College of San Rafael in California before transferring to the University of Arizona. It was there she graduated cum laude in 1951 with a B.A. degree in education.
1 7 1
J o a n
G a n z
C o o n e y
Joan Ganz Cooney surrounded by “Sesame Street” characters.
Cooney has faced many serious personal challenges in her life. When she was 26, her father committed suicide. She has suffered from anorexia, and, in 1975, underwent a radical mastectomy for breast cancer. Her first marriage to Timothy Cooney ended in divorce. Since 1980, she has been married to Peter G. Peterson, former U.S. Secretary of Commerce and former chairman of Lehman Brothers, a New York investment firm. Peterson, also chairman of the Council on Foreign Relations, is chairman of the Blackstone Group, a highly successful investment company, he started in 1985. Cooney and Peterson have homes in Manhattan and Long Island. Together they have established a foundation to support children’s programs.
1 7 2
B u s i n e s s
(The Bettmann Archive/Newsphotos, Inc.)
Cooney has served on the board of trustees of many organizations, including Educational Broadcasting Corporation, Columbia Presbyterian Medical Center, Metropolitan Life, and Johnson & Johnson. She has also been a member of several notable boards and commissions, including the Council on Foreign Relations, the President’s Commission on an Agenda for the 80s, and the Governors’ Commission on the Year of the Child. In 1995, Cooney was awarded the Presidential Medal of Freedom, the nation’s highest civilian order. In 1990, she was named to the Hall of Fame of the Academy of Television Arts and Sciences and in 1989 received an Emmy Lifetime Achievement Award from the Academy. That same year, at the 40th anniversary of the Christopher
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J o a n
G a n z
C o o n e y
Awards, Cooney received the James Keller Award. Harvard, Columbia, Princeton, Georgetown, Brown, Boston College, Smith College, and Notre Dame are among the many colleges and universities that have awarded Cooney honorary degrees. She is also the recipient of more than 50 other distinguished honors and awards for Sesame Street.
Chronology:
Career Details
Joan Ganz Cooney
After 13 months as a reporter for the Arizona Republican, Cooney moved to New York to become a television publicity writer, first for NBC and later for the dramatic series, United States Steel Hour. She then became a producer of public affairs documentaries and in 1966 received a local Emmy award for her three-hour documentary, Poverty, Anti-Poverty, and the Poor.
1929: Born. 1953: Became reporter for the Arizona Republic. 1955: Publicist, U.S. Steel Hour. 1966: Won local Emmy award for documentary, Poverty, Anti-Poverty, and the Poor.
In 1966, Cooney was asked by the Carnegie Corporation to prepare a report on how television could be better utilized in the education of the very young. Her report, “The Potential Uses of Television in Preschool Education,” was the genesis of Sesame Street. According to The New York Times, Cooney later recalled that the children of America themselves showed her the way to proceed. “When I began to study the potential uses of television for preschool children,” she said, “I was aware of the fact that children all across the United States were singing advertising jingles. I wanted Sesame Street to do the same thing for reading, writing, and arithmetic.”
1968: Cofounded the Children’s Television Workshop (CTW).
Cooney cofounded the Children’s Television Workshop (CTW) in 1968 with $8 million in federal and private funds from the Carnegie, Markle, and Ford Foundations and from the Corporation for Public Broadcasting. (She became president of CTW in 1970, chair and CEO, in 1988 and chair of the executive committee in 1990.) For several months, she directed teams of researchers, writers, teachers, animated cartoonists, and television producers in designing a program that would make learning the letters of the alphabet and the numbers from one to 10 as easy as learning the names of every box of cereal on the grocery shelf. Sesame Street, whose title is taken from the command “Open Sesame,” in Tales from the Arabian Nights went on the air November 10, 1969.
acknowledged goal was to narrow the cognitive gap between children living in impoverished circumstances and their middle-class peers. Middle-class children, however, loved the program as well. With its mix of live action, animation, and puppets, it was the first educational program to reach ratings as high as those on commercial networks.
Reviewers were enthusiastic from the start. Newsday reviewer Barbara Delatiner commented that the program “is an exciting example of what can be accomplished when inventive attention is paid to the care and feeding of young minds . . . And the reviewer for Time found that “What Sesame Street does, blatantly and unashamedly is take full advantage of what children like best about TV . . . .” By December 1969, the program was seen in more than 2 million homes nationwide.
1969: Debut of Sesame Street. 1970: Became President of CTW. 1979: Won “Women of the Decade” award. 1988: Named Chair and CEO of CTW. 1995: Awarded Presidential Medal of Freedom.
Cooney understood that Sesame Street had to be as fast-paced as Saturday-morning cartoons and as easy to remember as commercials. And, while the program was teaching concepts like the letter “B” and basic number skills, it was also making a statement about racial, social, and ethnic diversity. The show’s setting—a crowded Harlem alley—was familiar to inner city children, and presented as a positive environment. Strong AfricanAmerican characters were featured from the beginning; Hispanics Luis and Maria joined the cast in 1972. Variety reviewer Les Brown praised the program’s emphasis on racial integration, and educators appreciated the show’s positive tone. Some areas of the country, though, were not prepared for the program’s liberal message. The state of Mississippi banned Sesame Street at first because of its “highly integrated cast of children.”
At the outset, the target audience for Sesame Street was disadvantaged three-to five-year-olds; the program’s
But Sesame Street went on to become one of the most well-known and loved programs on television. Actor Robert Redford claimed it was one of his favorite shows, and football hero Joe Namath was eager to appear on the program. Lena Horne, Billy Crystal, and nu-
B u s i n e s s
S t u d e n t s
Social and Economic Impact
L e a d e r
P r o f i l e s
f o r
1 7 3
J o a n
G a n z
C o o n e y
merous other celebrities regularly guest starred in skits that emphasized humor and problem-solving.
rivalry, managing anger and fear, personal hygiene and health care, and respect for the environment.
Arguably the most memorable characters on the show were the Muppets created by Jim Henson. It would be hard to find many Americans today who are not familiar with Big Bird, Kermit the Frog, Oscar the Grouch, Ernie and Bert, and Cookie Monster, all regular cast members on Sesame Street. Big Bird was even invited to a Christmas party at the White House by First Lady Betty Ford! As the show progressed through the years, it adapted to what children knew from popular culture. Several Muppet skits, for example, spoofed such artists as the Beatles, the Rolling Stones, Bruce Springsteen, punk rockers, and rap singers to teach about letters or numbers. William Honan, in The New York Times, wrote, “What was unique about “Sesame Street” was the way it weaved puppets, animation and live actors into an interracial tapestry that delivered educational messages.”
Studies done since 1970 showed marked improvement in cognitive skills between children who watched Sesame Street and those who did not. It has been documented that poor children, especially, have benefited from watching the show. According to CTW, povertylevel three-to five-year-olds who watched Sesame Street made more than twice the gains in knowledge of the alphabet, counting, and reasoning skills than poor children who were not exposed to the program. Clearly, Cooney’s vision of a “wall-less nursery school” has had a tremendous impact on American society.
Soon after launching Sesame Street, Cooney and the Children’s Television Workshop introduced The Electric Company for older children. Later, CTW produced the popular Ghostwriter series, which featured a multiracial cast of young teens involved in solving mysteries. Another popular program for older children was Square One, a show that focused on math. Like Sesame Street, it used brief skits, music, and humor to teach math concepts like problem solving, pattern recognition, estimation, and even such seemingly difficult concepts as set theory and negative numbers. Over the years, the scope of programming on Sesame Street broadened beyond reading and arithmetic to ethics, emotions, and human relations. During one season, for example, the characters Luis and Maria fell in love and got married. In another season, they had a baby. The show has also featured material on adoption, sibling
1 7 4
B u s i n e s s
Sources of Information Contact at: Children’s Television Workshop 1 Lincoln Plz. New York City, NY 10023-7129
Bibliography “Children’s Television Workshop.” New York, CTW. Available from http://www.ctw.org/. The Columbia Encyclopedia. New York: Columbia University Press, 1993. Current Biography. H.C. Wilson, New York, 1970. Honan, William. “How Big Bird Came to Count, Education Life.” The New York Times, 2 November 1997. Lystad, Mary, “20 Years on Sesame Street.” Children Today, September-October, 1989. Mills, Hillary. “Pete and Joan.” Vanity Fair, August 1993. Moreau, D., Cliff, J. “Change Agents.” Changing Times, July 1989.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Camille Cosby Personal Life Camille Olivia Cosby was born in 1945, in Washington D.C., the eldest daughter of Guy and Catherine Hanks. Guy Hanks was a graduate of Southern University in Baton Rouge who went on to earn a master’s degree at Fisk University in Nashville. Her mother, Catherine, graduated from Howard University in Washington D.C.
(1945-) Philanthropist
After attending parochial schools, Camille Olivia Hanks continued her privileged education at the University of Maryland, where she studied psychology. Although her parents encouraged her to study music at an early age, her interests were inclined towards psychosocial issues related to African Americans. Her academic achievements were momentarily put on hold, however, when she met Bill Cosby on a blind date while in college. The two were wed in 1964 and her attention turned towards helping her husband’s budding career as a comedian, and building what would eventually become the Cosby empire, Cosby Enterprises. The couple had five children together, Erika, Erin, Ennis, Ensa, and Evin. A devastating blow came with the death of their 27-year old only son Ennis who was shot while changing a flat tire alongside a Los Angeles freeway in 1997. This unfortunately followed on the heels of another embarrassing media frenzy when earlier that year, her husband, Bill Cosby, was confronted with a paternity lawsuit from Autumn Jackson, who claimed to be the result of an affair he had years back. It was later proved that he was not the father, although he admitted to having the affair years ago. Camille remained composed, however, during this time when she related to the press a “that-was-then-and-this is-now”
1 7 5
C a m i l l e
C o s b y
the education department which studies existing structures and how they can affect change. She realized how profoundly television can impact lives and ideas, especially those of young people. In 1992 she produced a documentary titled, No Dreams Deferred, based on the true story of a husband and wife catering team who ran an after-school program for five youths in Atlanta, Georgia. It’s an inspiring story of a couple investing in their community through helping to improve and give opportunity to young people who see their lives as limited in what they can do. In response to what she saw as negative portrayals of blacks on television and influenced by her own dissertation research while at the University of Massachusetts, she wrote a book titled, Television’s Imageable Influences: The Self Perception of Young African-Americans, published in 1994. In this book, she asks young adults to consider the way in which blacks are portrayed on television and to learn some consciously critical skills while watching television. Reflecting on her own experience, she has said, “As a mother, I am very aware of what children watch and how they are influenced by television, movies, newspapers, and art.”
Camille Cosby.
(The Bettmann Archive/Newsphotos, Inc.)
type sentiment, stating that they were young and had much more growing to do as a couple at the time the affair occurred.
Social and Economic Impact
Career Details
When Camille Olivia Hanks married Bill Cosby in 1964, she had dropped out of the University of Maryland to accompany her husband while he traveled to different cities at the start-up of his career. In these early years, she decided to help manage the income after they had a bad experience with a manager who mishandled their money. She later became the chief executive of the company, Cosby Enterprises, which eventually included television commercials, books, comedies, movies, and the television shows, The Cosby Show and A Different World. When asked why she chose to become involved in her husband’s business affairs, she has remarked in interviews that it was a natural decision for a couple that considers itself partners in both marriage and business.
The most notable aspect of Camille Cosby’s life is her dedication to the recycling of opportunity and education that she and her family have benefited from. The projects she chooses all have one commonality: they financially, socially, or spiritually give back to the African American community. Influenced by her own parents attending black colleges, and her own research which indicated a lack of financial support from alumni to those institutions, Camille and husband, Bill Cosby, have made it a priority to lend financial support to black educational institutions. One of the largest donations to a college occurred in 1993 when she and her husband donated $23 million to Spelman College. These funds were used to build the Camille Olivia Hanks Cosby Academic Center, with three chairs in the fine arts, humanities, and social science fields. Other African American colleges/institutions the Cosby’s have donated money to include Fisk University, Meharry and Bethune-Cookman Colleges and Harlem Hospital. Non-institutional support reported by Dr. Cosby includes the sponsorship of 30 students to various colleges and universities.
When Dr. Cosby later returned to school, she studied organizational development, a program that is part of
Dr. Cosby has also written articles supporting her causes. In the December 1997 issue of Essence, called
Although she may be best known for her role as a wife to comedian Bill Cosby and a mother to his children, Dr. Camille has accomplished many things in her academic and professional life. She has earned a Ph.D. in education, owns a production company, has done television and stage work, and has written books and articles.
1 7 6
Dr. Cosby has also co-produced a Broadway play based on the book, Having Our Say: The Delaney Sisters First 100 Years which received critical acclaim. She is quoted as saying in Jet, in 1995 “What I hope people will get out of this play is that people will feel hopeful instead of hopeless, as we are often made to feel from different forms of media propaganda.”
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
C a m i l l e
Shopping for a Better World, she writes about how African American dollars are better spent at those businesses which reciprocate support to the black community. She says African American dollars should not go to support banks, schools, and other businesses which do not give back to the community and claims that “people who don’t think about their spending habits can end up promoting a culture of disempowerment, helplessness, and hopelessness.” Her obligation to give is steadfast but she prefers to stay out of the public light and only rarely does interviews. Ironically, it is with social causes that she chooses to attract media attention. In a New York Times article by Lena Williams, “Private Woman Pursues a Public Cause,” she explains her mission by stating, “I feel I have an obligation because I have the resources and access to people in the entertainment industry to do some things.” Despite her avoidance of the public limelight, Camille Cosby has been presented with several distinctions by the media. In 1996, she was named one of the “15 most beautiful Black women,” by Ebony magazine, sharing the distinction with Oprah Winfrey, Vanessa Williams, and Janet Jackson. The Ladies Home Journal also acknowledged her achievements by naming her one of the “most fascinating women of 1997,” along with Princess Diana, Ellen DeGeneres, and Mother Theresa. Finally, Camille Cosby was named as one of the winners of the Tenth anniversary Essence Awards in 1997. The award, designed to honor those whose “lives and work are a testament to enduring courage, steadfast love, selfless community commitment and a triumphant spirit,” was shared with her husband, Bill Cosby.
C o s b y
Chronology: Camille Cosby 1945: Born. 1964: Married William Henry Cosby. 1980: Graduated from Amhurst College with an MA. 1987: Spoke at Howard University commencement. 1989: Awarded an Honorary doctorate, Spelman College. 1992: Awarded National Coalition of 100 Black Women, Candace Award. 1992: Earned Ph.D. in education at University of Massachusetts. 1994: Published Television’s Imageable Influences: The Self Perception of Young African-Americans. 1995: Co-produced Broadway Play, Having Our Say. 1997: Named as Essence Awards Honoree, along with husband Bill Cosby.
Dictionary of Twentieth-Century Culture Vol. 5: African-American Culture. Gale Research: Detroit 1996.
Sources of Information
“The Fifteen Most Beautiful Black Women” Ebony, October 1996.
Contact at: Camille Cosby 34-12 36th St. Astoria, NY 11106 Business Phone:
“The Most Fascinating Women of 1997” Ladies Home Journal, January 1988. The New York Times Biographical Service Vol 25: Ann Arbor, University Microfilms International 1994.
Bibliography “Camille Cosby’s Book Explores Negative Images of Blacks in Media.” Jet, February 1995.
Notable Black American Women, Detroit: Gale Research, 1992. “Shopping For a Better World” Essence, December 1997.
“Camille Cosby Stands by Husband, Bill, Who Admitted He Had a Rendezvous Years Ago” Jet, February 1997.
Tenth Anniversary Essence Awards. 1997 May 1997.
“Catalyst Camille,” American Visions, December-Janaury 1994.
Who’s Who Among African Americans. 1998-1999.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
1 7 7
Casey G. Cowell (1953-) 3Com
Overview Casey G. Cowell made a significant contribution to the growth of the computer industry when he and some friends founded U.S. Robotics modem producers in 1976. The firm was a major player in advancing modem technology, increasing the speed and developing software, which allowed their modems to run on almost any computer. By developing its own technology instead of licensing it, U.S. Robotics was able to keep their costs down, thus capturing a large share of the market and allowing a greater number of users to benefit from the product. After Cowell, as chairman and CEO, led the firm to sales of over $2 billion, U.S. Robotics was acquired in 1997 by 3Com for $7.3 billion.
Personal Life Casey G. Cowell was born around 1953. Not much is known about his early years, except that he tended goal in two national high school hockey championships. He went on to attend the University of Chicago in 1971 and obtained a bachelor’s degree in economics in 1975. In college, he met and became friends with Stephen Muka in a computer programming class. Cowell had a keen interest in business, and the two discussed possible ideas for a venture. However, Cowell decided to enroll in graduate school at the University of Rochester in New York in 1975. The following year, he became disillusioned with school and went back to Chicago. Cowell became an industry leader with his firm, U.S. Robotics, which was later bought out by 3Com. Business
1 7 8
C a s e y
G .
C o w e l l
Week named him one of the top 25 managers in 1995, and Crain’s Chicago Business honored him as executive of the year in 1996. Other awards he has received include the High Technology Advocate and Inventing America’s Future awards from the American Electronics Association; the Illinois High-Tech Entrepreneur of the Year award from KPMG Peat Marwick; and Entrepreneur of the Year from Venture magazine. In addition, the University of Illinois in Chicago gave him the Dean’s Award and elected him to their Entrepreneurship Hall of Fame. Cowell’s range of service, besides as vice chairman of the board for 3Com, includes the board of directors for Northwestern Memorial Hospital Corporation, the Illinois Coalition, and the Chicago Public Library Foundation. He is on the board of trustees for the Illinois Institute of Technology, the Field Museum of Natural History, and the Golden Apple Foundation. In addition, he sits on the boards of May & Speh and System Software Associates, and owns and operates a number of privatelyheld companies.
Career Details
Casey Cowell.
In 1976, after leaving graduate school, Casey Cowell contacted his friend Stephen Muka and got serious about their dream of opening a business. The pair called on friends Paul Collard, Stan Metcalfe, and Tom Rossen, and the five men cofounded U.S. Robotics. It was named after a company in the Isaac Asimov novel I Robot. They set up shop next to a ballroom dance studio in a 400square foot room without any windows, above an army surplus shop on Chicago’s Lincoln Avenue. With little experience, the founders taught themselves how to solder parts and organized delivery and setup of their product. The U.S. Robotics shop originally developed an acoustic coupler, a primitive version of a modem, which allowed computer users to patch into mainframes from home using telephone lines and a television set. Though they ran into technical problems, they continued their research, and eventually started making modems. At first, the device was a clunky black box almost as large as a milk crate that connected to a telephone with clumsylooking rubber pieces, but by the beginning of the 1980s, they had streamlined them to plug right into a phone jack. In the company’s early days, Cowell functioned as the business manager when their initial customers included computer dealers and university computer labs. Meanwhile, the fledgling company suffered financial setbacks while Cowell and his friends moonlighted part-time as computer programmers to pay the bills. Once, they sent a package to a customer C.O.D. but accidentally addressed it back to themselves, and could not gather the cash to retrieve it from UPS. The company took a detour for a bit when they ventured into the business of distributing computer terminals, but found no success in that, either. When personal computers (PCs) took
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
(AP Photo/George Riley.)
off in the 1980s, Cowell started selling to manufacturers like IBM, Apple, and the former Commodore. Eager to step up production, Cowell convinced Mesirow Financial, a venture capital firm in Chicago, to invest $1.8 million in U.S. Robotics. The timing was perfect: PC sales boomed from the early 1980s to the early 1990s, and the company supplied private-label modems to the computer makers. Cowell was already considering branching out and establishing U.S. Robotics as its own superior brand name when a sudden industry slowdown made it necessary to make difficult business decisions. He laid off 75 of the company’s 275 workers and approached Mesirow for funding for a new project. Cowell’s idea proved fruitful. Instead of buying software to run their modems, U.S. Robotics began developing it themselves. This made it possible to run the devices on virtually any computer, and it kept costs down, which made their products more competitive. To help focus on this new direction, chairman and CEO Cowell hired a product development whiz, a chief financial officer, and a marketing director. These three newcomers helped replace the original founders of U.S. Robotics; Muka died of complications from Hodgkin’s disease in 1985, and the other three founders had left in 1978 to follow other paths. By 1990, U.S. Robotics had achieved approximately $60 million in sales annually. Cowell set the lofty goal of reaching “5 by 5,” that is, sales of $500 million by 1995. In 1994 he told Gary Samuels of Forbes, “People
S t u d e n t s
1 7 9
C a s e y
G .
C o w e l l
bought out by 3Com, they became part of a giant conglomerate that employed 13,500 people around the world.
Chronology: Casey G. Cowell 1953: Born. 1975: Received B.A. in economics from University of Chicago. 1976: Cofounded U.S. Robotics. 1996: Named Executive of the Year by Crain’s Chicago Business. 1997: U.S. Robotics merged with 3Com.
have been trying to figure out when we are going to stumble. Especially given that so many of our competitors have stumbled.” With a three-tiered effort reaching into business computers, home buyers, and large corporate customers, U.S. Robotics reached sales of almost $1 billion by the target year, nearly double its stated goal. Cowell then set his sights on the $5 billion mark in sales by the year 2000. In 1997, three years before Cowell could realize his new goal, networking giant 3Com bought out the Skokie, Illinois-based U.S. Robotics for $7.3 billion. Since the buyout, Cowell acts as vice chairman for the board of 3Com, but it is not clear if his generous compensation as CEO of U.S. Robotics continues. In May of 1997, the Chicago Tribune reported that Cowell was the highest paid CEO out of the top 100 publicly traded companies in the Chicago area, with annual salary, stock options, and bonuses totaling close to $34 million.
Modems have had a major impact on both business and personal communication in the late twentieth century. They make it possible for computers to connect to each other, allowing people to send data in the form of words, pictures, even video clips, over telephone lines or cable. Businesspeople can share entire databases with an office across the country, and apartment hunters can take virtual walks through model apartments online. People around the globe can hold real-time written conversations in “chat rooms,” or actually speak to one another “faceto-face” by holding video conferences. Thanks to modem technology, a wealth of information and entertainment is available via the World Wide Web, to which more and more people have access each day. Along with being a boon to business, education, and consumer information, modems have also led to an online pornography industry, unscrupulous business practices, and crime. The world continues to struggle with regulating this powerful technology which is in its infancy. However, Cowell sees even more potential in the field of modems that may bring the world closer than ever to the futuristic world depicted in films and television shows of old. He told Crain’s Chicago Business that modems may eventually have household appliances talking to each other: “I can imagine a world in which your alarm clock tells your coffee pot when to start and tells your garage door to open.”
Sources of Information Contact at: 3Com 5400 Bayfront Plz. Santa Clara, CA 95052-8145 Business Phone: (800)638-3266
Bibliography Aragon, Lawrence. “Robotics’ Hat Trick.” PC Week, 2 December 1996. Cahill, Joseph B. “Modem Man: Cowell Keeps on Connecting.” Crain’s Chicago Business, 3 June 1996.
Social and Economic Impact
“CEO Compensation in the Top 100.” Chicago Tribune, 11 May 1997.
Although there are other modem producers, “No company symbolizes the dramatic advances in modem technology more than U.S. Robotics,” according to Alan Stewart of Communications News. “And no executive articulates his vision with more enthusiasm than U.S. Robotics’ President and CEO, Casey Cowell.” Cowell was one of the first to foresee PCs as communications tools, and he worked diligently to increase the speed at which data could travel, thus improving the technology greatly. Under Cowell’s direction, the firm also slashed prices of their home PC modems in half in 1993, from $520 to $260, opening up the market to a much greater number of buyers. By 1997 U.S. Robotics sold 40 percent of all modems in North America. That year, when they were
1 8 0
B u s i n e s s
“CEO Interview-Casey G. Cowell, U.S. Robotics, Inc.” Wall Street Transcript Digest, 8 February 1993. Inside 3Com. “Casey Cowell.” Santa Clara, CA: 3Com Corporation, 1998. Available from http://www.3com.com. Inside 3Com. “FastFacts.” Santa Clara, CA: 3Com Corporation, 1998. Available from http://www.3com.com. Samuels, Gary. “Modem Mogul.” Forbes, 15 August 1994. Stewart, Alan. “Double Time.” Communications News, March 1997. Vizard, Michael. “Pipe Dreams.” InfoWorld, 3 February 1997. “Why It All Computes at Cowell’s Robotics.” Crain’s Chicago Business, 29 April 1996.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Jenny Craig Overview
Jenny Craig, Inc.
Jenny Craig is the creator and founder of one of the most successful weight-loss programs ever marketed. Since the 1980s, her Jenny Craig Weight Loss Centres have helped numerous Americans lose unwanted pounds and learn to eat a nutritional diet that can lengthen their life span. In 1997 there were 780 weight-loss centers bearing her name in North America, Australia, and New Zealand. It is the only such company traded on the New York Stock Exchange.
Personal Life Craig was born Genevieve Guidroz in the early 1930s and grew up in New Orleans. Her father, James Guidroz, was a boat captain and part-time carpenter, while mother Gertrude Guidroz grew her own vegetables to help feed a large family of six children, of which Jenny was the youngest. She studied at Southwestern Business School and worked as a dental hygienist for a time, but by the late thirties was married to a building contractor and was the mother of two young daughters, Michelle and Denise. Her second pregnancy was a difficult one, and Craig gained a lot of weight. “I used to look in the mirror and cry,” she recalled in an interview with People magazine in 1990. “I would just cry and say, ‘What did you do to yourself?’” To fix her figure, Craig went on a drastic diet, began attending an exercise class, and within a few months had lost 30 pounds. She then went to work for a health club in the New Orleans area, and was eventually hired
1 8 1
J e n n y
C r a i g
versity at Fresno, where he went to school in the early 1950s, and as a result its business school was named in his honor.
Chronology: Jenny Craig
The Craigs also own a second home in Aspen, a private jet, and several thoroughbred racehorses. For a time, both Craig daughters from her previous marriage were multi-franchise owners of Jenny Craig Diet Centers. Craig is the grandmother of seven, still keeps to the lowfat diet which launched her weight-loss success, and exercises an hour each day.
1932: Born. 1970: Joined Sid Craig in fitness-center company. 1982: Sold Body Contour chain, netted $3.5 million. 1983: Launched Jenny Craig Weight Loss Centres in Australia. 1985: Opened first franchises in United States. 1990: Oversaw 285 outlets bearing her name. 1991: Initial public offering of stock on the New York Stock Exchange. 1993: FTC charged company with deceptive advertising practices. 1994: Revenues of $403 million annually. 1997: Called for health-insurance providers to classify weight-loss programs as a valid medical reimbursement.
as a staff member. She met future husband Sid Craig in 1970 when he arrived in the New Orleans area to expand a chain of failing fitness centers he had just bought. His chain, Body Contour, was going to be positioned as a competitor with Jenny Craig’s employer. The California entrepreneur had once been a tap-dancing child in the “Our Gang” series in the 1930s, and then went to work as an instructor with the Arthur Murray Dance Studios. He eventually owned several Arthur Murray franchises before getting into the exercise business. Sid Craig and Jenny Bourcq were still married to respective spouses when they met, but during 1970s both unions ended in divorce. Their working relationship evolved into a romantic one, and they wed in 1979. After founding the successful diet program that bears the “Jenny Craig” name, the partnership grew into a lucrative financial one as well. In the 1990s, she held the title of president of Jenny Craig, Inc., while Sid Craig was the company’s CEO and board chair at headquarters in suburban San Diego. They lived in an impressive beachfront home and were collectors of 17th- and 18th-century European art. In 1997, her annual salary was over $885,000. Some of that wealth has funded a health clinic in Mexico for the disadvantaged, and the Craigs once sponsored Australia’s entire Olympic team. Sid and Jenny Craig donated a large sum to California State Uni-
1 8 2
B u s i n e s s
Career Details When Sid Craig opened the first Body Contour fitness clubs in the New Orleans area in the early 1970s, Jenny Craig went to work for him. She brought her own ideas about diet and physical fitness, which was still a fledgling industry at the time, and Body Contour grew into a $35 million-a-year business. In 1982 the Craigs sold Body Contour to Nutri/System, but there was a “noncompete” clause that prevented either of them from working in the diet or fitness center industry for two years. The clause, however, only applied to the United States, so the Craigs went to Australia and opened the first Jenny Craig Diet Centres there, which were a success. They brought their idea back to American shores in 1985, and opened the first 14 Jenny Craig Weight Loss Centres in the Los Angeles area in 1985. Two years later, they had 46 outlets, and by 1990 the company had grown to number 285. They continued to grow, and took their company public, offering shares on the New York Stock Exchange in October of 1991. To do so, a Wall Street investment bank that saw great potential in their concept of managed weight loss raised $100 million on their behalf to launch the shares. With the success of the offering, the Craigs and children received $108 million; Jenny and Sid Craig still owned about 60 percent of company stock. By 1992, Jenny Craig, Inc. was a $400 million company, its biggest competitor was the aforementioned Nutri/System. Weight Watchers and the Diet Center were also top rivals. There were 621 Jenny Craig outlets in 1993, and that year the company posted $467 million in sales. It was perhaps the height of the company’s success, and thousands of overweight Americans were attracted to the 16-week program, which offered nutritional counseling and prepackaged foods called “Jenny’s Cuisine” at an extra cost for both. The frozen foods, which provided ready-made meals to clients at a cost of around $70 a week, accounted for about 90 percent of company sales; individual counseling sessions cost about $7 each. The average member spent about four months in the program. Yet problems arose as a result of the swift growth of Jenny Craig, Inc. In 1992, there were allegations and
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J e n n y
a court case from shareholders of the company’s stock who claimed the rapid expansion in the early part of the decade was done to camouflage financial woes. “The suit claims that at the time of its October, 1991, public offering, the company knew the market for diet clinics had become saturated but went ahead with expansion plans to boost revenue and create the illusion that Jenny Craig was a prosperous company,” noted Denise Gellene in the Los Angeles Times. The profit the Craigs earned when the stock went public may have caused some of this dissatisfaction. In 1993, the Jenny Craig Weight Loss Centres dropped its initial membership fee from as high as $185 for some plans to just $49 in a bid to attract new clients. It is estimated that the diet market in the United States hovers around 50 million, or just under a fifth of the total population. A few franchisers were unhappy with the new lure, and claimed that in some cases, new clients could not afford the prepackaged foods essential to successful weight loss in the Jenny Craig program. The Craigs bought out many of the franchises that were unprofitable, including some owned by Craig’s daughters and their husbands. The fiscal year 1993 saw further problems with the company’s finances: the stock had been trading at $34 a share in 1992, but had dropped to $15 a year later. In response, the Craigs restructured the company, and brought in experienced executives hired away from other companies, none of whom remained on board for long. By 1994, the company had posted heavy losses, and many centers had closed altogether. Dieting, as Leslie Vreeland wrote in a 1995 Working Woman article, had become “uncool” and cited trends such as a greater selection of low-fat foods on supermarket shelves, and the avowal of television personality Oprah Winfrey never to “diet” again after losing a great deal of weight on a liquid diet and then gaining it back within two years. Vreeland also noted the success of anti-diet guru/infomercial host Susan Powter with her “Stop the Insanity” program. Furthermore, the reputations of programs such as Jenny Craig suffered a blow when a popular consumer magazine asked 19,000 people to rate their membership in and weight-loss success at such centers, and a large percentage of them reported dissatisfaction. Jenny Craig, Inc. made headlines of a different kind in 1995 when a group of men who became known as the “Boston Eight” brought a gender-discrimination suit against the company. The male employees of a Massachusetts Jenny Craig Centre filed suit in Massachusetts Superior Court for what they felt were condoned workplace practices that denigrated them because of their gender. In what came to be called a “reverse sexual harassment,” the men claimed, among other snubs, that they were requested to shovel snow, and were not invited for off-premise socializing with their mostly female co-workers.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
C r a i g
Social and Economic Impact Jenny Craig Weight Loss Centres achieved phenomenal success in the 1990s with its diet program that gave clients counseling as well as an easy-to-use meal plan that saved time in meal preparation. In that decade, it was estimated that about eight million Americans were joining programs such as Jenny Craig, and spending about $1.7 billion a year. After Weight Watchers, Jenny Craig became one of the most recognized brand names of the bunch. Like Weight Watchers, the company spent a great deal of its budget on advertising, and often enlisted celebrities as spokespeople. Entertainment personalities such as Susan Ruttan (once a regular on L.A. Law) Dick Van Patten, and Cindy Williams, star of the 1970s sitcom Laverne & Shirley, have been affiliated with Jenny Craig ad campaigns. One reason for the name-brand identity that Jenny Craig Weight Loss Centres have achieved may be due to the fact that both Craig and the program she designed stress that overweight people need to learn not how to follow a diet, but rather how to eat properly for life. Dieting, Craig has emphasized, should not be an occasional drastic measure. Nutritionists agree, but problems arose with some of the company’s claims and practices. In late 1993, the Federal Trade Commission cited Jenny Craig, Inc. and four other diet programs for false advertising. Investigators asserted the programs made misleading claims about their effectiveness and the percentage of clients who were able to maintain their weight loss once they had left the program. In the spring of 1997, the company agreed to abide by guidelines that required them to offer proof that their customers were able to lose their desired number of pounds in a certain amount of time, and that those pounds remained off over a specific period of time without rejoining the program at an additional cost. Federal agencies, however, were not without their own internal missteps. In 1996, the Food and Drug Administration (FDA) allowed dexfenfluramine and fenfluramine (known by the brand name “Redux” and “fenphen”), the first new prescription drugs for weight loss since the early 1970s, onto the market. Initially, sign-ups and sales at diet programs such as Jenny Craig plummeted, but like some of its competitors, the Centres hired part-time doctors to prescribe the drugs. The drugs were withdrawn from the market in 1997, however, when a Mayo Clinic study linked one of them to heart disease. Concerned about the drug’s side effects already and sensitive to critics that charged the company with becoming a “pill mill,” Jenny Craig Weight Loss Centres had already ceased the use of the drugs two weeks before the announcement. Returning once more to their credo, Jenny Craig, Inc. called for a new strategy to help overweight Americans: in response to the controversy, it urged managed healthcare organizations to adopt new rules that would reimburse members for joining weight-loss and weight-
S t u d e n t s
1 8 3
J e n n y
C r a i g
management programs such as Jenny Craig. Such healthinsurance providers had reimbursed patients for the prescription diet pills before their side effects came to light. This call for a more health-focused approach to weight management fit in with a new strategy by Jenny Craig, Inc. to position itself as a wellness plan.
“The Follies Come to Boston.” Fortune, 3 April 1995. “FTC Accuses Five Diet Programs of Deceptive Advertising.” FDA Consumer, December 1993. Gellene, Denise. “Jenny Craig Takes a Pounding.” Los Angeles Times, 22 May 1994. Ingersoll, Bruce. “Jenny Craig Settles FTC Charges That Ads Made Deceptive Claims.” Wall Street Journal, 30 May 1997. “Jenny Craig diet centers stop using Fen-Phen,” 11 July 1997. Available from http://www.cnn.com
Sources of Information
1 8 4
Contact at: Jenny Craig, Inc. 11355 N. Torrey Pines Rd. La Jolla, CA 92037 Business Phone: (619)812-7000 URL: http://www.jennycraig.com
Kroll, Luisa. “Fat Fads.” Forbes, 18 November 1996.
Bibliography Barrett, Amy. “How Can Jenny Craig Keep on Gaining?” Business Week, 12 April 1993.
Sanz, Cynthia, and Leah Feldon Mitchell. “Fitness Tycoon Jenny Craig Turns Weight Losses into Profit by Shaping Her Clients’ Bottom Line.” People, 19 February 1990.
Berman, Phyllis, and Amy Feldman. “Fat City.” Forbes, 17 February 1992.
Vreeland, Leslie. “Lean Times in Fat City.” Working Woman, July 1995.
Newsmakers: The People Behind Today’s Headlines. 1993 Cumulation. Detroit: Gale Research, 1993. “San Diego’s Highest Paid Executives.” Available from http:// www.sddt.com/features/sourcebook/lists/97/highpaid/index.htm
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Mary Cunningham Overview Mary Cunningham gained national media attention through much of her adult life; first through her fast corporate rise and later as the founder of Nurturing Network, an alternative for women considering abortion. Cunningham has a public image as both a spiritual motivator and a manipulative controller, and has long been associated with her husband’s volatile business dealings.
(1951-) The Nurturing Network
Personal Life Mary Cunningham claimed that she realized God was her father on the day of her First Communion. Her birth father was a drinker who abandoned the family when she was five years old. She blamed the incident on herself and resolved to be good for the rest of her life. After her father left the family, Mary’s mother took refuge with a relative who was a priest, Father Bill Nolan, who helped raise Mary and her siblings. Cunningham grew up grounded in the Catholic tradition. Her religious realization on the day of her First Communion would shape what she claimed were her values, and would lead her to found a resource for women considering abortion. A bright woman, she went on to college at Wellesley to major in philosophy and logic. She graduated with high honors. Later she attended Harvard. Cunningham met her future husband, William Agee, for the first time when she was 27, and she had just graduated from Harvard with an MBA. Agee, as CEO of Bendix, was recruiting for the company. He hired her on as an executive assistant. It was the start of
1 8 5
M a r y
C u n n i n g h a m
lic eye. Six months after leaving Bendix, Cunningham obtained a position with a six figure salary at Seagrams. In 1984 Cunningham published Powerplay, a bestselling book about her experiences at Bendix. Though Cunningham and Agee went on to raise two children, live at Cape Cod, and run a small firm, they resurfaced in the public eye when Agee became CEO of Morrison Knudsen Company in Boise, Idaho. Ultimately the move was a disaster for the company and for Cunningham and Agee personally. Boise’s residents did not receive the couple kindly, though Agee had grown up near the town. Much of the resentment stemmed from the fact that Agee’s first wife was well liked in the cosmopolitan, but clannish town, and people objected that Agee had annulled his marriage to her in order to wed Cunningham.
Mary Cunningham.
(AP Photo/Mario Suriani.)
a fast career rise and of later tumult in both their lives. One of the things that they shared in common was the desire to start a family. Amidst personal and professional turbulence in the couple’s life, Cunningham suffered a life changing loss that was, in her opinion, even worse than her father’s abandonment. In 1984 she had a miscarriage in the second trimester of pregnancy. The incident led her to found the Nurturing Network, a resource for women considering abortion.
Career Details After Cunningham finished college and was recruited by Agee in 1979 to work for Bendix, her career skyrocketed. After a year at the company, Agee promoted her to vice president of corporate communications. Three months later she was promoted to vice president for strategic planning. By 1980, resentment was building in the company and rumors flew that the two were romantically involved. The press capitalized on the scandal, reporting on every new turn of events. Cunningham left the company at the height of the scandal, although later she and Agee were blamed for strategically misdirecting the company in a failed attempt to become more high tech. Shortly after, Bendix was sold to Allied-Signal where Agee worked briefly. When Agee left the company both he and Cunningham disappeared from the pub-
1 8 6
B u s i n e s s
Cunningham and Agee were uncomfortable in the required social roles of upper crust Boise society and lived privately when they could. Their reticence led many to conclude that they were not interested in interacting with anyone else. By this time, Cunningham had founded a charity organization for women considering abortion called The Nurturing Network and was also running the Morrison Knudsen Foundation. Her work left her with little energy for socializing. At one point, she said, “Did I, at the end of the day, enjoy putting on a sparkly dress and greeting employees? No, I’m tired at the end of the day. I’m not the kind of person with painted nails.” Meanwhile, unproven rumors surfaced around town about Cunningham, such as one that claimed the couple donated a $100,000 cross to the local Catholic Church and paid for it out of Morrison Knudsen funds. Cunningham was perceived as a person who controlled her husband and was involved in the company, even though the couple made efforts to appear otherwise. The Nurturing Network was formed after Cunningham miscarried. At this time in her life, she had time to reflect upon the plight of women who lost children in other circumstances, such as abortion. She speculated that many of these women did not have the loving support that she had received. With the beginnings of an idea in her head, she contacted 10 abortion clinics in the United States and asked them to give her phone number to clients who might be willing to discuss their abortion experiences. The women who interviewed with Cunningham claimed that they would have chosen an alternative to abortion if such an alternative had existed for them. In order for some of these women to consider carrying their pregnancies to term, they needed assistance like: leave of absence from jobs, free medical care, adoption resources, counseling, or a safe home. Motivated by this information and also with $300,000 from the sale of a vacation home, Cunningham founded the Nurturing Network in 1986. The organization provided resources and help for women considering terminating pregnancies. By 1994, the Network claimed to have served 4,500 clients. Clients seeking help from
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
M a r y
C u n n i n g h a m
the network called a toll free number and filled out questionnaires about themselves, their goals, and what difficulties they would encounter if they carried their pregnancy to term. By 1994, The Network claimed that 18,000 potential clients had contacted them for assistance. The organization set up creative collaborations with other groups to provide resources for its clients. Clients who needed a place to stay were linked with one of 700 Nurturing Homes. A participating group of doctors provided free or low cost medical care. Interested colleges and employers made arrangements to accept clients for short term study programs or jobs. In a 1993 48 Hours interview at Nurturing Network, one client expressed gratitude for the services and claimed that she would have killed herself rather than have an abortion. Cunningham remained a central force in the Nurturing Network. She personally counseled clients and urged them to face what might be tough in the short term. In the long term, she advised, the pregnant client would reach fulfillment and personal growth in choosing to bring their child into the world. Cunningham claims that abortion is really the ultimate form of violence, disguised in a slogan called freedom. On the other hand, employees told of a sort of unscrupulousness that pervaded the Network offices. Security devices were largely in effect. Receptionists were instructed to say that Cunningham was in meetings, even when she was across the country. A former client counselor claimed that the number of clients that received assistance was greatly exaggerated and that many clients were, in fact, referred to other agencies. Cunningham and her husband continued to face personal obstacles. She was diagnosed with cancer in 1991 but refused chemotherapy, preferring to pray instead. The cancerous lumps on her neck disappeared soon after. During this time, anonymous Morrison Knudsen employees accused the couple of using company money to live lavishly. The couple’s children were harassed at school. Their Boise home was broken into and they hired bodyguards. After Agee underwent cancer surgery in 1992, a black rose was delivered to his office when he returned to work. It ended up being the final straw for the couple, who packed up and moved to California where, Agee continued to run his business, however, the company lost money in 1992 ($7 million) and several lucrative project possibilities. When some suspected that Agee kept the Board of Directors from knowing the true condition of the company, company executives wrote a letter to the Board, describing their immense dissatisfaction with how Agee was running the company. The letter led to an investigation and later, the Board fired Agee, amidst losses of $310 million in 1994. At this point, Cunningham resigned as director of the company’s non profit foundation.
Chronology: Mary Cunningham 1951: Born. 1953: Graduated magna cum laude from Wellesley College with Phi Beta Kappa key. 1979: Met William Agee, future husband who would partially shape her career. 1983: Suffered miscarriage; began conceptualizing Nurturing Network. 1984: Published New York Times Bestseller Powerplay. 1985: Founded the Nurturing Network. 1991: Diagnosed with cancer, later recovered. 1993: Nurturing Network featured on 48 Hours. 1994: Resigned as director of Morrison-Knudsen Foundation.
volatile politics that accompanied abortion in the United States. The Network employed some people with prochoice views. Generally, 15 percent of Network clientele gave up their newborns for adoption while the remaining 85 percent kept them. Controversy remained regarding connections between Morrison Knudsen and Nurturing Network—questions were posed about whether the Network was relying on financial and staff resources from Morrison Knudsen.
Social and Economic Impact
Cunningham continued her work with Nurturing Network, and managed to successfully circumvent the
Cunningham’s life in the public eye—since meeting Agee for the first time and working as his assistant at Bendix—was very controversial. Opinions were divided on the essence of her true nature. Even her work with Nurturing Network was suspect. After Agee’s dismissal from Morrison Knudsen, a legal investigation was initiated that questioned the connections between the company and Nurturing Network. Many board members for the company, for example, had wives who served on the Board of Nurturing Network—creating concerns about conflicts of interest. As a corporate expert cited in the New York Times “once so many of the directors and their wives had joined with the Agees in a moral crusade— how likely was it that they would challenge Mr. Agee in
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
1 8 7
M a r y
C u n n i n g h a m
the boardroom?” Cunningham and Agee were also suspected of funneling Morrison-Knudsen Funds into other Catholic charities. Because Cunningham and Agee were so close personally and publicly, decisions they made together impacted them both and particularly shaped public opinion of Cunningham. For example, although the Agees went to great lengths to prove that Mary did not have a hand in the Morrison-Knudsen business, many still believed that a $7,000 portrait of the Agees that hung on company walls was an example of Mary’s influence. Cunningham was seen by some of her peers at Nurturing Network as a deeply spiritual person with a message that the world needs to hear. One person described interacting with Cunningham as an experience that made one feel special and singled out, the total focus of Cunningham’s attention. On the other hand, Network employees who were first impressed by her charisma, later hinted of a manipulative personality. According to these employees, she had a secretive and paranoid management style. Her foes from Morrison Knudsen saw her spirituality as self serving and said she used it as a tool. Her life grabbed the attention of the national media and even
1 8 8
B u s i n e s s
attracted allies like Gloria Steinem of the National Organization for Women, who protested when Bendix ousted Cunningham. Depending on the interpretation, Cunningham was seen as a champion of unborn rights, a successful corporate icon, or a powerful partner in her husband’s business.
Sources of Information Bibliography Berman, Laura. “The Gospel According to Mary.” Working Woman, August 1995. Hopkins, Jim. “The Agees: Personalities Key to Couple’s Stunning Reversal of Fortune.” Gannett News Service, 11 June 1995. Hopkins, Jim. “Agees Surrounded Selves With High-Tech Security.” Gannett News Service, 20 February 1995. O’Reilly, Brian. “Agee in Exile.” Fortune, 29 May 1995. Vaughn, Ellen Santilli. “For Women, Against Abortion.” Christianity Today, 7 March 1994.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Arthur Davidson Overview Arthur Davidson, along with William Harley, formed the Harley-Davidson motorcycle company in a converted shed in Milwaukee, Wisconsin in 1903. Today Harley-Davidson is the only remaining motorcycle manufacturer in the United States, and much of the company’s success is due to Arthur Davidson’s early work in setting up an extensive network of dealerships that handled the company’s products exclusively. Over the years, the “hog,” as the bike is affectionately known by its riders, developed a reputation as the preferred transportation of rebels and outlaws, but it has also gradually been transformed into a sporty recreational vehicle for “weekend warriors” who hit the road after a tough week at the office.
(1881?-1950) Harley-Davidson
Personal Life Not much is known about the early life of Arthur Davidson, except that he hailed from Milwaukee, Wisconsin, and was born about 1881. His father was a cabinet maker who helped Davidson, his two brothers, and William S. Harley build the first Harley-Davidson “factory” in a converted shed in the Davidsons’ backyard. Davidson was 20 in 1901 at the time when he and boyhood pal Harley first set about constructing a motorized bicycle. Arthur Davidson was a small-built man with sandy hair. He had an outgoing nature, perfect for his role as the firm’s sales and advertising manager. According to Herbert Wagner in Harley-Davidson 1930-1941: Revolutionary Motorcycles & Those Who Rode Them, “He
1 8 9
A r t h u r
D a v i d s o n
eliminated the need for pedaling, and this caught their interest. Evinrude helped the friends out by giving them De Dion engine drawings from a French factory where he used to work.
Chronology: Arthur Davidson c. 1881: Born. 1901: Began building motorized bicycle with William Harley. 1903: Harley-Davidson Motor Co. founded. 1907: Harley-Davidson incorporated. 1909: Harley-Davidson introduced V-twin engine. 1920: Harley-Davidson became top selling motorcycle in United States with dealers in 67 countries. 1950: Arthur Davidson died in auto accident.
was an out front brassy little guy. A handshaker. He loved people. He could sit down to a stranger on the train and know his life story in five minutes. He loved a good joke and loved telling stories, and he was good at it, too.” Known for his business savvy, Davidson was recruited to serve as a director for various companies, including the Koehring Company, the Kellogg Seed Company, and the Wisconsin Pharmaceutical Company. He was a Milwaukee Boys’ Club board member and was active in the YMCA. Davidson also held many roles with the Boy Scouts Association of America and was awarded the group’s highest honor for distinguished service. An avid outdoorsman, he was a lifetime member of the Izaak Walton League. During the last six years of his life, he was president of the American Motorcyclist Association, shaping much of its policy and helping it to expand. Around this time he also served as president of the Motorcycle and Allied Trades Association, a collection of people affiliated with the motorcycle industry. Davidson and his wife died in a car accident in late 1950.
Career Details Davidson was trained as a pattern maker in a Milwaukee manufacturing firm, where his friend Harley worked as a draftsman. At this shop, they met Ole Evinrude, a German draftsman who would become known for his superior outboard boat motors. Like many young men, Davidson and Harley enjoyed puttering around with building things. Other shops across the United States and Europe were churning out motorized bicycles, which
1 9 0
B u s i n e s s
Davidson then made the patterns for a small aircooled engine while Harley designed the bicycle. Working in a basement shop with little time or money, they soon realized they needed an experienced mechanic. They called upon Davidson’s brother Walter, a machinist for a railroad in Kansas, to come home to Milwaukee. He was already planning to return for the wedding of another brother, William, and the men had promised him an exciting ride on the new machine. Walter was thoroughly disappointed to discover that his brother wanted him to help build it, but agreed to join the operation. William later signed up as well. With William and Walter Davidson now on board, the four men outgrew their basement and moved to a friend’s workshop, where real tools-such as a lathe and drill press-were available. They soon needed even more room, so the Davidsons’ father fixed up a ten-by-fifteenfoot shed in the backyard as the first factory, with “Harley-Davidson Motor Company” painted on the door. The Harley-Davidson company web site proposes two reasons why Harley’s name comes first: perhaps because he built the actual bicycle, or maybe that, since the Davidsons outnumbered him three to one, they figured it was a gentlemanly gesture. Harley went on to function as chief engineer and treasurer of the company, while Arthur Davidson became secretary and general sales manger. Davidson’s brother Walter held office as company president, and brother William was works manager. Arthur Davidson was instrumental in the company’s staying power throughout the century due to his initiative in setting up a network of dealers that would sell only Harley-Davidson motorcycles. He also helped establish the Harley-Davidson Service School to provide quality mechanics for bike owners. The company firmly backed their products and made sure that dealers’ profits came first. Davidson was known as the financial brain of the firm, and dispensed business advice to dealers who were having money problems. This became especially necessary during the Great Depression. Harley-Davidson survived during these difficult domestic times, in large part because of foreign sales. An unexpected boon to Harley-Davidson was the rise of Henry Ford’s Model T automobile in the mid-1920s, which was cheaper than a motorcycle and put dozens of competing motorcycle companies out of business. Harley-Davidson kept up sales because the U.S. Postal Service and police departments continued purchasing the bikes for business.
Social and Economic Impact In 1903 the Harley-Davidson company produced and sold their first three motorcycles. The next year, in an ex-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
A r t h u r
panded shed, they built eight. After yet another addition in 1905, the men moved their factory to Chestnut Street, now called Juneau Avenue, in Milwaukee, where the corporate offices still stand. Their uncle, James McLay, a beekeeper, loaned them money to build the 2,380-squarefoot shop. In 1909 they made 1,149 bikes, including 27 of their trademark V-Twin engine models with a top speed of 60 miles per hour, which failed until the bugs were worked out a couple of years later. By the mid-1910s, Harley-Davidson was the third largest motorcycle manufacturer in the country, and by 1920 held the number one position, with dealers in 67 countries. By 1953, HarleyDavidson was the only remaining American motorcycle company when its main competitor, Indian, closed its doors, and in 1995 it boasted a production of over 105,000, with demand continuing to grow. Harley-Davidson, however, is more than a motorcycle company with a strong brand recognition. Something resembling a cult of personality has developed around these piles of chrome that belies its founders’ intentions. Originally nicknamed the “Silent Gray Fellow,” Harley-Davidson bikes were designed to be quiet, with large mufflers to subdue their noise. They were marketed as practical transportation, even for families, if a sidecar was attached. Later the motorcycles became a favorite of sportsmen when the company began entering their products in races-and often winning. In fact, one of the Harley racers around 1920 reportedly used to do his victory laps with his pet pig sitting with him on the bike, giving rise to the nickname “hog.” The Harley-Davidson web site, though, claims the term is an acronym for the Harley Owner’s Group, the company-sponsored club. In World War I and II the bikes were used to run dispatch on the front lines, and the GIs took it upon themselves to begin chopping off parts-including headlights and fenders-to make the machine go faster. Thus the word “chopper” came to represent a customized Harley. Eventually it was expected that “hog” owners would personalize their bikes, not only by making them into choppers, but also by adding custom paint jobs or fenders and other unique touches.
D a v i d s o n
book on his experiences called Hell’s Angels: The Strange and Terrible Saga of the Outlaw Motorcycle Gang. After his exposé was published, some of the members beat him senseless. During the 1960s and 1970s, lower-priced Japanese motorcycles, which lacked the stigma of the Harley, gained popularity among recreational bikers. By the 1980s and 1990s, however, the image of the Harley rider began to change. Though the tattoo-and-leather crowd, with their beards, booze, and bad attitudes, still roamed, more and more “yuppie” bikers began to take to the open road. This cadre of mellow executives and family men were, no doubt, intrigued by the “bad boy” element just as much as the appeal of the wind rushing past them as they sped down the highway. Harley-Davidsons could be seen lined up outside hip nightspots in major cities, expensive toys affordable only by the successful. Harley accessory boutiques sprang up in tony shopping districts. The company set up a slick web site, and in 1994 Turner Original Productions produced a special cable program narrated by actor James Caan and featuring celebrities such as David Crosby, Peter Fonda, Wynonna Judd, and a leather-clad Larry Hagman touting their love of the bike and its accompanying mystique. Finally, the HarleyDavidson seemed to be regaining its original intent as a vehicle for genteel sportsmen and women, albeit with a slight edge this time around.
Sources of Information Contact at: Harley-Davidson 3700 W. Juneau Ave. PO Box 653 Milwaukee, WI 53208 Business Phone: (414)342-4680 URL: http://www.harley-davidson.com
Bibliography Bolfert, Thomas C. The Big Book of Harley Davidson: Official Publication, Harley Davidson, Inc., 1991.
In 1947, however, the image of the outlaw biker gained full momentum. An article in Life magazine detailed the horrors of a rebel motorcycle gang who terrorized a town in California. No longer seen as simply sporting enthusiasts, riders were now lumped with those known as “Hell’s Angels,” a group of bikers who took their name from a 1930s Howard Hughes film. Though this proved to be bad publicity for Harley-Davidson, the media latched on and continued to beef up the stereotype, with films like The Wild One portraying the subculture. Unfortunately, the stories surrounding biker gangs—rape, robbery, beatings, looting—were often more truth than fiction. Journalist Hunter S. Thompson in the 1960s infiltrated the ranks of the Hell’s Angels, posing as one of their members, and wrote a full-length
Fucini, Joseph J. and Suzy Fucini. Entrepreneurs. Boston: G. K. Hall & Co., 1985.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
“Harley-Davidson: The American Motorcycle,” television program aired on TBS, Turner Original Productions, 1994. Harley-Davidson History. Milwaukee, WI: Harley-Davidson, 1998. Available from http://www.harley-davidson.com. Johnson, David. “Family Affair: Four Men, One Dream.” Cycle World, September 1993. Thompson, Hunter S. Hell’s Angels: The Strange and Terrible Saga of the Outlaw Motorcycle Gangs, New York: Ballantine Books, 1966. Wagner, Herbert. Harley-Davidson 1930-1941: Revolutionary Motorcycles & Those Who Rode Them, Atglen, PA: Schiffer Publishing Ltd., 1996.
1 9 1
Suzanne de Passe (1948-) de Passe Productions
Overview As a producer, and a record and film company executive, Suzanne de Passe is recognized as the creative driving force in the Motown industry headed by Berry Gordy. Beginning with Motown’s conception in Detroit, Michigan to its present Los Angeles, California location, de Passe diversified as the business grew from music to motion picture and film winning accolades. De Passe eventually went on to form her own company, de Passe Entertainment.
Personal Life Suzanne Celeste de Passe was born in middle class Harlem, New York in 1948. Her father, a Seagram’s executive and mother, a school teacher, divorced three years later. Subsequently Suzanne’s father remarried providing an encouraging family atmosphere for his daughter, who dreamed of limousines and modeled original clothes for the Harlem elite. She attended illustrious Manhattan high school, and private, integrated New Lincoln School. With writing ambitions, she went on to Syracuse University in 1964, where she placed more emphasis on social life than on her schooling. When asked to leave, she transferred to Manhattan Community College where she majored in English. Later, de Passe married actor, Paul Le Mat, while continuing to experiment with a varied succession of employment from saleswoman to horse riding instructor. The couple is still married and lives in Los Angles.
1 9 2
S u z a n n e
d e
P a s s e
Career Details Suzanne de Passe’s serendipitous beginnings included a flair for recognizing talent which she developed early as a talent coordinator at an up-scale Manhattan club, Chettah Disco. There she auditioned and scheduled performers, developing a keen business sense and invaluable experience. In a similar fashion, Suzanne went on to work for the Howard Stein firm, where she obtained the position of talent coordinator. The Motown sound captured her interest, but her inability to schedule those artists proved frustrating. In an article by Robert DeLeon featured in Jet Magazine she stated, “Cindy Birdsong, former member of the Supremes introduced me to Berry Gordy. His limousine didn’t show up to take him for some reason, so I offered him a ride. A friendship blossomed then, and every time he or some other Motown people would come to town, I’d take them around.” The Gordy/de Passe friendship proved to be a fortunate alliance, resulting in a job offer from Gordy in 1968 to join his Motown staff as his creative assistant. There in offices in Gordy’s home in Detroit, Michigan she worked first with artist Smokey Robinson. At its peak, the Motown sound climbed the charts featuring all time greats like Diana Ross and the Supremes. Suzanne participated in new developments discoveries, such as the Jackson Five, the Four Seasons, the Commodores, Lionel Richie, and others. Following the company’s move to Los Angeles, California, de Passe quickly kept pace with phenomenal growth from then director of the West Coast’s creative division to vice-president and later would continue to diversify. Without a doubt the motion picture industry was another of Gordy’s interests and he formed a new division, Motown Productions, to develop more facets of the company. As a newly named President, de Passe shrewdly contracted new talent such as Rick James and Stevie Wonder. De Passe moved away from the recording side of business and put to use her talent as a writer in 1970 when Diana Ross was featured in a T.V. special, “Diana.” Later in 1972, she turned to screen play writing and was quite successful. The critically acclaimed screen play “Lady Sings the Blues”, was written by de Passe and Chris Clark, in which Diana Ross played the famous Billie Holliday in the film. This earned Suzanne a prestigious Academy Award nomination. Television proved to be another venue for de Passe’s magic touch with the famous NBC special, “Motown 25: Yesterday, Today, Forever.” “Callie and Son,” and “Happy Endings” starring Lindsey Wagner, and John Schneider respectfully were de Passe’s productions. De Passe also played a substantial role in the writing and production of other Motown productions, including The Wiz and Mahogany.
Suzanne de Passe.
(Archive Photos, Inc.)
hour miniseries and its sequels, which earned her Golden Globe, Emmy, and Peabody awards. De Passe was also responsible for the sitcoms “Sister,Sister,” which was scheduled for syndication in late 1998 and “Smart Guy.” Numerous accolades included her in Women of the Year, one of 12, by Ms. magazine in 1972, and the Women in Film Crystal Award in 1988. In 1992 Suzanne was inducted into the Legacy of Women in Film and Television, while the following year the Executive Leadership Council present her with the Turner Broadcasting Trumpet Award and the Achievement Award from the Executive Leadership Council. She also joined the Board of Morehouse College as the first woman to serve in their 127 year history. In addition, she remains culturally productive in ballet and opera. Clearly Suzanne de Passe’s contributions to the entertainment industry make her a powerful business leader.
Social and Economic Impact
In 1988 de Passe left Motown and formed her own company, de Passe Entertainment, four years later. Her genius for choosing talent was particularly demonstrated when she bought the rights for the Lonesome Dove eight
There is no question that the Motown sound of which de Passe was a significant contributor, brought people together, having a particularly beneficial effect on existing race relations. In an article by Phil Gallo in Variety, in early 1998, politician Julian Bond was referenced as saying, “If you can’t understand Motown’s effect on youth, then you can’t understand the United States.” As an African American woman, de Passe overcame per-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
1 9 3
S u z a n n e
d e
P a s s e
Chronology: Suzanne de Passe 1948: Born. 1967: Hired as a talent coordinator. 1968: Became Creative Assistant to President, Motown Productions Los Angeles. 1970: Writer: “Diana” Diana Ross’s solo television special. 1972: Co-authored the screenplay “Lady Sings the Blues.”
In an industry generally dominated by European American males, de Passe’s talents include powerful leadership, communication, and organizational skills along with a determined commitment to produce continuous high quality entertainment. Having to overcome both racial and gender stereotypes, de Passe has remained positive. “You can bark at the moon or you can get things done,” was how she characterized her own working philosophy. Her ability to change and evolve in the industry has been remarkable. Despite starting her own company in 1992, de Passe often speaks about the business strategies and principles she learned from Berry Gordy and from working for Motown. In an interview with BET Tonight in early 1998, de Passe discussed these ideas and how they have affected her business style. She says he taught her that “a business based on principles is more important than a business based on revenue.” She credits much of her success to her direct and honest business style.
1972: Named one of 12 Women of the Year by Ms. Magazine. 1972: Received Academy Award nomination for “Lady Sings the Blues.” 1981: Became president of Motown Productions Los Angeles. 1988: Received the Women in Film Crystal Award. 1992: Became CEO, de Passe Entertainment. 1993: Accepted the Turner Broadcasting Trumpet Award.
Sources of Information Contact at: de Passe Productions 5720 Wilshire Blvd., Ste. 610 Los Angeles, CA 90036
Bibliography Bark, Ed. “Schedule gap angers Motown producer” Dallas Morning News, 20 January 1998. DeLeon, Robert A.”Suzanne de Passe: Woman behind Motown Stars” Jet,12 June 1975.
ceived notions of both gender and race discrimination. Who’s Hot featured de Passe’s response to questions on her experiences producing the Lonesome Dove series, “I find it ironic, that people have such trouble with a black woman wanting to produce a Western. I don’t think Stan Margulies or David Wolper had to answer, ‘Why are you two white guys producing Roots?’...I’m not angry about it-it’s just a fact.”
1 9 4
B u s i n e s s
Gallo, Phil. “Motown 40: The Music is Forever.” Variety,16 February 1998. “Smokey Robinson and Suzanne de Passe.” BET Tonight, 11 February 1998. Who’s Hot. July 1998. Available from http://www.emmys.org. Who’s Who among African Americans. Marquis: New York, 1998-99. Who’s Who in America Marquis: New York, 1998.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
John Deere Overview The old plows, for centuries made out of iron and wood, were no match for the sticky, heavy clay soils of the Central Plains of America. John Deere invented the modern steel plow to cut through the mud and clay of the American prairie with speed and efficiency. Deere’s farm implements played one of the major roles in the transformation of America’s wild lands into fertile, agriculturally productive farmlands. This inventor and manufacturer enabled the settling of America, and brought to all of America a first wave of farmers who populated and settled the wilderness of the undeveloped lands of the United States, with the help of Deere’s plow
(1804-1886) Deere & Company
Personal Life John Deere was born on the east coast of the United States, in Rutland, Vermont, on February 7, 1804. He was the third son of William and Sarah (Yates) Deere. John grew up in the country and was deeply touched by nature and the land. He attended school in Rutland and acquired an average education for this time period. At age 17 he began to learn the blacksmith trade, beginning a four-year apprenticeship with Captain Benjamin Lawrence in Middlebury, Vermont. He was a good blacksmith and practiced it for the next 12 years, until he was 33. Deere married Damaris Lamb of Granville, Connecticut, in 1827. She died in 1865, and two years later he married her younger sister, Lucinda Lamb.
1 9 5
J o h n
D e e r e
John Deere demonstrating his new plow in Molene, Illinois.
Career Details In 1837, John Deere moved to the small prairie community of Grand Detour, Illinois, where he opened a blacksmith shop. It was here that he became aware that the old iron plow he brought with him from Vermont was unsuited to penetrate the hard clay soil of the prairie. Deere set about to invent a new kind of plow to deal with this raw and difficult land, to transform it into suitable agricultural farmland. Using trial-and-error techniques, Deere finally fashioned a curved plow, using both wrought iron and steel from a discarded circular saw blade. The blade was curved to one side, making it unnecessary to stop and push dirt aside by hand. An added
1 9 6
B u s i n e s s
(Baldwin H. Ward/Corbis-Bettmann.)
benefit of Deere’s new plow was that it could be pulled by horses instead of the oxen that the old plows required. With a steel share and a wrought iron moldboard (the upper part of the plow) of his own design, Deere was able to plow a dozen rows easily, nonstop. By 1839, Deere had made and sold 10 of these new plows, and by 1840 he had 40 satisfied customers. Within a few years his output of plows increased to 1,000 a year. Part of the challenge of creating his new plow was finding high-quality steel. Deere first bought a quantity of steel from England and, after testing it, he negotiated the purchase of steel with Jones and Quigg in Pittsburgh Pennsylvania for the manufacture of steel plate.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J o h n
His company was growing rapidly, and Deere decided he needed a better location for his business. In 1847 he sold out to his partner, Leonard Andrus, and moved from the isolated community of Grand Detour to Moline, Illinois, which had much better access to rail and river routes. In addition to better access to shipping transportation for his plows, Moline also offered better power resources for making them. The John Deere Company was officially organized in 1857. Deere produced 10,000 plows during his first year, many of which were carried westward across the prairies by covered wagon. The plow Deere produced became known as the “singing plow” because of the highpitched humming sound it made while sliding through the dirt.
D e e r e
Chronology: John Deere 1804: Born. 1821: Began blacksmith apprenticeship and career. 1837: Opened a blacksmith shop in Grand Detour, Illinois, and started work on a new plow.
A year later, Deere incorporated his company and became president of it. He also made his 20-year-old son, Charles Deere, his partner. In 1868, 10 years later, the company became Deere and Company. By that time, Deere, then age 64, had greatly diversified and expanded the output of his company. He was now making and selling not only plows, but mechanisms called cultivators, and other mechanisms that automatically baled hay.
1838: Established partnership with Leonard Andrus and produced and sold his first steel plows.
John Deere died in 1886, leaving the business to his son to carry on. The John Deere Company continues to manufacture farm equipment but the company also expanded its operations to include lawn, construction, and forestry equipment.
1868: Incorporated John Deere and Company and became president of the company.
At the company’s 150th anniversary celebration in the 1980s former Deere & Company chairman Robert Hanson attributed the great success of the company to its solid corporate philosophy established by founder John Deere. “He stressed quality and value in his products and services. He stayed close to the customers in order to provide them with products they needed to meet their individual requirements. Above all, he emphasized fair dealings and the principle of mutual advantage for all who came in contact with his company. We’ve never lost sight of this business philosophy.”
Social and Economic Impact It is likely that the settling of the American West and the civilization of the plains came to pass for three reasons: the presence of the train, which was able to transport goods and people across America; the Homestead Act of 1862, which made vast areas of the western plains available to farmers, free—if they promised to cultivate it; and the steel “singing plow” invented and manufactured by John Deere.
1846: Increased production to 1,000 plows annually. 1847: Moved to Moline, Illinois, and established a new company. 1858: Made his son, Charles Deere, a partner in the company.
1886: Died.
the steel plow was invented, it is thought that some farmers gave up on trying to plow the sticky prairie soil and abandoned their farms. Deere’s plow gave the farmers a tool that greatly increased their efficiency and productivity. The number of farmers who could stay in business as well as the number of acres that could be farmed increased dramatically due to Deere’s plow. For example, in 1850, there were 5.9 million acres under cultivation in Iowa and Illinois. By 1870, this number had risen to 28.7 million. Even after John Deere died, the Deere Company continued to be well known for its production of farm machinery and also its generosity. During the Great Depression of the 1930s, the Deere Company helped numerous farmers by extending special lines of credit to needy farmers and forgiving many debts owed by the farmers.
Sources of Information
The invention of the steel plow is often cited by scholars as the primary reason that agriculture came to the arid regions of the United States and other countries of the world. The plow was crucial to the development of agriculture as a major business for the world. Before
Contact at: Deere & Company 1 John Deere Pl. Moline, IL 61265-8098 Business Phone: (309)765-8000 URL: http://www.deere.com
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
1 9 7
J o h n
D e e r e
Bibliography Ardrey, R. L. American Agricultural Implements, 1894.
Clark, Neil M. John Deere, He Gave the World the Steel Plow. Moline: Deere and Co., 1937.
Arnold, Dave. Vintage John Deere. Stillwater, OK: Voyageur Press, 1995.
Garraty, John A. and Jerome l. Sternstein, eds. Encyclopedia of American Biography, New York: HarperCollins, 1996.
Barr, Linda. “John Deere: Blacksmith Helped Cultivate Success for Generations of Americans.” Quad-City Times, 26 February 1995.
Hofstadter, Richard. The United States: The History of a Republic. Englewood Cliffs, NJ: Prentice-Hall, 1967.
Brohel, Wayne, Jr. John Deere’s Company: A History of Deere and Company and Its Times. New York: Doubleday, 1984. Byers, Paula K. and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography. Detroit: Gale Research.
1 9 8
B u s i n e s s
Ingham, John N. Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood, 1983. Preston, Wheeler. American Biographies. Detroit: Gale Research, 1974. World of Invention. Detroit: Gale Research, 1994.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Michael Dell Overview Michael Dell started his company, Dell Computer Corporation, when he was a college freshman in 1984. By the early 1990s, the company had exceeded $500 million in annual revenues, and Dell had become the youngest CEO of a Fortune 500 corporation. Although he experienced troubled times in 1993, he developed new corporate strategies, and by 1997 he was predicting that his company would lead the personal computer industry by the year 2000.
(1965-) Dell Computer Corporation
Personal Life Dell was born in Houston, Texas, in February 1965, the son of Dr. Alexander Dell, an orthodontist, and his wife Lorraine, a stockbroker. In October 1989, Dell married Susan Lieberman, a commercial leasing agent. The couple have two children. At one point, Dell would often tell his employees that his daughter’s first words were a plea to beat the competition: “Daddy, kill Compaq. Daddy, kill IBM.” When Michael Dell was only eight years old, he sent off for information on a high-school equivalency diploma, hoping he could avoid putting in a full 12 years in school. His parents, however kept him in school and later sent him to the University of Texas at Austin, hoping he might become a doctor. With his fledgling computer company (which he operated from his dorm room) making $80,000 a month, however, he had other plans. After his freshman year, he told them he wanted to spend the summer working in his business, and if things did not work out with his venture, he would return to school. He never went back.
1 9 9
M i c h a e l
D e l l
companies as IBM and Compaq, to which they added various features. By early 1985 it had 30 employees, and in July 1985 introduced its own model, the Turbo PC. He borrowed money from his family, but soon repaid it as his company grew to annual sales of $30 million. In 1987, PCs Unlimited became Dell Computer and in 1988, Dell began selling stock. Its sales that year reached $159 million, and by 1993, the figure was $2 billion. Then came a period of challenge and a slump in stock prices, prompting Dell to change his strategy. In 1994, the new Dell Latitude XP laptop model was launched and confidence in the company soared. From 1990 to 1997 Dell’s stock has increased by 20,000 percent, from $0.39 to $80.00 a share.
Michael Dell.
(AP/Wide World Photos, Inc.)
If there is such a thing as a born entrepreneur, Dell surely is one. When he was only 12, he made $2,000 through a stamp and baseball card trading enterprise that he operated through the mail. In high school, as a newspaper delivery boy for the Houston Post, he aggressively sought out new subscribers by obtaining mailing lists of newlyweds, then sending them a trial offer of two weeks’ free service, which he then followed up with phone calls. The extremely enterprising young man made over $18,000 this way, which he used to pay cash for a fully loaded BMW—even though he was not yet able to drive. This period in his life is also when Michael Dell discovered computers and found that he enjoyed taking them apart and putting them back together. He soon realized that he could make money by adding components to units and selling them for a profit. Soon he started doing business through magazines, as he had earlier operated his stamp and card trading business. In college, he operated his business out of his dorm room, which irritated his roommates so much that they barricaded his door with piles of his computer equipment.
Career Details Soon after he left the University of Texas in the summer of 1984, Dell incorporated his company, PCs Unlimited, and began operating out of a storefront. The company marketed equipment made by such computer
2 0 0
B u s i n e s s
Michael Dell has played a great deal on his image as a “whiz kid,” but the 1993 downturn showed the Dell Computer leadership that it was time to adopt a new corporate attitude to replace the brash image that had attended the company’s beginnings. Dell was a billiondollar company, and it had grown big and unwieldy. Before Dell suffered the fate of other pioneers who have lost control of their own companies, he brought in a number of older executives with proven records, reorganized operations, and put his CEO Mort Topfer in charge of running Dell on a day-to-day basis. Dell recognized that his own strengths lay in maintaining an eye on the company’s overall vision, rather than specific details. Among the most successful strategies employed by the Dell Computer Corporation is the direct-sales model, which provides a made-to-order personal computer that is shipped within 36 hours. Customers can place orders by calling a toll-free number or by logging on to the company’s web site, where models can be customized onscreen, priced, and ordered with a credit card. To ensure timely shipping, Dell maintains close relationships with suppliers, some of whom have built new facilities near Dell headquarters outside of Austin, Texas. According to an April 1998 article in InternetWeek, “The combination of direct sales and the Internet have made Dell Computer a fierce competitor that has kept heavyweights like Compaq and IBM scurrying to keep up.” Dell’s sales strategy has been to market to large corporations and computer enthusiasts rather than to firsttime buyers, reasoning that a consumer is a first-time buyer only once. Among its largest customers are Shell Oil, Boeing, and Toyota. Another aspect of the company’s business success stems from the fact it only manufactures units it has already sold. Therefore, it maintains no inventory and is free of storage and other overhead costs associated with maintaining a large warehouse stock.
Social and Economic Impact In 1991 Michael Dell said that he hoped to make his company a billion-dollar-a-year enterprise, a goal he has surpassed significantly. In September 1997 Andrew E. Ser-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
M i c h a e l
wer asserted in Fortune that “Dell Computer has become the driving force in the PC business.” By fiscal 1998 Dell’s revenues topped $12 billion, according to InternetWeek, which also reported the company’s income at $944 million for the same period. Dell has also announced that he hopes to remain CEO for the next 60 years, and his 1993 reorganization helped to ensure that he would maintain power. Describing the position of Dell Computer in the year 2000, Dell told an InternetWeek interviewer, “We don’t want to be all things to all people. We only have six percent of the PC market share. Some analysts have said that by growing at 40 percent a year for five years, we’ll have 12 percent share. That would be a good position to be in.” He has said that he is not afraid of dire predictions that the personal computer market will be saturated, since his focus is on repeat rather than first-time buyers. The success of Dell Computer has brought numerous awards and distinctions to founder Michael Dell, including an Entrepreneur of the Year citation from Inc. magazine in 1990. In addition, he was named “Man of the Year” by PC magazine in 1992 and “CEO of the Year” by Financial World in 1993. Dell is also the richest man in Texas with earnings of up to $10 million a day. Comparing his own success with that of Dell, whose company is an important Microsoft customer, Bill Gates noted in Fortune, “We have both stuck with our convictions, and learned from our mistakes . . . Michael has the same passion for the industry I do.”
D e l l
Chronology: Michael Dell 1965: Born. 1984: Founded Dell Computer. 1988: Took Dell Computer public. 1990: Named “Entrepreneur of the Year” by Inc. magazine. 1992: Became the youngest CEO ever to make the Fortune 500. 1993: CEO of the Year, Financial World magazine.
Bibliography Aronoff, Craig E. and John L. Ward, eds. Contemporary Entrepreneurs. Detroit: Omnigraphics, 1992. InternetWeek, Interview Michael Dell, Chairman and CEO, Dell Computer, 13 April 1998. “Leadership Experts Explain the Secrets.” Forbes, 8 April 1996. “Michael Dell’s Plan for the Rest of the Decade.” Fortune, 9 June 1997.
Sources of Information
Newsmakers 1996, Cumulation. Detroit: Gale, 1996.
Contact at: Dell Computer Corporation 1 Dell Way Round Rock, TX 78682-7000 Business Phone: (512)338-4400 URL: http://www.dell.com
B u s i n e s s
L e a d e r
Palmer, Jay. “Selling to Veterans.” Barron’s, 24 March 1997. Serwer, Andrew E. “Michael Dell Turns the PC World Inside Out.” Fortune, 8 September 1997.
P r o f i l e s
f o r
S t u d e n t s
2 0 1
Fred DeLuca (1947?-) Subway International
Overview Fred DeLuca began the Subway Sandwich chain as a 17 year-old in need of money for college. His company grew from two unsuccessful outlets in suburban Connecticut in 1965, to over 13,000 stores around the world in 1998. Subway sandwiches are available in 64 countries, and it is the second-largest fast-food franchise operation in the world—only McDonalds has more outlets. For several years in the 1990s, it was consistently named the top franchise opportunity in Entrepreneur magazine’s annual ratings issue. DeLuca is known as a hands-on CEO who regularly checks up on Subway stores posing as an average customer.
Personal Life DeLuca was born in the late 1940s in Brooklyn, New York. His father worked in a factory. As a child the family lived in a housing project. De Luca earned money by collecting empty bottles and cashing them in for $.02 each. When he was 10, the family moved to Schenectady, New York, and there he further honed his entrepreneurial skills with a paper route that grew to more than 400 addresses. In his teens, he moved once again with his family to Bridgeport, Connecticut. He later earned a degree from the University of Bridgeport, but was already well on his way to heading a successful fastfood company at the time of his graduation. When Connecticut instituted a personal income tax in 1991, DeLuca moved his wife and son to Florida. His son earned a degree in economics and works for the Sub-
2 0 2
F r e d
Fred Deluca holds a Subway submarine sandwich bun.
way chain. Though DeLuca is a billionaire, he keeps to modest lifestyle, driving a seven-year-old car and often flies coach, rather than the more expensive business class. Until 1990, he signed every check issued by the company.
D e L u c a
(AP Photo/STR/Don Heiny.)
use to open a store. Buck, a nuclear physicist, saw potential in DeLuca’s plan: to begin a fast-food venture that provided a healthier, less fattening bill of fare. At the time, burgers and pizza were the standard fast-food menu. DeLuca seized the idea of submarine sandwiches—a novelty food named because the long oblong bun shape.
As a teen, DeLuca wanted to study medicine, and needed money for tuition. He took a job in a hardware store the summer before college, but realized the meager wages would not last long. He asked a friend of his parents, Dr. Peter Buck, for a loan of $1000, which he would
Buck loaned DeLuca the money and he became coowner of the company. The first store opened in 1965 in Bridgeport, Connecticut; DeLuca was still 17 years old. At the end of that summer, he had only $6 left over. This outcome did not discourage Buck and he suggested that they open a second store, for higher visibility. As DeLuca told Fortune it was done to create the image of success. The second store lost money as well. DeLuca and Buck
B u s i n e s s
S t u d e n t s
Career Details
L e a d e r
P r o f i l e s
f o r
2 0 3
F r e d
D e L u c a
Chronology: Fred DeLuca c. 1947: Born. 1965: Opened first submarine shop. 1974: Began franchising Subway name. 1978: Opened 100th store. 1987: Opened 1,000th store. 1989: Subway named number one “franchise opportunity” by Entrepreneur magazine 1991: Relocated to Florida. 1997: Subway sells over $3 billion in food and beverages.
opened a third store. They changed the name from Pete’s Submarines to the catchier name Subway. The venture began making a profit, earning $7,000 its first full year. Buck remains as co-owner in the company with DeLuca. DeLuca did earn his degree from the University of Bridgeport, but found the entrepreneurial life hard to resist. He planned on expanding Subway to at least 30 stores by the end of its first decade in business, but in 1974 was half short of that goal. When he brought a friend on board to help run one of his stores, it gave DeLuca the idea that well-trained owner-operators would be the best suited to build the Subway chain. This led him to start franchising his business. DeLuca hired development agents to sell the franchises. For an investment of about $85,000, husband-andwife teams can own their own store; Subway provides the training. In contrast, the start-up cost to open a McDonalds is about a $1 million. Subway signs a lease for a small commercial space with a landlord, and rents are low since the stores have limited seating. The bread is baked on the premises. Staff costs are also nominal— during busy periods, just two people are needed: one to make the sandwiches, which is not complicated, and one to staff the register. There is no grill and no fryer. In 1978, Subway’s 100th store opened. DeLuca and Buck’s original strategy to increase visibility had become a cornerstone of their long-term plan. “Even when we were small, Fred always thought we should compete with McDonalds,” a top executive, Dick Pilchen, told Nations Restaurant News. “He probably won’t be happy until we surpass McDonalds in size.”
2 0 4
B u s i n e s s
Subway passed the 1000 store mark in 1987. In 1993 alone, over 1100 units were opened—McDonalds opened just under 800 that same year. DeLuca believes that overall volume sales increase in a region along with the number of Subway shops in that area. DeLuca’s belief caused some concern among franchise owners. Franchisers who, in some cases, had given what amounted to their life savings to the Subway parent company for the right to operate a store, were unhappy when a new Subway outlet opened a few miles away and cut into their revenues. In 1998, Subway had over 10,000 stores in the United States, but faced criticism: there were 160 lawsuits pending against the company in various stages, from franchisers who claimed fraud to landlords suing for unpaid rent. This figure was higher than the combined number of lawsuits pending against seven of Subways biggest competitors. The Federal Trade Commission investigated the company for unfair franchise practices, but the suit was dropped for lack of evidence. Later, another business venture of DeLuca’s, Cajun Joes, faced similar inquiry. DeLuca, and his company respond to criticism by pointing out the nature of the franchise business. In many cases, franchisers are first-time business owners. One of DeLuca’s maxims is: Everybody goes to high school, but not everybody reads the book, according to one of his associates quoted in Nations Restaurant News. Franchisers are provided with a two-week training session, and then provided with guidelines about cleanliness and service—but they don’t always follow them. DeLuca recounted an anecdote about one store he visited with dirty windows, and how he told the owner they needed washing. When he returned a day later, the windows were still dirty. I was really upset, because I knew that would negatively impact their sales, but I couldn’t do anything about it, he told Suzanne Kapner and Peter O. Keegan in Nations Restaurant News. Visiting stores is an integral part of DeLuca’s job. He is known to drive cross-country for a tour of anonymous visits, in which he simply orders a sandwich. Owners or employees rarely recognize him. With over 10,000 outlets in the United States alone, he tries to pack in as many visits as his day permits, and sometimes eats a half-dozen submarines a day—if the sandwich is made properly, I can eat one for every meal and never get sick of them, DeLuca told Carrie Shook of Business First-Columbus.
Social and Economic Impact Subway has grown into the most successful fastfood franchise after the colossal McDonald’s corporation. It has over 13,000 outlets around the world. Despite the legal problems, many praise DeLuca and his handson attitude. “Fred understands franchisees better than most presidents because he started out very poor,” one franchise owner told Nations Restaurant News.” He knows the value of a dollar and the hard work it takes to
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
F r e d
make sandwiches, wash floors, and clean bathrooms. He came from there.”
Behar, Richard. “Why Subway Is The Biggest Problem in Franchising.” Fortune, 16 March 1998.
Mitchell, Russell. “Fred DeLuca: The New Hero of the Sandwich Stand.” Business Week, 8 August 1988.
Contact at: Subway International 325 Bic Dr. Milford, CT 06460 Business Phone: (203)877-4281
L e a d e r
Bibliography Kapner, Suzanne, and Peter O. Keegan. “Fred DeLuca.” Nations Restaurant News, January 1995.
Sources of Information
B u s i n e s s
D e L u c a
Shook, Carrie. “Fred DeLuca Goes Underground to Monitor the Mayo.” Business First-Columbus, 29 May 1995.
P r o f i l e s
f o r
S t u d e n t s
2 0 5
Cecil B. DeMille (1881-1959) Motion Picture Producer and Director
Overview Cecil B. DeMille, along with Jesse L. Lasky and Samuel Goldwyn, made Hollywood into the world’s movie-making capital. DeMille was the groundbreaking producer and director who is credited with many technologies and practices every filmmaker today takes for granted. Out of a barn in the quiet Los Angeles suburb of Hollywood in 1913, the future of movies began when DeMille made his first movie, “The Squaw Man.” His epic dramas include two versions, silent and sound, of “The Ten Commandments,” as well as “Samson and Delilah” and “The Greatest Show on Earth.” These films gave him his place in Hollywood history as one of the most flamboyant directors of all time.
Personal Life Cecil Blount DeMille was born on August 12, 1881 in Ashfield, Massachusetts when his parents were on theatre tour, performing one of their own plays. His parents are Henry C. and Mathilde (Samuel) DeMille. The DeMille family was of Dutch ancestry and had been in America since 1658. Mathilde was born in England. The DeMilles were both employed as teachers at John Lockwood’s Academy in Brooklyn, New York, at the time of Cecil’s birth. Henry DeMille had intended to become an Episcopalian minister. However, as DeMille told in a story about his parents shortly before his death “ . . . . My father studied to be an Episcopalian minister—then he met my mother who was a teacher of English at Lockwood’s Academy. She told him he would have a much larger congregation in the theatre than he would in the
2 0 6
C e c i l
B .
D e M i l l e
pulpit. In the pulpit he would have a few thousand people, and in the theatre he would have hundreds of thousands. He accepted her advice and became a playwright, and a good one.” Cecil had one older brother, William, and a younger sister, Agnes, who died as a baby. Much of DeMille’s boyhood was spent at homes in New Jersey. The first home was in Echo Lake. The second was built by DeMille’s father in Pompton Lake in 1892. Henry DeMille spent every evening reading to his sons from the Bible. He would read one story from the Old Testament and one story from the New. This early acquaintance with the drama of the Bible affected DeMille throughout his life and his work. DeMille’s father died suddenly from typhus in 1893. Only two months later, Mrs. DeMille opened the Henry C. DeMille School in their home. She raised her sons on her own, adapting to the kindly but stern standard her husband had begun with them. When he was 15, DeMille entered the Pennsylvania Military College in Chester, Pennsylvania. He enjoyed this harsh education, complete with early morning drills, cold baths, and a strict religious tone. At the beginning of the Spanish-American War, DeMille tried to run off and volunteer, but he was too young to be accepted. So instead of going to Spain, he began studying for a career in acting at the American Academy of Dramatic Arts in New York City. He made his acting debut in 1901. On August 16, 1902, DeMille married Constance Adams, an actress with whom he was touring. They had four children: Cecilia, Katherine, John Blount, and Richard. DeMille, even at the peak of his Hollywood career, preferred quiet family evenings at home to glamorous parties. When DeMille was almost 30 years-old, in 1911, he gave up acting. He joined his mother and launched a theatrical agency. With that crucial move, DeMille’s personal life and career would barely be separated again. While filming “The Ten Commandments” in 1956, DeMille suffered his first heart attack. That one did not slow him down for long, but a second heart attack that he suffered in his Hollywood home proved fatal. DeMille died on January 21, 1959.
Career Details DeMille was working as general manager of his mother’s theatrical agency when he met Jesse L. Lasky and Lasky’s brother-in-law, Samuel Goldfish, who later changed his name to Goldwyn. The three men formed a partnership in 1912, known as the Jesse L. Lasky Feature Play Co., with $20,000 in capital. After only one day of learning the basics in the Thomas Edison studios in New York, DeMille headed west to shoot his first movie. “Squaw Man” had been a successful Broadway play, a
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Cecil B. De Mille.
(Archive Photos, Inc.)
melodrama set in Wyoming. He intended to shoot the picture in Flagstaff, Arizona. When the train stopped there, however, it was bleak and rainy, so he decided to stay on the train all the way to Los Angeles. The sunny skies were perfect for lighting. The long season without rain was ideal for working outside, even when shooting indoor scenes. DeMille set up his first studio in a barn at the corner of Vine and Selma. The studio later moved to Marathon Street. It eventually evolved into Paramount Studios, and remained at that location. DeMille was not the first producer to work in Hollywood. Yet the fact that he decided to stay there and continue to create movies made all the difference to the future of movies. His first movie had a budget of $15,000.
S t u d e n t s
2 0 7
C e c i l
B .
D e M i l l e
Chronology: Cecil B. DeMille 1881: Born. 1898: Entered American Academy of Dramatic Arts, New York City. 1912: Cofounded Jesse Lasky Feature Play Co. with Lasky and Samuel Goldwyn. 1913: Made first picture, “The Squaw Man.” 1916: Introduced color for first time in “Joan the Woman.” 1923: Made first “Ten Commandments.” 1929: Made his first sound picture, “Dynamite.” 1949: Won Lifetime Achievement Academy Award. 1952: Received Irving G. Thalberg Memorial Award from Academy of Motion Picture Arts and Sciences. 1953: Won Best Director, Golden Globe Awards, for “The Greatest Show on Earth.” 1956: Released second version of “Ten Commandments.” 1959: Died.
It ended up earning a remarkable $225,000. With that success, he bought out his partners Lasky and Goldwyn. After two more successful DeMille films, Lasky moved his entire operation to California in 1914. He worked with Alvin Wyckoff, one of early Hollywood’s most important cameramen. Wyckoff’s invention of new camera lenses that aided shooting under difficult conditions furthered DeMille’s early work. DeMille quickly became known as a welcome middle ground between D.W. Griffith’s serious, intense dramas, and Max Sennet and Hal Roach’s slapstick comedies. He was a hit at the box office with his popular dramas. But DeMille’s status slipped when he made his first epic, “Joan the Woman,” based on the story of Joan of Arc, in 1917. The public was apparently not ready for such a lengthy, serious drama, and the film was roundly criticized. DeMille’s next few years of moviemaking continued to be difficult, as he made one box office flop after another. When he made the movie “The Whispering Chorus” not long after “Joan,” he ventured into a more sophisticated artistic method. The film featured a
2 0 8
B u s i n e s s
chorus of whispers following the leading man throughout the movie, as he attempted to avoid his debts by faking his own death. While it was recognized to have critical merit, the public scorned it. DeMille seemed determined to give the public what they wanted following these resounding failures. He regained his fame with ordinary people by making social comedies with moral messages. In 1923, having re-established himself as a moneymaker for producers and studios, DeMille set out to make his second epic, “The Ten Commandments,” which cost more to make than any movie up to that time. The final cost was $1.5 million. Adolph Zukor, head of the studio, was upset enough to talk about stopping production. But DeMille did finish the movie, and it was a blockbuster. DeMille made 70 films during his career in Hollywood. While not all of his movies were successful, he brought much more to Hollywood. His many innovations in filmmaking established the norm in the business. In addition to his introduction of color in movies, he was also well known as the person who invented “Rembrandt lighting,” a technique of lighting part of a character’s face for accent, much as a spotlight would on stage. He was also responsible for the first camera “boom” by which the camera could move around a set. In addition, once “talkies” (motion pictures with sound) began, he invented the standard sound “blimp,” the protective cell to keep machinery noises recording onto a sound track. DeMille also wrote over 30 screenplays. DeMille did not often enjoy critical acclaim. Until his “Greatest Show on Earth” won Best Picture at the 1953 Academy Awards, only one of his many films had received an Oscar. That was “Reap the Wild Wind,” in 1940. Anne Bauchens, the first woman editor of a motion picture, won the award for Best Editing. In 1949 he received the Irving G. Thalberg Award for lifetime achievement from the Academy of Motion Pictures for “thirty seven years of brilliant showmanship,” in the words of the Academy. The McCarthy Hearings in the United States Senate on Communist activities signaled an end to the respect DeMille enjoyed in Hollywood. His testimony as a political conservative against Joseph Mankiewicz, then president of the Director’s Guild, brought DeMille many enemies. Other directors, especially John Ford, began to turn away from him following the hearings. DeMille’s side career as the host and narrator of Lux Radio Theater was also ended by the radio union for his political action. He was thereafter barred from the radio air. DeMille made his final movie, “The Ten Commandments,” in 1956. Again, it was blockbuster at the box office, even if it was not his most respected picture. Until later directors such as Steven Spielberg emerged in the 1980s, “The Ten Commandments” remained the most successful commercial film of all time. The movie is shown on the American Broadcasting Company (AMC) network annually at Easter, and continues to reach a wide audience.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
C e c i l
Social and Economic Impact DeMille helped found Hollywood in the early part of the twentieth century and helped make a tiny section of Los Angeles emblematic of American culture known throughout the world. It was DeMille himself who decided to stay in Hollywood and make it the place where movies were made. The economic significance of the motion picture industry in America is almost without parallel when it comes to making fortunes. Hollywood (along with the aerospace industry) was responsible for California becoming the money and entertainment capital of the world. DeMille also produced more efficient films with his technical innovations in camera, sound, and lighting.
B .
D e M i l l e
vented by DeMille. It was DeMille, however, who best captured that mood. DeMille influenced a whole century by telling the stories people wanted to hear and see. Andrew Sarris, in his book The American Cinema, said of DeMille, “He may have been the last American director who enjoyed telling a story for its own sake.”
Sources of Information Bibliography Byers, Paula K. and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1998.
DeMille’s conservative religious background influenced his movies profoundly. The advice of DeMille’s mother had radically influenced his father’s life and it was DeMille who fully reaped the benefits of that wisdom. His Biblical and moral dramas brought religion to many people. DeMille’s interpretation of the Bible made moviegoers flock to his pictures. The American taste for explicit films with a puritanical undertone was not in-
Hochman, Stanley, ed. A Library of Film Criticism. New York: Frederick Ungar Publishing Co., 1974.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
“Cecil B. DeMille Obituary.” Variety, 28 January 1959. Contemporary Authors. Detroit: Gale Research, 1996. Available from http://galenet.gale.com. Higham, Charles. Cecil B. DeMille. New York: Charles Scriber’s Sons, 1973.
2 0 9
Richard DeVos (1926-) Amway International
Overview Richard DeVos heads one of the most lucrative enterprises in the world. In 1997, his personal wealth was estimated at $3.2 billion, making him one of the wealthiest Americans of the decade. What is more remarkable is that his Michigan-based Amway Corporation, founded in 1959 with his high school friend Jay Van Andel, brings in about $7 billion a year though a simple formula: selling household products and other goods through a vast network of sales people and distributors, many of whom work part-time.
Personal Life DeVos was born in 1926 in Grand Rapids, Michigan. The southwestern corner of the state had drawn many Dutch immigrants in previous decades, and DeVos, like his next-door neighbor Jay Van Andel, grew up in a close-knit Dutch-American community. Simon DeVos, his father, was an electrician, and the family were devout Christians of the Reform Christian faith. As teens at Grand Rapids Christian High School, DeVos and Van Andel dreamed of becoming business owners. During World War II, they served in the Army Air Corps, and both later graduated from Grand Rapids’ Calvin College. In 1953 DeVos married Helen Van Wesep, and they had four children. Once known as a tireless business traveler for the Amway cause, DeVos underwent triple-bypass heart surgery in 1992, and retired from the day-to-day operations that same year. In 1997, at the age of 71, he had heart-transplant surgery in England.
2 1 0
R i c h a r d
D e V o s
Richard DeVos and his wife, Helen, return to a large welcome home party at the Amway hangar at Kent County International Airport in Grand Rapids, Michigan, after receiving a heart transplant in London on June 2, 1997. (AP Photo/Grand Rapids Press, Brad Coville.)
Despite the immense wealth his company brought him, DeVos continued to call the Grand Rapids area home. He is still active in the LaGrave Avenue Christian Reform Church in the city. DeVos is also the owner of the Orlando Magic basketball team and in his more robust days liked to race ocean-going yachts. Secondgeneration DeVos and Van Andel family members have taken over some of the top positions in the company and on its board.
Career Details DeVos and Van Andel saw themselves as entrepreneurs from a young age but had difficulty in finding or creating a solid opportunity. After serving in the Army Air Force, they began a flying school outside of Grand Rapids, Wolverine Air Service. It was unsuccessful, so they then opened a drive-in restaurant. DeVos did the cooking while Van Andel waited on cars. In 1948, they bought a schooner to sail to South America, but neither had much experience and the boat sunk between Cuba and Haiti. Returning home to Grand Rapids once more, they went to work as sales agents for Nutrilite, a California vitamin company. Its products were “directly marketed,” that is, not sold in stores, but purchased by salespeople at a discount from the company and then sold to
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
customers. Nutrilite distinguished itself from other direct-marketing companies in that it used what was called a multilevel marketing system. Salespeople received commissions on the products they sold, but could also advance through the ranks by recruiting new salespeople into the company; they then received a commission on the profits of those they brought in. DeVos, often described as a natural salesperson, was successful at selling the Nutrilite line, and both he and Van Andel rose to prominence in the company. Yet differences with executives led them to break out on their own in 1959. Some sources note that Van Andel was asked to take over company presidency in 1957, but declined; other sources credit DeVos and Van Andel with developing key products in the Nutrilite line. Yet another source explains that Amway was founded when DeVos and Van Andel incorporated new products into the Nutrilite system that they were already selling. Amway did eventually add the Nutrilite vitamins and food supplements to its product line. What is not in dispute is the founding of Amway in early 1959 and the modeling of its employee hierarchy on the same multilevel, commission-based idea as Nutrilite. “We call our company Amway because the American way of private ownership and free enterprise is the best way,” DeVos told recruits early on. The company began in the basements of the DeVos and Van Andel
S t u d e n t s
2 1 1
R i c h a r d
D e V o s
are also encouraged to buy these tapes to sell to others. Many recruits burn out after a few months, and find that their friends and extended family members shun them after too many sales pitches and recruitment efforts.
Chronology: Richard DeVos 1926: Born. 1944: Enlisted in U.S. Army Air Force. 1953: Married Helen Van Wesep. 1959: Cofounded Amway Corporation. 1969: Company rebounded after fire destroyed plant and offices. 1979: Launched Amway in Japan. 1983: Charged with customs fraud in Canada; paid $25 million fine. 1989: Amway received Environmental Programme Achievement Award from the United Nations. 1992: Retired from Amway. 1997: Underwent heart transplant.
homes in Ada, Michigan, outside of Grand Rapids and is still headquartered in Ada. The first Amway products were household cleaners, including a biodegradable soap called “L.O.C.” DeVos and Van Andel had bought the recipe from a chemist in Detroit. Together, the co-founders created and refined a complex and sometimes controversial corporate structure for Amway. A person enters the sales force after being “sponsored” by a present member. These salespeople can be known for their enthusiastic tactics that often appeal to average-income families struggling to make ends meet. “How would you like to make an extra $1000 a month?” begins the typical Amway recruitment pitch, and new salespeople are encouraged to tape pictures of things that they would like to own such as a summer cottage or a luxury car to their refrigerator to encourage them in meeting their goals. Once a person has purchased a starter kit and a number of Amway household products, they are encouraged to recruit others. What is known in Amway terminology as the “downline” is then created; this is the number of recruits a person has signed up. After a certain number, they become a “distributor” and then get a percentage of every product sold by members on their downline. This sales force keeps in touch with one another via Amvox, a voice-mail system they rent from the company. Amway also sells their sales force motivational tapes, many recorded by DeVos himself. Amway sellers
2 1 2
B u s i n e s s
Though many top distributors do indeed become rich by selling Amway and recruiting new members, according to a disclaimer required by Federal Trade Commission, the average Amway distributor earns about $88 a month. Such tactics led to investigations by the FTC beginning in the 1970s. Amway was cautioned for its recruitment techniques, but not found guilty of fraud. Canadian authorities were more persistent, and uncovered a scheme detailed in executive memos between DeVos, Van Andel, and other top Amway officers that pointed to a conspiracy to undervalue their Amway goods through a system of dummy invoices and fake transactions. In 1982 Canadian customs officials brought formal criminal charges against DeVos, Van Andel, and two other executives. Between 1965 and 1980, Canada claimed, Amway had underpaid about $23 million in customs duties. In response, Amway declared that Canadian customs officials had long been aware of the company’s practices and they attempted to have the case moved to U.S. courts. They refused to appear in Canada to answer for the charges, saying they were unwilling to give up the constitutional protections that American citizens on American soil enjoyed. In 1983, DeVos and the other executives entered a guilty plea and agreed to pay a $25 million fine. Another FTC investigation found that Amway recruiters had overstated earning potential, and in 1986 the company paid a $100,000 fine. By the 1990s, there was a class-action suit against the company in a Pennsylvania district court that was open to anyone who had been an Amway distributor between 1990 and 1996 and bought its motivational tapes or books. Despite such setbacks, Amway has grown into a hugely successful company. It posted record growth in the 1980s and 1990s, and in 1997 had a sales force of 2.5 million in 80 countries around the world. Asian markets have been especially receptive to the free-enterprise credo of Amway. The company launched operations in Japan in late 1970s, and they later spun off the subsidiaries Amway Japan and Amway Asia Pacific into publicly-held companies with stock offerings on Wall Street. In Japan, it is estimated that almost 1 percent of the population is involved in the Amway network.
Social and Economic Impact From its beginnings, Amway attempted to create and market products that did not harm the environment. Its first product, L.O.C., contained no phosphates or solvents; only in the 1970s did major manufacturers begin trumpeting the biodegradable features of their soaps and cleaning products. As DeVos recalled in Compassionate
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
R i c h a r d
D e V o s
Capitalism, he and Van Andel “grew up fishing, swimming, and playing in . . . lakes and streams” around Grand Rapids, but were dismayed when they realized how polluted the waterways of western Michigan were becoming. In the 1990s, almost all of the Amway products are biodegradable, packaging is usually paper, a soybean derivative is used as carton filler instead of Styrofoam, and no products are tested on animals. For their long commitment to the “green revolution,” Amway was awarded the Environmental Programme Achievement Award from the United Nations in 1989.
sion broadcast costs of the Republican Party’s national convention in San Diego in the summer of 1996. In the spring of 1997, he sent two checks totaling $1 million to pay for debts stemming from the 1996 election. Jill Abramson of the New York Times noted that by 1997, the company had given almost $4 million to the Republican National Committee in just under four years, and “won a lucrative measure to ease international tax rules on its Asian affiliates in the sweeping tax bill passed by Congress last summer. The measure was championed by the Republican congressional leadership.”
The influence of Amway as a corporate philanthropist began in downtown Grand Rapids. In the 1970s, as their company grew successful, DeVos and Van Andel donated millions of dollars to revitalize the declining city center. Today, there is the Amway Grand Plaza Hotel, and the Van Andel Museum Center/Public Museum of Grand Rapids.
Amway’s entry into China, which is still technically a Communist nation, is predicted to be its biggest success yet. In 1995, the company spent $100 million for a recruitment campaign and also constructed a massive plant. To accomplish this presence it was necessary to court the Chinese government, and company officials were so successful in this they even won permission to hold Amway rallies.
DeVos and Van Andel became known for their support of certain conservative issues, such as a stance against a constitutional amendment which would guarantee women’s suffrage. Sometimes they paid for fullpage newspaper ads to get their views across, and by 1980 owned the nation’s largest radio network, Mutual Broadcasting Network. That same year, two Detroit Free Press reporters, Patricia Montemurri and Larry Werner, wrote a series of articles for the paper called “Amway: Profits and Politics,” in which they wrote of “the emergence of Amway as a conservative social movement.” In the series, a prominent business person in Grand Rapids who wished to remain anonymous told Montemurri and Werner that “there isn’t a great deal of difference between what Amway is saying and what (Ronald) Reagan is saying.” At the time, Reagan was campaigning to win the Republican nomination for the presidency and would later that year win that election as well as a second term four years later. The values Reagan spoke of in his campaign speeches hearkened back to a simpler era and appealed to many Americans’ sense of patriotism: America is a great country, capitalism works, and if a person has not achieved material success, it is likely due to their own shortcomings. Such messages had long been a staple of the Amway creed. When the Berlin Wall fell in 1989, and Soviet-style communism in Eastern Europe with it over the next few years, Amway became a presence in those countries and found many eager to join Amway’s free-enterprise road to success. A documentary film that presented a frank look at Amway’s presence in Poland was suppressed by the company from distribution for several months in 1998. Some of the success that Amway people have achieve in Eastern Europe, however, are detailed in DeVos’s 1993 book, Compassionate Capitalism.
Sources of Information Contact at: Amway International 7575 E. Fulton St. Ada, MI 49301-9173 URL: http://www.amway.com
Bibliography Abramson, Jill. “Money Buys a Lot More than Access.” New York Times, 9 November 1997. “Amway: A Savior—Or a Villain?” Detroit Free Press, 18 June 1980. Anstett, Patricia. “DeVos Gets a New Heart.” Detroit News, 4 June 1997. Butterfield, Stephen. Amway: The Cult of Free Enterprise. Boston: South End Press, 1985. DeVos, Rich. Compassionate Capitalism: People Helping People Help Themselves. New York: Dutton, 1993. Grant, Linda. “How Amway’s Two Founders Cleaned Up.” U.S. News & World Report, 31 October, 1994. Guest, Larry. “Rich DeVos on Road to Recovery with New Heart.” Saturday Evening Post, September/October 1997. Kushma, David. “Amway Officials to Boycott Court,” Detroit Free Press, 30 November 1982. McKinsey, Kitty. “The Two Who Built and Run Amway.” Detroit Free Press, 22 August 1982. Montemurri, Patricia and Larry Werner. “A World Where Dreams Are Sold.” Detroit Free Press, 16 June 1980. “Over $3,000,000,000.” Forbes. 14 October 1996. Spolar, Christine. “Polish Film Ignites Debate.”Washington Post, 19 July 1998.
Free
Speech
DeVos is a major contributor to the Republican Party. During the 1980s he was appointed to a national commission on AIDS by President Reagan. In 1994, he donated $2.5 million, and offered to pay for the televi-
Werner and Montemurri. “The 2 Big Men Behind an Even Bigger Company.” Detroit Free Press, 17 June 1980.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
2 1 3
Walt Disney (1901-1966) The Walt Disney Company
Overview Walt Disney was one of the great pioneers of filmmaking and the creator of several classic films, most notably his feature-length animated films such as Snow White and the Seven Dwarfs and Pinocchio. Disney, who grew up almost without a childhood, found a way to amuse himself as an adult by making cartoons and filling them with characters like Mickey Mouse and Donald Duck. Creator of cartoons, live-action movies, theme parks, and television programs for the whole family, Disney introduced wholesome family entertainment on a world scale, and was one of the major entertainment forces of the twentieth century.
Personal Life Walter Elias Disney, known throughout most of his life as Walt Disney, was born on December 5, 1901, in Chicago, Illinois. He had three older brothers and a younger sister. He and one of his older brothers remained especially close throughout Disney’s lifetime and pursued the same business together. Disney’s parents, Elias and Flora Disney, came from farming backgrounds, Elias from Canada and Flora from Ohio. Walt’s father was a strong influence on the entire family. A stern religious fundamentalist, he readily disciplined his children with his belt. He also denied the children toys, games, and sporting equipment associated with childhood, and this experience may have had some impact on Disney’s later passion for the entertainment of children.
2 1 4
W a l t
D i s n e y
Growing up in the Disney family was further complicated by the father’s pro-union activism and his political support of the socialist presidential candidate, Eugene Debs, as well as his tendency to change jobs frequently. The family was forced to move to both rural and urban areas all over the Midwest, from Chicago to Marceline, Missouri, to Kansas City, Missouri, and back to Chicago. Disney’s father worked in farming, railway shops, carpentry and contracting work, and newspaper distribution. The family was always on the verge of financial collapse, and everyone in the family who could do some kind of work, like deliver newspapers, did. Disney, according to his brother and lifelong business partner Roy, always enjoyed country life. He loved the animals he encountered, some of which may have inspired him to create cartoon animals in his later career in filmmaking. Disney had a difficult time gaining an education because of his family’s constant moving and his need to work to help support the family. When he was 16, though, he was able to join an art class at the Chicago Academy and Fine Arts, where he developed his modest drawing skills. Disney dropped out of high school at age 17 to serve in World War I. He had tried to follow his brother Roy into the Navy but was rejected because he was underage. He was accepted as an ambulance driver for the Red Cross after altering the birthdate on his application. He served in France for a short time and returned to the United States in 1919. After returning from the war, he moved on his own to Kansas City, Missouri, where he worked a variety of jobs as a commercial artist and cartoonist. Disney met Lillian Bounds, one of the employees in his first cartoon-film studio in the early 1920s, and they married on July 13, 1925. The marriage lasted a lifetime, and they produced two daughters. Disney was known as a perfectionist and a demanding man. Some people saw him as self-centered, and he seemed often baffled when people disagreed with him. He was described by friends and coworkers as a driven man, even “a workaholic.” Disney’s personal life was filled with paradoxes. He smoked constantly, yet seemed to dislike this bad habit in others. Politically, he was the total opposite of his father. Disney joined the Republican Party in California and remained a firm political conservative. Though he loved country life, he spent most of his life in cities. A complex man, he suffered two nervous breakdowns in his life, one at age 30, and another a decade later, after half the cartoonists of his company went out on strike against him in a dispute about his labor practices. By 1960, Disney had become a wealthy man, despite many ups and downs in his career. Just as he neared the pinnacle of his career, after having won five Oscars for his production of the movie Mary Poppins, he learned that his lifetime of cigarette smoking was to have consequences. He had surgery for lung cancer in 1966. Though he appeared to be recovering, he had a relapse and died on December 15, 1966.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Walt Disney.
(The Library of Congress.)
Disney received more than 700 awards for his creative achievements, including an honorary Academy Award in 1939, four Academy Awards in 1954, and the Presidential Medal of Freedom, awarded to him by President Lyndon B. Johnson in 1965. He was also honored with the Freedom Foundation Award later that same year.
Career Details By 1922, Disney had set up his first small cartoonproduction company in Kansas City with Ub Iwerks, whose drawing ability and technical inventiveness were prime factors in Disney’s eventual success. Their business soon failed, though, and Disney took a job with an ad service that made cartoon advertisements to be shown between movies at the local theater. Disney gained a basic understanding of the medium and, anxious to get back out on his own, moved to Hollywood, California, in 1923 and started a business with his brother Roy. Out of his “garage” operation there, Disney filmed a live performance with cartoon figures from Alice in Wonderland. He expanded on this idea with the creation of a series called Alice in Cartoonland. He produced 56 of these cartoons in three years and in 1927 returned to a straight cartoon format with his Oswald the Rabbit series, producing 26 of these cartoons in less than two years. By about 1927, Disney began looking for a new approach to his cartoons and a new character. He came up
S t u d e n t s
2 1 5
W a l t
D i s n e y
students, using state-of-the-art technology, who made possible the first feature-length cartoon, Snow White and the Seven Dwarfs. Other costly animated features followed, including Pinocchio and Bambi.
Chronology: Walt Disney 1901: Born. 1923: Produced his first cartoon series, “Alice in Cartoonland.” 1928: Created Mickey Mouse. 1937: Produced first great critical and financial success, Snow White and Seven Dwarfs. 1941: Began making training and instructional films for the armed forces. 1954: Appearance of the television show, Disneyland. 1954: Received four Academy Awards. 1955: Opened Disneyland theme park. 1966: Died.
with a mouse character called Mortimer, but his wife Lilly thought the name was too stiff and convinced Disney to go with Mickey instead. Mickey Mouse came to life in 1928, first as a pilot, then as an adventurer, a sort of pirate-character. Late in 1928, after seeing the first sound movie, The Jazz Singer, Disney decided to make the first all-sound, talking-and-music cartoon, with Mickey Mouse starring as “Steamboat Willie.” By 1936, eight years later, critics and fans alike agreed that Mickey Mouse was the most recognized figure in the world. Songs were written about him. Watches had his face on them. He could be found everywhere. Disney was called “a genius.” During this time, Disney studios launched other successful cartoon characters, including Donald Duck and Pluto. Although he had stopped actually drawing the cartoons himself by 1927, and relied on a staff of animators to implement his ideas, Disney himself was the voice of Mickey Mouse in all the cartoons from 1928 to 1946. Disney’s cartoons, both short and full-length features, won many awards. During the 1930s, the Disney cartoons were a phenomenon of worldwide success. This success led to the establishment of immensely profitable, Disney-controlled, sidelines in advertising, publishing, and franchised goods, which helped shape popular tastes for nearly 40 years. Disney expanded his business rapidly, creating new studios and a training school for animators. It was these
2 1 6
B u s i n e s s
In the 1940s, despite his many successes, Disney produced a series of financial “flops,” including a film now regarded as a classic, the animated feature Fantasia. Fantasia did poorly at the box office, and Disney was devastated. Then half his artists went on strike against him, protesting his dictatorial style. Some say that if it were not for a government contract he obtained to produce service-related training films, Disney might have gone bankrupt by the end of World War II. Luckily, he was able to reexamine his studio operations and pursue other directions successfully. During the 1950s he made a series of live-action feature movies, such as Treasure Island, and his favorite, So Dear To My Heart. With the advent of Seal Island, Disney moved into wildlife films, and expanded production of live-action pictures, which led to many other family films. His elaborate production of Mary Poppins, which won five Academy Awards two years before Disney’s death, was one example of a successful family film that used occasional animation and plenty of music. In 1954, Disney also began to do something revolutionary for the time: he began to produce for television, which had been the traditional “enemy” of the movie business. During the 1950s, Disney joined with American Broadcasting Company TV productions and made a fortune producing Davy Crockett and The Mickey Mouse Club for television exclusively. By the time of his death, Disney had more than 280 television shows to his name. Disney also began to develop his famous Disneyland theme parks, the first opening in 1957 in Anaheim, California. Disney World, in Orlando, Florida, was not completed until after his death, in 1971. Disney’s vision was to interconnect all his many business ventures so that one would help the other; in other words, seeing his work on TV would cause people to want to go to Disneyland, and going to Disneyland would cause people to want to see family-oriented Disney movies. Disney’s dream of creating a city of the future was realized in 1982 with the opening of EPCOT, which stands for Experimental Prototype Community of Tomorrow, a real-life community of the future. Disney theme parks have continued to expand with the opening of Disney-MGM Studios and Animal Kingdom. By the 1960s, Disney had created a diversified empire, founded on the animal icons, like Mickey Mouse, that had first brought him such fame. The Disney empire is noted for its traditional family values, wholesome middle-class productions, and high level of quality control. Today, the Walt Disney Company, with the creation of Touchstone Pictures, has branched out to a broader range of films. Disney also owns Hollywood Records, and even has its own cruise line. It is a multibillion-dollar enterprise with undertakings all over the world.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
W a l t
D i s n e y
Bibliography
Social and Economic Impact The impact of Walt Disney’s career has been felt throughout much of the twentieth century. His creation of wholesome cartoon characters and first-rate animation made Disney what British cartoonist David Low called “the most significant figure in graphic arts since Leonardo.” After Disney’s death, his classic films continue to be shown, the TV Disney Channel broadcasts his work to TV audiences 24 hours a day, and his theme parks in America and elsewhere (including Tokyo and Paris) sell his wholesome vision of America as a mecca. Disney’s impact on childhood entertainment is almost immeasurably great and, at the time of his death, Disney’s business empire was estimated to be worth over $100 million a year. In addition, Disney created a new university, the California Institute of the Arts. Disney once said, “If I can help provide a place to develop the talent of the future, I think I will have accomplished something.” “Walt Disney” continues to be a household name in American homes.
Anderson, Harry. “Staking Their Names on It.” Los Angeles Times, 2 October, 1989. Apple, Max. “Uncle Walt.” Esquire, December 1983. Byers, Paula and Suzanne Bourgoin, eds.Encyclopedia of World Biography. Detroit: Gale Research, 1997. Downs, Robert B., John T. Flanagan, and Harold W. Scott. More Memorable Americans, 1750-1950. Littleton, CO: Libraries Unlimited, 1985. Finch, Christopher. The Art of Walt Disney. New York: Harry N. Abrams, 1973. Garraty, John A. and Mark C. Carnes, eds. Dictionary of American Biography. New York: Charles Scribner’s Sons, 1988. Maltin, Leonard. The Disney Films. New York: Bonanza Books, 1973. Mosely, Leonard. Disney’s World. New York: Stein and Day, 1985. Munsey, Cecil. Disneyana: Walt Disney Collectibles. New York: Hawthorn Books, 1974. Schickel, Richard. The Disney Version. New York: Simon and Schuster, 1985.
Sources of Information
Shaw, John Mackay. Childhood in Poetry. Detroit: Gale Research, 1980.
Contact at: The Walt Disney Company 500 S. Buena Vista St. Burbank, CA 91521 Business Phone: (818)560-1000 URL: http://www.disney.com
B u s i n e s s
L e a d e r
Who Was Who in America. Chicago: Marquis Who’s Who, 1968.
P r o f i l e s
f o r
S t u d e n t s
2 1 7
Donald Douglas (1892-1981) Douglas Aircraft
Overview Donald W. Douglas, Sr. was a designer and entrepreneur who founded what became the Douglas Aircraft Company in 1920. His innovative aircraft designs revolutionized civilian and military aviation. Among his most successful designs was the DC-3, which became the standard for civilian and military air transportation around the world and remains in service more than 60 years after its first flight in 1935. Douglas merged his company with the McDonnell Company in 1967, forming McDonnell Douglas. In 1996, McDonnell Douglas itself was merged with the Boeing Company, creating the world’s largest producer of civilian aircraft.
Personal Life Donald W. Douglas, Sr. was born in Brooklyn, New York in 1892, the second son of William Douglas, a banker, and Dorothy Hagenlocker, a German immigrant. At an early age, he acquired a love for the sea and sailing that would later influence his work as an aircraft engineer. An energetic and bright child, Douglas was once sent home by a grade school teacher for correcting her pronunciation. Later, at Trinity Chapel School, Douglas developed his love for words as the editor of the school magazine and won a number of prizes, including a fivedollar gold piece for his essay on Trinity Church. At age 14, Douglas wrote and published a book of poetry, printing copies on a press in his home. But Douglas soon found another source of inspiration. In 1908, Wilbur and Orville Wright announced the
2 1 8
D o n a l d
D o u g l a s
trial demonstration of their new biplane, the Flyer, at Fort Meyer, Virginia. A 16-year-old Douglas persuaded his mother to accompany him to Virginia to witness the trials, an experience that would change him forever. In 1909, Douglas was appointed to the U.S. Naval Academy, following the lead of his older brother, Harold. He spent much of his spare time building rubber bandpowered airplane Models and he also tried, unsuccessfully, to build a rocket-powered model. The resulting smoke caused a panic when he launched it from the window of his room. In 1912, he left the Naval Academy because, as a Douglas Aircraft Company release would say years later, he could not “interest his officers in the airplane as a naval weapon.” He immediately transferred to the Massachusetts Institute of Technology (MIT). Finishing after only two years, he became the schools’ first aeronautical engineering graduate. In later years, Douglas served as a member of the 1932 U.S. Olympic Yachting Crew and won the silver medal in sailing (six-meter class). He also garnered a series of prestigious awards for his aviation designs, including the Guggenheim Gold Medal and the Wright Brothers Trophy. Douglas was married twice and had four sons and one daughter.
Chronology: Donald Douglas 1892: Born. 1914: Graduated from MIT after two years. 1920: Founded Davis-Douglas Company. 1924: Douglas World Cruisers become first planes to circle the globe. 1928: Established Douglas Aircraft Company. 1932: Designed DC-2 for TWA. 1935: DC-3 debuted. 1958: DC-8 became company’s first jet-engine passenger plane. 1967: Merger created McDonnell Douglas. 1981: Died.
Career Details Douglas stayed at MIT for an additional year after graduating to work as a research assistant on the first wind tunnel, and also worked briefly for the Connecticut Aircraft Company on the Navy’s first dirigible. In 1915, aviation pioneer Glenn Martin asked the “boy engineer” to join his company, the Glenn L. Martin Company of Los Angeles. Already on staff was a young pilot, William Boeing, who in later years would become the head of Douglas’ chief rival, the Boeing Company. At Martin, Douglas designed his first airplane, a two-seat hydroplane later purchased by the U.S. Army Signal Corps. While Douglas became the company’s chief engineer, he left in 1916 for a civilian position as the chief aeronautical engineer with the Signal Corps. The Signal Corps had acquired several British and French airplanes for study but the Aircraft Production Board wanted only the automobile industry to construct airplanes, not the fledgling aircraft companies Douglas had worked for. An irate Douglas secretly copied all of the airplanes’ designs, gave them to American designers, and left the Signal Corps to return to Martin’s Cleveland plant in 1917, eventually becoming vice president of the company.
structions completely concealed in the teardrop fuselage.” But Douglas had only $600 to work with and he knew he would need capital if he was going to realize his dream. He quickly found it in David Davis, a wealthy sportsman who wanted to become the first person to fly nonstop across the United States. Douglas and Davis formed a partnership to reach their goals, and later that year, the Davis-Douglas Company set up operations in the back room of a Los Angeles barbershop. It was there that Douglas designed the Cloudster, which was to carry Davis across the country and into the record books, or so they thought. The Cloudster was grounded by engine trouble in Texas, but the plane set many new design standards. It was the first aircraft to carry a useful payload greater than its own weight and its streamlined design, efficient instrument panel, and high-power engine also earned national recognition. Douglas convinced the Navy, which years before had shown little interest in Naval Academy cadet Douglas’ aviation interests, that the Cloudster could be adapted as a torpedo bomber. The Navy ordered three copies for $120,000.
By 1920, Douglas was ready to strike out on his own. A 1941 profile of Douglas in the New York Herald captured his vision: “His dream, at the time, was a completely streamlined plane with engines and other ob-
Davis soon dropped out of the company and Douglas turned to Los Angeles Times publisher Harry Chandler, among others, for funds to produce the redesigned Cloudster. The planes were constructed in a former motion picture studio in Santa Monica, California. In 1923, the government placed an order for a plane capable of flying around the world and on April 6, 1924, four Dou-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
2 1 9
D o n a l d
D o u g l a s
glas-designed World Cruisers set out from Seattle, Washington. Two eventually returned, becoming the first aircrafts to circle the globe. This stunning success produced a slew of orders, the first from the government of Norway and a year later, from the U.S. Post Office Department for its new air-mail delivery service. In 1928, on the eve of the Great Depression, the company was reorganized into the Douglas Aircraft Company. The Great Depression posed a number of financial difficulties for American corporations, but Douglas Aircraft survived primarily through its work on military contracts. However, that would change in 1932 when the Boeing Company, a Douglas Aircraft rival, built the world’s first passenger aircraft, the Model 247. The plane was the fastest of its time, and Boeing built 60 for its subsidiary, United Airlines. But Boeing would not allow other airlines to purchase the Model 247 which prompted Transcontinental & Western Airlines (TWA) to ask Douglas to design a bigger, faster version of the Model 247. The result was the world’s most advanced airliner, a twin-engine, all-metal monoplane (singlewing) called the DC-2. The DC-2 was an instant success. TWA ordered 25 copies, but also asked Douglas to design a larger version. Just as the DC-2 had supplanted Boeing’s Model 247, the newly minted DC-3 promptly overshadowed its predecessor. This twin-engine airliner could carry 21 passengers 1,480 miles at 195 miles per hour, and had sleeping berths for cross-country flights. Its wider body and larger wings lowered its operating costs for carriers and it quickly became the mainstay of military and civilian air transportation around the world. Douglas would make more than 10,000 of them by the end of its production run in 1945. A much larger four-engine redesign, the DC4, was produced in 1938. By the beginning of World War II, Douglas airplanes carried 95 percent of the nation’s domestic passenger traffic. As war approached, Douglas began designing fighter-bombers and other attack aircraft for friendly nations, and later, for the United States. Douglas’ SBD (Dauntless) dive bombers were credited with the destruction of four Japanese aircraft carriers at the Battle of Midway in 1942. During the War, Douglas organized the Aircraft War Production Council and served as its president. Peace brought new challenges. Douglas Aircraft reentered the civilian aviation market with its new, propeller-driven DC-6 and DC-7 airliners. In 1950, Selig Altschul wrote in Aviation Week that Douglas Aircraft had “the strongest financial position of any major aircraft builder.” The advantage was short-lived, however, this was the jet age, and Douglas had to scramble to catch up with his competitors’ new technology. The company launched the DC-8 in 1958, and soon after the popular DC-9, but it was too little, too late to keep pace with the competition. Douglas continued to construct a number of military and transport aircraft, and even designed the
2 2 0
B u s i n e s s
Thor guided missile in 1957, which was redesigned years later to put satellites into orbit. Douglas handed over the reins of his company to his son, Donald Jr., in 1957 but Douglas Aircraft never completely recovered from its late and costly entry into the jet aircraft market. In 1967, creditors forced Douglas Aircraft to merge with the rival McDonnell Aircraft Corporation. Douglas remained on the board of directors of the new McDonnell Douglas Corporation, but his days as an active company leader and designer were over. Douglas died of cancer in Palm Springs, California in 1981.
Social and Economic Impact Douglas had a profound impact on the aviation industry. Not only did his aircraft become the first to circle the globe in 1924, but during World War II, his company built one sixth of the airplanes manufactured in the United States. His DC-3 became the workhorse of air transportation around the world, so much so that 60 years after its maiden flight, more than 2,000 DC-3s are still in service. Part of his lasting fame comes from his belief in the “streamlined” design for aircraft. In the early years of flight, airplane engines, wing supports, landing gear, and pilots, were exposed to the open air. Douglas wanted all of these elements concealed within the fuselage of the craft. That way, the planes would not only be more efficient in flight, using less energy to fly longer and faster than before, but would be pleasing to the eye. Douglas’ designs not only achieved these goals, but paved the way for larger and more powerful aircraft. Douglas also helped launch the careers of other noted aviation engineers, including Jack Northrup and James Kindelberger, who would later head their own aircraft manufacturing companies. But Douglas wasn’t prepared for the rapid change from propeller-driven aircraft to jet- powered planes. The DC-8 passenger airliner, while produced in various versions until 1972 and used as a cargo transport as late as 1995, was a late entry into the market and its development costs were never fully recovered. Douglas often misread the market for aircraft, and while his planes were reliable, sturdy craft, he was unprepared for the leap into jet propulsion. In 1990, his youngest son, James, was laid off from McDonnell Douglas, marking the end of the Douglas family’s involvement with aircraft design and manufacture.
Sources of Information Bibliography Benes, James J. “The Roaring ‘20s and Turbulent ‘30s.” American Machinist, August 1996.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
D o n a l d
“Boeing & Douglas: A History of Customer Service.” Seattle, WA: the Boeing Corporation, 1998. Available from http//:www. boeing.com. “Common Heritage - The Early Years.” Seattle, WA: The Boeing Corporation, 1997. Available from http//:www.boeing.com.
D o u g l a s
“Donald W. Douglas.”Notable Twentieth Century Scientists. Detroit: Gale Research, 1995. “McDonnell Douglas History - Commercial Aircraft.” Seattle, WA: The Boeing Corporation, 1997. Available from http//:www. boeing.com.
“Donald Wills Douglas.”Current Biography:Who’s News and Why. New York: H. W. Wilson Company, 1950.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
2 2 1
Charles Dow (1851-1902) Dow Jones & Company, Inc.
Overview Charles Henry Dow, cofounder of Dow Jones & Company, Inc. and the first editor of The Wall Street Journal, was an American journalist and financial analyst. He created an index of a dozen leading stocks, mostly railroads, that eventually became the Dow-Jones Averages, the most popular and widely-read of all stock measurements. The Dow Theory, an analysis of stock market behavior that remains valid today, was derived from Dow’s essays in The Wall Street Journal at the turn of the century.
Personal Life Charles Henry Dow was born on November 6, 1851, on his family’s farm in Sterling, Connecticut, the youngest of three sons. His father died when he was only six years old and his mother raised him. Dow’s only formal education took place in a one-room village schoolhouse. Dow left home at the age of 16 in 1867 to work as an apprentice printer and reporter and begin a newspaper career that took him to Springfield, Massachusetts; Providence, Rhode Island; and finally, to New York City in 1879. In 1881, Dow married Lucy M. Russell and her daughter by a previous marriage became Dow’s stepdaughter. A tall, stooping man, Dow was quiet, studious, and hard-working. He was renowned for his mild manner, measured speech, and personal integrity. He died at the age of 51 at his Brooklyn home on December 4, 1902.
2 2 2
C h a r l e s
D o w
Career Details Dow said he had tried some 20 jobs before landing his first real reporting position at the Springfield, Massachusetts Springfield Daily Republican, at the age of 21. He covered the city beat for the newspaper and quickly advanced to the position of assistant editor under the watchful eye of legendary editor Samuel Bowles III. The Springfield Daily Republican was the most popular provincial newspaper in the country and Bowles was the most respected editor of his time. His tutelage and advice helped many young journalists, including Dow, secure positions at other leading metropolitan publications. In 1875, Dow moved to Providence, Rhode Island where he first became night editor of the Press and Star and then joined the Providence Journal in 1876. At the Providence Journal, he distinguished himself as a writer of significant historical articles such as a history of steamboat transportation that was later reprinted as a book. Another well-received article, also made into a book, was a history of the city of Newport, Rhode Island. Dow’s well-written, carefully-researched articles for the Providence Journal led to an 1878 invitation to join a group of eastern financiers on their way to the boom town of Leadville, Colorado to assess possible investments in silver mines. A huge silver strike in the area had brought thousands of speculators, miners, and gamblers to the area, and Dow wrote a series of articles from Leadville called the “Leadville Letters.” These vividly detailed articles included stories, not only on the mining industry and mining economics but on the fast life in the wide-open mining town as well. On his return from the West in 1880, Dow decided to relocate to New York City. He recognized that his strength as a reporter lay in his ability to research and analyze economic issues, and so he began to look for opportunities in financial journalism. After first taking a job as a business reporter for the New York Mail and Express, he left this position for a job as an editor with the Kiernan News Agency, a firm that wrote and delivered brief news bulletins to banks and brokerage houses as well as individuals. A former colleague and acquaintance in Providence, Edward D. Jones, also joined the Kiernan News Agency as a reporter. In November of 1882, Dow and Jones left the Kiernan News Agency and formed Dow Jones & Company, Inc. as a competitor to the Kiernan News Agency. They were a well-balanced team. Jones was a first-rate financial reporter with excellent sources who could explain technical details succinctly and accurately. Dow’s forte was thoughtful analysis of companies and industries and market trends. They set up a news-bulletin service at 15 Wall Street (next door to the New York Stock Exchange) in a dreary room behind a soda-water establishment. Throughout the day, their boy messengers rushed “flimsies” or “slips”
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Charles Henry Dow.
(UPI/Corbis-Bettmann.)
containing business news and analyses reported and written by the two named partners and silent partner Charles M. Bergstresser to subscribers in banks and brokerage houses throughout the financial district. The flimsies were hand-written in duplicate on thin sheets of paper with an agate stylus. At the end of the firm’s first year in 1883, the partners introduced the Customer’s Afternoon News Letter. This one page report, also handwritten with a stylus on small, thin sheets, summarized the day’s news and financial activities and occasionally included a brief analysis of the stock market or a financial forecast, usually written by Dow himself. This reporting of the financial average for a particular day came to be known later as the Dow-Jones average. By 1884, a small cylinder press had replaced the stylus and both the messenger service and the afternoon publication began to expand. The Customer’s Afternoon News Letter, now printed on a larger press, had grown to two pages by 1885 and had become the precursor to The Wall Street Journal. On July 3, 1884 Dow Jones & Company, Inc. began to publish the average closing price of representative active stocks, including ten railroad and two industrials. The list was determined by Dow from his research to be reliably indicative of market trends. The first issue of The Wall Street Journal appeared on the afternoon of July 8, 1889. The new daily afternoon paper was published by Dow Jones & Company,
S t u d e n t s
2 2 3
C h a r l e s
D o w
later called the Dow Theory. Two decades after his death, a book containing Dow’s writings was published and, since then, countless newspaper articles, investment letters, stock commentaries and books have continued to reinterpret Dow’s theories in light of modern stock market conditions.
Chronology: Charles Dow 1851: Born. 1867: Left home to begin career. 1872: Began working at the Daily Republican. 1875: Became night editor at Press and Star. 1882: Cofounded Dow Jones & Company, Inc. 1883: Published Customer’s Afternoon News Letter. 1889: Published The Wall Street Journal. 1896: Published first Dow-Jones industrial average. 1902: Sold Dow Jones & Company, Inc. 1902: Died.
Inc. and Dow’s name was on the masthead as editor. The price was two cents a copy, but reduced rates were offered to bankers and brokers, and the paper was delivered free to subscribers to the company’s news bulletin service. Correspondents from London, Boston, Philadelphia, and Chicago regularly wired news stories by telegraph from those cities. An office in Washington, D.C. for The Wall Street Journal was established in 1897. In 1898, Dow Jones & Company, Inc. would publish a morning edition of the The Wall Street Journal. The circulation of The Wall Street Journal was small at first, but the news bulletin service, which had grown to some 1,500 copies daily, was grossing about $300,000 a year by 1899. The small staff was able to get out both the daily newspaper and the news bulletins because of their strong work ethic. The three partners often met at Dow’s home until late at night after evening assignments, and all worked 12-hour days. Dow had immeasurable amounts of energy. He not only managed the editorial side of the newspaper but also the business side of Dow, Jones and Company, Inc. By 1900, The Wall Street Journal was clearly headed for success. Its circulation had reached 10,000 in 1899 for both editions of the newspaper, and Dow sought to expand its readership from Wall Street insiders to the general public. On April 21, 1899, he introduced a regular column called “Review and Outlook,” in which he attempted to educate readers on the stock and bond markets. These essays are today considered stock market classics and form the basis for what was
2 2 4
B u s i n e s s
Dow wrote clearly and intelligibly to the uninitiated about complex subjects. For example, he compared the market dynamic to a tug-of-war in which the side with the most investors pulled the market either up or down. In another essay urging patience in holding stocks, he explained that investors had to expect to wait before making a profit just as a farmer does before harvesting corn from seed. In addition to running and managing Dow, Jones and Company, Inc., from 1885 to 1891, Dow was also a partner at Goodbody, Glynn and Dow. He was also a member of the New York Stock Exchange where he gained experience handling stock orders on the trade floor. Dow continued to write his influential essays until 1902 although, after 1900, he was in ill health. Jones had left the firm in 1900 to pursue other interests and on March 13, 1902, Dow resigned as director and president of Dow, Jones and Company, Inc. As the company’s majority owner following Jones’ departure, Dow arranged for the sale of Dow Jones & Company, Inc. to Clarence W. Barron, whose descendants continue to have a controlling interest in it. The sale of Dow Jones & Company, Inc. was finalized only two months before Dow’s death.
Social and Economic Impact The Dow-Jones average has remained as one of the most important, useful, and trusted indicators of stock market conditions throughout the world. Today, the same methods used by Dow around the turn of the century are put to use daily in order to indicate financial trends. Dow Jones & Company, Inc. published its first DowJones industrial average on May 26, 1896 which has been kept up to date every day since by The Wall Street Journal. On that day, the market closed at 41 based on Dow’s method, which was based on the stocks of 12 well-known and successful smokestack firms. Dow added up the prices for these companies stocks and then divided that number by twelve. Today, the market regularly exceeds a level of 8,000 based on the same methods used at the turn of the century. Only now, the stock prices are divided by 0.33839549 because of the sheer volume of stocks traded. There are those that do not prefer Dow’s method and think that it is too slow for the modern market place. These detractors feel that Dow’s theories are very useful in analyzing the past but less useful in predicting the fu-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
C h a r l e s
ture. They suggest that other methods, such as the Standard and Poor’s 500 Index (S&P), are a better indicator of market activity. The S&P started in 1923 and measured each stock differently according to its market success while Dow’s method measured each stock the same regardless of a particular company’s success or failure. In addition, they feel that Dow’s method does not take into account the large number of stocks traded on the market and would leave an investor reading the wrong signals. Dow’s original method was based on the prices of 30 stocks while today, thousands of stocks are regularly traded on a daily basis. Among the many tributes to Dow that appeared in The Wall Street Journal following his death in 1904, was one from his long-time partner and colleague, Edward D. Jones that quite possibly explains why his influence is still felt so long after his death. Jones said: “(Dow) was a ceaseless searcher for facts and the best way to tell and distribute them. His honesty was rugged, his industry was prodigious, his integrity unsullied, and his home life ideal.”
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
D o w
Sources of Information Contact at: Dow Jones & Company, Inc. 200 Liberty St. New York, NY 10281 Business Phone: 212-416-2000 URL: http://www.dowjones.com
Bibliography Bishop, George W., Jr. Charles Dow and the Dow Theory. New York: Appleton, Century Crofts, Inc., 1960. Bishop, George W., Jr. Charles H. Dow: Economist. Princeton, NJ: Dow Jones Books, 1967. Dow Jones & Company, Inc. “Charles Henry Dow.” The Dow Jones Averages: The Market’s Measure. 1997. Available from http://djia100.dowjones.com/chDow.html. Scharff, Edward E. Worldly Power: The Making of The Wall Street Journal. New York: Beaufort Books Publishers, 1986. Wendt, Lloyd. The Wall Street Journal: The Story of Dow Jones & the Nation’s Business Newspaper. Chicago: Rand McNally & Co., 1982.
S t u d e n t s
2 2 5
Éleuthère Irénée du Pont (1771-1834) E.I. du Pont de Nemours and Company
Overview Generations of men and women have contributed to the development of E.I. du Pont de Nemours and Company, which grew from a single gunpowder mill on Brandywine Creek to an international giant. But the company’s start, as well as its heart and soul, are attributable to one man, Éleuthère Irénée du Pont, who was shaped by the revolutionary period of France in the late eighteenth century and came to America as a refugee.
Personal Life Éleuthère Irénée du Pont was born in Paris, France, on June 24, 1771, to Pierre Samuel du Pont and Nicole Charlotte Marie Le Dee. In Greek his names signify the ideals of honor, liberty, and peace. Du Pont’s father was a noble, granted his position after having served the corrupt French throne for many years. His mother died when du Pont was 14 years old. Along with his older brother, Victor, du Pont grew up at Bois-des-Fosses, a family estate 60 miles south of Paris, and was schooled by private tutors. The young du Pont was heavily influenced by the momentous politics of his time. He grew up during the harsh and oppressive political atmosphere of France during the days of Louis XIV and the angry mobs of the revolution, who used the guillotine liberally. His final days in France saw the rise to power of Napoleon Bonaparte. Pierre du Pont was politically active, sharing the title of commander of the National Guard with the Marquis de Lafayette. Du Pont aligned himself politically
2 2 6
É l e u t h è r e
I r é n é e
d u
P o n t
with his father who, along with Lafayette, was a conservative who promoted a constitutional monarchy. A good friend of du Pont’s father, Antoine Lavoisier, was chief of the royal powder works and, in 1788, du Pont started to train with him at Essonnes. This is where he gained the basic knowledge that he would eventually use to establish his own business in America. Lavoisier also taught du Pont about the scientific method and instilled in him a lifelong interest in botany and scientific agriculture. In 1791, at the age of 20, du Pont married Sophie Madeleine Dalmas; the two would eventually have seven children. The same year, Lavoisier lost his directorship of the powder works and du Pont had to leave Essonnes. He went to Paris, where he took charge of the printing house his father had established to promote his political point of view. On August 10, 1792, the du Ponts led a 60-man private guard to defend the king’s palace from an assault by radicals dedicated to ending the monarchy. The success of this action did not change the inevitable, however, and the French revolution saw the king and du Pont’s friend and mentor, Antoine Lavoisier, guillotined. Pierre du Pont also was arrested, but was granted his freedom by Robespierre and escaped the guillotine. Du Pont had been attempting to make a living with the publishing house, but it was wrecked by a mob during the revolution. The newspaper he produced was a revolutionary-theme publication, and the times were still precarious. His father’s new newspaper, L’Historien, supported reviving the monarchy and opposed Napoleon. When Napoleon came to power in a coup, both du Pont and his father were imprisoned. Fortunately, they were released, but only upon pledging to leave France. The du Pont family arrived in Newport, Rhode Island, on December 31, 1800, and it was in the United States that Éleuthère du Pont would thrive. Du Pont had a strong interest in agriculture, was active in the American Colonization Society, and became a director of the Bank of the United States in 1822. He died on October 31, 1834, in Philadelphia. Du Pont was succeeded in his business first by his oldest son, Alfred, and then following Alfred’s death by his second son, Henry.
Career Details Shortly after arriving in America, the du Ponts moved to New York. Du Pont’s father had planned to develop land in western Virginia, but was advised to delay his land investments. His father then started a commission business in New York City, but it was not successful. Éleuthère du Pont then happened upon an idea that was much more profitable. On a hunting trip with Colonel Louis de Toussard, an American military offi-
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Éleuthère Irénée Du Pont.
(Archive Photos, Inc.)
cer, du Pont discovered that American gunpowder was not only poor in quality but high in price. They made a study of the powder industry in America and concluded that the construction of a powder mill might be a profitable business, since gunpowder was a much needed commodity. The people settling the American frontier required protection from Indians and wild animals. Settlers hunted for meat and skins, and gunpowder was used to clear land to build homes and roads. Du Pont saw a good market for gunpowder, and in 1801 returned to France for three months to secure financial support and machinery and designs for the manufacture of gunpowder. On July 19, 1802, du Pont purchased land on Brandywine Creek near Wilmington, Delaware, the site of America’s first cotton mill. Naming the plant Eleutherian Mills, in honor of freedom, du Pont set about building his first gunpowder factory. He moved his family close to the plant and persisted in building it as quickly as possible despite hardships, the most major of which was lack of capital. Du Pont was forced to take a partner, Peter Bauduy, an established businessman, in order to obtain enough money to start his business. Thus du Pont supplied the technical knowledge and management skills for the plant, while Bauduy, along with du Pont’s father, supplied the capital. The small mill began processing saltpeter for the government in 1803; in the spring of 1804, the first du Pont gunpowder was sold. Thomas Jefferson, then president, promised du Pont that the government would place orders with him, and du Pont became a principal supplier
S t u d e n t s
2 2 7
É l e u t h è r e
I r é n é e
d u
P o n t
able resource. Saltpeter (a white powder ingredient used to make gun powder) was always thoroughly cleaned in de Pont’s mills, no matter what the state of cleanliness of the material when it arrived. Sulfur was not used unless pure and clear in color.
Chronology: Éleuthère Irénée du Pont 1771: Born. 1791: Began training with Lavoisier at powder works. 1791: Took over father’s printing house in Paris. 1800: Emigrated to America. 1802: Founded his own powder works. 1804: Sold first supply of powder. 1812: Became principal supplier of gunpowder to U.S. government. 1815: Bought out partner. 1834: Died.
of gunpowder to the federal government. He also sold large amounts of supplies to the American Fur Company and to South American countries. In the first year of business, du Pont sold $10,000 worth of powder; by 1807 annual sales were up to $43,000. By 1815, du Pont was able to buy out his partner and run the business on his own. Du Pont, always loyal to his family, was also able to make good on debts incurred by his brother and his father when the businesses they had started in America failed. He also started to diversify; in 1811, du Pont, his brother Victor, and Peter Bauduy bought a woolen mill on the Brandywine River. In addition, du Pont helped establish a cotton mill and a tannery. Du Pont spent 32 years as the president of E.I. du Pont de Nemours and Company at the mills on Brandywine Creek and became one of the most innovative and successful industrialists of his day. Du Pont’s company is still in existence as one of the twentieth-century’s largest international conglomerates.
Social and Economic Impact Following the teachings of his mentor, Antoine Lavoisier, and the scientific method he espoused, du Pont established technical, methodological, and ethical principles to which the company adheres to this day. Du Pont gave careful attention to raw material preparation. He used charcoal made from willow trees, because these trees always grew new branches and thus were a renew-
2 2 8
B u s i n e s s
Du Pont installed a labor-saving device for kerneling of the powder. He always sought means to improve his methods and the quality of his product, regardless of the state of the economy or the success of the business. One hundred and fifty years before they became buzz words in American business, du Pont was pursuing quality, product, and process improvement. Du Pont also began a trend toward what has become known as vertical integration, knowing that a company’s income can be enlarged through diversification and that by growing the grain for his transport horses on company land, he could increase profits. Du Pont was also a man of exemplary ethics. Influenced by the events of the French revolutionary period in which he was raised, as well as by a devout mother, he lived his personal life by a strict code. He also carried this code of ethics into his business and required the company to act accordingly. In March 1818, for example, his mills were ruined by an explosion that killed 40 men. Even though there were no laws to require it and the business practices of the day did not point this way, du Pont took it upon himself to compensate the families of the victims. He pensioned the widows, gave them homes, and took responsibility for the education and medical care of the surviving children. This action and the rebuilding of the plant required additional borrowing by the company, but du Pont’s moral consciousness was his priority. This same sense of morality fostered his belief that quality was a matter of pride, and there would be no compromises made on quality. Du Pont’s impact was much more than the creation of a family business. The traditions espoused by his code of conduct and business honor carry through to this day. His guiding principle was that privilege was inextricably bound to duty. His sense of obligation to his customers was quite different from the norms of business in his time. Many times, he risked his business and his personal fortunes in order to fulfill a pledge or an obligation. His moral consciousness and technological ingenuity were precursors to business precepts of this century. The legacy of du Pont includes a commitment to technological innovations and increased productivity, never at the expense of quality products. Du Pont’s business methods and code, which originated in the turbulence of the French revolution and were honed in the Brandywine Mills, still guide the du Pont Company today. The du Pont family empire spans the globe and has holdings in real estate, arms and defense industries, computers, communications, media, utilities, oil, food industries, banks, aviation, chemicals, rubber, insurance, and many other businesses.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
É l e u t h è r e
I r é n é e
d u
P o n t
Du Pont Wrote the Book on Painting. Automotive News, 29 April 1996.
Sources of Information Contact at: E.I. du Pont de Nemours and Company 1007 Market St. Wilmington, DE 19898 Business Phone: (302)774-1000 URL: http://www.dupont.com
Encyclopedia of World Biography. Detroit: Gale Research, 1997.
Bibliography
Preston, Wheeler. American Biographies. Reprint: Detroit: Gale Research, 1974.
Garraty, John A., and Jerome L. Sternstein, eds. Encyclopedia of American Biography, 2nd ed. New York: HarperCollins, 1996. Ingham, John N. Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood Press, 1983.
Dorian, Max. The Du Ponts: From Gunpowder to Nylon. Boston: Little, Brown, 1961.
Who Was Who in America. Chicago: Marquis Who’s Who, 1967.
Dujarric de la Riviére, René. E.I. Du Pont de Nemours. Paris: Librairie des Champs élysées, 1954.
Winkler, John K. The Du Pont Dynasty. New York: Reynal and Hitchcock, 1935.
Du Pont: The Autobiography of an American Enterprise. Wilmington, DE: E.I. Du Pont de Nemours and Co., 1952.
Ziog, Gerald Colby. Du Pont: Behind the Nylon Curtain. Englewood Cliffs, NJ: Prentice Hall, 1974.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
2 2 9
Robert Earl (1952-) Planet Hollywood
Overview Robert Earl initially was responsible for expanding and promoting the Hard Rock Café into international fame. He then moved on to become the founder of Planet Hollywood and many other themed restaurants around the world. From these very trendy businesses, Earl has created a multibillion-dollar enterprise.
Personal Life Robert Ian Earl was born in 1952 and raised in London, England. His father, Robert Earl, Sr., was a British pop singer, comparable (according to Earl) to Tony Bennett. Earl spent much of his childhood on the road with his father and was infatuated with show business from the start. But, as Earl told Nation’s Restaurant News, he “had zero talent,” so he decided that the next best thing to being a performer would be to manage a club or restaurant. Earl graduated from the University of Surrey in 1973 with honors in restaurant and hotel management. While at Surrey, Earl gained his first taste of his future business. The father of one of his friends was organizing a rock festival and, because Earl was studying food preparation, he gave Earl the job of running the concessions. Earl bused 400 fellow students to the site of the festival and paid them to cook for the 250,000 people who showed up during the three-day concert. Earl is married and has two daughters. He and his wife live in a 25,000-square-foot mansion in an exclusive neighborhood in Orlando, Florida.
2 3 0
R o b e r t
E a r l
Robert Earl presents artist Yoko Ono with a check for money raised from limited edition Hard Rock t-shirt sales with drawings by the late John Lennon. The profits were donated to the Spirit Foundation, a non-profit organization helping to save the planet. (AP Photo/John Bellisimo.)
Career Details Earl ventured into his first business with the opening of The Beefeater, a London dinner show, in 1972. During the 1970s he also founded the Talk of London, Shakespeare’s Tavern, and the Cockney Club. Earl’s target audience was tourists. As he told The Wall Street Journal, “The thought of 50 Americans pulling up in a coach repulsed the average English restaurateur,” but Earl created places they could feel welcome and have a good time, and it paid off.
portant moves in the position was the acquisition of Hard Rock International PLC, a company with rights to all of the Hard Rock Cafés east of the Mississippi (Peter Morton owns the Hard Rocks west of the Mississippi.). The Hard Rock Café originated in London as a distinctly American restaurant with a rock and roll theme. Musicians donated items such as guitars and gold records, and the concept of the Hard Rock as a memorabilia restaurant was established. In addition to food, the Hard Rocks sell souvenirs such as T-shirts, jackets, sunglasses, and golf balls.
In the late 1970s, the Walt Disney Company approached Earl with the idea of taking his theme-dinner idea to its EPCOT Center. Earl declined Disney’s offer but was impressed with Orlando and the potential it could have for his business. He moved to Orlando in 1983, first opening a Shakespeare’s and then other banquet halls, such as Mardi Gras and Wild Bill’s. Earl said in Restaurant News, “I chose to relocate to the U.S. because I found the market better. I found the staff and quality of service here way ahead of Europe. It was inspirational.”
Earl’s new employer, Pleasurama, was subsequently bought by Mecca Leisure PLC; this was followed by a buy-out by The Rank Organization. Earl remained in charge of U.S. operations throughout both acquisitions, and in 1989 he became chief executive of Hard Rock International. By 1993, Earl had increased the number of Hard Rock restaurants from seven to 22 and had raised profits twentyfold. Earl’s real success, though, was in public relations. He convinced rock stars to make appearances at the restaurants and hosted fund-raisers for music-industry charities, giving the Hard Rock Cafés an even more popular image and following.
Four years after moving to Orlando, Earl sold his group of English restaurants, which by then numbered 70, to a company called Pleasurama PLC for $103 million. He became Pleasurama’s chief executive and chief operating officer in the United States. One of his first and most im-
In 1989, movie producer Keith Barish approached Earl about creating a café that would be full of movie memorabilia and would attract movie stars, as well as people hoping to see them. Earl and Barish decided to bring some celebrities in as investors as a way to get the
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
2 3 1
R o b e r t
E a r l
Chronology: Robert Earl 1952: Born. 1972: Opened his first dinner theater, The Beefeater. 1983: Moved to Orlando and started new group of restaurants. 1987: Sold English group of restaurants. 1988: Bought into the Hard Rock Café. 1989: Became chief executive of Hard Rock International. 1991: Opened first Planet Hollywood in New York. 1995: Opened first All Star Café.
venture off the ground. They managed to recruit Arnold Schwarzenegger, Bruce Willis, Demi Moore, and Sylvester Stallone, and Planet Hollywood was born. The first Planet Hollywood opened in New York in 1991 with elaborate fanfare and many movie stars in attendance. It was an immediate success. Like the Hard Rock Cafés, Planet Hollywood sells souvenirs, including everything from $3.50 pins to $325 leather jackets. In fact, apparel sales account for about one-third of the annual sales at the average Planet Hollywood restaurant. The cafés are filled with a large variety of movie memorabilia, including the bus from the movie Speed, the rocking chair from Psycho, and the uniform Tom Cruise wore in Top Gun. The Wall Street Journal called the restaurants “equal parts theme park and eatery.” With locations around the world (including London, Hong Kong, and Maui, as well as many other cities), Planet Hollywood continues to enjoy unprecedented success. Earl’s next project was the opening, in 1995, of the Official All Star Café, a sports-themed restaurant that is billed as the most spectacular sports bar in the universe. He recruited sports stars such as Joe Montana and Shaquille O’Neal as attention-catching investors.
Sources of Information Contact at: Planet Hollywood 8669 Commodity Cir. Orlando, FL 32819 Business Phone: (407)363-7827 URL: http://www.planethollywood.com
Bibliography Ball, Aimee Lee. “Mr. Universe.” New York, 15 July 1991. Greenberg, Herb. “Is this Company Really Worth $2.5 Billion? Earth to Planet Hollywood.” Fortune, 23 December 1996. Hays, Jack. “Robert Earl: The King of Planet Hollywood Promises the Stars-And He Delivers.” Nation’s Restaurant News, 9 October 1995. Jefferson, David J. “At Planet Hollywood, the Star of the Show Isn’t Stallone, It’s Earl.” Wall Street Journal, 21 June 1994.
Social and Economic Impact When Earl told Fortune in 1996, “I intend to build an empire,” he already had a good start. The Hard Rock Café in Orlando made $14.5 million in its first year of operation; by 1996 it was generating $50 million a year, making it one of the highest grossing restaurants in the
2 3 2
world. With the opening of Planet Hollywood and other restaurants in the city, Earl is credited with helping to make Orlando, Florida, the world’s number one tourist destination. Planet Hollywood has been equally profitable. In the late 1990s, the group had sales of $373 million and profits of $48 million. Earl’s part of the ownership was worth $400 million in itself. Earl started a trend in the restaurant business that others have eagerly joined. Since the creation of Planet Hollywood, other themed restaurants like Harley-Davidson Café, Dick Clark’s American Bandstand Grill, and Dive! have sprung up around the country. Themed restaurants now make up one of the fastest growing segments of the casual dining industry. Analyst Paul Westra of Salomon Brothers called Earl “the grandfather of the theme restaurant industry.” Indeed, Earl continues to expand his idea. In the late 1990s he was planning a new musical restaurant, to open in Times Square; a Chefs of the World establishment, which would feature dishes prepared by a variety of world-famous chefs; and an eatery based on Marvel comic books. Part of Earl’s success, he told The Wall Street Journal, is his ability to “appeal to the masses.” For example, he changed the name of his restaurant Shakespeare’s Tavern to King Henry’s Feast, because the former sounded like “too cultural an experience.” Earl says he keeps in tune with his clientele by hanging out at shopping malls. “For 15 bucks a head we take people out of reality,” Earl said in Time. But, despite Earl’s enormous success at creating a unique entertainment experience for his clientele, he remains a restaurateur at heart. As he told Nation’s Restaurant News, “People don’t eat themes— no concept in the world can succeed for long unless it also delivers great food at the right price.”
B u s i n e s s
“Planet Hollywood Founder Plans Celeb Chef Concept.” Nation’s Restaurant News, 12 February 1996. Roush, Chris. “Dining on a Theme: Celebrity Cafes.” Atlanta Constitution, 17 September 1997. “Time’s 25 Most Influential Americans.” Time, 21 April 1997.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
George Eastman Overview George Eastman and his company are credited with introducing a simple-to-operate, roll-film camera, originally called the Kodak. Eastman made the camera available to virtually all people, enabling them to see the world and themselves in an entirely new way. Eastman built his company into the world’s largest photographic manufacturing establishment and dominated international markets by a continual pioneering of photographic research and development.
(1854-1932) Eastman Kodak Company
Personal Life George Eastman was born on July 12, 1854 in the small town of Waterville, New York. The youngest of three children born to Maria and George W. Eastman, he had two older sisters. Eastman’s father operated a small commercial business college in the nearby city of Rochester, and the family eventually moved there when young Eastman was six years of age. Two years later, the elder George Eastman died suddenly, and the business college closed. Thereafter, Maria Eastman supported the children by renting rooms in their house to boarders. At age 14, Eastman dropped out of school and began to work in an insurance office. He later took a position as a bookkeeper in a bank. Eastman grew into young adulthood as a shy, short, trim, and precise kind of person. He saw himself as a businessman very early in life. He kept daily detailed accounts of his income and expenses and carefully saved
2 3 3
G e o r g e
E a s t m a n
Eastman, in putting his total focus on photography, had unwittingly made a pivotal career choice, almost overnight. He had already developed many strengths that would help him succeed in nearly any business. He had strong technical and scientific skills, a commitment to capitalist business values, great personal ambition, and a strong desire to be in control of his work life. Before he quit his bank job, he was already using sophisticated marketing and financial plans to raise money to explore his photographic research. By 1884, at the age of 30, Eastman had tried many unsuccessful ways to market camera equipment of his own invention. Then he made improvements to a newlyinvented process of taking a series of pictures on strips of commercially-coated paper film. He also decided that the market for his new film would not be limited to professionals but would include amateur photographers as well, since at the time there were roughly ten amateur photographers for every professional.
George Eastman.
(The Library of Congress.)
his money. He immersed himself in business matters and remained a bachelor throughout his life. Eastman made a great fortune, and by the 1920s, when he was in his 60s, he devoted himself to philanthropic efforts, giving away his fortune to educational, medical, and civic organizations. His love of music led to a generous monetary gift to the University of Rochester, which resulted in the founding of the now world-famous Eastman-Rochester School of Music, the only institution ever named after him. By the age of 78, he had given away most of his fortune. When he sensed in 1932 that his mind and body were failing him, he wrote a simple note, “My work is done,” and took his own life on March 14, 1932.
Career Details While he was still working for the bank in Rochester, New York, Eastman became seriously interested in photography. At that time it was a clumsy, cumbersome, time-consuming pursuit confined to those who had enough patience to deal with the expensive and complex process of taking photographs. Eastman, however deeply enjoyed this activity. Though he had planned to remain a banker, he abruptly quit his job after failing to receive a promotion and decided to devote himself to his hobby of photography.
2 3 4
B u s i n e s s
Eastman created the trademark “Kodak” both for simplicity and to honor his mother’s maiden name, Kilbourn, by using the letter K. In 1888 Eastman began to market the first cameras that were simple enough to be used by anyone. He patented his creation carefully and equipped the Kodak camera with the first thin celluloid film, something most photographers now take for granted. Employing the sales slogan “You press the button, we do the rest,” he began successfully selling this camera to millions of people worldwide. Since his invention attracted a great deal of competition, Eastman’s strategy was to stay ahead by constantly making improvements on cameras and film so that he was always introducing new and refined products. At the turn of the twentieth century, Eastman sought to control the entire film industry. He bought up companies wherever he could and developed a monopoly on cameras, plate cameras, printing paper, and motion-picture film. Eventually, the U.S. government moved in and convicted him of creating a monopoly in the film business, Eastman found himself backing off on certain aspects of his enterprise to allow for some fair competition. Eastman began to get good results from his own research laboratory, where new products for film were developed. It was in this laboratory where color film processing was developed for commercial use. As a businessman, Eastman also recognized the value of retaining loyal employees. During this “progressive era” in American history, where employee rights were being defined by growing union activities, Eastman created many employee benefit programs. In 1910 he began to establish a profit-sharing program for all employees and in the next decade, created other employee benefits, including health services and retirement funds.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
G e o r g e
E a s t m a n
Social and Economic Impact Eastman spent his entire career as a businessman tangled in legal disputes related to his tendency to monopolize the marketplace and to use other people’s ideas without acknowledging them. One example was when Eastman used the idea of Hannibal Goodwin, an Episcopal minister—to whom he later paid financial redress—to develop his strip-of-film idea, allowing Eastman to place a strip of film on spools that would take multiple photographs with cameras such as the Kodak, the Brownie, and much later, the Instamatic. Eastman revolutionized aspects of our world with his promotion of the simple camera. Kodak was followed by the famous “Brownie” camera. Designed for children, it had pictures of fairies painted on the side. It sold 250,000 cameras in 1900, during its first year of production. The easy-to-use, inexpensive camera was clearly a tremendous contribution to science, art, and popular culture. Millions of people were now able to save treasured moments of their families, of their everyday lives, and of their travels. It is difficult to imagine a world without photography and photographs. It was George Eastman’s passion and devotion to his vision that brought the photograph into the everyday lives of ordinary people. He invented, for all practical purposes, the modern, everyday, easy-to-use, point-and-click camera, and the process for quickly developing the film and providing pictures to the photographer. The so-called ordinary camera has changed the world and how we look at it. The picture, taken as a photograph, has proven to be worth, indeed, a thousand words. Eastman pursued the development of his company as a very deliberate, dedicated businessman. He used every known business strategy to enhance the sales of his products. Eastman remained ahead of his competition, advertised intelligently, created affordable products of good quality, created a loyal work force who shared in his profits, and maintained an up-to-date research and development unit of his company that constantly introduced new and improved products to the marketplace.
Chronology: George Eastman 1854: Born in Waterville, New York. 1888: Began marketing the first easy-to-use cameras for nonprofessionals. 1900: Introduced the “Brownie” camera for children. 1910: Began profit-sharing program for employees. 1928: Marketed first Kodak using color film. 1932: Died.
During the last 20 years of his life, Eastman gave away his money in philanthropic gifts to universities and to medical and civic organizations.
Sources of Information Contact at: Eastman Kodak Company 343 State St. Rochester, NY 14650 Business Phone: (716)724-4000 URL: http://www.kodak.com
Bibliography Ackerman, Carl W. George Eastman. London: Constable and Co., 1930. Chandler, Alfred D. The Visible Hand: The Managerial Revolution in American Business. Cambridge: Harvard University Press, 1977. Collins, Douglas. The Story of Kodak. New York: Harry N. Abrams, 1990.
Overall, the strategy was to place Eastman camera equipment in the hands of the everyday citizen, as well as the professionals. He sought to saturate the world with cameras, even to the point of having a monopoly on the industry. His efforts to capture world markets seem to have succeeded very well.
Wade, John. A Short History of the Camera. Watford: Fountain Press, 1979.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Taft, Robert. Photography and the American Scene. New York: Dover, 1964.
2 3 5
Robert J. Eaton (1940-) Chrysler Corp.
Overview When Robert Eaton became head of the Chrysler Corporation in 1992, it marked the start of a singular new era for the automaker. Beset by problems for years, including poorly-built cars and financial mismanagement, Chrysler had been put back on the right course by the colorful, but often tyrannical Lee Iacocca. Eaton, a longtime General Motors executive with a far more reserved demeanor, would later steer Chrysler into the history books himself by engineering a first-of-its-kind merger with German automaker Daimler-Benz.
Personal Life Eaton was born on February 13, 1940, in Buena Vista, Colorado, but moved to the Kansas town of Arkansas City when he was young. His father was a railroad brakeman, and his mother a hairdresser. At the age of nine, he had a paper route that netted him 35 cents a day, and with that savings managed to buy his first car at the age of 11 for $10. He then spent another $15 to put the Chevy on the road. He had his driver’s license at the age of 14, as was common in some states in the 1950s, and through high school and college Eaton worked a number of jobs in order to indulge his love of hot rods and classic roadsters; he also raced motorcycles. These jobs included working as a janitor in a Montgomery Ward department store, and supervising the night shift in a pea cannery. Not surprisingly, Eaton chose to study mechanical engineering at the University of Kansas. He earned a
2 3 6
R o b e r t
bachelor of science in 1963 and only interviewed with one company, since he wanted no other job but one at General Motors’ Chevrolet division. He was hired as an engineer, and drove to Detroit from Kansas in a 1955 Chevrolet. Cornelia Drake became his wife in 1964, and the couple would have two sons. As Chrysler chair, Eaton drives one of the high-performance Dodge Viper sportscars.
J .
E a t o n
Chronology: Robert J. Eaton 1940: Born.
Career Details
1963: Received B.S. from University of Kansas.
Eaton’s first job at GM was at its axle plant in Warren, Michigan, and he soon entered a graduate training program in the company for young engineers. The program introduced them to several different areas of the automaker in preparation for a future management post. “That was the best thing that ever happened to me,” Eaton told Marjorie Sorge in an interview in Automotive Industries. “I got a tremendous exposure to the industry. That had a very significant effect on how I view everything. It was a very positive thing we don’t tend to do as much any more.” As a young engineer, Eaton became involved in the Corvair debacle not long after he moved over to the GM Technical Center, also in Warren. The sportscar had been declared by consumer activist Ralph Nader to be “unsafe at any speed”—the title of an actual book—and GM set out to defend its reputation. Eaton became the demonstration driver in training films for the car, and when there was a Corvair accident, he investigated and staged a runthrough in which he performed all the same maneuvers as the driver had, only at much faster speeds. He was often called upon to testify in court. Eaton advanced to the position of chief engineer in the Chevrolet division in 1975, and a year later to chief engineer in the corporate programs. In 1979 he was named assistant chief of the Oldsmobile division, then GM’s director of reliability and a vice president in 1982; from 1986 to 1988 he oversaw the company’s technical staffs group, and then was given the plum post of president of GM Europe in 1988. When Chrysler was looking for a replacement for the retiring Lee Iacocca, Eaton’s record in running GM’s important European division was brought to the search committee’s attention. He was interviewed for the top job, and accepted it on the condition that he would be both board chair and CEO. Eaton’s arrival back in the States in early 1992 to become head of the world’s number-three automaker surprised many. A top Chrysler executive, Bob Lutz, was thought to be in line for Iacocca’s job. But the directors were eager to begin a new era, and Eaton’s quiet demeanor and low-key personality made him the top choice. In 1996, after Eaton took over the president’s title from Lutz, who was made a vice-chair, industry watchers waited for signs of a rift at the upper levels at Chrysler, the high drama and infighting that has charac-
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
1964: Married Cornelia Drake. 1975: Named chief engineer with General Motor’s Chevrolet division. 1979: Named assistant chief of Oldsmobile division. 1982: Named GM vice president. 1988: Appointed president of GM Europe. 1992: Hired by Chrysler as vice chairman. 1993: Named CEO of Chrysler. 1996: Became president of Chrysler. 1998: Engineered merger with Mercedes automaker Daimler-Benz.
terized the industry for decades, but “the two Bobs,” as they are known in Detroit circles, get along famously and often poke fun of one another in meetings.
Social and Economic Impact The fortunes of Chrysler have been the most precarious among the top three American automakers almost since its inception. It is neither the financially sound company that has perched at the top of the Fortune 500 list for years, GM, nor does it possess the strong international presence of Ford. Twice Chrysler has teetered on the verge of bankruptcy: once in the late 1970s, when it received loan guarantees from the U.S. government, and again during a recession in the early 1990s. Eaton came aboard as Chrysler was retooling for a new era and had eradicated many of the engineering, marketing, and financial problems that had led to its near demise. By 1996 it was a very profitable company that had cornered both the minivan market and virtually launched the sportutility vehicle craze with its Jeep Grand Cherokee. It also had a line of well designed mid-sized cars and a high profit-per-vehicle ratio. Under Eaton, Chrysler’s shortcomings in the growing international market were remedied in a May, 1998
S t u d e n t s
2 3 7
R o b e r t
J .
E a t o n
event that made headlines on two continents. A merger was announced with German automaker Daimler-Benz, maker of Mercedes-Benz, that was the first of its kind, and it was a deal in which Eaton played a major role. He would become co-CEO with Daimler-Benz chair Juergen Schrempp for three years when the merger was finalized at the end of 1998. Eaton is also looking to bring Chrysler vehicles to other parts of the world. It opened plants in South America in 1998 that made Grand Cherokees and Neons for that market, and also entered Brazil as a manufacturer. He was also guiding the research and development teams at Chrysler’s state-of-the-art technical center in suburban Detroit to put a viable “CCV” on the market. This “composite concept vehicle” would be an energy efficient cross between a motorcycle and a small passenger car designed for the bicycle-loving urban millions in up-and-coming Asian nations such as India and China. Eaton’s accomplishments at Chrysler, even before the Daimler-Benz deal, led the magazine Automotive Industries to name him Executive of the Year in 1997. That may have come about as the result of his thwarting of a hostile takeover bid by two major shareholders, an investor named Kirk Kerkorian who had teamed with a disgruntled Iacocca. Years away from the usual age of retirement (Eaton turned 58 in 1998), he also hopes to resurrect the idea of the intern and management training program that made such an impact on him early in his
2 3 8
B u s i n e s s
career. The reporter J. P. Donlon of Chief Executive asked Eaton how he wanted to be remembered in the industry, and Eaton commented upon the periodically precarious financial situation at Chrysler over its last few decades. “I want to be the first chairman of Chrysler who never has to bring this company back from the brink of bankruptcy. I want us to be on the opposite side of that, the most financially stable auto company in the world.”
Sources of Information Contact at: Chrysler Corp. 1000 Chrysler Dr. Auburn Hills, MI 48326 Business Phone: (248)576-5741
Bibliography “At Chrysler: The Bobs’ Management Style Spells Success.” USA Today, 17 June 1998. Donlon, J. P. “Eaton Hits a Few Speed Bumps. Chief Executive, November 1997. Howes, Daniel. “Quiet Competence Eclipsing Mega-Ego at Chrysler.” Detroit News,11 December 1997. Nissen, Todd. “Top Chrysler Execs See Financial Gains from Merger.”Reuters, 6 August 1998. Sorge, Marjorie. “Bob Eaton: 1997 Executive of the Year.” Automotive Industries, February 1997.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Thomas Edison Overview One of history’s great inventive geniuses, Thomas Alva Edison, secured patents for more than a thousand inventions, most notably the incandescent electric light bulb, the phonograph, and the motion picture projector. His successes were the result of talent, intelligence, determination, and a lot of hard work. He was a classic example of the nineteenth century American success story—a young man who overcame poverty, a physical handicap, and financial setbacks, to become famous and wealthy.
(1847-1931) Inventor
Personal Life Thomas Alva Edison was born in Milan, Ohio, on February 11, 1847, the seventh and youngest child of Samuel and Nancy Edison. The family moved to Port Huron, Michigan, when he was seven years old. Edison spent only three months in primary school—his teacher thought he was mentally inferior. His mother, who was a schoolteacher, pulled him out of school and continued his education at home. With her encouragement, Edison began his lifelong habit of voracious reading. Many of his textbooks included instructions for physics and chemistry experiments and by the age of ten, he had set up a chemistry laboratory in the cellar and was conducting original experiments. Edison’s restless entrepreneurial spirit surfaced at an early age. At 12, he took a job on the Grand Trunk railroad that ran between Port Huron and Detroit selling newspapers, magazines, candy, apples, sandwiches, and
2 3 9
T h o m a s
E d i s o n
Thomas Edison performing a lab experiment.
tobacco. Identifying a potential market among the line’s regular passengers, he set up a small printing press in an empty baggage car and produced a small newspaper and sold subscriptions for eight cents a month. He also used the baggage car for a chemistry laboratory. During long daily layovers in Detroit, he read every book he could find. “I didn’t read a few books. I read the library,” he said later in life. As a teenager, Edison became fascinated by the telegraph. Legend has it that when he saved a three-year-old boy from being run over by a rail car in 1862, the grateful father, a skilled telegrapher, offered to teach him the very marketable skill. This offer came at a particularly favorable moment in Edison’s life, since after the age of 12, he had become virtually deaf. He mastered telegraphy quickly, and for the next few years, during the American Civil War, Edison worked as a freelance telegraph operator in towns throughout the Midwest. Edison married twice and was the father of six children. In 1871, Edison married Mary Stilwell with whom he had three children. Mary died of typhoid fever in 1884. Two years later, Edison married Mina Miller, the daughter of an inventor, and had three more children. Edison has been characterized as a workaholic and often worked more than 100 hours a week. He was also known to collect very unusual items and was always on the look out for things that would have some unique property. For example, he compressed some nuts from the rain forest to make phonograph needles and he used Japanese bamboo for a lightbulb filament.
2 4 0
B u s i n e s s
(The Library of Congress.)
In recognition of his accomplishments, he was appointed Chevalier of the Legion of Honor of France in 1878 and in 1889, Commander of the Legion of Honor. In 1892, he was awarded the Albert Medal of the Society of Arts of Great Britain. In 1928, he received the Congressional Gold Medal “for development and application of inventions that have revolutionized civilization in the last century.” Thomas Alva Edison died in West Orange, New Jersey on 18 October 1931.
Career Details In 1868, after the war, Edison found employment with Western Union Telegraph Company in Boston, which was the largest telegraphy company in the country. That same year, Edison bought a copy of Michael Faraday’s book, Experimental Researches in Electricity, and performed all of the experiments in the book. At night, instead of sleeping, he experimented with electrical currents. The first invention resulting from these experiments was a device for electronically recording voice votes taken by a legislative body. The patent for this device, for which there was little market, was Edison’s first. Thereafter, he operated as a freelance inventor. In June 1869, Edison was in New York City, desperately poor and looking for work. He had a stroke of luck when a new telegraphic gold-price indicator for the Gold Exchange broke down. He happened to be on hand
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
T h o m a s
for a job interview and quickly repaired the instrument and was offered a job as general manager of Law’s Gold Indicator Company. Several months after accepting his new job, he joined with Franklin L. Pope and James N. Ashland to form Pope, Edison, and Company. Soon, he received commissions to develop a new stock ticker. The result was the Edison Universal Stock Printer, which, together with several other derivatives of the Morse telegraph, produced the $40,000 he needed to set himself up as a manufacturer in Newark, New Jersey, manufacturing stock tickers and high-speed printing telegraphs. His firm quickly employed fifty consulting engineers and, in the next six years, Edison was granted about two hundred new patents for inventions he and others made there including the mimeograph and improvements to the typewriter and telegraph. In 1876, Edison began construction of a large research laboratory at Menlo Park, New Jersey. He called it an “invention factory.” Here, the “Wizard of Menlo Park” accomplished some of his most important work. It was Edison’s goal to invent something new every ten days and for several years, he exceeded his own expectations and obtained a new patent every five days. In all, Edison had more than 600 patents. In 1877 he invented the phonograph, a primitive instrument in which sound vibrations were transferred by a steel stylus to a cylinder wrapped in tin foil. Despite the enormous popularity for the new toy, which he actively promoted, Edison didn’t envision its commercial potential, and abandoned its development for ten years. Meanwhile, he was working hard on inventing an economical, practical, and durable incandescent lamp. By the late-1870s, Edison had earned the reputation as someone who could do anything, so when he announced that he could greatly improve the incandescent lightbulb, an invention of the English Physicist, Sir Joseph Swan, the stock prices of gaslight companies dropped drastically. On October 21, 1879, Edison first demonstrated in public an incandescent light bulb made with charred cotton thread sealed in a vacuum that could burn for several hours. When the thread was heated within the vacuum, it would glow, without breaking, melting, or evaporating. He patented his idea and promoted his version of the lightbulb. In 1879 Edison grandly demonstrated his lightbulb by lighting up his laboratory and half a mile of streets in Menlo Park. On December 17 1880, he founded the Edison Electric Illuminating Company of New York, which eventually became General Electric.
E d i s o n
Chronology: Thomas Edison 1847: Born. 1859: Started first job on the Grand Trunk Railroad. 1863: Learned telegraphy. 1868: Worked at Western Union. 1869: Invented universal stock ticker. 1876: Built Menlo Park. 1877: Invented phonograph. 1879: Invented modern, practical, light bulb. 1880: Founded Edison Electric Illuminating Company. 1883: Patented the Edison effect. 1887: Built factory at West Orange. 1903: Produced the motion picture The Great Train Robbery. 1913: Produced first talking motion picture.
also discovered, inadvertently, that negatively charged electrons would flow from the filament of the incandescent bulb to positively charged metal—the Edison Effect. In 1885, Edison developed and patented a way to transmit “aerial” signals. In 1887, Edison constructed another large laboratory in West Orange, New Jersey, where 5,000 persons were eventually employed. They produced a variety of new products, including improved phonographs using wax records, mimeographs, alkaline storage batteries, dictating machines, as well as motion picture cameras and projectors.
Edison realized the immense implications of his discovery. He spent the next few years adapting his invention for large-scale use. One problem needed to be solved. He needed to develop a method to generate and distribute electricity. His company began operating the world’s first power station in 1882 on Pearl Street in New York City. It supplied power to four hundred incandescent lamps owned by eighty-five customers. Customers utilized a parallel wiring system which made it possible to turn off one lamp without turning out all the others. He
Like Menlo Park, Edison built the West Orange facility with a chemistry lab and machine shop under one roof and surrounded himself with several assistants. His assistants were experts in areas where Edison was deficient or those who had similar interests. His closest associates included Charles Batchelor, Francis Upton, and Arthur Kennelly. Edison also had a talent for motivating the people that worked with him. He always kept informed about the research of his competitors and often worked on inventions that others had already worked on. Edison, however, had the capability of turning ideas into material products. Probably his best known invention from this period was the kinetoscope, a primitive moving picture cam-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
2 4 1
T h o m a s
E d i s o n
era and viewer. In 1903 Edison produced The Great Train Robbery, one of the first movies, with this technology. He later developed a prototype “talking picture” in 1913. Unlike many of his friends and contemporaries, such as Henry Ford and Harvey Firestone, Edison was not primarily a businessman. To raise funds, he sold businesses that had begun to manufacture and distribute some of his most potentially lucrative discoveries. The profits he earned from one invention were invested in the next. Edison was the only inventor of his time to maintain a completely equipped and fully staffed laboratory. As he moved from invention to invention, not all of them commercially successful, he repeatedly made and lost fortunes.
Sources of Information
Social and Economic Impact Edison’s inventions have had a profound effect on modern society. No other man has ever been responsible for inventing products with such influence on so many lives around the world. Edison was awarded more patents, 1,093, than anyone else in American history. For all who are curious, Edison is perhaps the quintessential role model. He would literally try something thousands of times and if something did not work, he counted it as a success because at least he would know what did not work. After 8,000 trials while he was developing a storage battery, he remarked, “Well at least we know 8,000 things that don’t work!” And when he was attempting to develop a synthetic rubber, he experimented with over 17,000 botanical sources. While Edison is credited with making our daily lives easier or more entertaining with his inventions, he can also be credited for making our lives safer. In 1914, he developed an electric safety lantern which became a necessity when working in the
2 4 2
mines. During World War I, Edison contributed over 45 inventions including, navigating equipment, smoke screen machines, an underwater searchlight, and devices for aiming and firing weapons. Edison left millions of pages of notes and drawings that reflect the scope of his genius. He had the focus to sift through billions of possibilities and find one solution. He was ahead of his time when it came to managing people: his style was actually an early form of “brainstorming.” He would certainly fit into the late twentieth century with his “systems” approach. For example, he didn’t just invent a good light bulb, he invented the fuse, the screw socket, and a way to generate and distribute the energy to light the bulb.
B u s i n e s s
Bibliography Baldwin, Neil. Edison: Inventing the Century. New York: Hyperion, 1995. Conot, Robert. A Streak of Luck. New York: Seaview, 1979 Josephson, Matthew.Edison: A Biography. Reprint Edition. New York: John Wiley & Sons, 1992. McAuliffe, Kathleen. “The Undiscovered World of Thomas Edison.” The Atlantic Monthly, December 1995. Millard, Andre. Edison and the Business of Innovation. Baltimore: The Johns Hopkins University Press, 1990. Notable Twentieth-Century Scientists. Detroit: Gale Research, 1995. Vanderbilt, Byron. Thomas Edison, Chemist. Washington, DC: American Chemical Society, 1971. World of Invention: History’s Most Significant Inventions and the People Behind Them. Detroit: Gale Research, 1994.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Michael Eisner Overview Entertainment executive Michael Eisner is the chief executive officer of the Walt Disney Company. He began as an usher at NBC and eventually rose to such positions as head of prime time programming at ABC and president of Paramount Pictures before assuming control of Disney in 1984. Considered a great judge of talent and a shrewd businessman in a tough industry, Eisner is also known as a devoted family man.
(1942-) Walt Disney Company
Personal Life Michael Dammann Eisner was born in Mt. Kisco, New York, the son of a well-to-do lawyer, and was raised in luxurious surroundings in his parents’ spacious Park Avenue apartment in New York City. His early life was characterized by discipline and strict etiquette that included wearing a jacket and tie for family dinners. Although raised in wealth, he learned early to treat money seriously. Eisner’s father, Lester, was a Harvard graduate and a lawyer who successfully invested an existing family fortune in New York real estate. Lester Eisner also served as a top housing official in the Eisenhower administration. Eisner and his sister were taught self-discipline early. Among other lessons, they were required to read each day for two hours for every one hour of television they watched. Eisner enjoyed reading “Hardy Boys” mysteries and the works of Jack London, and his television favorites included Hopalong Cassidy, Ozzie and Harriet, and Leave It to Beaver. Entertainment for the
2 4 3
M i c h a e l
E i s n e r
ner began writing plays. He is known to have completed two plays, one of which was produced by the school’s thespian club. Eisner graduated from Denison in 1964. Eisner and Jane Breckenridge were married in 1967. They have three sons, Breck, Eric, and Anders. Eisner is well known as a family man and prefers pictures of his family in business publications where others will use political shots with public figures. In the critical days leading to his election as chairman of Walt Disney Productions, he delayed meetings because of commitments to his sons. This quality of Eisner’s was likely not lost on those searching for Walt Disney’s replacement.
Career Details After college, Eisner made a trip to Paris, thinking he would be a writer. He returned home, however, in less than two weeks. Back in New York, he went to work at NBC where he took a job as a clerk who kept track of the number of times a commercial aired. He also worked weekends at an NBC radio station, giving out traffic reports. Not long afterward, Eisner moved to CBS, where he inserted commercials into their slots for children’s programs, the Ed Sullivan Show and Jeopardy. Somewhat dissatisfied with his career, Eisner sent out hundreds of resumes, looking for a break in the television business. That break came in 1966 when a young executive named Barry Diller called. Diller was only 24 years old but was already a vice-president at ABC. At the time ABC was a small network, only about ten years old, and with only a couple of dozen affiliates around the country.
Michael Eisner.
(AP/Wide World Photos, Inc.)
Eisners often included Broadway, and Eisner marked every special occasion with a visit to the theater. Eisner attended Lawrenceville School, an expensive New Jersey boarding school, where he was a good student. He tried sports but was largely unsuccessful. He belonged to the Periwig theatrical club and won a lead role in The Caine Mutiny as a senior, but illness forced him to withdraw. After Lawrenceville School, Eisner enrolled in Denison University, a small liberal arts college in Granville, Ohio. His intention was to prepare for a medical career, but by his junior year, he was back in the theater. Shy and not particularly driven to be an actor, Eis-
2 4 4
B u s i n e s s
Eisner moved to ABC and worked with Diller on ABC’s programming. Together, their innovations included the movie-of-the-week and the miniseries. Eisner genuinely enjoyed even the simple forms of popular programming such as sitcoms and cartoon shows. Thus, when he took over Saturday morning programming in 1969, he did not guess at what would sell, he just looked for what he liked to watch. Eisner’s first push for Saturday morning programming was a cartoon series based on the popular singing group, the Jackson Five. Soon, he added another featuring the singing Osmond Brothers. Within three years, ABC was the top-rated network on Saturday mornings. Within five years, Eisner was put in charge of ABC’s prime time schedule, where he was responsible for such hits as Happy Days and Welcome Back Kotter. Even though the critics complained, the shows were successful and the ratings improved. Eisner understood that the core elements that worked for Saturday morning programming were universal: the importance of the story line, character development, and conflict. He also was responsible for some serious work at ABC such as the miniseries Roots and Rich Man/Poor Man. ABC emerged from Eisner’s time as head of pro-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
M i c h a e l
E i s n e r
gramming as the top-rated network on the air, but Eisner had already left for greener pastures. In 1976 Eisner joined Paramount Pictures, where Diller was the chairman and Eisner became president. Paramount was not a strong company, which is why the parent, Gulf Western, brought in the two successful ABC executives. Paramount had not had a hit movie for several years and had lost money. Within a year, Paramount produced Saturday Night Fever, and a string of successful movies were to follow that included Raiders of the Lost Ark, Bad News Bears, Grease, Heaven Can Wait, and Beverly Hills Cop. Two years after Eisner joined Paramount, the studio led the “big seven” studios with nearly one quarter of national box office proceeds. For six years, Paramount never fell below second in market share. However, two events in 1984 changed Eisner’s career direction in a dramatic way. First, his mentor and supporter at Paramount, Gulf Western’s chairman Charlie Bluhdorn, died. Bluhdorn’s successor, Martin Davis, did not think as highly of Diller and Eisner. Davis has been quoted as complaining that Eisner was not “serious” enough and was “like a kid.” Diller had his problems with Davis, also, and left to become chairman at 20th Century Fox. The second event of 1984 was the culmination of two decades of problems and drift at Walt Disney Productions. Walt Disney had started the company in the late-1920s and after a couple of false starts had found success with the animated character Mickey Mouse. Together with his brother Roy, Disney had built an entertainment giant. Walt Disney’s sudden death in 1966 had deprived the company of not only its chairman, but of its heart and soul. Using Walt’s creative genius and his brother Roy’s business acumen, the company had been successful. Yet, like many family operated businesses, there had been little effort made to groom executives to succeed the founders. The aftermath of Disney’s death was a slowing of growth and, eventually, stagnation in the Disney empire. Attendance dropped in the company’s theme parks, and movie production faltered. Earnings dropped and constant fighting between the “Walt” and “Roy” factions paralyzed the company. While the conflict was visibly between the two arms of the Disney family, the fight was actually between the creative people (Walt) and the administrators (Roy). This fighting actually paralleled conflicts that had existed between the two brothers for years, only now it threatened to destroy their dream.
Chronology: Michael Eisner 1942: Born in Mt. Kisco, New York. 1964: Graduated from Denison University. 1966: Hired by Barry Diller at ABC. 1976: Named president of Paramount Pictures. 1984: Becomes chairman of the Walt Disney Company. 1986: Created international division of Disney. 1996: Disney acquired Captiol Cities company.
A group that became known as the “brain trust” was formed. The members of the trust were Roy Disney, Frank Wells, a consultant to Warner Brothers, and Stanley Gold, a Disney board member who ran Roy’s company, Shamrock Holdings. The three set out to find a new manager for the company who would restore it to a position of strength, if not past glory. Eisner was a leading candidate from the beginning and was seen as articulate, imaginative, enthusiastic, and with values complementary to the company’s family identity. It was thought that Walt Disney himself would have loved him. A protracted battle ensued and ultimately, then-current chief executive Ron Miller, who was Walt Disney’s son-in-law, was fired. Frank Wells was considered a candidate for the top spot, but he recommended Eisner. Finally, with the intervention of major stockholder Sid Bass, a compromise team of Eisner as chairman and CEO and Wells as president was proposed.
Disney of the early 1980s was ripe for corporate raiders and take-overs. In the Wall Street climate of the time, it was not uncommon for companies in Disney’s condition to be taken over by speculators who would then break up the company and sell the parts for huge profits. Several such profiteers were buying up Disney stock or making overtures to the company and its major stockholders. Disney insiders, including Roy Disney’s son, also named Roy, were intent on saving the company.
Stanley Gold, who was point man for the “brain trust,” pushed this team hard. According to Gold, Eisner’s reputation as a creative person and a “big kid” was perfect for the head of Disney. Gold said that the problem with Disney since Walt died was that the place had not been run by “crazies.” It “needed to be run by crazies again,” and Eisner was the man for the job. With the strong businessman Wells as Eisner’s partner, Gold was promoting the same type of team that had built Disney in the first place: Walt (Eisner) as the creative “crazy” that drove the company forward while Roy (Wells) applied the common sense and occasional braking that was necessary to satisfy the bankers and Wall Street. Gold’s efforts, with Sid Bass’s vocal support, proved to be very successful.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
2 4 5
M i c h a e l
E i s n e r
Eisner was appointed chairman and CEO of Walt Disney Productions on September 22, 1984. Wells became president, and the new team was off and running to reestablish the Walt Disney Company as the premier entertainment company in America. New blood was brought into the management team, many from Eisner’s old company, Paramount. The Disney film archives were utilized to their fullest capacity, the theme parks were restored to profitability with attendance again rising annually, the animation division of Disney returned to making featurelength films, and the stock value rose dramatically. Over the first decade of Eisner’s term as chairman and CEO, Disney produced a string of movie hits including Down and Out in Beverly Hills in 1986, Who Framed Roger Rabbit in 1988, The Little Mermaid in 1989, and Beauty and the Beast in 1991. Alladin, the first animated feature to be nominated for an Academy Award for Best Picture, was released in 1992. Disney has produced a major animated feature nearly every year and got back into television with the hit show The Golden Girls and a revised feature, the Disney Sunday Movie. Eisner spearheaded other ventures including a new amusement park, Euro Disney, which opened outside of Paris, although its initial returns were disappointing. Disney also acquired independent film company Miramax to produce more offbeat films, and in 1996, Disney acquired Capital Cities, which owned ABC television and the cable sports network ESPN. Almost 20 years after heading ABC’s prime time programming, Eisner headed the company that owned the network. Under Eisner’s direction, greater emphasis has been placed on the construction and operation of company hotels at the theme parks and a cruise ship line is in operation. Disney now owns a professional hockey team named after a modest Disney movie hit, the Mighty Ducks, and it has acquired the Anaheim Angels baseball team. By 1997, Disney’s annual sales had grown to $21.1 billion. Disney’s share price has grown 19-fold. The success story of Disney now even exceeded that of its creators, Walt and Roy Disney. Eisner had profited handsomely, earning millions in bonuses and stock options. While there has been some criticism of his compensation package and the amount of money he has earned, there is no question about the success of his ventures and the resulting strength of the company.
ent is unquestioned and has served him well, yet there are many stories around the entertainment industry of shrewd deals he has struck to make a movie and attention to detail in the financial end of the business. Eisner understands the need to let the creative juices flow, but he tempers this with the realization that the business must make a profit. In Hollywood, this has turned out to be a very successful formula. Eisner is willing to pay the necessary salaries and fees to make use of top talent in Hollywood. This was a radical departure from the older Disney practice of being quite lean in the compensation department. Eisner understood the need to pay top dollar for the services of the likes of George Lucas, but at the same time, he looks for promising newcomers that will become the next wave of creative talent in Hollywood. The strategy has been to make maximum use of the company’s strengths in name recognition, reputation, and assets while diversifying into other aspects of the entertainment industry. The growing number of hotel rooms under the Disney name, the cruise ship line, and the sports franchises are examples of this expansion into related areas upon which the Disney name can be capitalized.
Sources of Information Contact at: Walt Disney Company 500 South Buena Vista St. Burbank, CA 91521-0001 Business Phone: (818)560-1000 URL: http://www.disney.com
Bibliography “An Interview with Michael D. Eisner” American Academy of Achievement, 17 June 1994. Available from http://www.achievement.org. Grover, Ron. The Disney Touch. Homewood: Richard D. Irwin, Inc., 1991. “Michael D. Eisner: Biography.” American Academy of Achievement, 1998. Available from http://www.achievement.org. “Michael D. Eisner, Entertainment Executive.” American Academy of Achievement, 1998. Availalbe from http://www.achievement.org. Streisand, Betty. “Shareholders Smell a Rat.” U.S. News and World Report, 3 March 1997. Taylor, John. Storming the Magic Kingdom. New York: Alfred A. Knopf, 1987.
Social and Economic Impact Eisner’s style is at once casual and friendly, but he is also hard-working, driven, and tough. His creative tal-
2 4 6
B u s i n e s s
Who’s Who in America, 47th Edition, New Providence: Marquis Who’s Who, 1992.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Roger Enrico Overview Roger Enrico, chief executive officer of PepsiCo Inc., is credited with using brand-building to increase sales for the soft drink company and its affiliates. Enrico runs the company with a flair for the dramatic and a keen knack for image-making and profit building.
(1945-) PepsiCo
Personal Life Enrico was born in 1945 in Chilsolm, Minnesota, where his father was a maintenance foreman at an ironore processing plant. When Enrico was in high school, his first job was at a local soft drink bottling plant. At the time, he could never have anticipated how soft drinks would ultimately factor into his future. Enrico was an average student, mostly preoccupied with leaving Minnesota. Offer of a full college scholarship to Babson College in Massachusetts gave him the chance he was looking for. While at college, Enrico ran his fraternity and edited the college yearbook; he graduated in three years. Although he had not given much thought to his future, Enrico realized he enjoyed interacting with people, and working in the area of personnel seemed like a logical career choice. He was hired by General Mills to fill an opening in Minnesota. There, he reunited with his high school sweetheart, Rosemary Margo, whom he later married. What seemed like a good career match turned out to be otherwise. Enrico was bored by the isolation of the personnel division and considered pursuing an MBA. Instead he attempted to join the Navy, but that did not work
2 4 7
R o g e r
E n r i c o
Roger Enrico, right, drinks Pepsi with the president of Lucasfilm Ltd., Gordon Radley, as they announce a $2 billion marketing deal tying PepsiCo Inc. to the “Star Wars” films. A new “Star Wars” film is slated to premier in 1999. (AP Photo/Damian Dovarganes.)
out either, when he failed the Navy’s test for colorblindness. Not wanting to remain stateside, Enrico volunteered for service in Vietnam in 1967. He was stationed in the northern part of South Vietnam and worked transporting fuel. When he returned from Vietnam, Enrico was hired again by General Mills, this time in their brand management division. Although he loved the work, he felt he was passed over for promotions because of his lack of educational credentials. He began sending his resume to headhunters across the country and was offered a job with the Frito-Lay division of PepsiCo in Dallas.
2 4 8
B u s i n e s s
Initially, Enrico was wary about moving to Dallas because of the lingering memories of the recent assassination of President John F. Kennedy, for whom he had once campaigned. Enrico was able to put that behind him when he recognized that both Dallas and Frito-Lay were on the brink of enormous growth. Enrico and Rosemary have one son, Aaron. The couple enjoys vacationing on Grand Cayman and Enrico is an avid scuba diver. The couple also owns a ranch in Montana.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
R o g e r
E n r i c o
While in Turkey in 1990, Enrico suffered a heart attack during a company tour. It was a sobering experience for the executive, prompting him to ultimately give up smoking.
Chronology:
Career Details
Roger Enrico
When he first began to work for PepsiCo, Enrico was an associate brand manager for Frito Lay onionflavored snacks, Funyuns. Enrico enjoyed working at Frito Lay, and when he was 31, he was offered the job of president of PepsiCo Foods Japan. Japan was known to be a difficult, and in many ways bewildering market, but Enrico accepted the challenge, as it would be a valuable learning experience. Ultimately, the Japanese venture was unsuccessful, but PepsiCo understood the difficulties and challenges of that market and did hold that experience against Enrico. First, he was reassigned to Brazil and then returned to the company’s marketing division in the United States. The company’s then-president, John Scully, appreciated Enrico’s aggressive marketing views. When Scully left the company to take over Apple Computers, Enrico was appointed to his position. He remained president and chief executive officer of beverages from 1983 to 1986. During that time, he began the Pepsi Challenge, forcing longtime rival Coca-Cola to come up with New Coke. Ultimately, his marketing idea boosted Pepsi sales. In 1986 Enrico’s book, The Other Guy Blinked: How Pepsi Won the Cola Wars, was panned by critics who regarded Enrico as nothing more than an ego-driven executive. The experience made him leery of the media and he now shies away from press interviews. It also created additional tension between the two rival companies. From 1991 to 1993, Enrico worked as chairman and chief executive officer of Frito-Lay and Pepsi Foods International. There, he encouraged the company to push forward with a line of healthy snacks and slashed domestic operations. In 1994, Enrico took over the position he would hold until he was tapped for the CEO job—corporate vice chairman and chief of Worldwide Restaurants, a weak division in this corporate structure. Enrico began streamlining measures and reducing the number of units. The division had a 19 percent profit increase, with savings from operations estimated at more than $200 million. All of this was spearheaded by Enrico.
1945: Born. 1972: Hired at Frito-Lay. 1991: Appointed chairman and chief executive officer of Frito-Lay and Pepsi Foods. 1994: Named corporate vice chairman and chief of Worldwide Restaurants with PepsiCo. 1996: Appointed CEO at PepsiCo.
tion, as he was not sure that he wanted the responsibility that a CEO shoulders. The job, he once said, was nothing he had ever aspired to. Financially, PepsiCo made it worth his while. In 1997 Enrico was given a total compensation package of $2.8 million, which included his $900,000 base salary, plus bonuses. He stated that he planned to donate most of his actual salary to PepsiCo’s employee scholarship fund, which provided educational money for employees earning less than $60,000 a year.
Social and Economic Impact Shortly after Enrico took over the CEO position from his relatively staid predecessor, he went into the ballroom of the Laguna Nigue, California Ritz Carlton escorted by a phalanx of white uniformed Star Wars storm troopers. As trumpets blared, Enrico took the stage and announced a coup: PepsiCo would join with George Lucas to promote the 1997 re-release of the smash science fiction trilogy, “Star Wars.” It was a heady moment for the beverage company accustomed to trailing behind rival Coca-Cola. It was also a moment which embodied Enrico’s style and his energy.
Not surprisingly, Enrico’s efforts had long been noticed. He was tapped to take over as CEO in 1996, when the current head, Wayne Calloway, was diagnosed with prostate cancer. It took Enrico two weeks to decide whether or not he wanted to accept the posi-
In a company that values autonomy, Enrico is well-suited for the CEO position. In January of 1997, Enrico announced he would spin off the PepsiCo restaurant interests into an independent company. The more than 28,000 restaurants in question are Taco Bell, Kentucky Fried Chicken, and Pizza Hut. By doing this, Enrico created a restaurant operation second only to McDonalds. He also elevated the Frito-Lay division of the company, which Enrico has said is like “ . . . the
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
2 4 9
R o g e r
E n r i c o
Coke of snack foods without a Pepsi.” Wall Street analysts and market watchers had predicted this move once Enrico took over. Still, the announcement sent stock prices up 3.5 percent—this, after a three-yearperiod when the stock had risen only 18 percent over that period of time, compared to a 60 percent increase for rival Coca-Cola. Since his appointment as CEO, onlookers have questioned how long Enrico will last in the job, not because of any failings on his part or on the part of the company, but simply because of his restless need to try something new. One close friend suggested Enrico might become a teacher or ultimately get a job in the entertainment industry. He claims he has every intention of staying with PepsiCo, where he’s been for a quarter of a century.
2 5 0
B u s i n e s s
Sources of Information Contact at: PepsiCo PepsiCo Worldwide Beverages, 700 Anderson Hill Rd. Purchase, NY 10577 Business Phone: (914)253-2000 URL: http://www.pepsico.com
Bibliography “Enrico Steps into Pepsi Spotlight.” Beverage Industry, April 1996. “PepsiCo’s Enrico: Mustering Brands Beyond Cola Wars Into Star Wars.” Beverage Industry, 20 May 1996. “PepsiCo’s Enrico to Succeed Calloway.” Nation’s Restaurant News, 4 March 1996. Roger Enrico Brandweek, 7 October 1996.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
William Esrey Overview For years, the Sprint Corporation has lagged behind its biggest telephone competitors, MCI and AT&T, but during that time, William Esrey has been steadily working to develop technology, which will outstrip what the other telecommunications companies can offer by the end of the twentieth century.
(1940-) Sprint Corp.
Personal Life William Todd Esrey was born in Philadelphia, Pennsylvania on January 17, 1940, the son of Alexander and Dorothy Esrey. He received his B.A. degree from Denison University in Granville, Ohio, and then went on to graduate with a Master’s degree in Business Administration from Harvard University in 1964. Esrey was married to Julie L. Campbell on June 13, 1964, and they have two sons, William Todd and John Campbell. Esrey is a member of the Million Hills Country Club, the River Club, and the Links Club. He is also a member of the Kansas City Country Club, in Kansas City, where Sprint has its headquarters. In his spare time, Esrey enjoys exercising and helicopter-skiing. In 1997, Esrey sold 62,000 shares or 14 percent of his interest in Sprint so he could purchase a ranch and a home in Vail, Colorado. This came some months after he and several partners bought the $3 million King Creek Ranch in McCoy, Colorado. Esrey is also involved in skiing through his sponsorship of an aerial stunt and mogul skiing competition held in Colorado resorts.
2 5 1
W i l l i a m
E s r e y
Sprint is credited with building the first fiber-optic long distance network and was the first company to offer an advanced high-speed data service known as “frame relay” on a nationwide basis. In the early 1990s, Sprint’s profit shares remained flat, as giant AT&T waged an aggressive, expensive campaign to win back customers it had lost to its competitors in the initial flurry of deregulation. While Sprint was experiencing a lull, MCI increased its share by slightly less than 2 percent. This occurred largely because MCI launched its “Friends and Family” program, which encouraged customers to register friends they frequently call for reduced long distance rates to those people. This prompted both Sprint and AT&T to scramble to develop competing programs. Sprint introduced “MOST,” a program aimed at residential customers and advertised by well known company spokeswoman Candice Bergen.
William T. Esrey.
(Courtesy of Sprint Communications.)
Career Details Esrey started his career with AT&T shortly after earning his MBA at Harvard and had become president of a small company subsidiary by the time he was 30 years old. Esrey left the communications field shortly after his appointment in order to try his hand on Wall Street, ultimately rising to the post of managing director at Dillon, Read & Company. By the 1980s, Esrey entered the phone business again, this time as executive vice president of United Telecommunications, Inc. Though the Kansas City based United Telecom was a fledgling business, it was nonetheless profitable. Under Esrey’s guidance, the company dropped all its cellular businesses so it could concentrate its energies and resources on building its long distance service. At that time, cellular service was much more expensive than long distance, and despite the rapid growth in the cellular industry, Esrey knew the company would be unable to successfully compete on both fronts. Although United Telecom was several years behind MCI in the long distance competition, it still gained an enormous amount of business, as companies defected from AT&T in search of reduced costs. From 1986 to 1990, the company’s long distance revenues went from $1.1 billion to $5.1 billion, a growth rate of approximately $1 billion per year. United Telecommunications, Inc. subsequently bought up the controlling shares of Sprint in 1988 from GTE. In 1992, United Telecommunications officially changed its name to Sprint.
2 5 2
B u s i n e s s
Sprint overlooked the small business market for awhile, earning fewer long distance revenues than those of its rivals. Throughout the early 1990s, however, Esrey was continuing to refine Sprint’s infrastructure, scrambling to stay abreast of the most recent technological innovations, so he could ultimately incorporate the ones he chose into the company’s operating system. By 1996, Esrey had begun talking about the future of Sprint as a “galactic telecommunications company.” In this arena, Sprint was more advanced than any of its competitors, and Esrey was already anticipating the next step. In a September 16,1996 interview with Communications Week, the CEO outlined his vision for the future and discussed Seamless Sprint, which would enable one company to handle all communications, including voice, data, wireless, local and long distance. In that interview, when asked how Sprint compares with its competitors, Esrey answered, “We are blending together our international and wireless capabilities with our expertise in local telephony in 19 states. We’re also blending long distance under what we internally call One Sprint. We’ll call it Seamless Sprint, the single face that we will present to the market.” These advancements would essentially make Sprint a full service communications provider. Esrey was also aware of Sprint’s Internet capabilities, and commented, “. . . our network carries 40 percent of the domestic Internet and 60 percent of the international Internet backbone traffic. We provide the bulk of America Online’s and several Internet access providers’ communications services. We carry one trillion bytes of information a month over the Internet. We plan to increase the capacity dramatically over time.” When asked how he envisions the market shaking out, Esrey replied, “There are different scenarios you could anticipate for the future. We believe there eventually will be relatively few large, galactic telecommunications companies.” In 1997, buyout frenzy reached a peak in the telecommunications industry, with MCI receiving three takeover bids in October of that year. The first company
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
W i l l i a m
to approach MCI was British Telecom, whose bid was surpassed by WorldCom Inc., the fourth largest long distance carrier. Finally, GTE offered its proposal. At the same time, Esrey discounted rumors that Sprint would be the next company to be bought out. In February 1998, it was WorldCom Inc., which beat out competitors and purchased MCI for an astounding $42 billion.
E s r e y
Chronology: William Esrey
Social and Economic Impact
1940: Born.
For years, Esrey has insisted that the focus of Sprint was not merger but expansion into local markets, which would pave the way for his ultimate single company plan. At the time of the MCI buyout, Esrey commented that his company had every necessary asset to be a world player in telecommunications. “We have assembled them methodically and carefully over the last six years, and we haven’t paid tens of billions of dollars to do so.” This makes the company ripe for a potential buyout, something in which Esrey takes little interest. On June 3, 1998, the Sprint CEO publicly mappedout the company’s future plans, which included the creation of a single network to handle voice, video, data, fax, and cellular. This network, Esrey said, will be in place by the end of the century and ultimately will make the 100-year-old telephone industry obsolete. Sprint’s continued success is also getting the attention of analysts, who have begun to realize that Sprint is poised to provide a unique and ultimately vital service.
1964: Received his MBA from Harvard University. 1964: Joined American Telegraph and Telephone Company. 1969: Named executive vice-president, United Telecommunications, Inc. 1985: Chosen as president, United Telecom Communications. 1992: Became chairman, CEO, Sprint Corp.
Bibliography Andrews, Edmund. “Mr. Tough Guy in Telecommunications,” New York Times Biographical Service. August 1992. Chakravarty, Subrata N. “The Quiet Comer.” Forbes, 23 February 1998 “Sprint CEO, William Esrey.” Communications Week, 16 September 1996. “Statement from William T. Esrey, Sprint Chairman & CEO, In Response to MCI Network Catch-Up Announcement.” PR Newswire, 4 January 1994
Sources of Information Contact at: Sprint Corp. 2330 Shawnee Mission Pky. Kansas City, MS 66205-2205 Business Phone: (913)624-3000 URL: http://www.sprint.com
B u s i n e s s
L e a d e r
USA Today. 3 June 1998. Who’s Who in America. New Providence, NJ: Marquis Who’s Who, 1998.
P r o f i l e s
f o r
S t u d e n t s
2 5 3
Marshall Field (1834-1906) Marshall Field and Company
Overview Marshall Field, a pioneer in the retail industry, founded what grew to become the world’s largest department store. His innovative ideas and readiness to explore new ways of servicing retail customers distinguished Field from so many other merchants. His motto, “The customer is always right,” not only summarized his business philosophy, but also became a creed for all who entered the retail industry. His unwavering focus on customer satisfaction eventually made him a highly successful and respected merchant.
Personal Life Marshall Field was born on August 18, 1834, and was the third of six children on a modest farm near the town of Conway, Massachusetts. His parents, John and Fidelia Nash Field, had roots there that dated back to 1630. Field attended the district school in Conway. While he was not a very good student, he excelled athletically; he was the fastest runner in his school. Early on, he exhibited a keen sense of business in trading jack knives with the other boys. Marshall Field was quiet and usually spent most of his time alone, however, a trait that he carried with him in later years. Field matured to become a man of few words, particularly in the home. When he did talk, it was about business. Field was reportedly addicted to work, as he had been since childhood, a value instilled in him early by his father. If he had any relaxation time, it too was filled with thoughts of improving his business.
2 5 4
M a r s h a l l
F i e l d
Field’s personal life included hardship and tragedy. He married his first wife, in 1863 at the age of 29. Nannie was the daughter of a wealthy ironworker from Ohio. However, she left him in the late 1880s to live in France by herself. She complained that her husband was so involved in his business that his continuing absence had driven her away and only apart from him could she find relief from her loneliness. Field and his wife never divorced. When Nannie died in Paris in 1896, he began a secret relationship with Delia Spencer, the wife of a friend of his. After Delia’s husband died in 1905, she and Field were married. In November of 1905, his only son, shot himself in the abdomen while preparing for a hunting trip. The elder Field was devastated and, at age 71, came down with pneumonia a month after his son died. He died on January 6, 1906.
Career Details An unexpected closing of the main road that went by the Field farm is what would eventually lead Field to leave farming. Due to the change in property values, John Field sold the family farm and purchased a new piece of property, then turned it over to his son, Chandler, one of Field’s older brothers. The life in farming that Field had come to expect, even if it had not been appealing to him, was now no longer in his future. So he searched for other options, first trying his hand as a clerk at a store. It seemed like an easy job, but at age 15 Field was seen as a miserable failure. The merchant told John Field that his son would never make it in the business world. Marshall was forced to return to his brother’s farm and work as a hired hand. During the next two years working there, Field realized farming was not for him and he longed to be self-employed. At age 17, with his brother Joseph, he took a job in a dry goods store in Pittsfield, Massachusetts. Even into the twentieth century, a dry goods store was the name given to what is now known as a department store that offered a variety of clothing and household goods. This time Marshall knew he had no choice except to stay and work hard at making a career for himself. He remained at the store for five years, living above the store and learning the business. It was said that he was shy, but courteous, and hard working enough to make up for whatever natural talent he might have lacked. After five years, his employer in Pittsfield offered him a partnership, but Field declined. He decided that the best opportunities for making a fortune were in the West. At that time, prior to the Civil War, the West included the territories west of Ohio. Rapid development and population growth offered endless possibilities for any merchant ambitious enough to relocate to uncharted territory.
Marshall Field.
(The Library of Congress.)
was rough, wild, and muddy. Yet, it was a city on the verge of becoming the center of the American Midwest and the hub of travel by rail, land, and water. It was there that Field decided to set up shop. Upon moving to Chicago, Field obtained work as a clerk in a dry goods store called Cooley, Wadsworth and Company. It was the largest store of its kind in Chicago at that time. The small and serious Marshall Field arranged to live and sleep in the store, managing to save half of his small income by living this way. The man who came to be known as “silent Marsh,” because of his retiring social manner, at this time he became obsessed to become a successful businessmen. By age 28, Field had risen to become a full partner in the company. Field’s consistently high level of performance at the store prompted another local entrepreneur, Putler Palmer, to ask that Field and his close partner Levi Leiter start a new business. This would be a new and full-range dry goods store in Chicago. Marshall Field, by the age of 30, had risen from a small store clerk to the co-owner of one of the largest department stores in Chicago in only eight years. In 1867, after two years of partnership, Field had arranged to buy out his partner, Levi Leiter and brought his two younger brothers into the business as partners.
Social and Economic Impact
Field left New England at age 22 and moved to Chicago, which was a young city at the time. The city
The timing for Field’s business ventures would seem all wrong. He started his partnership in the midst of the
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
2 5 5
M a r s h a l l
F i e l d
Chronology: Marshall Field 1834: Born. 1856: Moved to Chicago and worked as clerk at Cooley, Wadsworth & Co. 1862: Became full partner with Cooley, Wadsworth & Co. 1863: Married first wife, Nannie Scott. 1864: Joined with partner Levi Leiter to start own store. 1867: Bought out Leiter and brought two younger brothers into business. 1881: Company assumed name, Marshall Field and Company. 1906: Died.
Civil War and calamities in Chicago soon followed. The fire of 1871 and the great financial panic of 1873, which impacted the financial stability of the entire nation, were challenges Field had to endure. He remained undaunted and unyielding to these forces, never veering from his goal of being a successful businessman. He worked day and night to rebuild and to refine his business. His efforts would eventually pay off, as he would ultimately create a giant department store that became world renowned. Field decided to concentrate on retail sales and totally abandoned wholesale aspects of his business. In the meantime, the city was changing every day. A new middle class was emerging with money to spend. He also realized the importance of concentrating on women as his main customers and moved his business to a part of town that was safe and physically accessible to women. As a merchant, Field was responsible for many innovations. He introduced the one-price system, bought and sold for cash, and permitted exchange of goods. The reliability of his store was well known. Field knew how to capitalize on the latest business trends and tailor them to his needs. He adopted the idea of home delivery and offering an interior decoration department. Field established his store as one for people of good taste and employed European buyers, who brought back the finest china and furniture from Europe. His store was to be the standard against which all others would be measured. Field is given credit for re-inventing the motto, “The customer is always
2 5 6
B u s i n e s s
right.” If an article was returned, for any reason, the customer’s money was returned, as well. He was the first to display merchandise in the front-windows to draw pedestrians inside. He also opened a restaurant in the store and initiated free gift-wrapping for customers. It was also Field who started what some may say as the most significant innovation of all: The Bargain Basement. Because of his efforts, sales grew from $12 million annually in 1868 to $25 million by 1881 and $68 million in 1906. Field’s business earned him millions in his lifetime. He was known to everyone in Chicago, and socialized with the very rich of the city. He had an enormous estate built on Chicago’s prestigious Prairie Avenue. Through it all, Field still held onto the ways of his farming boyhood and had changed little: he was still quiet, socially shy, and known as somewhat reclusive. Interestingly, Field pushed the development of downtown Chicago, so that when he died, half of his fortune, estimated at $100 to $150 million, was in Chicago properties. He wished to make Chicago a great educational and cultural center and gave large sums to various institutions. He helped found the Art Institute, donated the land on which the first building of the University of Chicago was erected, and contributed $1 million for the museum of the World’s Columbian Exposition. This museum became Field’s chief interest; in addition to gifts during his lifetime, his $8 million bequest built the Field (later Chicago) Museum of National History. Even to the present, this museum remains a foremost tourist attraction and significant contribution to the city’s culture. Field refined and created the model department store. It was a complete store with elaborate displays, a variety of products, in-store cosmetics shops, dining areas, and of course the bargain basement concept. His customer-friendly policy, and the simple vastness of his store offering something for everyone, brought him a shopping center with great customer loyalty. This concept was copied by all who opened department stores in the United States and around the world. In the latter part of the twentieth century, Marshall Field was known as a workaholic, never sitting idle for a day. His business style was to work constantly. He loved his employees who cared about business as much as he did, and promoted the ambitious and efficient ones to high ranks in the company. Field ushered in new ideas and initiated whatever seemed to work in other businesses. He took trends and made them work for his store with always an eye to the customer. He created the feeling, without a doubt, that the customer was always right—which had become his company’s most effective business strategy. The bulk of Marshall Field’s estimated fortune of $150 million was put into a trust fund for his grandson, who was 12 years old when his father, Marshall II, fatally shot himself. His grandson, Marshall III, caused society to talk when it became public that he was going to donate his inheritance. He believed that inherited wealth
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
M a r s h a l l
should go to help ease social problems. Much of his money went into founding the Chicago Sun newspaper. Field’s legacy would be transformed from one of wealth to one of promoting social justice—something Field could not accomplish in his own lifetime.
F i e l d
Bibliography Pierce, B. L. “Rise of a Modern City, 1871-1893.” History of Chicago, New York: Alfred A. Knopf, 1957. Tebbel, John. The Marshall Fields. New York: E. P. Dutton & Co., Inc., 1947. Twyman, Robert. Marshall Field and Co., 1852-1906. Philadelphia: University of Pennsylvania Press, 1906.
Sources of Information
Wagenknect, Edward. Chicago. Norman: University of Oklahoma Press, 1964.
Contact at: Marshall Field and Company 777 Nicollet Mall Minneapolis, MN 55402-2055 Business Phone: (612)370-6948 URL: http://www.dhc.com
B u s i n e s s
L e a d e r
P r o f i l e s
Wendt, Lloyd. Chicago, Pictorial History. New York: Bonanza Books, 1958. Wendt, Lloyd. Give the Lady What She Wants. Skokie, IL: Rand McNally & Co., 1952.
f o r
S t u d e n t s
2 5 7
Debbi Fields (1956-) Mrs. Fields’ Cookies, Inc.
Overview Debra J. Fields was able to market the tasty chocolate chip confection she perfected as a teenager into a multi-million dollar-a-year retail business. By the early 1990s, despite some financial setbacks, Fields had become known as the “cookie queen.” The hardworking Fields had retail stores in seven countries and a menu expanding into new areas of food items designed to please an upscale palate.
Personal Life Debra J. Fields, called Debbi, was born Debra Sivyer, on September 18, 1956, in East Oakland, California. The youngest of five daughters born to a Navy welder and his wife, she was raised in middle-class surroundings. Her parents taught her to work for what she wanted. Fields developed a talent and interest in baking. Starting with the classic 1930s Toll House Cookie recipe on the back of the Nestle’s Chocolate Chips bag, Fields began experimenting with the cookie batter through dozens of batches. By the time she was 18, Fields was well known locally for her cookies, which were richer and more doughy than the classic recipe. After high school, Fields took classes at a community college for two years and worked at a variety of jobs. In 1976 she married Randall Fields, a young financial consultant. Randy would often bring batches of his young wife’s cookies into the office and would come home repeating the praise her cookies had received. Even with such glowing praise Fields never
2 5 8
D e b b i
F i e l d s
contemplated her cookie-baking as more than a hobby, until an episode at a dinner party. Asked by an associate of her husband’s what she was going to do with her life, she replied, “Well, I’m trying to get orientated.” The associate immediately tossed the intimidated Fields a dictionary and said, “The word is oriented, not orientated. If you can’t speak the English language, don’t speak at all.” Fields went home in tears. While telling Redbook the story she added, “When people asked me what I did, I’d say, ‘I’m a housewife’ and they’d walk away. I decided right then that I never wanted to feel that way again. Soon after that I started to think about what it was that I loved to do, and I realized I loved to make cookies. Six months later I had a business plan.” With a $50,000 loan from her somewhat skeptical husband, she opened a small gourmet cookie shop in her local downtown food arcade. Called Mrs. Fields Chocolate Chippery, the store opened on August 13, 1977. By noon hardly a customer had entered the shop, and she began to believe her husband’s prediction, that she would not earn $50.00 the first day. Determined, Fields piled a tray with freshly baked cookies and started handing out free samples in the walkway. The food court, busy with lunch-time traffic, provided plenty of takers. After her tray had been emptied and she had returned to her shop, Fields found that she had won over some customers. Going home with $75.00 in sales, she demonstrated that she had the perseverance and resourcefulness to make her business a success. That small shop in Palo Alto, California has since sparked over 600 stores throughout the world. Fields’ other businesses are each named after one of her three daughters: Jenny’s for Kids, which sells children’s clothes; Jessica’s Cookies, a separate cookie company; and a gift shop called Jennessa’s. In 1987 she published her autobiography, One Smart Cookie. She has written a number of cookbooks, including Debbi Fields’ Great American Desserts in 1996.
Career Details From its roots in Mrs. Fields’ Chocolate Chippery, the Mrs. Fields Cookies retail chain was born in 1977. Its first headquarters was in Palo Alto, although the company would follow Fields and her family to Park City, Utah in 1982. Her determination continued, and Mrs. Fields Cookies retail locations expanded first within the San Francisco Bay area, then throughout California.
Debbi Fields speaks at the State of World Forum where people gather from around the world to seek solutions to the problems facing humanity. (AP Photo/George Nikitin.)
cookie combinations, as well as brownies and a frozen cookie treat. Despite growing numbers of store locations, Fields would continue to retain personal control over all cookiebaking operations. She inspected samples of all ingredients and visited individual stores by rotation, introducing herself to employees and checking to see that her own high standards were being followed. She has closed stores for the day because the cookies sold there were not soft and chewy enough. Fields readily admitted to Inc. magazine. “They have to be perfect. There’s no word at Mrs. Fields for ‘its good enough.’ I’ll go in and throw away $600 worth of product. I don’t think about what I’m throwing away, I just assume that there’s been some reason why the people were not taught what the standards of the company are.”
Between 1985 and 1988, the company opened 225 new stores. By the late 1980s the chain had grown to include 425 cookie stores across the United States and abroad, with annual retail sales of over $87 million. Fields expanded her product line, adding oatmealraisin, walnut, coconut-macadamia nut, and other
Because of high standards, Fields did not franchise her locations and soon found herself stretched too thin, both physically and financially. The recessionary national economy during the early 1990s also hit the business hard. By 1993 Fields was forced to give up 80 percent of the company to those lenders that had extended her over $94 million toward expansion of the business. Although she remains the company’s largest shareholder, she has lowered her profile within company management. Still, qualifications of franchisees have been established
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
2 5 9
D e b b i
F i e l d s
Social and Economic Impact
Chronology: Debbi Fields 1956: Born. 1970: Developed cookie baking techniques in her family’s kitchen. 1977: Opened Mrs. Fields Chocolate Chippery in Palo Alto, California. 1980: Became president and CEO of Mrs. Fields Cookies. 1982: Moved her family and business to Utah. 1986: Established Mrs. Fields Children’s Health Foundation. 1987: Published autobiography, titled One Smart Cookie. 1992: Began franchising existing retail store locations. 1993: Wrote off debt by giving her lenders 80 percent of the company’s assets.
In addition to a good-tasting product, industry analysts credited Fields’ overall success to her commitment to quality. She insists on only fresh ingredients and requires that local retailers bake cookies daily. As Fields told an interviewer in Moxie magazine, “The main thing is—if you absolutely know what you’re doing is good, it makes it very easy not to compromise and not to give up; because you know you’re going to make this world a little bit better.” Fields’ unconventional business style, manifested by her close involvement with each of her stores and her view of employees as an extended family, reflects her own high standards and expectations. These standards include a strong element of caring and concern for others, especially her customers. In addition, since her first year of operation, every cookie in each of her stores that was still on the rack after its first two hours out of the oven has been donated to a local charitable organization. Fields took the economic downturn of her business during the early 1990s in stride; she was quoted as telling the Los Angeles Times that cookies would continue to be her life. “I would not give this up for any amount of money.” Fields continues to operate as chairman of the board and is an enthusiastic marketer of the retail stores that bear her name. As she told Redbook, “Sometimes the things that are most devastating are the best things for you. I think you learn more from failures than from success.”
1996: Appeared in Public Television series.
Sources of Information with consideration for her exacting standards: potential owners must put in a minimum of three months’ steady employment at a current retail outlet, although Fields encourages six months. “You have to be a cookie lover,” she told Working Woman. Fields believes that the interaction between employees and customers is key to any business’s success. “When we interview, we put applicants through a threestep test,” she told Supermarket News. Applicants are first judged on their reaction to tasting Mrs. Field’s cookies. Then they are asked to go out on the street and give cookies away. Those that pass the first two steps are then asked to sing “Happy Birthday” in the middle of the store. “We do that because anybody can sing that, and we want people who would do something as outrageous as singing in front of a bunch of strangers,” Fields explained.
2 6 0
B u s i n e s s
Contact at: Mrs. Fields’ Cookies, Inc. 333 Main St. Park City, UT 84060 Business Phone: (801)463-2000 URL: http://www.mrsfields.com
Bibliography Contemporary Newsmakers. Detroit: Gale Research, 1987. Harper, Roseanne. “Mrs. Fields Shares Sweet Sales Secret.” Supermarket News, 26 June 1995. Moxie, August 1990. Myers, Dee Dee. “The Biggest Career Goof I Ever Made.” Redbook, November 1995. Pogrebin, Robin. “What Went Wrong with Mrs. Fields?”Working Woman, July 1993. Prendergast, Alan. “Learning to Let Go.” Working Woman, January 1992.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Paul Fireman Overview Paul Barry Fireman accomplished what others considered impossible. He transformed his family’s wholesale sporting goods business into Reebok International, one of the world’s chief contenders in the athletic shoe market. Fireman attended a trade fair in Chicago in 1979 and was impressed by a display of hand-sewn leather sneakers called “Reeboks,” which were made by the world’s oldest athletic shoe company, J.W. Foster & Sons. Six months later, he had convinced the British company to let him distribute the shoes in the United States. Within five years, Fireman’s company, Reebok, U.S.A., bought out all rights to the shoe, and Reebok International was born. Fireman worked to create a market for designer sneakers. By 1987, his company became the leading manufacturer of athletic footwear in the United States, and was second only in the world to Adidas.
(1944-) Reebok International
Personal Life Paul Fireman was born on February 14, 1944, in Cambridge, Massachusetts. He attended Tabor Academy, a private secondary school in Marion, Massachusetts. He enrolled in Boston University but did not stay to obtain his degree. Instead, he went to work for his family’s company, BC Recreational, selling outdoor recreational equipment. He eventually became vice-president, then treasurer of the company. Fireman and his wife, Phyllis, have three children. They live in Newton, Massachusetts, an affluent suburb of Boston. Nearby is the town of Stoughton, where Reebok, International is headquartered.
2 6 1
P a u l
F i r e m a n
J.W. Foster & Sons, which was founded in Britain in 1895, was the fair participant that caught Fireman’s attention. In the 1950s J.W. Foster & Sons started making special, hand-sewn shoes for the world’s best runners. Their shoe was named after a species of African antelope that was well known for its speed. Fireman quickly saw the potential these shoes had in the American marketplace. People were beginning to be conscious of fitness and joggers had become increasingly visible on America’s pavement by the end of the 1970s. He persuaded the shoe manufacturers, already known as Reebok International, to let him distribute their product in the United States.
Paul Fireman holds the specialist book with Reebok’s ticker symbol “RBK” on the trading floor at the New York Stock Exchange. (AP/Wide World Photos, Inc.)
Fireman relaxes by playing golf. He is not considered to be athletic, despite his company’s spotlight in the athletic arena. When he was denied membership in the exclusive Oyster Bay, New York Country Club, he went out and bought his own club. He is described as a person who speaks directly and decisively. Commenting about himself, Fireman once said, “I tend to get right to the point.” Fortune magazine’s list of the 400 richest people in America estimated Fireman’s wealth at $535 million. Fireman said in 1987, after he changed from his usual casual attire of jeans to suits and wing-tip shoes, that he refused to let financial success fail to remind him of who he has always been. In March of 1987, USA Today reported that Fireman claimed, “We moved to a ritzier neighborhood. But I will still go out for the same beer and pizza.”
Career Details Fireman was working in his family business for over 15 years by the time he discovered Reebok shoes. Whatever he did or learned before that moment was all a prelude. His career at the top of the business world began with a trip to a Chicago trade fair.
2 6 2
B u s i n e s s
Although sales of Reeboks were initially slow, Fireman demonstrated a solid understanding of marketdriven trends. The shoes were initially available at $60 a pair. They were amongst the most expensive athletic shoes on the market during the late-1970s. By 1981, Fireman had run out of money. In a bold move, he raised cash by selling about 60 percent of his new company to Pentland Industries, a London-based industrial holding company, for $75,000. Fireman agreed to a $65,000 annual salary from Pentland and an incentive bonus of 10 percent of pre-tax earnings more than $100,000. Fireman would also run the new company. Fireman’s first major success was his anticipation of the aerobics craze that went along with women’s increased interest in fitness and sports. These consumers had not yet been courted in the way that Fireman began to court them. Fireman used research as the necessary tool to serve the customer that nobody had yet served. In the August 3, 1986 issue of the Los Angeles Times, Fireman said, “All marketing, design, and production are directed toward answering the requests, needs, and fantasies (of customers) versus us trying to tell the consumers what they want.” Fireman took the lead in doing what others would do after him. He went to fitness leaders for advice. This strategy began to make a difference in how America shopped for shoes. Fireman’s “Freestyle” shoe was the first athletic shoe designed specifically for women. Reebok made them soft, lined them with terrycloth, and added delicate colors. Most of all, they made a sturdy shoe that survived the new fitness consciousness that was sweeping through America. Fireman decided to diversify Reebok in the mid 1980s. His goal was to turn the company into a multinational corporation worth $2 billion. The process involved the three steps of acquisitions, internal development, and international expansion. Between 1986 and 1987, Reebok acquired several companies, including Avia, a rival athletic shoemaker; John A. Frye, the prestigious and stylish boot maker; Rockport, a company known for its sporting and casual shoes; and Ellesse, an Italian company known for making expensive athletic shoes and clothing. In 1986, Fireman’s Reebok entered the sportswear market. Due to problematic shipments and inferior im-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
P a u l
port quality, Reebok missed the spring season altogether that year. Sales registered a mere $39 million, not enough to make much of a statement or realize the profits for which the company had hoped. Again, however, Fireman did not give up. He sought out Douglas Arbetman, formerly a divisional president with Calvin Klein, to head the apparel unit that September. Most of the design and sales staff were replaced. These problems and adjustments in the sportswear division were followed by management restructuring throughout the whole company. At the end of March 1987, Fireman named Joseph LaBonte, formerly president of Twentieth Century Fox studios, as Reebok’s new president and chief operating officer. Fireman also hired Mark Goldston, a former president of Faberge, and Frank O’Connell, former chief of operations for HBO Video. Fireman’s salary kept pace with soaring company profits throughout the 1980s. From 1984 to 1985, his salary jumped from $1.2 million to $5.5 million. Pentland, Reebok’s holding company, cut a new deal with Fireman when his original contract expired in 1986. Fireman would be paid a base salary of $350,000 plus five percent of pretax profits over $20 million. By 1990, this deal brought him, with stock options, an annual salary of $33.3 million. That same year, Pentland decided to sell 30 percent of its Reebok holdings. They followed in April 1991 with the sale of another 19 percent. Pentland announced in November 1991 that they planned to sell all of their remaining Reebok stock. Fireman decided to take a pay cut in 1990 as well. The size of the cut was unprecedented in American corporate history. Effective January 1991, Fireman took a base pay of $1 million, with bonuses totaling no more than $1 million. Fireman agreed to take this cut after he was attacked as the chief executive who had delivered the worst shareholder performance in relation to his own pay. Fireman proved invincible in the face of increasing criticism throughout the 1990s. He continued to invent new products and new advertising campaigns. His best success turned out to be with the teen and preteen age groups, even though he targeted the more desirable 18 to 35 year olds. In 1990, Reebok turned over its advertising to Hill, Holliday, Connors & Cosmopulos, Inc., a Boston-based agency. They hired the famous pop singer and personality Madonna to introduce two new shoes in a series of back-to-school ads. The two shoes introduced were the Double Pump, featuring two air bladders, and the Blacktop, a basketball shoe. With Fireman’s approval, the new advertising campaign adopted a new slogan: “Life is short. Play hard.”
F i r e m a n
Chronology: Paul Fireman 1944: Born. 1979: Obtained rights to sell Reebok shoes in the United States. 1981: Sold 60 percent of company to Pentland Industries, London to raise money. 1982: Introduced Reebok Freestyle shoe, the first aerobic shoe marketed. 1984: Fireman and Pentland Industries bought out Reebok from Foster & Sons. 1986: Entered sportswear apparel industry with Reebok line. 1986: Reebok surpassed Nike as top-selling manufacturer of athletic shoes in the United States, second only in the world to Adidas. 1987: Engineered major management restructuring of Reebok. 1988: Launched controversial $35 million “Reeboks lets U.B.U.” advertising campaign. 1988: Initiated Reebok Awards for Human Rights. 1990: Took a pay cut considered the largest in U.S. corporate history. 1996: Named to Footwear News Hall of Fame. 1998: Criticized by Reebok shareholders as company profits lag.
In 1996, Fireman opened his Reebok Sports Club/NY, in New York City, in a further attempt to gain an older clientele and expand his reach in the marketplace. Reebok was also an official licensee for the 1996 Summer Olympics.
val, Nike, suffered great losses through the negative publicity of its underpaid, underage Asian workers. Many colleges boycotted Nike and its products. Despite these setbacks for its number one competitor, Reebok continued to struggle. In an August 18, 1997 article in Fortune magazine, Fireman commented about his company’s change of direction: “We kind of forgot one of the key ingredients of our success-that the product is more important than the celebrity athlete.” Fireman also tried to turn things around by trimming costs, selling off Avia shoes and other company interests. Reebok’s new DMX 2000 series shoes, using DMX and 3D Ultralite technologies, were also expected to capture more consumer profits.
Throughout the-late 1990s, Fireman struggled to hold on to a sizeable share of the market. Reebok’s ri-
In March 1998, the Wall Street Journal reported that Fireman would receive only 56 percent of his annual
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
2 6 3
P a u l
F i r e m a n
bonus in 1998 due to his failure to meet performance goals. This meant he received only $562,000 out of a possible $1 million bonus. As of late May 1998, however, the sports shoe web page FOOTACTION USA reported that Fireman told shareholders that the company has “the best product line in the industry.” Fireman also announced that he planned a “Try on the Future” tour and would send out vans to major shopping malls so that customers could try on the company’s newest products.
did not hesitate to discontinue business with them. Under Fireman’s direction, Reebok implemented worker standards, known as the Reebok Human Rights Protection Standards. These standards are enforced through a system of education, training, and factory audits. Fireman has honored his customers by doing careful research to understand their needs. He has also worked repeatedly to ensure that the world is a better place. He proved that American capital ventures can survive financially and still serve the public welfare.
Social and Economic Impact Fireman took the lead in an emerging multi-billion dollar athletic shoe industry when such a move was a great risk. He also shocked corporate America by taking the advice of fitness experts and consumers. Less than twenty years after he began, Reebok became a $2 billion company. Fireman’s refusal to step aside, even in the midst of disappointing shareholder profits, proved his determination and hard work. Fireman created a constant challenge to Reebok and to all industry leaders to keep changing to increase consumer satisfaction and profits. Frieman’s greatest contribution to corporate America is his diligent effort in the area of human rights. Amnesty International honored Fireman for his work in this area. Along with Amnesty International, Fireman established the annual Reebok Human Rights Awards for activists under the age of 30 who have made significant achievement for human rights causes. In running his own company, Fireman said, “I didn’t want this to look like, taste like, or smell like an American corporation of the ‘50s, ‘60s, or ‘70s. I thought Reebok should be operated differently.” Fireman is outspoken beyond his own responsibilities to lessen human suffering for workers around the world. He also took all of corporate America to task when he called on corporations to take social responsibility more seriously. When he discovered manufacturer abuse of workers in various Asian countries, he
2 6 4
B u s i n e s s
Sources of Information Contact at: Reebok International 100 Technology Drive Stoughton, MA 02072-4705 Business Phone: (781) 341-5000 URL: http://www.reebok.com
Bibliography Anderson, Kevin. USA Today, 12 March 1987. “Fireman, Paul.” Current Biography Yearbook. New York: H.W. Wilson Co., 1992. Footaction News. 25 May 1998. Available from: http://www. footaction.com. Golf Digest, 1998. Available from: http://golf.com/golfdigest/profiles/richguys.htm. Groves, Martha. Los Angeles Times, 3 August 1986. “Reebok International Ltd. Company Profile.” Citizens Trust for Corporate Responsibility. Available from: http://www.citizenstrust.ca/personnel.html. Sellers, Patricia. “Reebok Gets a Lift.” Fortune, 18 August 1997. Wall Street Journal. 30 March 1998. Wilner, Richard. “Reebok Chief Says, ‘Hell No, I Won’t Go.’” New York Post, 15 January 1998.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Harvey S. Firestone Overview Industrialist Harvey Firestone established a rubber tire company with only a little cash and a fairly new patent in the rubber capital of the world, Akron, Ohio. A pioneer in the mass production process, Firestone created a company that became a major force in the industry and at its peak was counted among the “Big Five” tire manufacturers in the United States.
(1868-1938) Firestone Tire & Rubber Company
Personal Life Born December 20, 1868, Harvey Samuel Firestone was raised on a farm in Columbiana, Ohio. His family was descended from immigrants from the Alsatian region of France. Firestone’s early education was in a one-room school house. He graduated from high school, and then completed a business course at a Cleveland college. At the age of 27, Firestone married Idabelle Smith of Jackson, Michigan. The couple had five sons: Harvey S. Jr., Russell Allen, Leonard Kimball, Raymond Christian and Roger Stanley; all of the siblings worked in their father’s business. Firestone was a hard worker, but he enjoyed escaping from the rigors of business from time to time. He lived during an era that produced a number of great innovators. Some became his friends. It was not uncommon for Firestone to take long camping trips to remote regions with automaker Henry Ford, inventor Thomas Edison and naturalist John Burroughs. The foursome particularly enjoyed traveling through the countryside, and always without their families. According to the Akron Beacon
2 6 5
H a r v e y
S .
F i r e s t o n e
other dignitaries on hand. The observances lasted two days in Akron; a special viewing was then held in his hometown, Columbiana.
Career Details
Harvey Firestone.
(The Library of Congress.)
Journal, these trips “were caravans that included cars and trucks carrying servants, equipment and a fully equipped kitchen. The dining table they hauled with them had room for 20.” On one famous trip, Edison, Ford, Firestone and Firestone’s son, Russell, motored to Plymouth, Vermont, to visit President Calvin Coolidge at his farmhouse. The last trip took place in the summer of 1920, a year before Burroughs died. Ford, Firestone and Edison continued to take the road trips, but did so with their families. Even after Firestone became a wealthy and famous industrialist, he remained rooted in the country, spending much of his free time working on his farm in Columbiana. He was also a staunch Republican and devoted Episcopalian. And he even made time to serve as president of the Ohio Federation of Churches. Firestone’s interest in the rubber tire industry developed while he was working at his uncle’s Columbiana Buggy Company in the early 1890s. During that time, Firestone grew to believe that the future was in rubber wheels and not buggies. His suspicions were confirmed when his uncle’s firm went bankrupt in 1896. In that year he set out to establish his own rubber tire company. He continued to play an active role in the company well past age 65, and served as its chairman until his death on February 6, 1938 at the age of 69. He died in his sleep in his oceanfront retreat in Miami Beach. By the time of the funeral, more than 12,000 people had come to Akron to pay their respects, according to the Akron Beacon Journal. The funeral was well attended, with members of the Ford and Edison families, White House officials, and
2 6 6
B u s i n e s s
After the bankruptcy of his uncle’s buggy manufacturing firm, Firestone left Ohio and launched a company that sold tires. Three years later, in 1899, Firestone sold that venture to a competitor for more than $40,000 in cash, a sizable profit in those days. Firestone, however, was intrigued by the tire industry and, even more so, the growing automobile industry. The U.S. auto industry was launched in 1896, the year the Duryea brothers built more than one vehicle from the same design. From that point on, other manufacturers were determined to get a piece of this promising business. Firestone pursued tires, and acquired a patent for a method of attaching them. He set his sights on Akron, which was already the hot spot of the tire industry. Interestingly, tire makers were mostly manufacturing solid tires for buggies and pneumatics for bicycles; the U.S. automobile industry was still in its infant stages. Still, Firestone knew he had to be in Akron to become a player in the tire manufacturing field, which he predicted would soon take off with the rising popularity of the automobile. So in 1900 he moved to Akron and, at age 31, organized the Firestone Tire & Rubber Company with $10,000 in cash and a patent for a method of attaching tires to rims. The business was off to a slow start until two major events propelled Firestone to the forefront of the tire industry. First, the firm began to prosper when it began manufacturing its own products in 1903, allowing it to substantially cut costs and boost production. This was key, as the automobile industry was looking to tire makers for improved ways to move its vehicles. Firestone was there to respond to their needs. The second big break came when Firestone, in 1906, received a huge order for 2,000 sets of tires from automaker Henry Ford. Ford was even at that time a major player in an industry brimming with small manufacturers. Ford’s order signaled the start of a long business relationship with Firestone that led to a personal friendship as well. Financially, the order was the boost Firestone needed to jump-start his company. In 1907 the company sold 105,000 tires at a $538,177 profit. But Firestone knew that new advances in technology would keep his company competitive. A year after Ford placed his big tire order, Firestone began offering a “dismountable rim,” which allowed quick replacement of a worn tire to a spare. That was a breakthrough for Firestone, and he aggressively marketed these tires. Firestone was on a roll now, realizing a number of successes as he continued to introduce better and improved tires. His efforts paid off handsomely: company sales rocketed to $15 million in 1913, up from only $100,000 just 12 years earlier.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
H a r v e y
Akron Beacon Journal writers Steve Love and David Giffels said this about Firestone: “The blue-eyed, diminutive Firestone—he was 5-foot-6—would spend his mornings walking the grounds of the rambling Harbel Manor, his West Akron estate, now the site of the Georgetown Condominiums and environs. His body was there, walking among the flowers and trees, but his mind was on the rubber company as he thought through his daily plans.” Typically, Firestone arrived at the office around 10 a.m., but had already been busy with work.
S .
F i r e s t o n e
Chronology: Harvey S. Firestone
Firestone was a good ideas man, but had little interest in actually inventing things. He left such technical details to the engineers. One example of this occurred in 1908, when Firestone came up with a concept for a “nonskid” tire with a diagonal tread pattern. “He sketched out the idea on a note pad in his office. The designers made it work, and the company still points to the non-skid tire as one of its proudest developments,” reported the Akron Beacon Journal.
1868: Born.
Throughout the 1920s, Firestone prospered as one of the “Big Five” tire companies, standing in line with Goodyear, Goodrich, U.S. Rubber, and Fisk. Firestone, however, took nothing for granted. The postwar depression of the 1920s prompted Firestone to slash prices and cut wages in an effort to trim costs. He kept wages low during the expansion years of the 1920s and throughout the Depression, which helped the company maintain healthy profits. Surprisingly, Firestone, along with the other tire companies, was able to stall unionization of its manufacturing plants until the 1930s, a move that also kept wages low.
1932: Stepped down as company president; continued as chairman.
Social and Economic Impact Certainly, Firestone was a force in the industry. His innovations were renowned in the rubber tire and automobile industries, and greatly influenced the direction of rubber technology. In 1923 Firestone introduced the balloon tire, which quickly became the standard for most types of motor vehicles. He was also a proponent of using motor driven trucks, extending the American highway system, and the elimination of railroad grade crossings. Making tires was not Firestone’s only concern. Having the materials to build tires was equally important. So when the British government in 1922 implemented the Stevenson Plan, which restricted the production of crude rubber on plantations in British possessions throughout the world, Firestone responded. The Stevenson Plan drove up crude rubber prices, greatly effecting the profits of the tire industry. Firestone, however, refused to be a victim and, joined by his friend Henry Ford, set out to establish an American-controlled supply of crude rubber. In 1924 the two men began developing their own rubber supply in Liberia, in western Africa. By 1926 they had leased rights to a maximum of one million acres. As a result of his huge investment, Firestone became a force
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
1892: Sold buggies for buggy manufacturer. 1896: Established first tire company. 1900: Founded Firestone. 1906: Received huge tire order from Henry Ford. 1926: Developed rubber supply in Liberia, with Ford. 1928: Established service center stores.
1938: Died.
in Liberia’s economic fabric. Firestone was quite successful in Liberia, and achieved his goal of an independent rubber supply. Firestone even contributed to that country’s economic and social growth. He improved the Monrovia harbor, loaned the Liberian government several million dollars, and developed a sanitary work and living site for his native employees. Despite these efforts, Firestone was criticized for paying low wages to Liberian workers and for having too much influence in Liberia’s affairs. In the United States, Firestone was busy developing new strategies to keep his company prosperous. In 1928 Firestone began opening a chain of “one-stop master service stores” throughout the United States to supply the public with the company’s tires and gasoline, oil and batteries, and brake and general equipment service. In later years, the service centers included auto supplies, and the name was changed to “auto supply and service stores.” Just 14 years later, there were 650 of these stores in operation across the United States. Moreover, by the late 1930s, Firestone employed more than 45,000 people. He operated 13 plants in the United States and five plants abroad. By 1942, Firestone had the largest rubber plantation operating under single management in the world, employing 30,000 laborers, with 80,000 acres planted. That is just half the story. Firestone had indeed built an empire, and it was hugely profitable. The Great Depression of the 1930s did not diminish the health and strength of this company. During that bleak period, he never suspended dividend payment and even continued
S t u d e n t s
2 6 7
H a r v e y
S .
F i r e s t o n e
to show improvements in the business. Near the end of the Depression, in 1937, the company had a capital of $108 million and sales of $157 million, with profits of $9 million. Firestone had an impressive share of the market, as one-quarter of all tires sold in the U.S. wore the Firestone badge. Robert Koch is a retired Firestone vice president believed to be the last person alive to have been hired directly by Firestone himself. He said in the Akron Beacon Journal, “I think the thing that was outstanding about Mr. Firestone was that he had long-term vision,”. And Koch credits Firestone’s conservatism during the Great Depression as the reason for the company weathering that storm. However, Firestone was ultimately not equipped to adapt to changing circumstances. After World War II, industries grew bigger and stronger, and required a certain level of management expertise. Firestone had always run his empire as a closely-held family business. As the company grew, he was unable to make the hard decisions to keep it current and competitive. It soon lost its leadership in tire production to Goodyear, which had better marketing and management abilities. Another troublesome spot: Firestone never diversified beyond tire production. He acquired textile mills and rubber and cotton plantations, but these were all to aid the production of tires. All of the ingredients needed to build his tire empire later backfired and led to its demise. In the
2 6 8
B u s i n e s s
late 1980s, Japan’s Bridgestone acquired Firestone, which is now part of Nashville-based Bridgestone/Firestone Corp.
Sources of Information Contact at: Firestone Tire & Rubber Company 50 Century Blvd. Nashville, TN 37214 Business Phone: (614)872-5000 URL: http://www.bridgestone-firestone.com
Bibliography Bonn, Joseph. “For Vagabonds: Even Magnates Can Have Fun.” Automotive News, 21 September 1993. Byers, Paula K., and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography, 2nd ed. Detroit: Gale Research, 1998. Fucini, Joseph J., and Suzy Fucini. Entrepreneurs. Boston: G.K. Hall & Co., 1985 Ingham, John N. Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood Press, 1983. Love, Steve and David Giffels. “Risk-Takers Made Akron Rich.” Akron Beacon Journal, 26 January 1996. “Time Capsule.” Time, 1 September 1997. Van Doren, Charles, ed. Webster’s American Biographies. Springfield, MA: G. & Merriam Co., 1979.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Donald Fisher Overview Donald Fisher, with his wife, Doris, created the popular and ever-expanding chain of Gap clothing stores. The Gap began as a jeans store selling a wide selection of Levi’s, but gradually shifted to feature only its own private label of casual apparel for men, women, children, and infants. Old Navy and Banana Republic are also a part of the Gap empire, which has extended its all-American look to Europe and Japan.
(1928-) The Gap, Inc.
Personal Life Donald George Fisher was born in 1928. He and his wife, Doris Feigenbaum Fisher, have three sons, Robert, William, and John. Fisher graduated in 1950 with a bachelor of science degree from the University of California at Berkeley, where he was a swimmer and a star player on the water polo team. Presidents Ronald Reagan, George Bush, and Bill Clinton have all appointed him to the Advisory Committee of Trade Policy and Negotiations. In 1998, he and his wife pledged $25 million to a foundation which helps the San Francisco area public schools. The foundation planned to hire a for-profit firm, the Edison Project (of which the Fisher’s son John owns four percent) to reform the city’s traditional and charter schools. Fisher has been described as a “tall, professorial man, balding and white-haired” by Sylvia Weiland Nogaki in the Seattle Times.
2 6 9
D o n a l d
F i s h e r
lied heavily on Levi’s jeans for its profits, but by 1982, only 30 percent of their stock was Levi’s. In 1991 the Gap announced it would begin carrying only its own brand of merchandise.
Chronology: Donald Fisher 1928: Born. 1950: Entered real estate business with father. 1969: Opened first Gap store with wife, Doris Fisher. 1972: Opened first Gap store outside of California. 1983: Acquired Banana Republic stores. 1986: Opened first GapKids store. 1989: Introduced first BabyGap store. 1976: Began selling The Gap’s own brand exclusively. 1994: Opened first Old Navy store. 1995: Stepped down as CEO of Gap, Inc. 1998: Pledged $25 million to an educational foundation.
Career Details After graduating from college, Fisher entered the real estate business, first with his father in M. Fisher & Son, and later as president of Fisher Property Investment Company. In 1969, a shopping experience altered his fate. When he tried to exchange a pair of blue jeans, he found that most stores did not carry a good selection and were very disorganized. He and his wife, Doris, came up with a solution. In August of 1969, they opened the first Gap store near San Francisco State College, with Fisher acting as chairman and chief executive officer (CEO). The Gap was named after the so-called “generation gap,” and was meant to be a place where college students could try on trousers until they were happy with the fit. The store carried a wide selection of styles and sizes of jeans, and initially also stocked a record department, although they dropped it after five months to concentrate on clothing. The casual styles were a hit with the younger crowd, and soon new stores were opening. By 1972, the Gap had expanded out of California, and in 1974 began producing its own private-label clothing and accessories. Though the Gap began as a jeans retailer, Fisher soon added brightly-colored sportswear to its shelves to pair with the pants and round out the selection. The Gap eventually began producing its own T-shirts and tops, and also added activewear to appeal to older customers and working women. For many years, the company re-
2 7 0
B u s i n e s s
The Gap’s stock went public in 1976, and since then, business reports have followed the rise and fall of the retailer closely. It has experienced fluctuations in its price, but Fisher has ridden the waves with the company and helped it recover when things looked bleak. In the early 1980s, to improve sales, he expanded the size of the store (previously only 4,000 square feet) in order to broaden the merchandise line and sell more product, adding 50 percent more room to some stores and creating “Super Gaps” (three times the size of a regular store) at other sites. As he told Howard Rudnitsky in Forbes, however, “When you shop in Super Gap or a remodeled Gap, the jeans image will still predominate. All we are doing is widening the assortment of items we already carry.” With 550 Gap stores under his belt, Fisher, in 1983, acquired Banana Republic, a pair of stores in San Francisco known for their popular catalog. He built up a chain of Banana Republics, mainly in downtown business districts of large cities such as New York, Chicago, and Seattle, in addition to some mall spaces. Over the next decade, the company completely revitalized the store’s style, transforming its image from a silly safari style to an upscale casual chic, meant to be versatile enough to wear to the office or out to dinner. According to Banana Republic CEO Jeanne Jackson, there were 295 stores open throughout the country by 1998. Though this growth was healthy, it still left the company with additional room for expansion. The same year Fisher took over Banana Republic, he hired marketing guru Millard (Mickey) Drexler to take over as president of the Gap. Drexler, noted for his outstanding success with the Ann Taylor shops, proved to be a good catch for the Gap. In 1986, after deciding that children needed stylish, casual, and comfortable clothes that would also appeal to their parents, Drexler opened GapKids, based on the same styles that grown-ups were wearing. In 1990, along came BabyGap as a part of GapKids, featuring infant and toddler apparel. Despite the ever-crowding casual market, the business was booming, and Donald and Doris Fisher in 1986 made their debut on the Forbes 400, the magazine’s list of the nation’s 400 richest citizens. Doris Fisher is active in the business as the merchandising consultant, and two of the Fisher’s three sons also have their hands in the firm. The first Gap store outside of the United States opened in the London area in 1987, marking the first of a chain of international sites. In 1994, the Gap opened another division, called Old Navy. Drexler was involved in this as well. Though Gap sales had been outstanding, increasing from $480 million in 1983 to $2.5 billion in 1991, they began to slow in the early 1990s. Fisher’s son Robert told Fortune, “We were hearing from our own employees that the clothes were
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
D o n a l d
getting too expensive.” In 1993, Drexler took Gap stores that were not selling enough items and converted them into lower-price, down-market outlets, initially called “Gap Warehouses.” But Drexler wanted a more creative name. It came to him as he was strolling in Paris and saw the words “Old Navy” written on the side of a building. The name conjured just the down-to-earth, spartan image that Old Navy offered. Old Navy stores were placed mainly in strip malls or outlet centers instead of regular malls, so as not to compete with the Gap. Apparently Fisher was pleased with Drexel’s leadership, promoting him to CEO in September of 1995. Though sales in the first five months of 1997 lagged, the Gap picked up the pace. A stronger focus on women’s fashion and an upbeat $20 million advertising campaign in 1998 probably helped. Fisher remains chairman of the Gap, Inc.
Social and Economic Impact The Gap stores have become an expected fixture in malls and urban shopping districts around the country and throughout the world. At The Gap, Customers can almost always count on being able to find the right size jeans in a variety of styles at a more reasonable price than designer labels. The Gap’s high-quality, classic designs have remained wardrobe staples for youthful customers, older shoppers, and their children, bridging that “generation gap” that gave rise to the store’s name. The company’s growth, targeting a greater variety of consumers around the world, was awe-inspiring. By the 1990s, The Gap had become a pop-culture icon. In 1994, the store was featured prominently in the hit movie Reality Bites, starring Winona Ryder and Ethan Hawke, hinting that it was becoming an integral part of Americana. Also, Saturday Night Live for a while ran a hilarious skit featuring David Spade, Adam Sandler, and the late Chris Farley in drag portraying the “Gap Girls,” a trio of catty retail salespeople for whom the mall was the center of their world. In addition, on David Letterman’s late night talk show one night, he quipped that one of the signs that the rodent population of New York had surpassed the human population was the new “Gap for Rats” stores popping up on every corner.
F i s h e r
sales for 1997, when other sellers saw an average of three percent. Perhaps the greatest key to the Gap’s success has been Donald and Doris Fisher’s ability to satisfy customers with classic as well as new styles without succumbing to wild fads, and to hire talented people like Drexler to help them along. The 1990s saw a resurgence of khakis encroaching on the jeans market as American’s legwear of choice, and the Gap either followed the trend or helped create it, depending on the viewpoint. Its ad campaigns have generally been simple but effective. In 1993, it began promoting khakis using the images of Gene Kelly, Marilyn Monroe, and Ernest Hemingway. The Gap replaced its “fall into the Gap” jingle with a snazzy set of television spots in 1998, featuring slick direction and the music of Crystal Method (“Khakis rock”), Bill Mason (“Khakis groove”), and Louis Prima (“Khakis swing”), featuring a cadre of young dancers and skateboarders having fun in the loose-fitting pleated pants. The Gap, like other corporations, is involved in “giving back” to the community. Through its Community Relations program, a portion of its pre-tax profits is doled out to charities based on suggestions from employees. According to the company’s web site (http://www.gap.com), in 1995 the Gap donated more than $5 million to groups involved in the arts, the environment, and health and human services.
Sources of Information Contact at: The Gap, Inc. One Harrison St. San Francisco, CA 94105 Business Phone: (650)952-4400
Bibliography Caminiti, Susan. “Competition: Will Old Navy Fill the Gap?” Fortune, 18 March 1996. Forbes, 17 October 1994. “The Forbes 400 Richest People in America.” Forbes, 1996. Available from http://www.forbes.com/richlist. “The Gap.” Hoover’s Online, 1998. Available from http://www. hoover’s.com. The Gap, Inc. Company History. San Francisco, CA: The Gap, Inc. Available from http://www.gap.com/company.
From the late-1980s into the 1990s it seemed as if new Gap stores were appearing at an astonishingly rapid rate. Microsoft Investor (http://investor.msn.com) in 1998 reported that stock prices were up 57 percent. That same year, the Gap boasted over 2,100 stores in the United States, United Kingdom, Canada, France, Germany, and Japan, with sales of more than $4 billion. Sales figures are not broken out among the various divisions of the Gap, but Microsoft Investor reported that overall, the Gap enjoyed a 20 percent growth in retail
Rudnitsky, Howard. “Widening the Gap.” Forbes, 13 September 1982.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
“Gap’s 1st Global Ads Confront Dockers on a Khaki Battlefield.” Advertising Age, April 1998. Available from http://adage.com. George, Melissa. “Gap Founder Steps Down as CEO, Replaced by President.” Reuters Business Report, September 12, 1995. Gibbs, Nancy R. “Falling into the Gap: A Leading Specialty Retailer Takes a Dive on Wall Street.” Time, 5 October 1987.
2 7 1
D o n a l d
2 7 2
F i s h e r
“Ruling Banana Republic.” CNNfn (CNN financial network web site), 11 February 1998. Available from http://www.cnnfn.com.
Weiland Nogaki, Sylvia. “Banana Republic Opens to Rave Reviews in Heater.”The Seattle Times, 19 November 1994.
“Time to Go Shopping?” Microsoft Investor, 6 April 1998. Available from http://investor.msn.com.
Who’s Who in America New Providence, NJ: Marquis Who’s Who, 1997.
Toch, Thomas. “Sugar Daddies for Charters.” U.S. News & World Report, 27 April 1998.
Willis, Clint. “Wall Street: Board These Stocks at the Bottom and Soar 14 Percent to 65 Percent.” Money, 1 October 1992.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Jane Fonda Overview
(1937-)
Jane Fonda was a member of a famous American theatrical family and received many of the industry’s highest awards. Her multi-faceted career has included acting in films and television, starring in and marketing exercise videocassettes, and writing various non-fiction books, including Jane Fonda’s New Pregnancy Workout and Total Birth Program. In the late 1990s she retired from active business to focus on family and social causes.
Personal Life Jane Fonda was born at Doctor’s Hospital in New York City in 1937 to future film star Henry Fonda and Frances Seymour Brokaw Fonda. Her mother, as a confident, wealthy widow, had married Fonda the previous year and along with her six year old daughter Frances (known as Pan) established residence in New York. Two years later Jane’s brother Peter was born, and soon after the family moved to the Brentwood section of Los Angeles. Born into wealth, Fonda’s maternal lineage can be traced back to American Revolutionary leader Samuel Adams and to Jane Seymour, the third queen consort of King Henry VIII. Jane Fonda herself was called “Lady Jane” by her family almost from the time of her birth. The Fonda household accommodated cooks, maids, gardeners, and governesses. During her early childhood Jane’s brother was favored by her mother, leading to the development of a closer bond between Jane and her father. Her father’s film career was successful, but Henry was vocal about the types of roles he had to take in or-
2 7 3
J a n e
F o n d a
astronaut who sleeps with every man who rescues her. Because of her status as a spokesperson for feminist causes, critics claimed that sexually exploitive film marred Fonda’s career and undercut her credibility. During the Vietnam War, Fonda met anti-war activist Tom Hayden. Soon after Fonda obtained a divorce from Vadim and married Hayden. Together they protested the war, formed the Indochina Peace Campaign (later forming a film production company with the same name), and attempted to clean up American politics. In 1989 Fonda divorced Hayden, and two years later she married billionaire media mogul Ted Turner, settling into a much more domestic phase of her life.
Career Details
Jane Fonda.
(Reuters/Gary Cameron/Archive Photos.)
der to make it in Hollywood. It was this reality that Jane brought with her when she entered the film industry herself years later. In 1949 the Fonda family relocated to Greenwich so Henry could act on Broadway. The following year, when Fonda was 13, her mother committed suicide after learning of her husband’s interest in a much younger woman, Susan Blanchard. Told that her mother died from a sudden heart attack, Fonda only learned the truth a year later from a magazine article. Both she and her brother had difficulty coping with their mother’s death and their father’s quick remarriage. Peter attempted suicide while his father was on his honeymoon with Susan, and later turned to drugs. Fonda developed bulimia and suffered from this condition until she was 35. Fonda attended Brentwood Town and Country School in Los Angeles and then Greenwich Academy in New York for elementary school. She graduated from the female preparatory Emma Willard School in Troy, New York, and then entered Vassar. But Fonda never excelled academically, and she left college after only two years, much to the disappointment of her father. Fonda turned a largely unhappy childhood into a successful life. In 1965 she moved to France to make films. There she met and married Roger Vadim. Vadim directed her in several movies, including Barbarella. Barbarella became both a cult classic and the film which many critics call a blemish on her acting career. In Barbarella, a science-fiction spoof, Fonda plays a beautiful
2 7 4
B u s i n e s s
Fonda first appeared on stage in 1955 at the Omaha Community Playhouse in a fundraiser for her Aunt Harriet. Fonda’s father was also coaxed into taking a role in the production. He was quite surprised at his daughter’s natural acting ability, although he did not encourage her to enter the acting profession. Fonda, in fact, did not seriously decide on an acting career until four years later, when she began to study acting with Lee Strasburg, director of the Actor’s Studio. While taking her acting lessons, Fonda supported herself by modeling. She did quite well at that, appearing on the covers of Esquire,, Vogue, Ladies Home Journal, Glamour, and McCall’s magazines in 1959. Strasburg taught a technique of method acting that used inner motivation from past experiences to drive each performance. Actors such as Marlon Brando, Paul Newman, and Al Pacino were all schooled by Strasburg in method acting. Henry Fonda had expressed his dislike for the technique, but Jane found success in it. A number of people influenced her acting career, including her godfather, producer Joshua Logan, who signed her to a longterm contract. Immediately he cast her in a major motion picture, Tall Story, and in a Broadway play, There Was a Little Girl. Neither were critical successes. One play and three movies later, Fonda began to be recognized for her talents as an actress. In 1962 she bought her contract from Joshua Logan and began choosing her own roles. Unfortunately, after a string of less noteworthy movies, her career languished. It was not until she met French director Roger Vadim, soon to be her first husband, that her film career improved. In France, Vadim made many movies with Fonda, including Cat Ballou and the screen adaptation of Neil Simon’s Broadway smash Barefoot in the Park. Fonda returned to the United States in 1969 to take a lead role in They Shoot Horses Don’t They?; she received an Academy Award nomination for her performance. Two years later she played a prostitute stalked by a killer in Klute and won an Oscar for best actress.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J a n e
It was with her Klute co-star Donald Sutherland that Fonda toured coffeehouses in the United States and later the Far East, in FTA, a satirical antiwar revue. During this time Fonda became known as “Hanoi Jane.” Fonda’s involvement in politics supplanted her work as an actress for a time, but by the mid-1970s she began to divide her time between political work and her career as a performer and producer of films. The first feature film produced by Fonda’s IPC production company was Coming Home. Her performance as the initially dutiful wife of a flag-waving Marine captain who falls in love with a paraplegic war veteran earned Fonda a second Academy Award. Ironically, Jane Fonda earned two Academy Awards before her famous father won one. IPC also produced The China Syndrome, Nine to Five, the television movie The Dollhouse, for which Fonda won an Emmy for outstanding actress in a dramatic special, and On Golden Pond, the movie she filmed with her father and Katharine Hepburn. The plot of On Golden Pond paralleled Fonda and her father’s own relationship in many ways. It was Henry Fonda’s last role before his death and the highest grossing film of 1981. Although Jane Fonda did not win the supporting actress Oscar for which she was nominated, she did accept the Oscar for best actor on behalf of her father, who was too sick to attend the ceremonies. In a very different kind of business move, Fonda established her first exercise studio in 1979. Following the studio came records, books, and videocassettes. Fonda’s own fit and trim body, exposed in a bikini in On Golden Pond proved to be a powerful advertisement as a health craze swept the United States in the early 1980s. In 1981 Jane Fonda’s Workout Book topped charts for best-selling books; Jane Fonda’s Workout Record went double platinum (2 million copies sold); and Jane Fonda’s Workout remains one of the best-selling videocassettes in history. In a shrewd move, Fonda used previously recorded music for which the artists had forgone their royalties. As Fonda’s workout tapes sold millions, no royalties had to be paid. Fonda continued to make controversial movies, including Agnes of God. Based on the equally-controversial Broadway play, Fonda first checked to see if the Roman Catholic Church had taken a position on the content of the play. As she told biographer Christopher Andersen, “I did not want to become embroiled in any Catholic controversy.” The following year she played an alcoholic actress who blacks out and wakes up next to a dead body in The Morning After, which earned her a seventh Academy Award nomination.
F o n d a
Chronology: Jane Fonda 1937: Born. 1954: First appeared on stage. 1959: Modeled for five magazine covers. 1960: Debuted in film Tall Story. 1971: Won Academy Award for Best Actress in Klute. 1979: Opened Jane Fonda Workout Studio in Beverly Hills. 1982: Released first of 16 exercise videocassettes 1987: Forced to apologize for past political activism by townspeople in Waterbury, CT. 1991: Married Ted Turner on her 54th birthday. 1996: Published cookbook.
In 1996 she published a cookbook, Jane Fonda: Cooking for healthy Living. She also created, with the help of a physiologist, a new series of workout tapes called The Personal Trainer Series. Her goal with the new series was to design a program that anyone could stick with, stating in Good Housekeeping, “Anyone can do 25 minutes.”
Social/Economic Impact Jane Fonda has had an enormous effect on the motion picture industry, has raised a nation’s level of consciousness about a variety of societal and political issues, and has helped create the home video industry. One of the first things she did was overcome the loss of her mother and establish a name for herself in the same field as her father. Her training and talent enabled her to reap awards in the movie industry, and she used the prestige of being an award-winning actress to make the movies she wanted to make.
Fonda starred in a few more films, but in 1996 she confirmed in a Good Housekeeping article that she had left her film career, stating: “After a 35-year career as an actress, I am out of the business. That’s a big change. Work in many ways has defined me.” Although she left behind her acting and producing career, Fonda was far from idle.
While starring in controversial roles, she further stirred up controversy by speaking her mind. Her leftist political views alienated Fonda from many Americans. In fact, while filming the socially conscious film about adult illiteracy Stanley and Iris in 1988, Fonda was met with hostility and resentment and references to “Hanoi Jane” from 16 years earlier. These protests led to her first public apology for her Vietnam-era activities.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
2 7 5
J a n e
F o n d a
Fonda introduced the word “workout” to a nation and fueled the fitness craze that would continue throughout the 1990s, simultaneously proving to be a keen businesswoman. Fonda moved from radical to respectable in the eyes of the American public, enduring the collapse of two marriages, and acknowledging new-found faith in a greater power than herself. In the early 1980s Jane Fonda was one of the most respected and admired women in United States. Her drive for personal achievement has diminished since her marriage to Ted Turner. Her fitness enterprise was driven by her commitment to exercise, but she eventually scaled back on her original beliefs on exercise duration. She came to believe that attitude was more important to optimal health than thinness. As reported in Good Housekeeping,this shift is reflected in the exercise video released in 1996 “that substitutes shorter, more moderate workouts for the more strenuous exercise she used to promote” for women to stay fit. By 1993 over 10 million exercise tapes had been sold from the Fonda Video Fitness library, and Fonda herself remained healthy and fit, even as she turned 60. She remained politically active, particularly as a board member for the Turner Foundation, which focused on the environment and population growth. Fonda was personally interested in reducing teenage pregnancy through self-esteem role modeling programs. Fonda held many conflicting roles during her varied career. She was a sex symbol feminist, a bulimic
2 7 6
B u s i n e s s
health instructor, a vocal anti-capitalist, and captain of an exercise empire. Fonda will be remembered for her movies, her activism, and for the inspiration she gave to the fitness movement. But perhaps most inspiring is Fonda’s ability to continue to grow and evolve. This strength led to the many fruitful phases of her life.
Sources of Information Contact at: Jane Fonda P.O. Box 1198 Santa Monica, CA 90212
Bibliography Andersen, Christopher. Citizen Jane: The Turbulent Life of Jane Fonda. New York: Henry Holt and Company, 1990. Byers, Paula K. and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1998. Davidson, Bill. Jane Fonda: An Intimate Biography. New York: Dutton, 1990. “Fonda, Jane (Seymour).” Contemporary Authors. Detroit: Gale Research, 1993. Guiles, Fred Lawrence. Jane Fonda: The Actress in Her Time. New York: Doubleday & Company, 1982. Powell, Joanna. “Jane Fonda: A Surprising Talk About Putting Her Husband First, Traditional Family Life, and Shorter Workouts.” Good Housekeeping, 24 February 1996.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Malcolm Forbes Overview Malcolm Stevenson Forbes was one of the foremost publishers and business moguls in the United States. From 1957 until his death in 1990, he was publisher, editor-in-chief, and sole stockholder of the magazine his father founded. By 1982, Forbes magazine grossed over $10 million annually. He converted the business publication his father had started into one of the most influential magazines in America. His mix of business and pleasure, and the spirited way in which he flaunted his wealth, became a trademark of both his personal and professional life.
(1919-1990) Forbes Business Magazine
Personal Life Malcolm Forbes was born in Brooklyn, New York, on August 19, 1919. He was the third son of B.C. (Bertie Charles) Forbes, a Scottish immigrant and founder of Forbes magazine and Adelaine Stevenson Forbes. He inherited his wealth from his father, who established him at the Fairfield Times newspaper in Lancaster, Ohio, as owner and publisher only days after his graduation from Princeton University in 1941. He went on to publish the Lancaster Tribune in 1942. That same year, Forbes joined the U.S. Army, serving on the European front during World War II. His wartime actions earned him the position of staff sergeant, and earned him the Purple Heart and Bronze Star. In 1946, when he was released from military duty, he joined the staff at Forbes magazine. Forbes married Roberta Remsen Laidlaw in 1946. Their union produced five children: Malcolm S., Jr.,
2 7 7
M a l c o l m
F o r b e s
Malcolm Forbes.
(Archive Photos, Inc.)
Robert Laidlaw, Christopher Charles, Timothy Carter, and Moira Hamilton. Malcolm, Jr. took over the magazine upon his father’s death in 1990 and ran for the presidency of the United States in 1996. In 1985, Malcolm Forbes, Sr. and his wife, Roberta, divorced. As Steve explained in Forbes, his parents, “still loved each other, but could no longer live together.” If only a few could remember Malcolm Forbes’ birth, millions of people knew how old he was when he died. Extensive press coverage of the lavish 70th birthday party he hosted for himself in Morocco in September 1989 ensured that. The list of celebrities read like a who’s who of Hollywood, politicians, and European royalty. Televi-
2 7 8
B u s i n e s s
sion and newspapers carried the minute details across the world, including the menu and entertainment. In 1983 in People magazine, Arthur Lubow commented, “Not since antitrust spoilsports put the kibosh on the Gilded Age has an American capitalist reveled so openly in the pleasures that money can buy.” What made Forbes endearing to the American public, perhaps, was this sheer enjoyment of life. He was characterized as a man who loved the spotlight. It was said that he shamelessly enjoyed the privileges his money afforded him. Yet, Forbes demonstrated time and again, that he was as ordinary as any average American. In his book, Fact and Comment, he told a story about himself, from 1966,
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
M a l c o l m
that could have struck anyone as familiar. He begins, “The other day I learned something that I guess housewives learn early in life. It was a wallet-walloping experience. Don’t go supermarket shopping when hungry. Recently, a fabulous new A&P opened up near home, and I went down around noon Saturday to pick up two wee, needed items.” As he goes on to tell, he was enticed in every aisle by everything from endive to clams to ice cream and bakery items. “The $2 mission turned into a $49.12 extravaganza,” he says. Even for all of his wealth, he had the ability to be candid in times of folly. He had a sense of humor about himself. Americans appreciated that and showed that appreciation by buying his magazine and reading his books. Forbes was always in pursuit of adventure. He was a balloonist, a motorcyclist, and a sailor who took many trips on his huge yacht, the ‘Highlander.” He was a noted art collector, particularly of Faberge eggs. The Chicago Tribune reported that Robert, Forbes’ second eldest son, eulogized his father by emphasizing his playful nature: “He was so many things to so many of us. Boss, confidante, raconteur, balloonist, columnist, happiest millionaire, leader of the pack, source, mentor, friend, super this, mega that, father, grandfather, father-in-law, uncle, cousin, and sparkling naughty boy.” Malcolm Forbes enjoyed the well-earned nickname of, “the happiest millionaire,” up until the time he died of a sudden heart attack on February 24, 1990. Forbes’ philanthropy was not as well publicized as his spending. He gave millions of dollars each year to charities, and had been at a charity Bridge tournament the day he died. Malcolm Forbes even surprised his 750 staffers a week after his death in one last, grand act of kindness and generosity. In his will he left them all an extra week’s pay and had forgiven all loans, up to $10,000, paid to any company employee. He left control of his empire in the hands of his son, Steve. Malcolm Forbes may have been born with a silver spoon in his mouth, but instead of tarnishing it or losing it, he turned it into gold and made it shine. According to Advertising Age, “He expanded the magazine his father created in 1917 into a publishing powerhouse whether measured in circulation, advertising revenue, or the trepidation with which CEOs awaited stories about their companies.” With a circulation of 735,000, Forbes had doubtless become one of the top business magazines in America. In the early-1960s, the publication’s annual advertising revenues stood at nearly $2 million and by the time of Malcolm Forbes’ death, had risen beyond $150 million. When it comes to citing wealth in the United States, many continue to turn to the magazine’s annual listing of the 400 wealthiest Americans. Forbes also published the magazines, Egg, devoted to collectors; and, American Heritage,a magazine of American history that has been well-respected in the education of American students for decades.
F o r b e s
Chronology: Malcolm Forbes 1919: Born. 1941: Earned his B.A. from the Woodrow Wilson School of Public and International Affairs, Princeton University. 1941: Established as owner and publisher of the Fairfield Times weekly newspaper, Lancaster, Ohio. 1942: Joined U.S. Army and rose to rank of staff sergeant, earning a Bronze Star and a Purple Heart. 1946: Joined Forbes magazine as associate publisher. 1946: Married Roberta Remsen Laidlaw. 1948: Founded Nation’s Heritage a bimonthly historical magazine. 1949: Awarded Freedom Foundation Medal. 1957: Waged an unsuccessful bid for governor of New Jersey. 1957: Became publisher of Forbes magazine. 1985: Divorced Roberta Remsen Laidlaw. 1989: Hosted lavish, widely publicized birthday party for himself in Morocco. 1990: Died.
came Forbes’ trademark. He made a point of knowing the movers and the shakers of the business world that his magazine covered. In later years, when his magazine wanted a company to advertise, he could pick up the telephone and call the chief executive officer of the company directly.
Career Details
Forbes’s lavish lifestyle and charismatic aggressiveness were more than personality traits, they were a driving force behind his empire. While business orthodoxy shunned mixing business and pleasure, this mix be-
A savvy businessman by all accounts, Forbes inherited his wealth from his father. As quoted in Forbes, he was fond of saying that he was loaded with “sheer ability, spelled i-n-h-e-r-i-t-a-n-c-e.” Upon joining his father’s magazine after World War II, Forbes took the position of associate publisher. He eventually moved on to the posts of publisher, editor, editor-in-chief, vice-president, and, fi-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
2 7 9
M a l c o l m
F o r b e s
nally, CEO and president. As a politician, Forbes was less than successful. In his bid for Governor of New Jersey in 1957, Forbes said that he was “nosed out by a landslide.”
“He practiced something that most CEOs find very hard to practice,” recalls Steve Forbes, “and that is letting people make mistakes, but in a way that they can learn, rather than be destroyed.”
Social and Economic Impact Malcolm Forbes had a great impact on the success of his family’s namesake magazine, an impact not lost on his family. “My father recognized that although the magazine was very strong editorially, it wasn’t going to sell unless he went out and brought it to people’s attention,” his heir Steve Forbes told Forbes, the magazine he now runs. “He pulled out all the stops...his early marketing activities sound rather mundane today, but they worked for us for a number of years: an advertising campaign in major papers and trade press; luncheons with CEOs at the townhouse adjacent to our offices, that was something he perfected. He also entertained corporate and political chiefs and foreign dignitaries on our boat, the Highlander. In the mid-Sixties,
2 8 0
when he started collecting Faberge eggs, he linked them with Forbes magazine in an ad campaign as a symbol of quality.”
B u s i n e s s
Sources of Information Bibliography Columbia Encyclopedia 5th ed., s.v. “Forbes, Malcom.” Forbes, Malcolm S. Fact & Comment. New York: Knopf, 1974. Lubow, Arthur. People, 19 July 1982. “Malcom Forbes: He Practiced What He Preached.” Forbes, 30 April 1990. Pearl, Jayne. “The Forbes Mystique.” Forbes, 22 October, 1990. Time, 19 March 1990.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Eileen Ford Overview Known as the matriarch of the modeling industry, Eileen Ford founded Ford Models, Inc. with her husband in 1947 and it quickly grew from a small operation to a trend-setting, multimillion-dollar force in the world of fashion and beauty. For more than 50 years the agency was renowned for placing top fashion models on runways and in advertisements around the world.
(1922-) Ford Models, Inc.
Personal Life Eileen Ford first got into the modeling industry when taking summer jobs modeling, while she attended Barnard College. After graduating with a major in psychology, she continued to work in the field and honed her skills working as a photographer’s assistant, catalog stylist, copywriter, and reporter. Through her photography position Eileen met Jerry Ford, a naval officer and ex-football player at Notre Dame. The two married in 1946, the year Eileen turned 24, and launched Ford Models, Inc. together the following year. At the same time, they began to raise a family of three daughters and a son, Lacey, Katie, Jamie, and Bill. Katie and Bill would later join the business. Before founding the company, Eileen Ford did clerical work for Arnold Constable and Company in New York City. Despite the glamour associated with her business, Ford has been described as a plain-dressing—even frumpish—woman who wore little makeup, and she was shorter than the minimum height normally required of her models. She shied away from high-profile events. Her
2 8 1
E i l e e n
F o r d
Eileen Ford poses with models.
(Archive Photos/Sonia Maskowitz.)
personality was characterized as being strong and blunt, yet Eileen Ford also professed the traditional Protestant middle-class values of her upbringing concerning hard work, family, and social etiquette.
Career Details Ford Models Inc. started as a side job Eileen Ford ran from her home while she was pregnant with her son in 1946. The Fords formally launched the business in 1947, and by the next year they already had signed 30 top models to their New York City agency. First-year billings reached $250,000. Jerry Ford handled the financial side of the business while Eileen concentrated on identifying and signing potential stars. Within a few years, the agency was the biggest of its kind in the world. Eileen Ford was legendary for running a tight ship at her agency. She not only managed the professional lives of her models, who she called “my girls,” but she also attempted to supervise the social lives of the often teenage women. Ford housed many young models either in her home or in quarters above the agency’s offices, practices that are still common today. She also endeavored to enforce curfews at night and teach the young women etiquette, but this heavy-handed approach often kindled resentment from the models. The Spanish model Veronica Blume recalled an instance at age 16 when during a meal she wasn’t sure which fork to use and noticed
2 8 2
B u s i n e s s
Ford watching her intently. Blume said that Ford wanted the models to be educated and have manners. “It’s like going to school,” Blume recalled. Many models who stayed with Ford avoided her chaperoning by sneaking out at night. But Ford had little hesitation to release—or never sign in the first place—models whose personal lives conflicted with their careers. Ford Models became associated with big modeling talent, and the agency was regarded as the most prestigious in the business. It set trends both in how it conducted its business with models and clients as well as in the kinds of models it brought to stardom. Famous, topdollar models such as Brooke Shields, Elle Macpherson, Christy Turlington, and Lauren Hutton made their mark through the company. Eileen Ford had a remarkable eye for picking new talent and would travel the United States and Europe looking for new models. Once models were recruited, Ford worked vigorously to ensure they had favorable opportunities to showcase their beauty and talents. In part through her efforts modeling became a highly lucrative occupation for top prospects. Ford also had success as an author and published several books that gave beauty and fashion advice and glimpses into the modeling industry. These included Eileen Ford’s Book of Model Beauty, Secret of the Model’s World, A More Beautiful You in 21 Days, Beauty Now and Forever, and Ford’s Crash Course in Looking Great. She also wrote a syndicated fashion column called “Eileen Ford’s Fashion Beauty.”
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
E i l e e n
The Fords remained part of the agency well into their 70s, but in the early 1990s they began to cede some highlevel responsibilities to others. In 1993 a three-way copresidency was established at Ford Models consisting of Kate Ford and two other senior executives. Although Kate had been working at the agency since 1982, her ascent to the co-presidency was seen by some as nepotism. Other negative publicity also plagued the Fords in this period. In 1995, Eileen Ford reacted angrily to a book by Michael Gross titled Model: The Ugly Business of Beautiful Women. The book claimed that Ford’s husband had an affair with an agency model in the 1950s. The book may have prompted Ford to publish her own interpretation of the modeling industry. Also in 1995, Ford and her husband further withdrew from day-to-day management of the business by appointing their daughter Kate as CEO. Eileen was 73 at the time, but the elder Fords continued to co-chair the board of directors. Kate’s promotion ended the co-presidency and triggered a lawsuit by one of the other copresidents who felt Kate was promoted unjustly. The reshuffling of the management ranks also led to some defections by models who weren’t satisfied with Kate Ford at the agency’s helm. In her later years, Eileen Ford was criticized for growing out of touch with the youth-centered fashion industry—a charge she came to agree with. Ford was accused of selecting models based on a narrow definition of beauty that stereotypically included women of northern European descent with blonde hair and blue eyes, the so-called Swedish look. These complaints were voiced in spite of the Ford agency’s legacy as the first to sign women of color. She admitted that the agency had stagnated and that she was getting too old to have a sense for youth trends and the youth market. In 1997 she said in reference to her daughter’s new position, “We were getting old. What were we going to do, let her be like Prince Charles and wait for us to die? It was her moment. You have to give people a chance.”
Social and Economic Impact
F o r d
Chronology: Eileen Ford 1922: Born. 1947: Founded Ford Models, Inc. with husband Jerry Ford. 1948: Recruited 30 leading models in New York. 1957: Opened first international affiliate. 1981: Chosen as Woman of the Year in Advertising. 1988: Named Outstanding Woman in the Fashion Industry. 1993: Gave up presidency of the agency to her daughter and two others. 1995: Retired from active management of the agency.
Ford Models, Inc. typically took a 20 percent commission from each modeling contract. Though the standard for beauty constantly changes and featured Ford models have a variety of looks, the company continues to be a leading actor on the American fashion and beauty stage.
Sources of Information Contact at: Ford Models, Inc. 142 Greene St. New York, NY 10012 Business Phone: (212)753-6500 URL: http://www.fordmodels.com
Bibliography Bernstein, Roberta. “Kate Ford: Two Years After Taking Control, Eileen’s Daughter has the Ford Modeling Agency Sitting Pretty.” People, 8 September, 1997.
Eileen Ford’s vision created one of the world’s leading fashion model agencies, with more than $40 million in annual billings during the 1990s. She is credited for bringing dozens of well-known models to the fore of the fashion world, and in the process she had a strong influence over the direction of the modeling business. In the 1990s, top-name Ford models could expect to earn $20,000 a day or sign contracts in the tens of millions.
Harte, Susan. “Model Relationships Eileen Ford.” Atlanta Journal and Constitution, 15 May 1988.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Chun, Renee. “Eileen Ford Eats Her Enemies for Lunch.” New York, 24 July 1995. Cunningham, Kim. “Fork Lifts.” People, 27 September 1993.
2 8 3
Henry Ford (1863-1947) Ford Motor Company
Overview Henry Ford launched the era of the automobile and in doing so provided the tools necessary for the mass production of consumer goods. He founded Ford Motor Company, which is still the second largest carmaker in the world. Ford is associated with the creation of the assembly line, which allowed cars and other uniform products to be produced quickly and efficiently. His production of the Model T automobile on an assembly line brought the low-priced automobile within reach of many middle-class Americans.
Personal Life Henry Ford was born in Springwells, Michigan on July 30, 1863. Ford was the eldest of six children born to William, a prosperous farmer, and Mary (Litogot) Ford. Ford was raised on his father’s farm but developed a distaste for the farm lifestyle and, instead, became fascinated by machinery. He began tinkering with farm machinery that he was responsible for operating and without any formal training, became an excellent self-taught mechanic and machinist. While in his late teens, he even designed and built his own engine-based vehicle. He attended school in a one-room schoolhouse in the Dearborn school district in Wayne County, Michigan until the age of 15. Ford’s mother was responsible for his early education, teaching him to read and instilling in him the core values of responsibility, duty, and self-reliance. While running Ford Motor Company, Ford used his enormous wealth and power for social causes. For ex-
2 8 4
H e n r y
Henry Ford riding a quadricycle in 1896.
F o r d
(Courtesy of American Automobile Manufacturers Association.)
ample, he made an ill-fated attempt to end World War I, before the United States was drawn into it. In 1915, he set sail on his “peace ship,” Oskar II, and sailed to Europe to seek an end to hostilities. In 1918, Ford made an unsuccessful bid for U.S. Senate as a Democrat and was defeated by a narrow margin. At the beginning of World War II, Ford initially took a pacifist stance, but following Japan’s attack on Pearl Harbor, he retooled his auto plants quickly to help the U.S. military produce munitions for the war effort.
On April 11, 1888, Ford married Clara J. Bryant and had one child, Edsel, in 1893. Ford suffered strokes in 1938 and 1941, but did not trust his son to run Ford Motor Company single-handedly. Instead he kept most of the control over the company despite his declining health. His son Edsel died of cancer in 1943, and after World War II, Ford installed his grandson, Henry Ford II, as president of the company. Ford died on April 7, 1947 at his home in Dearborn, Michigan.
Ford’s last years were marred by scandals, the worst of which was his support of vehemently anti-Semitic statements made by the Dearborn Independent, a newspaper that he owned.
Ford initially founded the Ford Foundation, one of the world’s largest philanthropic foundations, in 1936 to avoid estate taxes. It has since given over $8 billion in funds to various social causes and organizations. Ford also founded the Henry Ford Hospital in Detroit and the
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
2 8 5
H e n r y
F o r d
From 1884 to 1885, while working long hours in Detroit, Ford also attended business college to learn the skills that he thought would be necessary if he were to sell the machinery that he hoped one day to manufacture.
Chronology: Henry Ford 1863: Born. 1880: Began job at Detroit Dry Dock Company. 1891: Began job at Edison Illumination Company. 1899: Founded Detroit Automobile Company. 1903: Founded Henry Ford Company and Ford Motor Company. 1909: Introduced Model T automobile. 1918: Named son Edsel Ford as president of Ford Motor Company. 1919: Built River Rouge automobile plant. 1927: Stopped production of Model T. 1928: Introduced Model A automobile. 1943: Became president of Ford Motor Company again after Edsel’s death. 1945: Retired from Ford Motor Company.
Ford did not find farming any more attractive as a young husband in his 20s than he had as a teenager. It was during this period that he built his first internal combustion engine, a two-cylinder device he used to power a bicycle. The lure of working on machinery was too strong for Ford and he found himself spending more and more time working at the Edison Illumination Company (later named Detroit Edison Company) in Detroit instead of working on his farm. By 1891, he had left his farm completely and took a job at Edison Illumination, where he earned the impressive salary of $100 per month as an engineer. Ford’s increased income allowed him to fund his experiments with the “horseless carriage.” In 1895, he was promoted to the position of chief engineer for Edison Illumination and met Thomas Alva Edison, who would eventually become one of his closest lifelong friends.
1947: Died.
In 1896, Ford spent his spare time building an automobile that used an internal combustion engine. The car utilized a two-cylinder, four-cycle motor that weighed only 500 pounds. It was mounted on bicycle wheels and had no reverse gear.
Henry Ford Museum and Greenfield Village in Dearborn, dedicated as a living museum to industry and technological innovation.
Because of Ford’s continued tinkering with automobiles, Edison Illumination forced Ford to choose between automobiles and his job. Ford chose automobiles and on August 5, 1899, with the backing of William Murphy, a wealthy Detroit businessman, Ford founded the Detroit Automobile Company. Ford’s first venture was an economic failure after disagreements with Murphy but it gave him the opportunity to concentrate all of his energies on designing and building automobiles.
Career Details In 1879, Ford left Dearborn for nearby Detroit to seek his fame and fortune. There he quickly found a position as an apprentice at the James Flowers and Brothers Machine Shop, a small company that was busily manufacturing valves and fire hydrants for the rapidly growing city. Ford’s job required 12 hours of labor a day, six days a week. Nine months later, Ford left the machine shop in order to work for the Detroit Dry Dock Company, working on steam engines. There he gained his first exposure to a new machine, the internal combustion engine. At the Detroit Dry Dock Company, he earned only $2.50 a week. Because Ford’s room and board in Detroit cost him $3.50 a week, he repaired watches and clocks at night to make up the difference.
2 8 6
Ford’s father was not happy with his young son’s career choice and offered him 40 acres of timberland adjacent to the family farm. Ford accepted his father’s offer, but also built a top-rated machinist workshop on his new farm, much to his father’s displeasure. It was during this time on his new farm that Ford met his future bride, Clara J. Bryant.
B u s i n e s s
In 1901, Ford, driving his own car, raced and beat what was then the world’s fastest automobile. This car, the “999,” was later driven to victory many times by the famous Barney Oldfield. The publicity from Ford’s victory grabbed the attention of Detroit coal dealer Alex Y. Malcomson, who offered financial aid to Ford. This allowed Ford to fund his second and third automobilemaking ventures, the Henry Ford Company (later renamed Cadillac) and the Ford Motor Company, formed in 1903 with $28,000. Ford continued to build racers, which provided free publicity and a practical laboratory for refining his ideas. As a result, the Ford Motor Company sold 1700 cars in 1904. After two failed attempts, Ford had launched a hugely successful car company.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
H e n r y
By 1903, 1,500 automobile companies had been started, bringing significant competition to the industry. Part of Ford’s success was due to the highly competent and driven assistants that he surrounded himself with. James S. Couzens, C.H. Wills, and John and Horace Dodge all worked for Ford at this time. In 1903, the Ford Motor Company came out with the Model A (also known as the Fordmobile) and by 1907, profits had exceeded $1.1 million. Ford continued to introduce new models frequently. Each new car was known by another letter of the alphabet up through the letter S. The Model T was introduced in 1909. Ford decided to build only one type of automobile at this time and the Model T (also known as the “Tin Lizzie”) would be that car. This car was reliable, easy to build, and cheaply priced. In its first year, Ford sold 8,000 Model T’s. Over the course of the next three years, Model T sales increased dramatically with 18,000 sold in 1909, 34,000 in 1910, and 78,000 in 1911. In 1916, the year of its greatest production, 730,000 of the automobiles were sold. In 1918, Ford made his son Edsel president of the company and concentrated on his race for the U.S. Senate. He still exercised control over most of the operational aspects of his company, though, and managed to purchase the majority of the company’s stock, making the company a family operation. In 1919, Ford’s River Rouge plant opened in Detroit and became the largest industrial manufacturing facility in the world. The 1920s saw increased growth in the company with over 60 percent of all the automobiles in the United States manufactured by Ford’s company. But by the end of the decade, customers wanted a change, and Ford sales began to lag. In response to consumer demand, other manufacturers were introducing different car models and they were selling better than Ford’s Model T. In 1927, Ford finally stopped production of the Model T. He introduced the new Model A, 18 months later, but the new model was not enough to help Ford claim the top spot from competing car manufacturer, General Motors. Ford never accepted the changes brought about by the Great Depression and his company suffered because of this reluctance. Ford refused to cooperate with President Franklin D. Roosevelt’s new National Recovery Administration, and suffered through numerous labor disputes. During World War II, Ford factories were converted to build bombers and other weapons for the armed forces. In 1943, when Edsel died, Henry Ford came out of retirement and was again president of the company. He retired for the last time in 1945, turning the company over to his grandson, Henry Ford II.
F o r d
often credited with inventing the moving assembly line, a system for carrying an item that is being manufactured past a series of stationary workers who each assemble a particular portion of the finished product. Using the moving assembly line, huge numbers of uniform products (such as automobiles, television, computers, toys, etc.) can be made quickly and cheaply. Ford made the first industrial application of this idea for his Model T, thereby revolutionizing manufacturing. In addition, by developing a car for the masses, Ford played a large role in the creation of an American automobile culture. This new culture radically changed the U.S. economy, including the housing, transportation, and tourism industries. A fiercely driven man, Ford exercised great personal control over every aspect of his company. He avoided the use of outside contractors and suppliers, preferring to make and develop his own materials and parts as much as possible. Ford shocked the world by raising his average wage to the unprecedented rate of $5.00 per day in 1914. In return, however, workers were subject to intense scrutiny both on and off the job. Ford required his employees not only to perform their jobs diligently and up to the standards, but to meet his personal ideals of conduct and morality. To enforce his rules, Ford maintained a large security force to watch his employees. This group, headed by Harry Bennett, was particularly important to Ford in his struggle to prevent the unionization of his factories. They were instructed to monitor, harass, and intimidate organizers and potential members of the newly formed United Auto Workers (UAW). Ford Motor Company was the last of the major auto companies to unionize. After many years of court battles and strikes, Ford finally relented and signed a contract with the UAW in 1941. Before Ford developed the Model T, the automobile existed largely as an expensive toy for the wealthy. Ford’s strategy turned the automobile into the transportation of choice for the masses. The Model T had a simple design, included many interchangeable parts, and was produced on the moving assembly line. As a result, the car was reliable, easy to repair, and affordable. After the second year of production, Ford either dropped the price or enhanced the features of the Model T every year, carrying out his stated goal of increasing the Model T’s value annually. The price of the Model T, initially $850 in 1908, dropped to as low as $260 in 1924, while the car’s quality improved.
Henry Ford’s impact on the manufacturing sector of the economy was and continues to be enormous. Ford is
Ford also created his own market for the Model T. In January of 1914, he doubled the pay of the average worker in the Ford plants from $2.50 to $5.00 a day and cut the work day from nine hours to eight. This strategy drew workers from all over the United States and the world. In addition, Ford drastically reduced employee turnover, raised morale, and created a new class of industrial workers who could afford to buy Ford automo-
B u s i n e s s
S t u d e n t s
Social and Economic Impact
L e a d e r
P r o f i l e s
f o r
2 8 7
H e n r y
F o r d
biles. Ford regarded low wages as “the cutting of buying power and the curtailment of the home market.” Ford’s strategy for producing the Model T was a huge success. The large degree of standardization in the automobile’s design and manufacturing allowed Ford to produce millions of vehicles. Over 15 million Model T’s were sold over a production run that lasted almost two decades. Ford achieved legendary status, and by 1922 was the richest man in the United States. In addition to his conflicts with organized labor, Ford’s fatherly behavior resulted in many poor business decisions. In 1920 he bought out the other shareholders in the Ford Motor Company and became the sole person in charge. He ignored the advice of his subordinates, chased away many of his best executives and, by 1927, the last year of production of the Model T, his company had been eclipsed by General Motors. General Motors was more successful than the Ford Motor Company in responding to changing consumer needs. The simplicity of Ford’s approach eventually became a major source of his company’s decline. As a boy on his family farm, Ford used machinery to ease his farm chores. Similarly, he saw the automobile as the tool that would end the dreary isolation of the American farmer and allow the inhabitants of the teeming urban slums to move to the outskirts of the great cities where there was plenty of room for new housing developments but no transportation to the factories. Driven by his sense of duty and obligation, Ford was an active philanthropist. His most enduring legacy has
2 8 8
B u s i n e s s
been the Ford Foundation, one of the largest philanthropic trusts in the world. It was established in 1936 for the purpose of “advancing human welfare.” Initially a local philanthropy, the Ford Foundation has functioned since 1950 as a national and international foundation. Headquartered in New York City, the foundation has issued more than $8 billion in grants and maintains offices throughout the world.
Sources of Information Contact at: Ford Motor Company The American Rd. Dearborn, MI 48121-1899 Business Phone: (313)322-3000 URL: http://www.ford.com
Bibliography Bennett, Harry and Paul Marcus. Ford: We Never Called Him Henry. TOR, 1951. Dahlinger, John. The Secret Life of Henry Ford. Indianapolis: The Bobbs-Merrill Company, Inc., 1978. Nevins, Allan and Hill, F.E. Ford: The Times, the Man, the Company. New York: Scribners, 1954. Rae, John B, ed. Great Lives Observed: Henry Ford. New York: Prentice-Hall, 1969. Wik, Reynold M. Henry Ford and Grass-roots America. Ann Arbor: University of Michigan Press, 1972.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Benjamin Franklin Overview Of all of the patriots who helped found the United States, Benjamin Franklin is probably the most respected and most revered. Franklin was a self-made man of many talents who prospered in the diverse arenas of politics, science, religion, education, and international diplomacy. As a writer, he is remembered for both his unfinished Autobiography and Poor Richard’s Almanack. As a person, he is remembered for his character, his accomplishments, and his role in creating the United States of America.
(1706-1790) Inventor
Personal Life Franklin was born in Boston in 1706, one of his father’s 17 children, all of whom had a staunch Puritan upbringing. Too poor to attend formal schooling, Franklin virtually educated himself. He not only read about the Enlightenment, but he vowed to use science and the scientific method to improve people’s lives. A scholar, he became fluent in French, Italian, and Spanish, and also studied Latin. Franklin had a common-law marriage with Deborah Read; the two could not have a legally binding ceremony because Read had previously been married. Franklin and Read had two children. Franklin also had an illegitimate son, William, whom Deborah Read raised in the family home. Franklin received recognition from colleges and universities late in life. He was awarded a honorary M.A. from Harvard, a honorary M.A. from Yale, and a honorary M.A. from William and Mary. Franklin was also elected as a fellow to the Royal Society.
2 8 9
B e n j a m i n
F r a n k l i n
created must thus be good, because evil would be opposite to God’s nature, and thus “evil doth not exist.” Printed when Franklin was only 19, this marked the start of a long and successful writing career. His emphasis on logic over emotion stayed with Franklin until the end of his life He returned to Philadelphia in 1726 to run a newspaper, the Pennsylvania Gazette. Soon he was running his own printing office and in 1732 started printing Poor Richard’s Almanack. This volume was printed annually for the next 25 years. Its theme was praise for thrift and hard work. Franklin wanted to start printing an almanac because; almanacs had proven to be lucrative ventures for other area printers. Poor Richard not only made money for Franklin’s business, it made him known as a writer throughout the colonies. In his essay “On Literary Style,” Franklin advocates that good writing must be smooth, clear, and short.
Benjamin Franklin.
(The Library of Congress.)
During his life, Franklin spent time in Philadelphia, England, and France. Franklin retired in 1748 from active business but he survived financially on income from his businesses for over 20 years after his retirement. He died in 1790 at the age of 84.
Career Details Franklin’s career began as an apprentice to his brother James in the newspaper business in Boston. It was here that Franklin began to print his own writings, anonymously publishing “Silence Dogood” in the New England Courant. “Silence Dogood” was the pseudonym Franklin used to pen his satirical, and thus critical, pieces. Franklin had two opportunities to manage the Courant. The first was when his brother was jailed for printing articles criticizing Massachusetts authorities. The second time James was jailed, Ben Franklin was named as publisher, a move designed to keep the paper printing. This ultimately ruined the brothers’ working relationship, however, and Franklin then moved to Philadelphia in 1723. A year later he went to England and became a master printer. In England Franklin became interested in Deism, a movement which advocated natural religion based on man’s reason rather than revelation, and also emphasized morality. In 1725 he wrote and printed the essay “A Dissertation on Liberty and Necessity, Pleasure and Pain.” Starting from the proposition that God is all-wise, all-good, and all-powerful, Franklin argued that everything
2 9 0
B u s i n e s s
Franklin formed the Junto, a civic improvement society, in 1727. His philosophy was “men of goodwill, organizing and acting together, could deal effectively with civic concerns.” This is evident by the successes of the Junto, including the establishment of the first public library in America; the formation of a fire company; the founding of a college (which later became the University of Pennsylvania); and the founding of a hospital. In addition to being a civic leader, Franklin dabbled in science. His famous kite experiment, which reportedly took place in June of 1752, proved that lightning is a form of electricity. In addition to his scientific experiments, Franklin is responsible for many inventions, including the Franklin stove, the lightning rod, bifocal lenses, and a harmonica. He charted the Gulf Stream, determined that white clothing does not attract heat as black does, and proposed daylight savings time. Franklin also proposed that the turkey be the national bird, because it was native to the United States, useful, industrious, and courageous. Franklin’s political accomplishments are equally impressive. In 1751 Franklin was elected to the Pennsylvania Assembly—the start of nearly 40 years as a public official. Franklin also revived the dormant Quaker party. Although he originally believed it best for the British Colonies to remain with England, the stubborn stance of King George III eventually pushed Franklin into the arms of the revolutionaries. Franklin even became estranged from his son William, who was a loyalist during the revolution. Franklin helped Thomas Jefferson draft a copy of the Declaration of Independence, and he himself signed it. During the latter stages of the Revolution, Franklin served as minister to France for the United States. His diplomacy proved vital in negotiating the Treaty of Paris to end the war. Following the end of the war, Franklin stayed in France as the American ambassador. He returned to the United States in time to attend the Constitutional Conference, serving as one of the original signers of the Constitution of the United States. In the final year of his life, Franklin introduced a bill to Congress outlawing slavery. This was his last public act.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
B e n j a m i n
Franklin philosophized about his success in his famous Autobiography, extolling the values and importance of hard work, thriftiness, and explaining how any one could develop an exemplary character with practice and perseverance. Above all else, Franklin valued self-improvement; he staunchly believed everyone—no matter what their social position—could benefit from self-improvement.
F r a n k l i n
Chronology: Benjamin Franklin
Social and Economic Impact
1706: Born.
Benjamin Franklin affected all levels of U.S. society. He used his firmly held beliefs in rationalism to improve the quality of life for all people. All citizens in Philadelphia had access to the library, fire department, and insurance agency. He also served as an example of the value of reasoning. As biographer Esmond Wright states in Franklin of Philadelphia, “for him, problems were for solving by reason and compromise.” He exemplified the beliefs of the Enlightenment, which asked for people to explain and understand their place in the world.
1724: Became master printer in England.
The United States, as a country, is indebted to Franklin for getting France into the Revolutionary War and for negotiating an effective peace treaty. Although France was anxious for England to be humbled, it could not openly afford to aid the U.S. rebels unless success seemed probable. For a year (1777) Franklin worked behind the scenes to hasten war supplies across the Atlantic, to block British diplomacy, and to ingratiate himself with the French foreign minister. Franklin helped get the French army and navy on their way to North America. In Paris at the end of the war Franklin set terms close to those finally agreed to: independence, guaranteed fishing rights, evacuation of British forces, and a western boundary on the Mississippi River.
1776: Assisted in drafting of Declaration of Independence.
Franklin’s economic views matched those of the French Physiocrats, who provided the foundation for the French Revolution. These views were evident at the Constitutional Convention. His concern for the poor was in part responsible for his suggestion of split representation in the legislature of the newly formed United States. His last famous speech at the Constitutional Convention was written by Franklin but delivered by James Wilson. He appealed to the Convention to adopt the Constitution unanimously.
1731: Started Philadelphia free library. 1732: Began printing Poor Richard’s Almanack. 1732: Founded Philadelphia’s first fire department. 1752: Equated lightning with electricity with his famous kite experiment. 1762: Served as deputy postmaster general for North America.
1783: Negotiated Treaty of Paris to end the American Revolutionary War. 1787: Attended the Constitutional Conference. 1790: Died.
The details of Franklin’s writing of his Autobiography are as interesting as any story in Franklin’s life. Autobiography, though only a fragment, is, ironically, Franklin’s longest work. The first part is a private letter to his son William, a letter Franklin never intended to publish. Originally begun in Philadelphia, Franklin continued to work on it while in France. While there, Franklin’s audience shifted from his son to a younger audience. He did not complete much writing in France, and he tabled the entire work until 1788. Franklin added to the work slowly only recording up until the year 1757.
Finally, as a writer, Franklin achieved immeasurable success. He is best known for his Autobiography, which he started in 1771 and never finished. His other book, Poor Richard’s Almanack, was reportedly the only book besides the bible that colonists read. Many of Franklin’s sayings and maxims, such as “Honesty is the best policy” and “God helps those who help themselves” remain in current usage. As stated in the Dictionary of Literary Biography, “Franklin holds forever a firm place in the hearts and minds of Americans who honor good humor, common sense, and wisdom—traits in his writing for which he is best known.”
Benjamin Franklin is honored and revered because of the many successes he achieved throughout his life. The term “the First American,” coined in 1764, originally referred to Franklin, and only later was it transferred to George Washington. Europeans also admired and honored Franklin, perhaps more so than any American before or since. Not everyone admired Franklin, though. Franklin’s contemporary, John Adams, dismissed Franklin as a politician. William Cobbett, a Federalist, called him a “crafty and lecherous.” And later literary giants like Mark Twain and Herman Mellville did not value him or his work. Critics of Franklin today cite his lack of interest in the humanities, his coarseness, and his opportunism as reasons for belittling him. No one
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
2 9 1
B e n j a m i n
F r a n k l i n
however, can dismiss him. Benjamin Franklin made his mark on America, and is featured prominently on the $100 bill.
“Benjamin Franklin’s Kite Experiment.” Weatherwise Online, 24 April 1998. Available from http://web2.iac-insite.com. Byers, Paula K. and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1998. Franklin, Benjamin. Autobiography. New York: Henry Holt and Company, 1916.
Sources of Information
Wright, Esmond. Franklin of Philadelphia. Cambridge, MA: Belknap Press of Harvard University Press, 1986.
Bibliography “Benjamin Franklin.” Dictionary of Literary Biography Online, 20 April 1998. Available from http://galenet.gale.com.
2 9 2
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Tom Freston Overview Thomas E. Freston rose through the ranks to become chairman and chief executive officer (CEO) of MTV Networks in 1987. In this position, Freston took responsibility for the management of one of the world’s premier suppliers of specialized programming. During Freston’s tenure, MTV Networks grew to encompass five basic cable television programming networks, including MTV, M2, VH1, Nickelodeon/Nick at Nite, and Nick at Nite’s TV Land.
(1945-) MTV Networks
Personal Life Tom Freston was born November 22, 1945 in New York City, where his father worked as a public relations executive. He attended St. Michael’s College in Vermont, where he spent a lot of time on the ski slopes and graduated with his bachelor’s degree in 1967. Two years later, he had completed work on his master’s degree in business administration (MBA) at New York University’s highly regarded Stern School of Business. Freston’s early aspirations included operating an art movie theater or a nightclub. He spent some time in the Caribbean as a bartender before returning to New York to begin his career. On October 18, 1980, Freston married Margaret Badali. Together they had one child, Andrew. He has served on the board of directors of the Rock ‘n’ Roll Hall of Fame and the Smithsonian Commission on Music in America. Known for an unpretentious personal style that MTV executive Judy McGrath once called a “‘can you believe I’m the president’ quality,” Freston cultivates the
2 9 3
T o m
F r e s t o n
all-music video cable channel. The joint venture between Warner Communications and American Express would eventually become known as Music Television, or MTV. Debuting in 1981, the network originally relied upon an almost exclusively white lineup of British new wave bands and obscure American performers. Nevertheless, photogenic acts like Duran Duran and Culture Club attracted viewers and paved the way for a greater variety of artists to begin making video clips for their own songs. Eventually, MTV branched out to include original programming as well.
Tom Freston.
(Ken Cedeno/Saga/Archive Photos.)
same relaxed style in his employees. When Forbes magazine asked him to describe his corporate dress code, he replied: “No full-frontal nudity.” Freston’s interests include photography, travel, and collecting antique rugs.
Career Details Freston began his career as an account executive with the advertising firm of Benton & Bowles. His portfolio included accounts for Scope mouthwash and the G.I. Joe action figure. He found the corporate bureaucracy restrictive and ineffective, however, and promptly quit. “I had no idea what I was going to do,” he later admitted to Forbes. He spent some time traveling in Africa and Asia before settling in New Delhi, India. While in New Delhi, Freston started up his own textile and clothing business. For the next eight years, shuttling between residences in New Delhi and Kabul, Afghanistan, he manufactured peasant clothes for export back to the United States. There, trendy urbanites loved the chic rags and Freston made a fortune. He could easily have continued this lucrative scheme, but by 1980 the Organization of Petroleum Exporting Countries (OPEC) oil crisis and the Soviet invasion of Afghanistan had made business conditions inhospitable. Fearful that his freshly radicalized workers might turn their anger on him, Freston fled back to the United States. Back in New York, Freston saw an ad in Billboard magazine seeking creative executives to help launch an
2 9 4
B u s i n e s s
Freston started out in the marketing department, where he helped conceive the immensely successful “I Want My MTV!” campaign that saw stars such as Billy Idol and Sting declaring their desire to have the video channel added to their basic cable package. Freston remained with MTV until 1982, when he left for a twoyear tenure as director of marketing for The Movie Channel, a premium film channel. He returned to MTV Networks in 1983 to become vice president of marketing. During this period MTV Networks launched a second video channel, a light pop alternative called VH1. Freston began a steady ascent that culminated in his being named president and chief executive officer (CEO) in 1987. The year before Freston took control, Viacom had bought MTV Networks for $513 million. The infusion of new capital, coupled with Freston’s energetic leadership, spurred the company on to a decade of unprecedented growth and expansion. When ratings did periodically flatten, Freston was quick to make changes. The most sweeping of these purges came in 1997, when a scathing memo by two 25-year-old production assistants prompted Freston to order a complete overhaul of both programming and presentation.
Social and Economic Impact Under Freston’s leadership, MTV Networks experienced the most significant growth in its history and extended its brands to launch a variety of secondary operations, while at the same time maintaining the company’s reputation as a leader in the television industry. In 1997, MTV Networks provided Viacom with close to $625 million in earnings, about 32 percent of Viacom’s gross earnings. Profits grew 25 percent a year during the 1990s. All of this growth occurred while Viacom’s other assets, Blockbuster Video, the Paramount film studio, and Simon & Schuster Publishing, were struggling to turn a profit. “You cannot overestimate the powerful role the MTV Networks have played at Viacom,” stated CEO Sumner Redstone in Fortune magazine in 1997. The phenomenal growth has allowed the network to expand worldwide. By 1994, globalization had made MTV available to 250 million homes in 58 countries. In fact, there were more subscribers in Europe than in the
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
T o m
F r e s t o n
United States. “A key part of our approach has been to localize,” Freston told an audience at a cable industry convention. Accordingly, MTV’s overseas operations, such as MTV Latino, MTV Japan, and MTV Brazil, emphasized local talent unknown in the United States. While remaining committed to “narrowcasting,” Freston has expressed concern about another industry development of the 1990s: pay-per-view. He feared a split in the television viewing audience similar to the one that took place when cable channels first began to displace the broadcast networks. “If we quintuple the number of channels,” Freston told Television Digest in 1994, “there’ll be dilution of ratings.” Freston has employed an unconventional management style that relies on few customary corporate practices. An example of his unique way of dealing with problems is the way he handled the merger of the MTV comedy network HA! with the rival Comedy Channel, owned by HBO. Originally the two networks competed fiercely. Freston even sent employees out in the middle of the night to plaster HA! logos all over the neighborhood of HBO chief executive Michael Fuchs. But neither channel caught fire with viewers, and by 1990 both were sputtering on the brink of collapse. Pride alone might have made other executives reluctant to pool their resources to solve the problem. But Freston and Fuchs got together and agreed that a merger of the two comedy networks was the only way to go. In 1991, they put aside their differences and formed Comedy Central, a joint venture between HBO and Viacom. Programming was consolidated, and a new CEO was brought in to provide oversight. By the end of that year, the subscriber base for the new channel had almost doubled to 22 million viewers. On the programming front, Freston pursued a policy of nurturing creative innovation and, as he phrased it, “putting people first.” Some of the new programming initiatives that began under Freston’s leadership included the popular cartoons Rugrats on Nickelodeon, Daria on MTV, and the VH1 concert series Storytellers. Freston’s decision to emphasize animated programming put him in the forefront of a creative rebirth for the cartoon industry. In 1997, MTV Networks announced that it would invest more than $420 million in original animation over five years for both Nickelodeon and MTV. This major investment would encompass animated television series, animated feature films, and other animated products.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Chronology: Tom Freston 1945: Born. 1967: Graduated St. Michael’s College. 1969: Awarded MBA from New York University. 1980: Joined MTV as director of marketing. 1981: Launched MTV. 1985: Launched VH1. 1986: Named MTV president of entertainment. 1986: MTV Networks bought by Viacom. 1987: Appointed chairman and chief executive officer of MTV Networks. 1997: Ordered overhaul of MTV programming.
Sources of Information Contact at: MTV Networks 1515 Broadway New York, NY 10036 Business Phone: (212)258-6000 URL: http://www.mtv.com
Bibliography Brown, Les. Les Brown’s Encyclopedia of Television. Detroit: Gale Research, 1992. Clash, James M. “Mr. Hatfield, Meet Mr. McCoy.” Forbes, 30 January 1995. Gunther, Mark. “This Gang Controls Your Kids’ Brains.” Fortune, 27 October 1997. Samet, Jonathan. “PPV To Split Audience.” Television Digest, 1 March 1993. Teubner, Gary. “MTV Networks CEO Thomas Freston Described ‘Globalization’ of MTV to Audience of International Attendees.” Satellite Week, 30 May 1994.
S t u d e n t s
2 9 5
Alfred Fuller (1885-1973) Fuller Brushes
Overview Alfred C. Fuller, who had a difficult time staying employed, started making brushes in his sister’s basement and selling them door-to-door. In a short time, his brush business became extremely successful. Fuller, essentially, reinvented the brush. His brushes were high quality and designed to fit the specific needs of his customers. He developed an independent workforce who followed his pattern of door-to-door selling. Fuller demanded ethical behavior from his workers and was a role model to other manufacturers for his management techniques.
Personal Life Alfred Carl Fuller, nicknamed Uppie, was born on January 13, 1885, in Nova Scotia, Canada. Some of his ancestors were among the passengers who came to America on the Mayflower. He was the 11th of 12 children born to Leander Joseph Fuller and Phoebe Jane Collins Fuller, and was raised on a farm in Nova Scotia. He, along with his family, was an active member in the Methodist Church. Going to church was absolutely mandatory and Fuller credits his early church experience for instilling his positive outlook on life. Rather than talk about how sin or crime does not pay, he heard about the virtue of modesty, and the rewards of living a clean and righteous life. Fuller was also instilled with a good work ethic early on in his life. His mother was a thrifty homemaker and his father distrusted what he called, “city slickers,” or those he thought tried to get by in life without having to work. Fuller’s father would often look at his hands and
2 9 6
A l f r e d
Alfred C. Fuller displays some of the company’s products.
say “These are your fortune, boy. Be suspicious of anyone who shows you how to make a living without using them.” At a young age, Fuller earned money by picking berries and being paid by the quart. In his autobiography, A Foot in the Door, Fuller remarks that “I think that my later organization of Fuller Brush Men as independent dealers who are business men in their own communities, draw no salary from the company, and earn only the fruits of their won sales, was germinated in a Nova Scotia strawberry patch.” Fuller went to grammar school, and afterwards had no formal training or schooling. In Nova Scotia, children were expected to be self-supporting by the age of 18. In 1903, Fuller left home for Somerville, Massachusetts, where five of his siblings had already settled. Fuller worked, unsuccessfully, at a variety of jobs before he started to sell brushes door to door for William Staples. In 1906, he started his own brush company and moved to Hartford, Connecticut. In 1908, he married Evelyn Ells, who helped Fuller keep his new business thriving. The couple had two children, Howard and Avard, who grew up to become presidents of the Fuller Brush Company. Fuller and his wife, Evelyn, divorced in 1930. Fuller was remarried in 1932 to Mary Primrose Pelton; that marriage lasted for the rest of his life. During his first few years in Hartford, Fuller became interested and involved in the teachings of Mary Baker Eddy, the founder of Christian Science. He credits much of his success in dealing with people from the teachings of Eddy. Fuller believed in altruism and his business was based
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
F u l l e r
(UPI/Corbis-Bettmann.)
on the principles of charity, help, and community. He was aware of the tremendous responsibility he had and felt that each management decision affected every person in the organization. For that reason, it was important for the business to rely on the guidance of a higher power. “The organization has been shaped and is now permeated with a spirit which, whether consciously or unconsciously, is founded on the Scriptures, and, I believe, is directly motivated by metaphysical influences,” Fuller once said. Fuller became a well respected man in the business world. He received many awards and was asked to be on the boards of several organizations. He died in Hartford, Connecticut on December 4, 1973.
Career Details After Fuller moved to Somerville, Massachusetts, he worked as a gardener, a delivery boy, and in a trolley car barn, but was fired from all these positions. Fuller’s brother, Dwight, had been in the brush business with William Staples who gave Fuller his first job selling brushes door to door. Fuller enjoyed the work and was successful. He became extremely interested in “the brush” and studied its history. He learned that in 1830, the first patent for a brush was issued and the mass production of brushes began. There had only been few improvements made in the manufacturing of brushes up to this time. And those that were made, were manufactured
S t u d e n t s
2 9 7
A l f r e d
F u l l e r
Chronology: Alfred Fuller 1885: Born. 1905: First job selling brushes door to door. 1906: Established Somerville Brush Company. 1906: Moved to Hartford, Connecticut and renamed company Capitol Brush Company. 1908: Married Evelyn Ells. 1913: Company became the Fuller Brush Company. 1918: Introduced the Handy Brush, a free gift to customers. 1921: Hired Frank Adams to save the company. 1943: Fuller signed first union contract. 1945: Retired as president of Fuller Brush Company. 1973: Died.
to be obsolete so, Fuller’s creations and innovations were a success waiting to happen. As Fuller went door to door selling brushes, he learned cleaning tips from his customers and listened to their suggestions for making brushes for specific uses. He noted which brushes sold well and which ones did not sell well. Fuller took this information to his employers, who turned a deaf ear. On New Year’s Day, 1906, Fuller set up a workshop in his sister’s basement and began to make his own brushes. It was the start of the Somerville Brush Company. Fuller sought to improve the brushes and to make new shapes and sizes, and they were a success. Staples and his partner, Fred Kelly, were upset by Fuller’s departure and subsequent success, and out of respect for his former employers, Fuller moved his shop to Hartford, Connecticut in April, 1906. Because Hartford was the capital city he renamed his company the Capitol Brush Company. His brushes were a success in Hartford and soon orders became backlogged. Eventually Fuller moved to a larger shop, bought machinery to produce the brushes, and hired someone to help him make and sell them. In 1908, Fuller married Evelyn Ells. Evelyn was very interested in the business and was instrumental in maintaining the success of the Capitol Brush Company. She borrowed his samples, and went door to door herself, consistently outselling him. She often accompanied
2 9 8
B u s i n e s s
him while he made business calls and insisted on being paid for her time. Even though Fuller recognized Evelyn’s competence and flair for selling his brushes, he never hired women because “in those days, it just wasn’t done.” In 1909, Fuller ran his first want ad for salesmen. The ad appeared in a national journal and the response was tremendous. His business practices however were haphazard, however, and he was not prepared to respond to all the inquiries or supply the potential salesmen with supplies without hiring more people to help. He credits Ruby Perkins, his first secretary, Phil Colturi, and George Marsh with helping him during the company’s expansion. Later, Fuller used the talents of Wallace E. Campbell and the inventor Henry Cave. One man who was extremely helpful in developing a successful workforce was Frank Beveridge who worked with Fuller from 1912 to 1929, when he left to start the Stanley Home Products Company which also sold door to door. In 1913, the Capitol Brush Company became the Fuller Brush Company. Selling door to door is a hard way to make a living. The salesmen were often linked to peddlers and frauds. Fuller always demanded that his salesmen dress nicely and behave in a courteous fashion. In 1918, he made the Handy Brush which was given out as a free gift to households where Fuller Brush men called. After World War I, sales gradually declined to the point where the company was in real trouble. Fuller, along with his financial advisor, Frank Adams, toured all of their divisions in the United States and Canada. They found disorganization and mayhem. Adams overhauled the entire company and saved it from collapse. The Fuller Brush Company survived the Depression years and afterward enjoyed a tremendous growth in sales. During World War II, the company prospered even further, as the demand for brushes was extraordinary. Also during this time, new synthetic materials were available to make the brushes. Fuller introduced new products including a line of cosmetics that were sold by a new workforce— the Fullerettes. Fuller products were so great in number that the company began publishing a catalog of available items. Fuller’s sons also became involved in the business. In 1943, the company signed its first formal contract with a union and afterwards, efficiency and scientific management replaced Alfred’s paternalistic way of management. His son, Howard, was the driving force behind the company’s success after World War II and became president in 1943, when his father became chairman of the board. After Howard’s death in 1959, Avard became president of the company. Alfred Fuller retired in 1968.
Social and Economic Impact The Fuller Brush Company is one example of the types of businesses that developed after the turn of the century. Those that started with a small sum of money,
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
A l f r e d
innovation, invention, and hard work, and that became extremely successful. It is expected that the company will still be a mainstay in the American marketplace into the 21st century. By the 1990s, Fuller products could be purchased over the Internet. The Fuller Brush Company was one of the first door to door sales companies and its management theories have greatly influenced many other door to door companies such as Stanley Home Products, Tupperware, Avon, and Amway. Alfred Fuller was looked to as a leader in the sales industry for his fair practices, beneficent treatment of employees, and a nononsense way of doing business. There have been numerous jokes and cartoons featuring the Fuller Brush Man in magazines and newspapers. In 1948, the movie The Fuller Brush Man, starring Red Skelton was released and in 1950, the sequel, The Fuller Brush Girl, starring Lucille Ball was released. All
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
F u l l e r
were a light hearted tribute to a company and a product that, as early as the 1920s, had become a common household product.
Sources of Information Bibliography Current Biography Yearbook. New York: H.W. Wilson Co., 1974. Fuller, Alfred C. A Foot In The Door. New York, McGraw-Hill Book Company, Inc., 1960. Ingram, John N. Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood Press, 1993. VanDoren, Charles. Webster’s American Biographies. Springfield, MA: G. & C. Merriam Co., 1979.
S t u d e n t s
2 9 9
Nely Galán (1964-) Galán Entertainment
Overview By the time she was 30, Nely Galán had signed production deals with HBO Independent Productions and Fox Television to produce television and film products for the Latino market. She made her broadcasting debut when she was 18 on a Public Broadcasting Service (PBS) news show for teens called Checking It Out. At the age of 22 she was the youngest station manager in the United States at WNJU-TV, New Jersey’s top Spanish-language television station. When she was 25 she created and hosted Bravo, a television talk show originating in Philadelphia that featured Latino guests and was eventually shown on more than 30 different stations. In 1990 she set up her first production company, Tropico Communications. She relocated to the West Coast in 1992 after signing a production deal with HBO, then went to Fox in 1994.
Personal Life Nely Galán was born Nely Alvarez in 1964 (some sources say 1963) in Cuba to Arsenio and Nelida Alvarez. The family moved from Cuba to the United States and settled in Teaneck, New Jersey. Galán attended the Catholic all-girl Academy of the Holy Angels in Demarest, New Jersey, about an hour from her home. In a Vogue interview, she said “I arrived in the United States at age three and grew up wanting both to live up to the old-world expectations of my parents and to fit in with the customs of my new homeland.” Her parents assumed that as much as they had done Nely would
3 0 0
N e l y
G a l á n
marry, stay home, and have children. but Galán had another vision for her future. She wanted to be a writer. A “wimpy, quiet kid,” according to her own account, she underwent a change in attitude when she was 15. Having learned English well, she impressed the nun who was her English teacher with a short story she had written, and it was read aloud in class. Later the nun charged her with plagiarism, simply on the grounds that a young girl could not have written such a good story. Galán retaliated by writing another story, this one a satire about a Catholic all-girls school, and sent it off to Seventeen magazine. While the essay was not published, the editors liked the piece and the magazine invited her to be a guest editor. She felt vindicated for the unwarranted accusation of plagiarism and gained a new confidence. Her guest editorship turned into a full-time job hiring models for fashion spreads in the magazine. Her contacts resulted in a job offer from the Elite modeling agency, and the 17-year-old Galán went to Paris to help coordinate talent for fashion shows there. When she was 18, the precocious teenager married Hector Galán, a documentary filmmaker. They were divorced after four years of marriage.
Chronology: Nely Galán 1964: Born. 1967: Emigrated to the United States. 1982: Became host of Checking It Out, a teen news show on PBS. 1989: Created and hosted Bravo, a talk show. 1990: Established Tropico Communications, a television production company. 1992: Signed production deal with HBO Independent Productions and formed Tropix, a production company. 1994: Signed production deal with Fox Television and formed Galán Entertainment, a production company.
Career Details Galán’s broadcast career began when she was 18 years old. She was the host of Checking It Out, a teenoriented news show on PBS. While working for the show, she spent two years traveling throughout the United States, interviewing guests and filming stories. Recognizing the power of television, Galán wanted to become a producer. At the age of 20 she went to work as a documentary producer at the CBS affiliate in Boston. She assisted with the production of Since JFK: The Last 20 Years, which won an Emmy award. Galán returned to New Jersey and was hired as the station manager of WNJU-TV in Teterboro, New Jersey. At the age of 22, she was the youngest station manager in the United States. WNJU was New Jersey’s top Spanish-language station, and Galán was responsible for a $15 million budget and a staff of 100 employees. Galán was hired away from WNJU when CBS made her an offer to anchor a show aired from WCAU-TV in Philadelphia and to host her own talk show called Bravo. Bravo was modeled after Oprah Winfrey’s popular talk show and featured prominent Latino guests. It was seen on more than 30 different television stations.
United States and the 200 million viewers in Latin America. While still working for CBS, Galán heard from an acquaintance, Concepción Lara, who was developing a Spanish-language version of HBO. Lara recommended Galán for a similar spot at ESPN, which wanted to develop a Spanish-language sports network. Although she wasn’t a sports fan, Galán took the work as a learning experience. Galán was soon approached by HBO Independent Productions, and in 1992 she successfully negotiated with HBO to form her own production company, Tropix. Galán ran Tropix from 1992 until September 1994, when she signed a new production contract with Fox Television. During that period she was working on Latino sitcoms and other projects for HBO. One show, Loco Slam, featured Latino stand-up comics and debuted in June 1994. Another project in development was a three-hour English-language anthology about three Latino families: Mexican, Cuban, and Puerto Rican.
Around 1990 movie studios as well as network and cable television companies were becoming more interested in reaching the 27 million Latinos living in the
With Fox, Galán established a new production company, Galán Entertainment. She planned to complete projects she had started at Tropix and to develop new ventures. She produced on-air and promotional graphics for the Fox Latin American Channel. Her video spots won many awards, including the 1994 Gold Award from the Broadcast Designers Association. Other new projects included a Miami-based dance show and two Latino sitcoms. One of the sitcoms, Sabrina, was being developed
B u s i n e s s
S t u d e n t s
Other projects that Galán was involved with included hosting Nely, another talk show; hosting Live in L.A., a local morning talk show; and anchoring The Gossip Show on E! Entertainment Television.
L e a d e r
P r o f i l e s
f o r
3 0 1
N e l y
G a l á n
for ABC. It was about a 13 year-old Latina growing up in the United States. The other sitcom was expected to feature a Latina professional, similar to The Mary Tyler Moore Show.
Social and Economic Impact Successful in both the broadcasting and production areas of television, Galán serves as a role model for other Hispanic women. She is respected and admired for her knowledge of both American and Hispanic cultures. In meetings she speaks English and Spanish interchangeably and has a talent for translating ideas into entertainment projects that are meaningful to the Latino market. Galán’s cultural sensitivity is evident by the attention she pays to such projects as a three language anthology about three families, one Mexican, one Puerto Rican and one Cuban. Each segment was written by a native of each country because only then would the cultural shadings be clear. Her influence on a show’s content has enabled her to develop television programs aimed at younger Latinos. Her concern was that traditional Spanish-language networks were directed mainly at older viewers, and that they failed to address younger audiences. She told The New York Times, “The trick for me is to reach masses of people with a message that’s universal but at the same time really sounds like a true Latino voice.” One pro-
3 0 2
B u s i n e s s
gram aimed at this younger audience is a dance show set in Miami titled “Salsa Til Sunup”, which may appeal to young adults. As someone who speaks English and Spanish and understands both the Anglo and Latino cultures, Galán has the potential to become a key player in the television industry. Her experience is indispensable to movie, network, and cable television companies that are trying to develop shows in English as well as Spanish that will appeal to the ever-growing Latino market.
Sources of Information Bibliography Galán, Nely. “Latin Class.” Vogue, August 1997. Garcia, Guy. “Tropical Tycoon: Nely Galán.” The New York Times Magazine, December 11, 1994. Also in The New York Times Biographical Service, December 1994. “Nely Galán: Writer/Director.” Available from http://www.hisp. com/apr96/14galan.html. Notable Hispanic American Women. Detroit: Gale Research, 1993. Rodriguez, Janel. Nely Galán. Raintree Steck-Vaughn, 1997. Who’s Who among Hispanic Americans. Detroit: Gale Research, 1994.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
George Gallup Overview George Gallup was the founder of the public opinion poll that bears his name. His work was considered to be pioneering in public opinion polling. He invented a scientific statistical technique through which he could sample opinions of a small number of people and derive the general public mood of the population on various issues. His technique was also successfully used for predicting the outcome of presidential elections and other political races. In 1936, when his opinion poll successfully predicted the victory of President Franklin D. Roosevelt, Gallup became the leader in his field.
(1901-1984) American Institute of Public Opinion
Personal Life George Gallup was born the son of George and Nettie Davenport Gallup on November 18, 1901. His father, George Sr., a farmer, had been described as an eccentric schoolteacher who dabbled in the real estate investments of farm and ranch lands. George, Sr. also dreamed of what he called a new kind of logic called “lateral thinking.” He inspired his son to think creatively and was considered a significant influence on Gallup’s eventual approach to his life’s work. Gallup grew up on the plains of Iowa and attended the University of Iowa. This was a difficult time for him. His parents were experiencing financial hardships and they found it difficult to help with college expenses. Gallup continued in his education, however, and was able to get the money he needed from scholarships and work, doing odd jobs around the university.
3 0 3
G e o r g e
G a l l u p
for Objective Methods for Measuring Reader Interest in Newspapers,” and clearly forecasted his future career interests. George Gallup was actively involved in his career until the time of his death. He lived comfortably on a 600-acre estate in the affluent community of Princeton, New Jersey. He died on July 26, 1984, at the age of eighty-three while he was travelling in Tschingel, Switzerland, where he suffered a fatal heart attack.
Career Details Gallup became a college professor upon receiving his Ph.D. He was the head of the journalism department at Drake University in Des Moines, Iowa, from 1929 to 1931. He taught at Northwestern University in Evanston, Illinois, from 1931 to 1933, as a professor of journalism and advertising. From 1933 until 1937, while beginning a career at Young & Rubicam Advertising in New York City, he continued to work as a professor of journalism at Columbia University.
George Horace Gallup.
(The Library of Congress.)
As it turned out, it was one of those odd jobs that would end up becoming the basis for his career. During one summer vacation while still in college, Gallup worked for a St. Louis newspaper, The Post-Dispatch, taking surveys door-to-door, asking the readers their feelings about the newspaper. The job was not a pleasant one. It was monotonous and tiring in the midst of the oppressive St. Louis summer heat. He had to ask each household exactly the same questions. All of this made Gallup wonder whether there might not be an easier, more efficient way to get the answers to these kinds of questions and still get accurate results. He determined that this would be his life, his career. Gallup’s training was a mixture of many elements. He was the editor of the campus newspaper at college. He built up the publication from a small college paper to one of general interest that supported itself with advertising. It became the voice of not only campus news, but of the entire town.
3 0 4
Gallup began his primary career when he accepted a job with the advertising firm of Young & Rubicam, in 1932, at which time the United States was in the midst of the Great Depression. He began to collect information about the public’s moods and he shared the results with Young & Rubicam’s clients. These clients who advertised on radio, and in magazines, were eager to pay for information about what the public wanted. In an era when money was not easily available to most Americans, even those with jobs, such information was crucial to a company’s direction and success. Gallup was a young family man when he joined Young & Rubicam. He had already become convinced that his ideas about “scientific sampling” were enormously important and useful. Many professionals regarded this as radical for the times, and they disputed his accuracy. Gallup did not sway, however, in pursuing his own methods as a way to capture the public’s moods and sentiments. George Gallup created a technique for asking questions of a small random mixture of Americans. He would then use the information to predict how huge populations felt about things, what they believed, what they would buy, and, most of all, how they would vote.
Gallup graduated from the University of Iowa in 1923, with a bachelor of arts degree in journalism. He remained at the college to become a professor of journalism. He also continued his studies and earned a master’s degree in psychology in 1925. At the end of that same year, on December 27, Gallup married Ophelia Smith Miller. They had three children: Alec Miller Gallup, George H. III (who continued as the head of his father’s organization), and Julia Gallup Laughlin.
By 1935, Gallup formed the American Institute of Public Opinion, a private company, where he gathered many and various predictions of public moods and attitudes. He sold the information to the newspapers that subscribed to his service. Gallup also formed the first polling group for the entertainment industry, known as Audience Research, Inc. This provided Hollywood, for instance, with public reaction to anything from movie titles to the popularity of movie stars.
In 1928, Gallup earned a Ph.D. in journalism. His doctoral dissertation was entitled: “A New Technique
Gallup increased his wealth quickly as he conducted polls for advertisers, entertainment executives, and the
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
G e o r g e
G a l l u p
media. However, he achieved his greatest fame when he began to predict the outcome of political races. In 1936, the Gallup organization accurately predicted that Franklin D. Roosevelt would win easily over presidential candidate Alf Landon. What Gallup had learned to do was implement a technique of sampling a small number of the general population that would accurately represent the population at large. This was a vastly different approach from the old “straw poll” whereby people who were asked to respond to questions were not necessarily people who provided a broad, representative spectrum of American opinions. Gallup had invented an ingenious contribution to political forecasting. While polling became the heart of his work, Gallup never strayed too far from his original interests of journalism and education. In his work The Miracle Ahead in 1964, and throughout his life, he emphasized and advocated that the best education system was one which called forth the creative powers of the human brain. He insisted that the best training a mind could have was that which developed skills such as perception, concentration, problem solving and decision making. Gallup believed most in the case history method of teaching, which according to him afforded, “. . . perhaps the best method that mankind has yet found to transmit wisdom as opposed to knowledge.”
Chronology: George Gallup 1901: Born. 1923: Earned his B.A. at the University of Iowa. 1925: Earned his M.S. at the University of Iowa. 1925: Married Ophelia Smith Miller. 1928: Obtained his Ph.D. from the University of Iowa. 1929: Headed Journalism Department, Drake University, Des Moines, Iowa. 1931: Became professor of journalism and advertising, Northwestern University, Evanston, Illinois. 1932: Named director of research, Young & Rubicam Advertising Agency, New York City. 1935: Founded American Institute of Public Opinion, New York City and Princeton, New Jersey. 1939: Founded Audience Research Institute. 1940: Published The Pulse of Democracy: The Public Opinion Poll and How It Works. 1958: Founded Gallup Organization, Inc.
Social and Economic Impact
1984: Died.
George Gallup invented the scientific method of obtaining the ideas and moods from a small group of people and translating their diverse opinions into an indicator of the sentiments of much larger groups. He invented modern polling techniques that brought to the forefront great productive accuracy. The impact of his polls on modern society is difficult to measure. Polls have provided a means, throughout the world, by which pollsters can scientifically examine the needs, the desires, the frustrations, and the satisfactions of large populations. This information, whether used for public or private benefit, has presented the key to understanding an ever-changing American mind, politically and socially. Gallup’s scientific method of gathering public opinion transformed this monumental task into a manageable one. He brought to many industries the answers for questions they had about the American disposition. Through polling, he could determine what Americans wanted, how they felt about political and social issues, and what they felt about products they bought in the grocery store. This information gave businesses the direction they needed to interpret and meet the public’s approval. This translated into financial gain for corporations that fueled a marketdriven economy.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
People doubted the accuracy of the Gallup Poll predictions for many years. Indeed, skeptics remain constant in any similar venture. However, Gallup succeeded with a startling accuracy in the polls which opponents found difficult to deny. He overcame his challenges when he consistently came up with the right answers. Gallup’s belief in people was, perhaps, his most important social contribution. He listened to what the average person had to say, and made it matter in the public arena. As founder of such an organization as Quill & Scroll, the high school journalism honorary society, he told the youth of America that they were important. His numerous awards from business and educational institutions speak to the value society placed on his contributions. Historian Richard Reeves interviewed Gallup in the final years of his life. When Gallup was asked about the effect that polling had on a democracy, his response was candid and assertive: “If government is supposed
S t u d e n t s
3 0 5
G e o r g e
G a l l u p
to be based on the will of the people, then somebody ought to go out and find out what the will is. More and more people will be voting on more and more things, officially, and unofficially in polls, on issues as well as candidates. And that’s a pretty good thing. Anything’s good that makes us realize that government is not ‘them.’ We are the government. You either believe in democracy or you don’t.” The life of George Gallup is the story of America and its foundation in democratic ideals. He emerged from a childhood of dreams, into a lifetime career of making even the smallest voice in America heard. His methods and his results might have been questioned but George’s unfailing influence in how America works, votes, and lives, is the legacy that survives him.
3 0 6
B u s i n e s s
Sources of Information Bibliography Gallup, George. The Gallup Poll of Attitudes Toward Education, 1965-1973. Princeton: Princeton Opinion Press, 1976. Gallup, George. The Miracle Ahead. New York: Harper Bros., 1964. Gallup, George, and John O. Davies. What My People Think. New York: American Institute of Public Opinion Press, 1971. Gallup, George, and Saul F. Rae. The Pulse of Democracy: The Public Opinion Poll and How it Works. New York: Simon & Shuster, 1940. Reeves, Richard. Fifty Who Made a Difference. New York: Villard Books, 1984.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
James Gamble Overview James Norris Gamble was principally responsible for the development of Ivory Soap, one of the most recognizable products in American business history. As a partner in Procter & Gamble, he helped guide the company through a period of rapid growth and innovation. The son of the company’s cofounder, he also innovated in the arena of labor relations by introducing a profit sharing plan in 1887.
(1836-1932) Procter & Gamble
Personal Life James Norris Gamble was born August 9, 1836 in Cincinnati, Ohio. He was the grandson of Irish immigrants who had settled in the “Queen City of the West” in 1819. The son of Elizabeth Ann and James Gamble, the cofounder of the Procter & Gamble soap and candle company, Gamble attended school at Cincinnati’s Chickering Institute. He earned his bachelor’s degree from Kenyon College in 1854 and completed his master’s degree there three years later. Gamble later did postgraduate work in chemistry at the University of Maryland. Gamble married Margaret Penrose, a native of Ireland and the daughter of a British army officer, in April 1862. With her, Gamble had two daughters, Maud and Olivia. He was made an honorary life member of the Cincinnati Chamber of Commerce and the Cincinnati Club. His other affiliations included the Republican Party, the Methodist Episcopal Church, the Masonic order, and Delta Kappa Epsilon. He died in Cincinnati on July 2, 1932.
3 0 7
J a m e s
G a m b l e
Chronology: James Gamble 1836: Born. 1854: Graduated from Kenyon College. 1857: Earned master’s degree from Kenyon College. 1862: Became partner in Procter & Gamble. 1887: Instituted profit sharing. 1890: Elected vice president and director of Procter & Gamble. 1895: Elected mayor of Westwood, Ohio. 1912: Entered semi-retirement. 1924: Donated stadium to University of Cincinnati. 1932: Died.
Career Details James Norris Gamble began his career as a factory worker at a Procter & Gamble plant in Cincinnati. The company had been founded by his father in partnership with William Procter in 1837. Procter was a prosperous candle manufacturer and Gamble was an apprentice soap maker. By coincidence, they married sisters, whose father encouraged the two men to go into business together. In 1837, a year after the birth of Gamble’s son James Norris, the two men began making and selling soap and candles and entered into a formal partnership in October of that year. By the 1850s, the moon and stars had become the company’s unofficial logo. Procter & Gamble sales first exceeded $1 million in 1859. James Norris Gamble was made a partner in his father’s business in 1862. His progress was interrupted only by the clarion call of war. When the U.S. Civil War broke out, Gamble joined the Ohio Infantry and was made a captain of the 8th Regiment. He returned to the company after his service to guide it through its greatest period of growth. During the Civil War, Procter & Gamble was awarded numerous contracts to supply soap and candles to the Union Army. These orders kept the factories constantly busy and established the company’s national reputation, as soldiers returned home from battle with their Procter & Gamble products in tow. As his business influence expanded, Gamble began to contribute in the civic arena as well. In 1869, he be-
3 0 8
B u s i n e s s
gan a decade-long association with Edward A. Ferguson designed to promote construction of a railroad between Cincinnati and Chattanooga, Tennessee. Their enterprise, known as the Cincinnati Southern Railroad Company, was owned wholly by the city of Cincinnati. Other railroad endeavors to which Gamble lent his influence included the Westwood & Cincinnati Railroad Company, of which he was president and sole proprietor, and the Little Miami Railroad Company. Gamble also enjoyed a successful career in politics. He served as mayor of Westwood, Ohio (later a part of Cincinnati) from 1895 to 1896 and he sat on Cincinnati’s Board of Parks Commissioners in 1898. As a commissioner, he helped plan and implement the city’s park and roadway system. As chairman of the Honest Election Commission from 1905 to 1912, Gamble worked to reform the electoral system in his native city. Through all of his other activities, however, Procter & Gamble business never strayed far from Gamble’s thoughts. In 1888, Gamble took personal control of the construction of the company plant in Ivorydale, Ohio. Designed by the famed industrial architect Solon Beman, the plant incorporated the latest technological advances with a pleasant work environment for employees, a progressive approach at that time. It was severely damaged by a fire in 1884. When Procter & Gamble was incorporated in 1890, Gamble was elected vice-president and director, positions he maintained until his death. In 1912, an aging Gamble stopped participating in Procter & Gamble company business. He devoted himself increasingly to his university and hospital interests until his death in 1932.
Social and Economic Impact Gamble’s most significant breakthrough was his development of Ivory Soap in 1879. A chemist by training, he devised the inexpensive, white soap to compete with high-quality imported soaps that cost more. “So pure it floats,” ran ads for the product, which did in fact float on water. Harley Procter, son of the company co-founder, took the name Ivory out of a Biblical passage, and the rest is history. Ivory Soap went on to become Procter & Gamble’s best-selling product, backed by a national advertising campaign that was the first of its kind anywhere. Ivory’s purity and floating capability became the product’s major selling points, and were touted across America in the weekly newspaper The Independent. Gamble’s other innovations included the development of a telegraphic communication system between the home offices and the company factory two miles away. His helpmate in this enterprise was a young telegraph operator named Thomas Alva Edison. In 1887, with local and national labor unrest threatening the business climate, Gamble took bold steps to address the problem.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J a m e s
With input from William Cooper Procter, he devised a pioneering profit-sharing program for Procter & Gamble factory workers. The plan allowed workers to participate in the management of the company, guaranteed them at least 48 weeks of employment a year, and provided insurance and pension benefits. In 1890, the company established an analytical lab at Ivorydale to study and improve the soap-making process. It was one of the first product research labs in the United States. Gamble gave generously to charities and other causes. He helped found the Cincinnati Young Men’s Christian Association (YMCA) and was one of the original sponsors of the Freedman’s Aid Society, an agency designed to help emancipated slaves adjust to their new status after the Civil War. In 1924, he donated a stadium to the University of Cincinnati and dedicated it to his late grandson, James G. Nippert. Gamble served on the board of directors of the school and was also a trustee of Ohio Wesleyan University. He set up the Christ Hospital In-
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
G a m b l e
stitute of Medical Research in 1927 and served on the board of the Ohio Valley Improvement Association. When he died he was the oldest living member of that association. A longtime advocate of a canal for the Ohio River, Gamble lived to see that project completed in 1929.
Sources of Information Bibliography The National Cyclopaedia of American Biography. New York: James T. White & Co., 1955. Reprint. Volumes 1–50. Ann Arbor, MI: University Microfilms, 1967–1971. The World Almanac Biographical Dictionary. New York: World Almanac, 1990. The World Almanac Book of Who. New York: World Almanac, 1980.
S t u d e n t s
3 0 9
Bill Gates (1955-) Microsoft Corporation
Overview William Henry Gates III became known as “The King of Software” by designing and developing innovative software for the personal computer (PC), helping to make them the universally popular machines they are today. With his high school friend, Paul Allen, Bill Gates co-founded Microsoft Corporation, which he built into a multibillion-dollar company.
Personal Life William Henry Gates III was born October 28, 1955, in Seattle, Washington. His father, William Henry Gates Jr., is a prominent Seattle attorney, and his mother, the late Mary Maxwell, was a school teacher, regent at the University of Washington and chairperson of the United Way International. He married Melinda French Gates, a Microsoft manager, in 1994. Together they have a daughter, Jennifer, born in April of 1996. In his leisure time Gates enjoys reading, playing golf, and bridge. Gates received $2.5 million in advance for his bestseller The Road Ahead. The book covers Gates’s views on the future of the Internet. Gates developed an early interest in computer science in the seventh grade at Seattle’s Lakeside School. There Gates became acquainted with Paul Allen, a teenager with a similar interest in technology who would eventually become one of his business partners. Gates entered Harvard University in 1973 to study pre-law. By 1975, Gates had decided to pursue a career in computer software and dropped out of Harvard.
3 1 0
B i l l
G a t e s
Career Details Gates’s early experiences with computers included debugging (or eliminating errors from) programs for the Computer Center Corporation’s PDP-10, helping computerize electric power grids for the Bonneville Power Administration, and—while still in high school—founding with high school friend, Paul Allen, a firm named Traf-O-Data. Their small company earned them $20,000 in fees for analyzing local traffic patterns. While working with the Computer Center’s PDP-10, Gates was responsible for what was probably the first computer virus, which is a program that copies itself into other programs and ruins data. Discovering that the machine was hooked up to a national network of computers called Cybernet, Gates invaded the network and installed a program on the main computer that sent itself to the rest of the network’s computers: Cybernet crashed. When Gates was found out, he was severely reprimanded, causing him to stay away from computers for his entire junior year at Lakeside. In January of 1975 Allen showed Gates a cover story in the magazine Popular Mechanics about a $350 million microcomputer, the Altair, made by a firm Called MITS in New Mexico. When he saw the story, Gates knew he wanted to be in the forefront of computer software design. “What first got me so interested in software development, and eventually led to the founding of Microsoft, was the excitement I felt as a teenager when I realized that computers gave me feedback and information like a puzzle to be studied and solved,” said Bill Gates (http://www.microsoft.com). Gates and Allen first wrote a BASIC interpreter for the Altair computer. BASIC being a simple, interactive computer language designed in the 1960s and “interpreter” program that executes a source program by reading it one line at a time and performing operations immediately. When Gates dropped out of Harvard in 1975, he ended his academic life and began his career in earnest as a software designer and entrepreneur. At this time, he and Allen became cofounders of Microsoft. They wrote programs for the early Apple and Commodore machines and expanded BASIC to run on microcomputers other than the Altair. Gates’s big opportunity arrived in 1980 when IBM approached him to help with their personal computer project, code named Project Chess. Gates created the Microsoft Disk Operating System, or MS-DOS, and its related applications can run on almost any IBM compatible PC. By the early 1990s, Microsoft had sold more than 100 million copies of MS-DOS, making the operating system the all-time leader in software sales.
Bill Gates.
(Courtesy of Mirosoft Corporation.)
terest of his is biotechnology, because of the breakthroughs that have occurred using this technology. He believes that with the Internet, researchers will be able to communicate faster with each other, thus leading to more cures. Finding the best way to treat or prevent illness is important to Gates. He donated $1.5 million in 1998 to the International Aids Vaccine Scientific Blueprint project in the hope of developing a vaccine for Aids. By the end of 1998, Gates was worth around $39 billion, making him the wealthiest self-made man in the entire world. In 1997, Microsoft recorded a net income of $3.4 billion. This made up 41 percent of the profits of the 10 largest publicly traded software companies. This period saw the roll out of Windows 95 and 98, major updates of the world’s preeminent computer operating system, Windows. In the first three days of its release, Windows 98 sold more than 500,000 copies, matching the sales of Windows 95 in its debut. Gates’s competitive drive and fierce desire to win have made him a powerful force in business, but have also consumed much of his personal life. In the six years between 1978 and 1984 he took a total of only two weeks vacation.
Social and Economic Impact
Gates’s other interests encompass medicine and the arts. In 1989 he started a company called Corbis. Corbis owns the rights to 800,000 digitized images. The images are licensed by newspapers and magazines and published by them either in print or electronic form. Another in-
Accompanying Gates’s competitive drive is a fear of losing. A guiding force in Microsoft’s economics is Gates’s insistence that rather than incurring debt, Microsoft should have on hand enough cash to operate for
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
3 1 1
B i l l
G a t e s
Chronology: Bill Gates 1955: Born. 1972: Established Traft-O-Data firm. 1973: Developed BASIC computer program for MITS Altair. 1975: Cofounded Microsoft with Paul Allen. 1984: Sold 2 million copies of MS-DOS. 1987: Unveiled Windows software. 1989: Founded Corbis Corp. 1995: Offered the Windows 95 update. 1995: Published The Road Ahead. 1998: Becomes the world’s wealthiest self-made man.
a year without any revenues. Business associates have argued the point with him and succeeded to a certain extent in acquiring cash for investment in expansion and development; however, as of January 1997, Microsoft had $8 billion in cash and no long-term debt. In 1987 Gates entered the world of computer-driven multimedia when he began promoting CD-ROM technology. Gates envisioned the expansion of his business by combining PCs with the information reservoirs provided by CD-ROM and was soon marketing a number of multimedia products. In addition, Gates invested $1 billion in the cable company Comcast in 1998 in an effort to persuade the cable industry to assist in developing faster connections using cable modems. That same year, Microsoft formed the Cable Broadband Forum with Intel, TCI, and Time Warner to promote cable modems. The company also invested $425 million to guarantee itself a 20 percent equity stake in the cable access venture, Road Runner. Microsoft employs around 20,000 people in 48 countries. A typical Microsoft employee is very intelligent, but may only have little if any experience—much like Gates’s own background. Gates also invites challenge and confrontation to maintain flexibility. As a student of business history, Gates came to believe that it is paramount for corporate executives to be sensitive to change in their industries and that they remain flexible in order to respond to change when necessary and to seize opportunities. In Hard Drive, James Wallace and Jim Erickson quoted Gates as saying, “I can do anything if I put my mind to it.”
3 1 2
B u s i n e s s
Gates’s strategy has been to leverage Microsoft’s desktop operating system to dominate all software sales—from word processing to spreadsheets. Because most new PCs are equipped with the Windows operating system, Gates can place icons for Microsoft software packages on the desktops when a computer is purchased. Also, Microsoft’s large cash reserves give it an advantage over its competitors. Microsoft can enter a new market or introduce a new package without needing to make a profit from the outset. With these successes have come scrutiny. In April 1995, when Microsoft attempted to make the biggest acquisition in the history of the software industry by purchasing Intuit, a maker of personal-finance software, the antitrust division of the Department of Justice blocked the deal and Microsoft backed off. However, competitors continue to complain that Microsoft uses an existing monopoly to retard the development of new technology. It was the bundling of software, such as Web browsers with Windows 95 and 98 that prompted the Justice Department to file an antitrust lawsuit against the company in 1998. A U.S. Court of Appeals panel ruled that Microsoft was free to bundle its software, but a court date was set for September 1998 to determine the final ruling. Microsoft tripled its sales in the early 1990s with its successful Windows debut. Microsoft Network (MSN) was launched in 1994, Windows 95 was released in August 1995, and Windows 98 made its debut in June 1998. At first, while Microsoft was enjoying these successes, other companies were making inroads in the development of software for the World Wide Web (WWW). But in the fall of 1995, Gates realized that 20 million people were surfing the net without Microsoft software. An aggressive campaign was launched to raise Microsoft’s stake in the Web. Staffing was increased, software was bought, and deals were cut—America Online (AOL) was given an icon in Windows 95 in exchange for using Microsoft’s Internet Explorer as its principal web browser. Windows 97 integrates its Internet Explorer browser and MSN into its Windows operating system, creating an active desktop. In 1998, Microsoft gained a significant hold on Web browsers, the NetAction consumer group reported. It found that four of the largest Internet service providers (ISP) distributed only Microsoft’s Explorer. Microsoft’s influence is spreading to banking, retailing, entertainment, and the news. MSNBC debuted on July 15, 1996. This is a joint venture between Microsoft and General Electric’s NBC, which offers a 24-hour cable-TV-news channel with a companion Web site. Gates envisions the merging of content and software and with this move has positioned Microsoft to be at the forefront. Real estate is another area that Gates became involved with in 1998, when Cliveden PLC of the UK, a luxury hotel and leisure club operator, agreed to be purchased by Destination USA, a group of US investors, of which Gates owns 10 percent.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
B i l l
Gates also envisions Microsoft as being the number one software provider to China, the world’s largest emerging software market. By training technicians at China’s universities and centers, developing Chinese-language Windows operating systems, providing Chinese government ministries with PCs that use Windows and DOS, and by developing with Chinese researchers interactive TV and speech and handwriting recognition programs, Gates is laying the groundwork for enormous Microsoft sales.
G a t e s
Bibliography “Citizen Gates.” Economist , 23 November 1996. “The Future of Microsoft.” Economist, 22 May 1993. Manes, Stephen, and Paul Andrews. Gates. New York: Doubleday, 1993. “Microsoft’s Long March.” Business Week, 24 June 1996. Newsweek, 27 November 1995. The New Yorker,10 January 1994. The New York Times, 3 January 1994. Rebello, Kathy. “Inside Microsoft.” Business Week, 15 July 1996.
Sources of Information
Slater, Robert. Portraits in Silcon. Cambridge MA: MIT Press, 1987.
Contact at: Microsoft Corporation 1 Microsoft Way Redmond, WA 98052 Business Phone: (425)882-8080
B u s i n e s s
L e a d e r
Time, 25 December 1995. Wallace, James, and Jim Erickson. Hard Drive. Wiley, 1992.
P r o f i l e s
f o r
S t u d e n t s
3 1 3
Anne Geddes (1956-) Anne Geddes Studio
Overview The work of Anne Geddes, a photographer known for her engaging pictures of babies, has become phenomenally popular in Australia, New Zealand, the United States, and other parts of the world. Geddes’s pictures of chubby babies in various settings, such as gardens, flowerpots, and cabbages have appeared everywhere: in books, calendars, posters, and greeting cards. She and her husband, who is also her business manager, direct three companies established because of her work and are primarily responsible for the rapid growth of Cedco Publishing, a formerly small firm in San Rafael, California.
Personal Life Born in Queensland, Australia in September of 1956, Geddes established herself as an excellent photographer without any formal training in the craft. She had a varied career as a young woman in such fields as fashion, television, and public relations before seriously embarking on a career in photography. She has lived in Hong Kong; Sydney and Melbourne, Australia; and Auckland, New Zealand. Today she lives with her husband Kel and their two daughters in Parnell, a suburb of Auckland.
Career Details As a young woman, Geddes simply decided she wanted to be a photographer and apprenticed herself to
3 1 4
A n n e
an experienced one. At first working in her native country, especially in Melbourne, she began to develop the distinctive style which would later make her famous. When her husband’s job took him to Hong Kong, she set up her own business and began photographing babies, children, and whole families. She explained in an interview on her own web site that she simply loved babies and children and also wanted to develop a kind of photography that others had not done. She emphasized the importance of creating one’s own style, with simplicity, in photographic images. “I never saw pictures I thought were real so I set out to do what I thought was real,” said Geddes in a 1996 review. Working exclusively with babies pose some challenges. In a story about Geddes on the American Booksellers’ web site, she indicated that it is easy to use newborns up to four weeks for sleeping pictures; by five months, they are awake too much. Infants six to seven months old sit up, smile, and are cooperative; while older ones tend to crawl or walk away. At any rate, she prefers working with all of her subjects in the mornings to avoid naptimes. She will also include several babies in a photo session. One time she assembled and photographed 123 babies, each nestled in a flowerpot. After moving to New Zealand in 1986 with her family, she established her first real studio near Auckland. She was good at promoting her work, setting up exhibitions wherever she could and soon became well known for her photographic specialty. Moving away from strictly portraiture, she produced the “Cabbage Kids” calendar, which was associated with the Child Protection Trust in New Zealand, and found a ready market for these charming pictures. By 1991, her husband had decided to quit his job as a TV program director to run three companies associated with his wife’s photography. The Especially Kids Company is related to her studio work; Next Generation Enterprises produces calendars and datebooks; and Kel Geddes Management does marketing and promotion. Geddes’s popularity attracted the attention of a national magazine, significantly increasing her clientele and her name recognition. She was invited to join the New Zealand Institute of Professional Photographers in 1990 (NZIPP), an organization which presented her with several awards in 1992. Geddes was the first woman to receive an honorary fellowship from NZIPP for her contributions to photography. These included the “Commercial Photographer of the Year” and “Portrait Wedding Photographer of the Year” awards. In 1997, she was asked to give the keynote speech at the convention of the Professional Photographers of America (PPA) in Las Vegas and was awarded a lifetime membership in that organization.
G e d d e s
Chronology: Anne Geddes 1956: Born. 1986: Moved to New Zealand. 1990: Accepted into New Zealand Institute of Professional Photographers (NZIPP). 1991: Founded Next Generation Enterprises Ltd. 1992: Achieved “Master of Photography” designation from NZIPP. 1993: Won six gold and five silver merits at AGFA/NZIPP competition. 1996: Down in the Garden became top seller among giftbooks. 1997: Awarded honorary fellowship for services to photography in New Zealand by NZIPP. 1997: Given lifetime membership in the Professional Photographers of America. 1997: Cedco Publishing reported 250 percent increase in sales since 1996 because of Geddes’s work.
usual costumes for the babies, portraying them as flowers, caterpillars, butterflies, and the like. One particularly memorable fold-out section features baby “earthworms” in a network of underground tunnels. After two and onehalf years of work on the project, Geddes promoted the book in a nine-city tour across America. Three spin-off books, Down in the Garden Book of Days, Down in the Garden Addresses, and Down in the Garden Birthdays soon followed. Geddes has also become involved with Target, a department store in the United States, in a series of commercials based on her work. According to an article on Geddes’s web site, Kel Geddes said that the campaign focused on Target’s own interest in the family; one particular commercial focused on Target’s charitable contributions.
In 1997, Geddes produced Down in the Garden, which quickly became a bestseller. The book is full of humorous gardening advice and pictures of babies in garden settings. Her stylist, Dawn McGowan, created un-
Geddes has completely departed from her earlier interest in portraiture and is focusing her attention on calendars, greeting cards, and books. Geddes’s work has also appeared in a number of well-known publications, such as Time, People, Life, and PPA Magazine. Geddes intends to produce a book of black-and-white photographs, as well as a figurine collection for Enesco
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
3 1 5
A n n e
G e d d e s
(maker of the popular Precious Moments and Cherished Teddies collections).
Social and Economic Impact Since 1996, Cedco Publishing Company, a once rather small firm in California, has substantially grown, largely because it has Geddes as a client. The company reported a 250 percent sales increase between fiscal 1996 and fiscal 1997. Geddes’s first full-length book, Down in the Garden, was the top-selling gift book in the United States in 1996, remaining on the bestseller list for more than a year. Geddes appeared on the Oprah Winfrey show and several other nationally broadcast talk shows to promote the book. By 1998 it was in its 11th printing, and it has been translated into eight languages. Some of the many other Geddes books published by Cedco include Monday’s Child, Shapes, Baby Names Keepsake, Twelve Days of Christmas Book, Woodland Fairy Journal, and several board books for children. In the fall of 1997, Cedco, which also handles licenses for Star Wars, Dilbert, and World Wildlife Fund products, moved to larger offices. According to an article in Publishers Weekly, Paul Kelly, publisher and CEO, asserted that the company, previously known mostly for its calendar collection, expects to be a premium gift illustration book company. The Geddes product line— which includes greeting cards, calendars, stationery, prints, T-shirts, puzzles, and children’s books—appeals to a large variety of people and has literally turned the company around. In 1998, Cedco employed over 50 people. Geddes has contributed to a variety of charities, particularly those involving prevention of child abuse. She was involved in forming the Child Protection Trust in New Zealand, has worked with anti-child abuse causes
3 1 6
B u s i n e s s
in Australia, Britain and the United States, and donates $.75 from each calendar sold to the KEMPE Foundation in Colorado. “I feel that when you are successful you have a responsibility to give back,” Geddes has repeatedly said. She has given more than $350,000 to child abuse prevention since 1992.
Sources of Information Contact at: Anne Geddes Studio 2 York St., Parnell Auckland, New Zealand Business Phone: 64 9 375 2560 URL: http://www.annegeddes.com
Bibliography Anne Geddes Biography. Anne Geddes Studio web site. Available from http://www.annegeddes.com. “Baby Sitters: Anne Geddes Does Wonders with Minor Models and a Fertile Imagination.” People Weekly, 30 September 1996. Brady, Kim. “The Magical World of Anne Geddes.” Anne Geddes Studio web site. Available from http://www.annegeddes.com. Castellitto, Linda M. “You Must Have Been a Beautiful Baby . . . .” American Booksellers Association Bookweb. Available from http://www.2.bookweb.org/reading/features. “Enesco, Anne Geddes Sign Licensing Pact.” HFN, the Weekly Newspaper for the Home Furnishing Network, 20 April 1998. Fuerstein, Adam. “Marking Off Calendar Success One Day at a Time: Licensing Deal with Hot Photographer Puts Cedco on the Fast Track.” San Francisco Business Times, 31 January 1997. Outerbridge, Laura. “Focus on Small Subjects Reaps Huge Reward.” Insight on the News, 26 June 1995. Publishers Weekly, 21 July 1997. Swanezy, Sue. “An Interview with Anne Geddes.” Anne Geddes Studio web site. Available from http://www.annegeddes.com.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
David Geffen Overview David Geffen is widely regarded as the wealthiest man in the U.S. film industry. A self-styled “boy from Brooklyn” who became a millionaire by the age of 25, the ambitious, energetic music and movie executive established a vast Hollywood-based empire. With Steven Spielberg and Jeffrey Katzenberg, he cofounded Dreamworks, ensuring that he will continue to shape the world entertainment landscape into the next century.
(1943-) DreamWorks
Personal Life David Geffen was born February 21, 1943 in Brooklyn, New York. His parents were Soviet Jews who had emigrated to Brooklyn’s thriving Russian community. Geffen’s father, Abraham, was a pattern maker. His mother, Batya, made and sold women’s undergarments out of a tiny shop. Geffen claims to have learned the basic principles of entrepreneurial skills at his mother’s knee. An avid reader, Geffen was impelled toward an entertainment career by Hollywood Rajah, the life story of movie mogul Louis B. Mayer. “I looked at these moguls and the world they created and figured it would be a fun way to make a living,” he told Forbes magazine. Geffen took up music and drama in high school, where he also developed a reputation for his gregarious personality that would benefit him later in life. By 1998, his personal worth was valued at over $1 billion. Geffen, who is single and openly gay, lives a lavish but unpretentious lifestyle out of a New York City apartment and a beach house in Malibu, California. He collects fine art, but his
3 1 7
D a v i d
G e f f e n
knack for spotting new talent and trends in the entertainment industry. Often on the basis of a single demo tape, Geffen signed up some of the hottest rock and roll acts of the early 1970s, including Linda Ronstadt, Jackson Browne, and The Eagles. Once he signed them, Geffen nurtured the relationship he had established with these artists by treating them fairly and giving them artistic and career advice. When he sold Asylum Records in 1971 to Warner Communications, it was one of the largest deals in the music industry up to that point. Geffen stayed on as Asylum Records president through its merger with the Warner label Elektra in 1973. His major coups during this period were in securing the services of Bob Dylan, Joni Mitchell, and The Band for the new Elektra/Asylum label, which became one of Warner Communications’s most profitable subsidiaries. Geffen had become a major player in the recording industry and was on the lookout for new challenges.
David Geffen.
(AP/Wide World Photos, Inc.)
major passion remains his work. He reportedly spends the majority of his day on the telephone, making deals and listening to creative pitches.
Career Details Upon graduating from high school in 1960, Geffen headed west, not to California, but to the University of Texas at Austin. He lasted only one semester until he flunked out with poor grades. He worked at a series of odd jobs in New York before landing a position in the mailroom of the William Morris Talent Agency in 1964. There he earned $55 a week sorting letters, but quickly aspired to greater things. “I’m delivering the mail to people’s offices,” he told The New Yorker “and I hear them on the phone, and I think, I can do that. Talk on the phone. This I can do.” Geffen began developing relationships with musical talent. He was made a junior agent a year and a half after joining William Morris Talent Agency and was soon managing the career of the promising singer/songwriter Laura Nyro. That led to contacts with other up-and-coming stars such as Joni Mitchell, Crosby, Stills, Nash, & Young, and Janis Joplin. In 1969, Geffen made his first million by selling out the music publishing operation he had started with Nyro. In 1970, Geffen cofounded Asylum Records with Elliot Roberts, a friend from his days at William Morris. It was at Asylum Records that Geffen cultivated his
3 1 8
B u s i n e s s
One of those came in 1975, when Warner Communications chief Steve Ross asked Geffen to take on the job of vice chairman of Warner Brothers Pictures. With no experience in the movie business, Geffen leapt at the chance but only had middling success in a year on the job. He felt stifled by the corporate decision-making structure and asked for a less structured portfolio. After a four-year semi-retirement precipitated by a mistaken diagnosis of terminal cancer, Geffen returned to his first love, the music business, in 1980. He founded Geffen Records with capital assistance from Warner and began gobbling up new and established talent. John Lennon, Elton John, and Donna Summer were among the acts who released records on the Geffen imprint. Two years later, again with help from Warner, the Geffen Film Company was launched. The company’s initial release, the 1983 comedy Risky Business was an immense hit with audiences and it helped make a star out of Tom Cruise. During this period, Geffen also expanded his portfolio to include Broadway and off-Broadway theater. He helped bankroll such successful productions as Dreamgirls, Little Shop of Horrors, and the hugely profitable Cats. Geffen re-upped his record deal with Warner in 1984, commanding a 100 percent equity stake in the company. While he still dealt personally with older acts like Neil Young and Cher, Geffen increasingly began to rely on the evaluations of younger executives more in tune with the musical tastes of the 1980s. The policy paid off in the late 1980s with the signing of Guns N’ Roses, a hard rock band from Los Angeles whose first two albums sold more than 14 million copies. In March 1990, at the conclusion of a six-year contract, Geffen sold his recording operation to the Music Corporation of America (MCA) for $6.13 million and $50 million in stock options. Almost immediately, he founded DGC, a new record label he hoped would attract cutting-edge bands. The change in strategy immediately paid dividends as one of DGC’s first acts, Nirvana, scored a breakthrough hit with their 1991 album Nevermind.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
D a v i d
Powered by the explosion of “grunge rock,” DGC continued to be a dominant market force well into the 1990s. Meanwhile, Geffen’s other enterprises were doing almost as well. His movie company produced the hits Interview with the Vampire and Beavis and Butthead Do America. The plays Miss Saigon and M. Butterfly benefited from a New York theater boom. Once again, Geffen sensed a change coming on the entertainment horizon. In 1994, together with director Steven Spielberg and former Disney executive Jeffrey Katzenberg, he cofounded DreamWorks, a movie studio and entertainment production company. The studio’s first release, the epic film Amistad, directed by Spielberg, was released in 1997 to great critical acclaim. With three of the world’s leading lights at the helm, industry analysts were already hailing Dreamworks as a major player in the entertainment industry of the next century.
G e f f e n
Chronology: David Geffen 1943: Born. 1964: Joined William Morris Agency. 1964: Sold music publishing company for $4.5 million. 1970: Founded Asylum Records. 1971: Sold Asylum Records to Warner Communications. 1980: Founded Geffen Records.
Social and Economic Impact
1982: Named Head of Geffen Film Company.
Geffen’s personal worth has been estimated at well over $1 billion. He donates much of his annual salary to the David Geffen Foundation, a charitable organization devoted to his pet causes. These include AIDS research, a crusade he has backed avidly since publicly announcing his homosexuality in the early 1980s. Beyond making financial contributions, Geffen has lobbied Washington tirelessly on behalf of funding AIDS research and gay rights. In 1993, he took out full-page newspaper ads protesting President Clinton’s policy on gays in the military. Acquiring a stake in the DreamWorks studio cost Geffen $33.3 million, the same stake put up by his two partners, Steven Spielberg and Jeffrey Katzenberg. Initially, Geffen was skeptical about getting back into the movie business full-time, but the creative opportunities proved too tempting to resist. “I thought, ‘How can I turn this down?’” Geffen told Los Angeles magazine. “I’m 52 years-old, and if I don’t do this, I will get tired and lazy and bored. But being with these guys will keep me hanging onto a train that is going 300 miles an hour.”
1990: Sold Geffen Records to Music Corporation of America (MCA). 1990: Founded DGC. 1994: Cofounded DreamWorks SKG.
Bibliography Anson, Robert Sam. “Geffen Ungloved,” Los Angeles Magazine, July 1995. “David Geffen.” Current Biography Yearbook. 1992. Friedman, Alan. “Mogul with the Most.” The Financial Times, 22 February 1993. Seabrook, John. “The Many Lives of David Geffen.” The New Yorker, 23 February & 2 March 1998. Sheff, David. “Playboy Interview: David Geffen.” Playboy, September 1994. Who’s Who in America. 1998.
Sources of Information Contact at: DreamWorks 100 Universal City Plz. Universal City, Bungalow 477, CA 91608 Business Phone: (818)733-7000
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
3 1 9
Louis V. Gerstner, Jr. (1942-) International Business Machines Corporation (IBM)
Overview Louis V. Gerstner was appointed chairman of the board and chief executive officer (CEO) of IBM in 1993 and since then has brought the computer giant back from the low point the company found itself in during the early 1990s with debts in the billions of dollars. Since those days, Gerstner has taken many steps to trim the company’s waistline and make it an agile company and an industry leader once again.
Personal Life The second of four boys, Louis V. Gerstner was born on March 1, 1942 and grew up in modest circumstances in Mineola, on New York state’s Long Island. His father, Louis Sr., was a night superintendent at a brewery and his mother worked as a real estate agent. Both parents demanded that their children excel at school and all the children would go on to become high-achievers in their later careers. Gerstner attended Chaminade High School, a competitive Catholic high school run by the Marianist order of the Catholic church. Standards at Chaminade were high for both academic performance and behavior. Although most Chaminade students later attended colleges affiliated with the Catholic church, Gerstner chose to accept a scholarship to attend non-sectarian Dartmouth College. At Dartmouth, he was tapped by the elite senior honor society, the Casque and Gauntlet. After graduating from Dartmouth in 1963 with a bachelor’s degree in engineering, Gerstner immediately enrolled at Harvard
3 2 0
L o u i s
Louis V. Gerstner, Jr.
V .
G e r s t n e r ,
J r .
(AP Photo/Marty Lederhandler.)
Business School. In 1965, Gerstner received his master’s degree in Business Administration from Harvard. Gerstner married Elizabeth Robins Link in 1968 and together they have two children; Louis III and Elizabeth. In his leisure time, Gerstner is a passionate golfer and gardener.
forming Arts, the America-China Society, and the Council on Foreign Relations. He serves as a member of the President’s National Security Telecommunications Advisory Committee and Advisory Committee for Trade Policy and Negotiations. He is also a member of the Board of Regents of the Smithsonian Institution.
Gerstner is a director on the board of Bristol-Myers Squibb Company and has previously served on the boards of American Express Company, AT & T, Caterpillar, Inc. and The New York Times Company. He is a member of The Business Roundtable, serving on its policy committee, and a member of The Business Council. He is also a member of the board of Lincoln Center for the Per-
Gerstner received an honorary doctorate in business administration from Boston College in 1994 and has been awarded honorary doctor of laws degrees from Brown University and Wake Forest University. He has received numerous awards for his work in education, including the Cleveland E. Dodge Medal for Distinguished Service to Education from Teachers College, Columbia University, and the Distinguished Service to Science and Edu-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
3 2 1
L o u i s
V .
G e r s t n e r ,
J r .
vided steadiness and focus . . . and he steered the debtladen company through the collapse of the junk bond market. He never flinched at tough decisions.”
Chronology: Louis V. Gerstner, Jr. 1942: Born. 1963: Graduated from Dartmouth College. 1965: Graduated from Harvard Business School. 1965: Joined McKinsey and Co., Inc. 1970: Became youngest principal at McKinsey and Co., Inc. 1975: Named youngest director at McKinsey and Co., Inc. 1978: Joined American Express Company as an executive vice-president. 1989: Joined RJR Nabisco, Inc. as chairman of the board and CEO. 1993: Joined IBM as chairman of the board and CEO. 1994: Co-authored Reinventing Education: Entrepreneurship in America’s Public Schools.
cation Award from the American Museum of Natural History.
Career Details Gerstner began his career at the management consulting firm of McKinsey and Co., Inc. after graduating from Harvard. During his 13 years at McKinsey, he became the firm’s youngest principal at the age of 28 and one of its youngest directors at the age of 33. Working on McKinsey’s American Express Company (Amex) account, he acted as an adviser to James D. Robinson III, Amex’s new chairman of the board of directors and CEO. In 1978, Gerstner left McKinsey to join Amex as an executive vice president and head of the charge card business. During his ten years with Amex, he became president of the parent company and chairman and CEO of its largest subsidiary, American Express Travel Related Service Company. In 1989, Gerstner joined RJR Nabisco, Inc. as chairman of the board of directors and CEO. At the time, RJR was in disarray following a $25 billion leveraged buyout. In Fortune magazine, Betsy Morris reported, “Gerstner got high marks for crisis management at RJR. He pro-
3 2 2
B u s i n e s s
In 1993, Gerstner was heavily recruited to take over the struggling International Business Machines Corporation. He was reportedly reluctant to take on the job. But, according to Morris, “The recruiters told Gerstner he had a moral imperative to take the job. He must do it for the good of the country. That worked.” When Gerstner arrived at IBM (known in the industry as “Big Blue” because of the color of its logo and its once dominant market share) on April 1, 1993, he confronted a situation in which declining sales of mainframe computers had resulted in almost $16 billion in losses. The company was in the process of halving its work force from 406,000 in 1986 to 219,000 in 1994, and its debt rate was dropping fast. Within 90 days of joining the computer giant, Gerstner made two critical decisions. The first was to keep the company together and to concentrate on mainframes rather than sell off pieces of the company in order to save money. Secondly, he announced that IBM would again become the industry leader in devising the information technology strategies of big companies by building and running their systems. By 1997, Gerstner eliminated more than 35,000 jobs, cut costs company-wide, returned IBM to profitability and slashed its debt. Wall Street and IBM stockholders appreciated his aggressive cost-cutting and layoffs approach as IBM under Gerstner’s guidance has gained more than $40 billion in market value. Gerstner has challenged many long-held IBM traditions. No longer is a career with IBM a guarantee of lifetime employment as was the case in the past. The company, which was founded in 1888 and initially manufactured things such as time clocks and weight scales, had become bogged down in its own lengthy decision-making processes and internal politics and was a victim of its own perfectionism. Morris quoted Gerstner telling some of his technical people; “You don’t launch products here. They escape.” Gerstner demanded performance from his employees, and he got it. IBM’s new 420,000-square-foot headquarters in Armonk, New York reflects Gerstner’s approach. While his previous offices were cloistered at the end of a long corridor of other offices, his new quarters and those of a few top executives occupy the center wing of a sprawling Z-shaped structure. Most of the remaining IBM headquarters staff work in cubicles with expansive amounts of space on either side. Everyone is within range of Gerstner because “I like to walk the floors,” he told The New York Times. The new building also demonstrates the latest in high technology. “I wanted this building to be a living example of the strategy of the company, which is built around network computing,” Gerstner told The New York Times.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
L o u i s
The compensation package he received in 1993 for agreeing to head IBM was enticing. Gerstner reportedly was paid a $1.5 million salary along with a $1.1 million bonus. He also reportedly received options for 500,000 IBM shares plus a payment of $4.2 million to cover the RJR benefits he had left behind. In November of 1997, Gerstner agreed to stay on at IBM for an additional fourand-a-half years. IBM’s board of eight directors reportedly granted him options for an additional two million shares of stock in addition to the 2.4 million shares Gerstner had received since 1993. These shares were worth an estimated $95 million in 1997.
V .
G e r s t n e r ,
J r .
million grant program that enables IBM researchers and classroom teachers to address curriculum and other education issues. Through Reinventing Education, IBM has initiated strategic partnerships with ten states and school districts using IBM technology and technical assistance. Gerstner speaks frequently on the quality of education and many other issues dealing with America’s educational system. In November of 1997, he received a public service award from the Advertising Council, a New York-based partnership of non-profit groups and advertising agencies, and warned that technology would not be the “silver bullet” needed to reform what he termed the “grinding underperformance of U.S. schools.” Gerstner said, “Technology can help, but it cannot replace a great teacher’s ability to inspire.”
Social and Economic Impact By all accounts, Gerstner is intense, brilliant, impatient and intimidating. He drives himself and others ruthlessly and has never tolerated fools or time-wasters. He has been called pompous by many and is reportedly remarkably status-conscious. In response to criticisms of his style, Gerstner told Morris; “I’m intense, competitive, focused, blunt, and tough, yes.”
Sources of Information Contact at: International Business Machines Corporation (IBM) New Orchard Road Armonk, NY 10504 Business Phone: (914)765-7382
It says something, however, about Gerstner’s personal magnetism, integrity and loyalty that a group of very able top assistants has stayed with him from his early days while working at American Express.
Bibliography
As he has moved from position to position at the top of America’s greatest companies, Gerstner has been a lifetime advocate for the importance of quality education. He is co-author of Reinventing Education: Entrepreneurship in America’s Public Schools, which was published by Dutton Publishers in 1994.
“IBM’s Gerstner Says Technology Not A Cure-all.” Reuters New Media, 21 November 1997.
He is vice chairman of the New American Schools Development Corporation and, while he was at RJR Nabisco, served as chairman of Next Century Schools. At IBM, he established Reinventing Education, which is a $35
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
“The Best Managers.” Business Week, 13 January 1997. “Gerstner Agrees to Be Chief of I.B.M. Until at Least 2002.” The New York Times, 22 November 1997.
International Business Machines Corporation. “Louis V. Gerstner Jr.” Executive Profile, August 1997. Kalish, David E. “IBM, Gerstner Make Package Deal.” Press & Sun-Bulletin, 22 November1997. Morris, Betsy. “Big Blue.” Fortune, 14 April 1997. Zuckerman, Laurence. “House That Lou Built Reflects a New I.B.M.” The New York Times, 17 September 1997.
S t u d e n t s
3 2 3
Jean Getty (1882-1976) Getty Oil Company
Overview J. Paul Getty, as he preferred to be known, was an oil producer who defined the way that the oil business would operate. He was educated to understand geological data for finding the location of oil. He took a step away from the veterans of the business in that regard. Yet, Getty became the key player in the risks and high stakes of oil production. He entered a new century as a young man when the world was only beginning to get a hint of the powerful role oil would come to play. His skill in business and economics captured the real fortune, however. Getty bought and sold oil leases. He sought out other companies and pursued controlling interests. Eventually, his Getty Oil Company stood among the largest oil producers and distributors in the world.
Personal Life Jean Paul Getty was born on December 15, 1892, in Minneapolis, Minnesota. He was the only child of George Franklin Getty and Sarah Risher Getty. His father was a lawyer by profession but in 1904 he sought out a new career. George Getty moved his wife and son to the Oklahoma territory and began a life in the oil business, forming the Minnehoma Oil Company. J. Paul Getty attended Harvard Military Academy, and then went on to graduate from Polytechnic High School in 1909. Both of these schools were in Los Angeles. Following high school, as was often the tradition of wealthier families of the time, Getty toured Europe. He attended both the University of Southern California
3 2 4
J e a n
G e t t y
and the University of California at Berkeley. During the summers Getty worked on his father’s oil rigs. In 1912, he enrolled in Oxford University in England and obtained a degree in economics and political science there in 1914. Much of Getty’s adult life was spent in the public eye. His five marriages, all ending in divorce, became legendary. He married Jeannette Dumont in 1923 and the couple had one son, George Franklin II. After his divorce from Dumont, he married Allene Ashby in 1925. Divorced a year later, Getty and his second wife had no children together. Adolphine Helmle married Getty in 1928, and she gave him a second son, Jean Ronald. His marriage to Ann Rork in 1932 produced two more sons, Jean Paul II, and Gordon Peter. Getty had one more son with his fifth wife, Louisa Lynch, whom he married in 1939. He was Timothy Christopher. Getty outlived two of his sons and at the time of his death, he was survived by three sons, sixteen grandchildren, and one great grandchild. His family relationships were difficult and surrounded by tragedy. The most famous incident occurred in 1973 when his grandson, J. Paul Getty III, was kidnapped in Italy. His cut-off ear was sent to Getty as proof that his grandson was being held. Much speculation circulated at the time that his grandson had been a willing accomplice to this, thus furthering the family horror. He was returned soon after Getty paid the ransom. Getty fascinated everyone. His reputation for extravagance and for stinginess never ceased to be subject matter for news stories. Getty once indicated he had three principal grievances about being rich. They were: 1) People beseeched him for money. 2) People overcharged him or expected him to tip generously. 3) He could never be certain that he was liked for being himself. On the other side of the topic, however, Getty was asked when he reached the age of seventy-three, if being rich was worth it. Of himself and his wealthy counterparts, he said, “Though our rewards may be small, we are, if our society is to remain in its present form, essential to the nation’s prosperity. We provide others with incentives which would not exist were we to disappear.” Getty’s interest in art climbed to the level of his interest in oil, beginning in the 1930s. His extensive collection included European paintings, furniture, Greek and Roman sculptures, and other works of art from all over the world. Two of his most prized pieces were the legendary Ardabil Persian Carpet made on the royal looms of Tabriz in 1535, and Rembrandt’s painting, “Martin Looten.” In 1959 Getty purchased an estate outside London, Sutton Place, which was built in the sixteenth century and sat on seven hundred acres. Getty established his offices there as well. He also had a ranch house estate at Malibu, California. His art was kept in these two residences and the home in Malibu became a permanent gallery when he opened one wing as the J. Paul Getty Museum in 1954. In 1969, Getty began construction on a new museum. Renovations and additions in 1998 con-
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Jean Paul Getty.
(Archive Photos, Inc.)
tinued his predominance in the art world, long after his death. Getty provided financially for the museum to continue as the best endowed in the world. Getty died of a heart attack at his English country estate on June 6, 1976, at age eighty-three. He had been in failing health for several months. Getty had hoped to return home to California one more time before his death, but he did not.
Career Details Getty did not begin his career in the oil business officially until he was almost twenty-two, in 1914. However, he believed that his life in the oil business began with his father’s decision to head to Oklahoma when he was twelve. Getty credited his oil empire to his father’s lead, as well as to his own luck and cleverness. In a quote attributed to him in the New York Times following his death, Getty offered an interesting outlook on his success when he said, “In building a large fortune, it pays to be born at the right time . . . If I had been born earlier or later, I would have missed the great business opportunities that existed in World War I and later.” Getty returned to Oklahoma following college and he immediately started buying oil leases in September 1914. His father disagreed with his purchases of what were known as the red-beds, thought to be barren of any oil. Because of this, he bought many leases for very lit-
S t u d e n t s
3 2 5
J e a n
G e t t y
Chronology: Jean Getty 1892: Born. 1904: Moved to Oklahoma territory with parents. 1906: Moved with family to Los Angeles, California. 1909: Graduated from Polytechnic High School, Los Angeles. 1914: Received degree in economics and political science, Oxford University, England. 1914: Arrived in Tulsa, Oklahoma to begin career as oil producer. 1916: Struck first successful oil well. Made first million dollars as wildcatter and lease broker. Retired from oil business. 1919: Returned to oil business. 1930: Became president of George Getty Oil Company after the death of his father. 1949: Secured oil rights in Saudi Arabia’s half of the Neutral Zone. 1957: Identified by Fortune magazine as the richest man in America. 1973: Grandson, J. Paul Getty III, kidnapped. 1976: Died.
tle money. These purchases turned out to be investments that paid off richly. In 1916, after he acquired his first million, Getty left the oil business for over two years and he returned to Los Angeles and lived the life of a playboy. He went back to work in 1919, however. Wealth began accumulating quickly for Getty during the 1920s. His genius became apparent when he began buying and selling oil leases with great energy. By the time his father died in 1930, Getty was worth $3 million, a remarkable amount of money in that first year of the Great Depression. Getty’s father left him $500,000 when he died. The elder Getty was impressed by his son’s business sense but he was shocked by his personal life. His son had already divorced three wives. Getty acquired oil leases and companies avidly during the Depression. He bought the Pacific Western Oil Corporation early in the 1930s. This was a holding company with large oil reserves and a big cash balance. Getty
3 2 6
B u s i n e s s
eventually persuaded his mother that he should gain a controlling interest in the family company, too. In 1949, he continued to negotiate for influence of worldwide oil interests when he secured oil rights in Saudi Arabia’s half of the Neutral Zone, a barren tract of land between Saudi Arabia and Kuwait. Other oil companies were shocked at the concessions he made to King Saud but three years and a $30 million investment later, Getty found his oil deposits. They made him a billionaire, but Getty did not quit. He continued to maneuver patiently and by 1953, he had gained control of the Mission Corporation and its holdings in Tidewater Oil and Skelly Oil Company. These all went toward the building of his empire, atop of which stood his own Getty Oil Company. He maintained an eighty percent interest and control in Getty Oil. In 1967, Getty merged Tidewater and Mission Development into the Getty Oil Company, consolidating assets of more than $3 billion. Getty’s business interests were not only in the oil industry. In 1938, he purchased the Pierre Hotel in New York City and in the late-1950s he built the twenty-two story Getty Building off to the rear of the hotel. This was owned through the Getty Oil Company along with a skyscraper in Los Angeles, an office building in Tulsa, and the Pierre Marques Hotel near Acapulco, Mexico. Getty surprised his friend, Under Secretary of the U.S. Navy, James V. Forrestal, with a telegram the day the United States entered World War II. It read, “I am 49 but in good health, have owned three yachts and am experienced in their care and maintenance. If Navy can use me in any capacity, please advise . . . .” The Navy rejected him. Navy Secretary Forrestal, however, suggested Getty do something with the Spartan Aircraft Company, a Getty holding, in Tulsa. During the war, Spartan manufactured trainers and plane parts under Getty’s personal leadership. After the war, Getty turned the company into a profitable producer of mobile homes. Getty set out to prove that he could keep up with all of the other major oil companies, a feat he accomplished until his death. When he died, he had holdings in oil, an entire fleet of oil tankers, real estate, trailer homes, and hotels. He also had interests in the Minnehoma Insurance Company, the Minnehoma Financial Company and the Spartan Cafeteria Company, all in Oklahoma. Getty not only lived his life and pursued his career but he also spent a great deal of time reflecting on it and writing about it. In books and in several magazine articles for mass-circulation publications such as Playboy, Getty wrote about everything from his and his father’s history in the oil business, to collecting art, to success. His best-known book, My Life and Fortunes, was published in 1963. How to Be Rich, published by Playboy Press in 1965, was composed of a series of articles Getty wrote for, “young executives and college students,” who read Playboy.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J e a n
Social and Economic Impact Getty and his fortune remained a phenomenon to the world during his lifetime. If he had not been smart enough to take risks, and to buy up lands and oil leases nobody else wanted, Getty’s name might never have been known. His driving force behind the oil business for most of the twentieth century affected not only oil but also affected government, politics, and Wall Street. He successfully rode his luck at being “born at the right time,” and never saw an end to the opportunities his good fortune afforded him. His son, George, who died in 1973, said of his father, “Mr. Getty is the smartest businessman I know. Coming to see him is like visiting Mount Olympus.” Getty’s love of art will keep his name recognized for, perhaps, centuries to come. The legacy he left through his Getty Art Collection and Museum has touched the world in a way he was never able to do in his personal life. Money might not have bought happiness for Getty during his life but his keen foresight ensured that it might bring joy to others in theirs. Getty agreed with his son, George, in his estimation of his power. However, Getty said, “I’m a bad boss. A
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
G e t t y
good boss develops successors. There is nobody to step into my shoes.” Getty represents the power and determination of the American dream.
Sources of Information Bibliography Atkinson, Dan. “Demonstration Dynasty.” The Guardian, 4 November, 1995. Byers, Paula K. and Suzanne M. Bourgion, eds. Encyclopedia of World Biography, 2nd ed. Detroit: Gale Research, 1998. Lowenthal, Lauren. “The First Monument to the Bull Market.” Fortune, 24 November, 1997. O’Neill, Anne-Marie. “Can’t Buy Me Love: Getty’s Billions Brought Fine Art but Spawned a Broken Family.” People Weekly, 13 April, 1998. Whitman, Alden. “J. Paul Getty Obituary.” The New York Times, 7 June 1976. Who Was Who In America. Chicago: Marquis Who’s Who, 1981.
S t u d e n t s
3 2 7
Roberto Goizueta (1931-1997) Coca-Cola Company
Overview A refugee from Cuba, Roberto Crispulo Goizueta rose through the ranks to become chairman and chief executive officer of the Coca-Cola Company. Credited with transforming the global soft drink manufacturer into one of America’s most admired companies, he became a legend of business management and a very wealthy man.
Personal Life Roberto Crispulo Goizueta was born on November 18, 1931, in Havana, Cuba, the only son of Crispulo D. and Aida (Cantera) Goizueta. Goizueta’s father worked as an architect and owned a construction and hardware business. His mother was the heir to a large sugar plantation in Cuba which she inherited from her father. Goizueta and his sisters grew up amid aristocratic splendor in the mansion built by his maternal grandfather, Marcello Cantero, who had immigrated to Cuba from Spain during the early 1900s. Goizueta was educated at Belen, a private Jesuit-run school in Havana, before spending a year at the prestigious Cheshire Academy, a prepatory school in New Haven, Connecticut. At the Cheshire Academy, the young Goizueta learned to speak English and did well enough in his studies to earn admittance to Yale University in New Haven in 1948. While at Yale, he participated in the school’s soccer and squash program before graduating with a bachelor’s degree in chemical engineering in 1953. Goizueta married Olga Casteleiro on June 14, 1953 following his graduation from Yale. They had three chil-
3 2 8
R o b e r t o
G o i z u e t a
dren; Roberto S., Olga, M. and Javier C. In 1969, Goizueta and his wife became naturalized United States citizens. Goizueta was a lifelong heavy cigarette smoker and lived only one month after being diagnosed with lung cancer in September of 1997. When he died on October 18, 1997, at the age of 65, Coca-Cola plants and offices were closed worldwide and thousands attended his memorial service in Atlanta. Goizueta served on the board of Suntrust Banks, the Ford Motor Company, Sonat, and Eastman Kodak. He is credited with reviving several important Atlanta civic and cultural institutions. In 1994, Emory University, whose endowments have been enriched with Coca-Cola stock, named its business school in his honor.
Career Details In 1954, Goizueta moved back to his native Cuba after graduating from Yale and began to think about what he wanted to do with his life. His father had offered him a job within his business, but Goizueta wanted to strike out on his own in a different career. He answered a newspaper advertisement that had been placed by an unidentified company for a bilingual chemical engineer or chemist, and was offered the job. Goizueta’s father allowed him to accept the position only if he also worked for the family’s business on Saturdays. The company turned out to be the Coca-Cola Company, and Goizueta accepted the job and its $500 per month salary on July 4, 1954. “My friends thought I was absolutely crazy,” he told Fortune in 1995. But, within a few years, Goizueta had quickly moved up the corporate ladder to claim the position of chief technical director for Coca-Cola’s five bottling plants in Cuba. Goizueta’s career in Cuba seemed secure, but it soon took an unexpected turn. In January of 1959, communist rebel Fidel Castro led a revolution against the Cuban government, and declared himself premier a month later. Castro threatened to take over all private businesses in Cuba and make them the property of the new communist government. In the midst of this political turmoil, Goizueta and his wife sent their three children to stay with relatives in the United States. Three months later, with both Coca-Cola and his parent’s sugar plantation about to be seized by the new Cuban government, Goizueta and his wife made hasty plans for their own escape. They decided to use the vacation they had planned earlier to Miami, Florida, as an excuse to leave the country in August of 1960. They then stayed on in Florida and were reunited with their children. The Cuban government seized all Coca-Cola’s assets in Cuba two months later.
Roberto Goizueto.
(Reuters/HO/Archive Photos.)
ily had only about $40 and 100 shares of Coca-Cola stock with them when they fled. Goizueta never sold these shares and today, according to Fortune, they are worth $3 million. The family took shelter in a small motel room where a curtain divided the parent’s bed from the children’s sleeping area. “You cannot explain that experience to any person,” Goizueta told Fortune in 1995. “That was ten times more important than anything else in my life. All of a sudden you don’t own anything, except the stock . . . It brings a sense of humility. It builds a feeling of not much regard for material things.” Coca-Cola had continued to employ Goizueta and even provided him with an airport hotel in Miami that he used as an office. He soon set to work and began the climb back up the corporate ladder. In 1961, Coca-Cola moved him to Nassau, Bahamas, to work as area chemist for Coca-Cola’s operations in the Caribbean. In 1963, he became the staff assistant to the senior vice-president for Latin America. In 1964, he was transferred to CocaCola’s headquarters in Atlanta, Georgia, where he received a promotion in 1966 to the job of vice-president in charge of technical research and development for all of Coca-Cola. This promotion made him the youngest person to ever reach that position within Coca-Cola.
Like thousands of others, Goizueta left family wealth and security behind when he fled Cuba. The fam-
In Atlanta, Goizueta performed so well that he caught the eye of 91-year-old Robert W. Woodruff, who had been Coca-Cola’s chairman. Although Woodruff had retired in 1965, he still maintained great presence
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
3 2 9
R o b e r t o
G o i z u e t a
this new system, Goizueta became Coca-Cola’s director, company president, and chief operating officer.
Chronology: Roberto Goizueta 1931: Born. 1953: Graduated from Yale University. 1954: Began work for the Coca-Cola Company in Havana,Cuba. 1960: Fled Cuba. 1963: Became staff assistant to senior vice-president for Latin America. 1964: Transferred to Coca-Cola’s headquarters in Atlanta, Georgia. 1966: Named vice-president of technical research and development for Coca-Cola. 1979: Became one of six vice-chairmen in charge of Coca-Cola. 1980: Became Coca-Cola’s director, company president, and chief operating officer. 1981: Became chairman and chief executive at CocaCola. 1982: Introduced Diet Coke. 1996: Helped bring Olympic Games to Atlanta. 1997: Died.
and influence within the company as its major stockholder and chairman of Coca-Cola’s finance committee. Woodruff and Goizueta became close friends and ate lunch regularly together, and Woodruff began to regard Goizueta as his protégé. Largely because of Woodruff’s influence, Goizueta was given a promotion to the post of senior vice-president in the technical division in 1974. A year later, he was promoted again to the post of executive vice-president in the technical division. In the following years, Goizueta worked supervisory responsibilities for the company’s legal, technical, and externalaffairs divisions. When Coca-Cola’s president, J. Lucian Smith, resigned in 1979, Goizueta was chosen as one of six vicechairmen who reported directly to Coca-Cola’s chairman of the board of directors, J. Paul Austin. All of the six were potential successors to the then-current chairman and chief executive. Less than a year later, this system of management came to an end when four of the vicechairmen were made executive vice-presidents. Under
3 3 0
B u s i n e s s
Goizueta immediately began to make changes within the company. Perhaps his biggest change was to allow Coca-Cola bottlers to use high-fructose corn syrup in their soft drinks rather than natural sugar. The price of natural sugar had risen dramatically and corn syrup cost about 40 percent less. This decision led to him being considered for his next promotion. After Coca-Cola’s chairman of the board of directors, J. Paul Austin, retired in 1981, Goizueta became chairman of the board of directors and chief executive. He was termed by Fortune as the “consummate longterm strategist” and from the beginning, he set about building a group of first and second-level executives well prepared to take over the company at his death. When Goizueta took over the helm at Coca-Cola, the company was, according to The New York Times, very conservatively managed and headed for trouble. CocaCola was also experiencing a “flat growth” rate that saw only minimal increases in sales from year to year. Goizueta immediately set out to change this. While some of the lack in sales could be attributed to the slow pace of total soft drink sales during these years, a more important reason was Coca-Cola’s largest and most serious competitor, Pepsi-Cola. Pepsi had been posing a serious threat to Coke for over three decades and while Coca-Cola still outsold Pepsi-Cola at soda fountain outlets, Pepsi had been outselling Coke in foodstore sales since 1979. Within a month of taking over at Coca-Cola, Goizueta called a meeting of the company’s top 50 officers and laid out his new plan, explained in the booklet “Strategy For The 80’s.” The plan’s main point called for the reinvestment of a larger portion of Coca-Cola profits to promote growth. True to his long-term planning reputation, Goizueta said in 1982 that “There will be changes, but slow changes, evolutionary, not revolutionary.” Goizueta’s comment to the Times indicated his vision for Coca-Cola: “We’re going to take risks. What always has been will not necessarily always be forever.” First, Goizueta transformed the company by purchasing under-performing bottlers, replacing their management and increasing volume, and then spinning the companies off to a subsidiary. He also revised Coke’s financial strategy, focusing more attention on stockholder returns. According to Fortune, he borrowed billions to buy independent bottlers around the world and then upgraded their distribution systems. In 1982, Goizueta changed Coca-Cola’s slogan from “Have a Coke and a Smile” to the more aggressive “Coke Is It!” He also diversified Coca-Cola’s holdings in a controversial move when he had Coca-Cola purchase Columbia Pictures for $690 million. Goizueta explained the move into the entertainment business by telling the New
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
R o b e r t o
York Times, “Like soft drinks, entertainment is a business where the social dynamics are on your side.” After the studio produced the blockbusters Tootsie and Ghandi in 1982, no one was doubting his move. Coca-Cola later sold Columbia Pictures for $1.55 billion to the Sony Corporation in the late 1980s. Goizueta’s biggest move was his introduction of Diet Coke. For years, Coca-Cola’s low-calorie product had been Tab, but Goizueta was eager to put the CocaCola name and trademark on a diet soft drink. His decision was a wise one; just a year after its introduction, Diet Coke rose to the top of the diet soft drink market and its sales even eclipsed the popular Diet Pepsi. Diet Coke became the most successful consumer-product launch of the 1980s. In 1983, Goizueta supervised the introduction of Coca-Cola’s popular caffeine-free versions of its soft drinks. There was one significant exception, though, to Goizueta’s long list of successful innovations: New Coke. This smoother and sweeter version of the timetested beverage bombed almost as soon as it was introduced in 1985. But, immediately recognizing a major marketing mistake and moving swiftly to reduce the damage, Coca-Cola executives brought back the old secret formula as “Classic Coke.” After the New Coke debacle, Coca-Cola overhauled its marketing efforts and has gained market share against rival Pepsi ever since.
Reviewing his 16-year-tenure as chairman, Fortune credited Goizueta with reformulating “a business that was actually floundering—organizationally, culturally, and financially.” Goizueta was widely acknowledged to have led what many considered an unexpected company comeback to world preeminence in its field. Between 1981 and 1997, the total value of the company’s stock increased from $4.3 billion to more than $152 billion. Shareholders who bought $1,000 worth of Coke stock when Goizueta was named president would have accumulated more than $65,000 from that investment by the time of his death. Goizueta himself benefited hugely from the increased value of the company’s
L e a d e r
P r o f i l e s
stock. In 1991, he received a bonus of nearly $83 million in stock. During his final year on the job, his compensation included $4.88 million in salary and bonuses, plus options, restricted stock, and performance and incentive units. Forbes tallied Goizueta’s worth at $1.3 billion-making him “the wealthiest Hispanic in the United States,” as stated in Newsweek. Coca-Cola also used its clout in aggressive public relations campaigns. The company spent millions of dollars to ensure the 1996 Olympic games would be hosted in Atlanta. This continued a relationship between Coca-Cola and the Olympic Games that dated back to 1928. Goizueta was considered a courtly gentleman with elegant manners and a cerebral management style. He brought Coca-Cola to the top of the world of soft drink manufacturers and the jobs and economic advantages that this provided are immeasurable. But Goizueta, ever humble, described his life in a 1997 U.S. News & World Report interview as simple: “My story boils down to a single, inspiring reality . . . the reality that a young immigrant could come to this company, be given a chance to work hard and apply his skills, and ultimately earn the opportunity to lead not only a large corporation but an institution that actually symbolizes the very essence of America and American ideals.”
Sources of Information
Social and Economic Contributions
B u s i n e s s
G o i z u e t a
f o r
Bibliography Kaplan, David and Daniel McGinn. “The End of an Era: A Management Legend, Coca-Cola’s Remarkable Roberto Goizueta Succumbs to Lung Cancer.” Newsweek, 27 October, 1997. “Last Thanks from Coke.” Business Week, 3 November, 1997. Morris, Betsy. “The Brand’s the Thing.” Fortune, 4 March, 1996. “One-On-One with Roberto Goizueta.” Goizueta Business Magazine, Spring 1995. Schwartz, Jerry. “Roberto C. Goizueta.” New York Times, 19 October 1997. Sellers, Patricia. “Where Coke Goes From Here.” Fortune, 13 October 1997.
S t u d e n t s
3 3 1
Christina Gold (1947-) Avon Products Inc.
Overview Christina Gold, who once shunned public speaking, eventually overcame her shyness, which allowed her to rise to Avon’s executive suite. After 19 years and about 20 different jobs with Avon Canada, she was named head of that operation in 1989. In 1993 she became the first female president of Avon’s North American operations, where her problem-solving skills and practical ideas turned the ailing cosmetics company around. Known for its long-time commitment to empowering women, many within and outside the company were stunned in 1997 when Gold and two other women were passed over for the chief executive officer (CEO) position. Gold resigned from Avon in February of 1998.
Personal Life Gold was born Christina Engelsman on September 12, 1947, in the Netherlands, the second of three children. Her father was a Dutch former Olympic gymnast and military officer, and her mother was a Canadian nurse and painter. The family immigrated to Montreal, Canada when Gold was four years old. She was shy and overweight as a teenager and worked at the candy counter of a local theater. Her father was a large influence in her life. Gold told Paul D. Wisenthal in Newsday, “He told me, ‘You have to do your very best and be fair with people’.” She credits her love of people to her mother. After graduating from Beaconsfield High School in 1965, Gold attended Carleton University in Ottawa, Canada, where she met her future husband, Peter M.
3 3 2
C h r i s t i n a
Gold. She received her Bachelor of Arts degree in geography in 1969. A longtime Avon employee and executive until 1998, she is also a director of the Conference Board, Inc. of Canada, and a member of the executive committee of the Conference Board in New York. In addition, she serves on the board of directors of the Direct Selling Association and ITT Industries. Gold was named one of Business Week’s Top 25 Managers in 1996 and received the Woman of Distinction award from Birmingham Southern University. Her interests include painting, skiing, reading, and going to the theater. Since 1970 she has lived outside Montreal and maintained a country retreat on the shore of Lac L’Achigan, about 45 miles north of Montreal in the Laurentian Mountains.
G o l d
Chronology: Christina Gold 1947: Born. 1969: Hired as an accountant with Brooke Bond Foods Ltd. 1970: Joined Avon Canada Inc. 1989: Named head of Avon Canada. 1993: Became the first female president of Avon, North America.
Career Details After graduating from college, Gold began her career working at Brooke Bond Foods, Ltd. as an accountant adding up the discount coupons that customers redeemed at the supermarket checkout. She then took a job making $100 a week—a $10 a week increase—at Avon Canada in order to help her husband buy a desk for his newly-opened law office. Because she did a great job in inventory control, she was soon promoted to marketing. Though her future with Avon Canada looked bright, the company absorbed the marketing area into its United States headquarters in New York City. Her husband could not relocate his practice, so Gold took a position in sales promotions, which did not hold the same promise of advancement. The head of human resources, Mun Lavigne, saw Gold’s potential and became her mentor. “I read her performance appraisals,” Lavigne told Claudia H. Deutsch in the New York Times, “and I knew this woman should be moved ahead.” He encouraged her to take a step down in order to get a different kind of management experience and helped her overcome her fear of public speaking. He required her to give a speech to senior management in New York and made her rehearse it repeatedly. Though she was upset with him and threatened to quit, Lavigne kept challenging her. A couple years later, Gold asked to be put in charge of sales in an English-speaking, suburban area of Canada. Lavigne responded by making her head of sales in downtown, French-speaking Montreal. He kept pushing her to improve sales in poor-performing areas, and she continued to show results. “Christina had a feeling for people,” Lavigne told Wisenthal in Newsday. “Although a shy person, she was a great problem-solver, and her co-workers liked and respected her a lot.” Her career kept her moving through the company and, after having held 20 different positions in 19 years, she was named head of Avon Canada in 1989.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
1995: Avon sales soared to $765 million, up from $140 million two years earlier. 1996: Named one of the Top 25 Managers by Business Week. 1998: Resigned from Avon.
While Avon Canada thrived under Gold, its American operations languished, wiping out three presidents in six years, and opening the door to a possible hostile takeover in 1990 by Chartwell Inc. In 1993 Avon chairman James Preston asked Gold to come and revive the ailing operations. This was a critical arm of the Avon empire, as U.S. revenues totaled 35 percent of Avon’s worldwide sales of $4 billion. Without question, the U.S. operations needed a capable leader. But there was so much for Gold to consider. The decision to relocate to Avon’s New York headquarters was not easy. Though she had decided early on not to have any children, she was concerned about what her husband thought about the major change in their lives. “If my husband had said he would not or could not have moved, I wouldn’t have done it,” Gold told Cynthia Rigg in Crain’s New York Business. Though he had an established law practice and had served on their local suburban city council, Gold’s husband told her it would be an adventure. She moved to New York in late 1993 to take the job and he stayed near Montreal until 1995, when he closed his practice to move to New York to attend Columbia University’s graduate law school and explore business opportunities. In her new position, Gold oversaw operations in the United States, Canada, Puerto Rico, and the Dominican Republic. She brought the division’s share up to about 40 percent of Avon’s sales, instituting a number of new ideas to facilitate the improvement. The 400,000-person
S t u d e n t s
3 3 3
C h r i s t i n a
G o l d
sales force at the time was upset about a new direct-mail catalog, which they believed was the first step toward phasing out their jobs. In all, about 25,000 sales representatives quit. Gold raised morale by reintroducing a rewards catalog for sales representatives (the previous president decided to offer rewards in the form of savings bonds only), and opening up communication so that salespeople could learn from one another. In addition, Gold kick-started sales and raised profits, which had fallen about 30 percent. She got rid of slow-selling gift items, expanded the apparel line, and improved the offering of non-cosmetic products, including games, videos, books, and toys. She entered a partnership with Mattel to add Barbie dolls to the catalog; a big coup. She went out into the field to motivate the sales force. In 1997 when she stepped down as president to become executive vice president of global direct selling development, some thought she may be removing herself from the running to become CEO. Gold disagreed, claiming that she was assuming control of an integral area of the firm. It was an unpleasant surprise for many in 1997 when Gold, along with two other top Avon performers, were overlooked for the CEO position. The job went to Charles Perrin, a former CEO of Duracell International, Inc., the battery maker. Gold resigned in February of 1998.
Social and Economic Impact For many women, Avon products symbolize female fraternity and empowerment. Most women are familiar with the colorful, glossy, digest-sized catalogs shimmering with fresh-faced models wearing the low-cost makeup. Women can conveniently shop for gifts such as jewelry, cologne, knick-knacks, toys, and more recently, clothing and lingerie, through the catalog. They have personal contact with a sales representative, typically someone they know in their community, workplace, and church. The sales representative gets a commission from the sale and delivers the items to clients at their home or office. Like Mary Kay and other home product sales outfits, Avon offers people the opportunity to make money while working outside their home or to supplement an existing income, while working at their own pace. Its corporate vision, is “to be the company that best understands and satisfies the product, service, and self-fulfillment needs of women-globally.” Though the politically incorrect term “Avon lady” is not accurate—there are men on the force as well—the company is still known as one of the preeminent organizations that sell cosmetics among female friends, family, neighbors, and coworkers, with 98 percent of its revenue coming from direct sales. Once known as a mainly door-to-door operation serving women who did not work outside the home, Avon used to use the slogan “Avon
3 3 4
B u s i n e s s
calling!” accompanied by a “ding-dong” doorbell noise. However, the company has updated its image and in 1996 sold about 50 percent of its goods in the workplace. Gold helped keep the firm on its feet and made sure that the salespeople were satisfied when she took over as president of Avon’s North American operations in 1993. By boosting morale and incentives and making some savvy marketing decisions, Gold beefed up Avon sales to close to $5 billion which also breathed life into its stock. She recruited new Avon representatives— Avon has a total of almost 2.3 million of them in 131 countries—and added popular products to the established cosmetics lines. Though many were upset that neither she nor two other top players, Andrea Jung and Susan Kropf, were handed the CEO rank in 1997, Avon defended its decision. Avon has had a reputation as being friendly to women in its corporate ranks as well as in its general sales force, unlike many big companies. As of 1997, some Fortune 500 industries did not have any women as corporate officers. Tobacco, securities, rubber and plastic, entertainment, hotels, casinos, and resorts showed no female officers, according to a study by Catalyst in the Washington Post. Retail, on the other hand, boasted 37 percent female officers, with diversified financials at 16 percent and publishing and printing at 15 percent. Cosmetics, soap, and computer software each showed that 11 percent of their officers were female. Overall, only 3 percent of top executives at Fortune 500 companies in 1997 were women. Avon is a leader among these firms. It was one of 250 firms that helped form Catalyst, a nonprofit group devoted to promoting economic opportunity among women. It has a good record of promoting women, with four females in its top slots. By 1996, 44 percent of its senior vice presidents were women and more than 25 percent of all vice presidents were women. However, the seven-man, four-woman board decided that their most prominent women, including Gold, who had spent nearly three decades at the firm were not ready to become CEO.
Sources of Information Contact at: Avon Products Inc. 1251 Avenue of the Americas New York, NY 10020-1196 Business Phone: (212)282-5000 URL: http://www.avon.com
Bibliography Avon, Inc. “The Avon Story.” New York: Avon, Inc., 1998. Available from http://www.avon.com. “Christina A. Gold.” White Plains, NY: ITT Industries. Available from http://www.ittnd.com. Deutsch, Claudia. “Relighting the Fires at Avon Products.” New York Times, 3 April 1994.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
C h r i s t i n a
Dugan, I. Jeanne. “Why Avon Called a ‘Nonwoman.’” Business Week, 16 March 1998. Gault, Ylonda. “Avon is Calling on Its Women to Fill CEO Post: Corporate Culture, Current Chief’s Lead Place Three Females as Top Candidates.”Crain’s New York Business, 2 June 1997.
G o l d
Rigg, Cynthia. “75 Most Influential Women: She Wanted to Buy Her Husband a Desk.” Crain’s New York Business, 25 March 1996, W-32. Wisenthal, Paul D. “Avon Is Her Calling, but Family Comes First.” Newsday, 3 September 1995.
Grimsley, Kristin Downey. “Avon Calling ... On a Man.” Washington Post, 12 December 1997.
Who’s Who in Canadian Business, Toronto: Trans-Canada Press, 1986.
Machan, Dyan. “The Makeover.” Forbes, 2 December 1996.
Who’s Who of American Women, New Providence, NJ: Marquis Who’s Who, 1996.
Morris, Betsy. “If Women Ran the World It Would Look a Lot Like Avon.” Fortune, 21 July 1997.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
3 3 5
Ellen Gordon Tootsie Roll Industries
Overview After working her way up the corporate ladder to president of the company, Ellen Rubin Gordon used modern business strategies to keep Tootsie Roll Industries, Inc. at the top of the international lollipop business, while still maintaining the feel of a “mom and pop” operation.
Personal Life Gordon was born Ellen Rubin, the daughter of William B. and Cele H. Rubin. She attended Vassar College from 1948 to 1950. While at Vassar, she met and married Melvin J. Gordon, who would later become CEO of Tootsie Roll. The two were married on June 25, 1950 and had four daughters—Virginia, Karen, Wendy, and Lisa. After her marriage, Ellen Gordon eventually returned to college. She attended Wellesley and received her B.A. in 1965 from Brandeis University. In 1968, Gordon did graduate work at the Graduate School of Arts and Science at Harvard University, which was the same year she started to work at Tootsie Roll. Gordon has served as President and Board of Director Member of The Committee of 200 and as vice-president and board member of the National Confectioners Association. She has served as director and president of HDI Investment Corporation. She has also sat on the Harvard University Board of Overseers Visiting Committee for the university’s medical and dental schools. She has received a number of honors for her contributions and her work, including the Dean’s Award from the National Candy
3 3 6
E l l e n
G o r d o n
Wholesalers Association in 1978 and the Kettle Award from the candy industry in 1985. When the Gordons are not in Chicago, the headquarters of Tootsie Roll Industries, they reside in Center Harbor, New Hampshire. The Gordons eventually hope to turn the business over to their four daughters and to the company’s senior managers.
Chronology: Ellen Gordon
Career Details
1965: Earned B.A. from Brandeis University.
Ellen Gordon’s involvement with Tootsie Roll began in 1922 when the company went public and Gordon’s mother bought some shares of the company stock; she also encouraged all of her relatives to do the same. By the 1930s, she had a controlling interest in the company because of her stock holdings. In 1968 Ellen Gordon went to work for the candy company, starting in the areas of pension planning and product development. Two years later, she had moved into the position of corporate secretary. From there, her rise in the company was steady: vice-president of product development in 1974; senior vice-president in 1976, and president and chief operating officer in 1978. By all accounts, Tootsie Roll is a sweet place to work . . . literally. Employees are encouraged to sample as many of the confections as they would like during the business day, and Gordon is known as a boss who takes a personal interest in her staff and employees. She greets everyone in the company by name. Tootsie Roll was started in 1896 by an Austrian immigrant, Leo Hirshfield, who brought his secret candy recipe to the United States and began selling his hand-rolled chocolates for a penny a piece in a small store in New York. Hirshfield named his chocolate candies after his daughter, nicknamed Tootsie, who was five years old at the time. By the early 1900s the candy was manufactured at a small candy factory. Its name was changed to Sweets Co. of America in 1917, and at that time, the company began to advertise its confection nationally. The company was registered on the New York Stock Exchange by 1922. The Tootsie Pop—a hard lollipop with a chewy Tootsie Roll center—was invented in 1931, and within seven years, the company had moved its operation to Hoboken, New Jersey and began mass production of the candy using conveyor belts. As demand for the candy increased, the company opened a West Coast division, in Los Angeles in 1949. It wasn’t until 1966 that the company changed its name to Tootsie Roll Industries, Inc. At that time, the corporate headquarters were moved to Chicago, and a manufacturing plant was opened there, too.
1968: Attended Harvard University. 1968: Began working at Tootsie Roll Industries. 1970: Promoted to corporate secretary at Tootsie Roll. 1974: Chosen as vice-president, product development at Tootsie Roll. 1976: Named senior vice-president. 1978: Named Tootsie Roll President and CEO.
with the greeting, “Dear Mr. Gordon.” In 1993, Gordon proved her executive mettle when she won her company $1.4 million in state and local tax exemptions and other incentives, in exchange for keeping the business in Chicago. Although Tootsie Roll was worth an estimated $245 million at the time, Gordon managed to obtain a lucrative incentive and benefits package for her more than 800 employees, capitalizing on the fact that the city had suffered a major economic blow the previous year. That move had cost the Windy City 2000 jobs, and officials were willing to negotiate with Gordon to avoid losing another substantial segment of the workforce. As part of the settlement, Gordon asked for a $1.4 million exemption in both city and state taxes over a 15 year period. In addition, she sought a low-interest loan so the company could buy its manufacturing plant, $200,000 in job training funds and tax breaks on machinery and processing equipment. In addition to staying in Chicago, Gordon agreed to add an additional 200 workers to the company payrolls and begin a loan program for workers who wanted to buy houses. The negotiations between Chicago and the candy company were said to have been peaceful; to keep the deal sweet, Gordon reportedly kept chocolates on the table throughout the transaction.
When Gordon was named company president and CEO in 1968, she was one of the first women in the country to head a publicly-traded company. She would often get letters, she once said, addressed to Mr. Ellen Gordon or
By 1995, company sales topped $300 million, with sales of more than 37 million Tootsie Rolls and 16 million Tootsie Pops each day—making Tootsie Roll the largest lollipop producer in the world. Since then, sales have continued to rise, to meet the demands of a sweet-toothed public as well as international sales. Net sales jumped from $264.4 million in the third quarter of 1996 to $289.1 million for that same period in 1997. Also in 1997, stocks rose
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
3 3 7
E l l e n
G o r d o n
almost 70-percent, and the company had a net profit margin higher than Wrigley’s or Hersheys Foods. Tootsie Roll candies are now sold in Canada and exported to more than 30 other countries, including an office in Hong Kong. In addition to operations in Tennessee, New York, and Massachusetts, the company has a manufacturing plant in Mexico which produces the confection for the Mexican market. Gordon and her husband own nearly half of the firm’s shares, worth approximately $675 million in 1998. In 1996, Tootsie Roll celebrated its 100th birthday with a gala celebration at the corporate headquarters which included a huge party and tour of the manufacturing plant for employees and their families. The mayor of Chicago declared it “Tootsie Roll Day” in the city and the story of the company was broadcast, via satellite, to many national television stations. In all, the company received wellwishes and congratulations from 150 consumers.
Social and Economic Impact There are, in all likelihood, several keys to Gordon’s success with Tootsie Roll. For one thing, she has never tampered with the candy’s original recipe. Tootsie Roll is a quintessential American product, with virtually universal recognition and a rich history. The candy, for instance, was a staple for troops in World War I. Legendary crooner Frank Sinatra always insisted that there be Tootsie Rolls in his hotel room when he traveled. Sammy Davis Jr. would pass the candies out to his audience when he sang, “The Candy Man,” and Jacqueline Kennedy Onassis reputedly kept a bowl of Tootsie Rolls in her office for guests. Gordon has paid attention to her product’s value and has priced traditional Tootsie Rolls in a variety of prices, ranging from a penny, just as it was when Hirshfield sold it a century ago, to 50 cents varieties. The product is sold both in individual pieces and in bags. However, Gordon has not relied solely on Tootsie Rolls for the company’s success. In fact, since the 1970s, she has acquired other promising candy makers. These have included the 1972 acquisition of Mason Division of Candy Corporation of America, which makes Mason Dots and Crow brands. In 1985, Tootsie Roll bought Cellas’ Confection, which makes chocolate-covered cherries. It was the 1988 purchase of Charms Co., a lollipop maker, and the combination of Charms and Tootsie Pops which turned the company into the largest manufacturer of lollipops in the world. In 1993, Tootsie Roll branched out into a somewhat different arena when it bought the chocolate and caramel brands of Warner-Lambert Co., which included Junior Mints, Sugar Daddy, Sugar Babies, and Charleston Chews. So far, the company has concentrated on other candy companies, choosing not to venture into other
3 3 8
B u s i n e s s
products. That is due, in part, to Tootsie Roll’s success, but also, Gordon once admitted, to what she calls “the magic of candy. It always brings smiles when we tell people what we do.” In the end, it is still the Tootsie Rolls and the Tootsie Pops that lead the company sales, even after 100 years. As Gordon said in a 1996 interview with Food Processing, “. . . the chocolaty chews and the hard candy have remained favorites.” As company president, Gordon has been quick to spot trends, pitching the low-fat content of her products to an increasingly calorie-conscious consumer. She was the first in the confection industry to pick up on what would become a huge marketing trend. In addition, Gordon has never been shy about developing new products. She introduced Caramel Apple Pops in 1996—a mix of sour apple hard candy and milk caramel in a flat pop. This has become very successful, as has the company’s redesigned Sugar Blow Pop. Tootsie Roll was the first to use raspberries, previously popular in drinks, in candies. Its Blue Razzberry Tootsie Pop was voted product of the year in the candy industry. In their other lines, Gordon also proved innovative, introducing a tropical mix in its Mason Dots, which include Jungle Punch, Citrus Safari, Wild Peach Berry, Ape Grape, and Orang-aga-tangy. While Tootsie Rolls still come in their traditional wrapper, Gordon has changed a decades-old ad of an owl and a turtle to animated, high-tech creatures asking the traditional question: “How many licks does it take to get to the center of a Tootsie Roll Pop?” This is meant to appeal to a younger, more technologically savvy audience. Gordon’s management style has been cited by industry watchers as very successful. For one thing, she and her husband emphasize cross-training employees, so workers have a broader understanding of the business and a sense of what goes on in all the other departments. The two attempt to discourage office politics and encourage teamwork, always rewarding creativity. Tootsie Rolls have become a part of American life in much the same way as other household brands. While it can be difficult to sort out fact from myth, it may be that fancy is part of the product appeal. In her Food Processing interview, Gordon told this anecdote: “There’s one story about a man who went into a convenience store and held up the cashier. Along with the money, he took a bag of Tootsie Rolls. He left the store and began eating them, dropping the wrappers one by one. The police were able to follow the wrappers and caught up with him.”
Sources of Information Contact at: Tootsie Roll Industries 7401 S. Cicero Ave. Chicago, IL 60629 Business Phone: (773) 838-3400
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
E l l e n
Bibliography “Bigger Breaks for Small Business.” Working Woman, November 1993.
L e a d e r
P r o f i l e s
“On a Roll: Candymakers Ellen and Melvin Gordon, Tootsie Roll’s Leaders Keep Brand On Track in Its 100th Year.” Food Processing, December 1996. Who’s Who of American Women. New Providence, NJ: Marquis Who’s Who, 1996.
Celebrity Register. Detroit: Gale Research, 1990.
B u s i n e s s
G o r d o n
f o r
S t u d e n t s
3 3 9
Berry Gordy, Jr. (1929-) Motown Records
Overview Although Berry Gordy, Jr., directed and produced some films in the 1970s, he is best known for his founding of the legendary Motown Records and his production of recordings by such artists as Diana Ross and the Supremes, the Miracles, Gladys Knight and the Pips, the Jackson Five, Stevie Wonder, and many others.
Personal Life Born on November 28, 1929, in Detroit, Michigan, Berry Gordy, Jr., was the seventh of eight children of Berry Gordy, a plasterer, and Bertha Gordy, an insurance agent. He attended Detroit public school, but dropped out of high school in his junior year to pursue a career in boxing. He was a professional featherweight boxer from 1948 to 1950, and won 12 of the 15 Golden Glove matches that he fought, but was forced to give up boxing when he was drafted into the Army to serve in the Korean War. While in the Army, Gordy earned his general equivalency diploma (GED) to gain the equivalent of a full high school education. Upon returning from the war in 1953, Gordy opened his own record store, Three-D Record Mart, in Detroit. The business failed in 1955, and Gordy went to work for Ford Motor Company as an assembly-line worker. He worked there until 1959, when he left the job to become a full-time songwriter. Gordy married Thelma Coleman in 1953; they were divorced in 1959, and he next married Raynoma Liles. In 1962 his second marriage also ended in divorce, as
3 4 0
B e r r y
G o r d y ,
J r .
did his third marriage to Grace Eton, which lasted from 1990 to 1993. Gordy has seven children: three from his first marriage, two from his second, one with Margaret Norton, and one with Diana Ross. Gordy has received numerous awards, including the Business Achievement Award from the Interracial Council for Business Opportunity (1967), an award for Outstanding Contribution to the Music Industry at the Second Annual American Music Awards (1975), the Whitney Young, Jr., Award from the Los Angeles Urban League (1980), the Black Achievement Award from the Brotherhood Crusade (1988), the National Academy of Recording Arts and Sciences Award (1991), and the Black Radio Exchange Lifetime Achievement Award (1993). In addition, Gordy was named one of the five leading entrepreneurs in the nation by Babson College in 1978 and a Gordon Grand Fellow by Yale University in 1985. He was inducted into the Rock and Roll Hall of Fame in 1988.
Career Details While Gordy was working on the assembly line at Ford, he would write songs in his head to alleviate boredom. Some of his songs were recorded by local artists, but Gordy soon realized that, in order to really make any money in the business, he needed to own the songs. With the encouragement of William “Smokey” Robinson, Jr., Gordy borrowed $700 from his family in 1959 and formed his own recording business. First known as Hitsville, U.S.A. and later as Motown Records, it was located in a row house on Detroit’s West Grand Boulevard. Gordy slept on the second floor and made records on the first. In 1960 Motown released “Shop Around,” written by Smokey Robinson and performed by him and the Miracles. The song sold more than a million copies, earning it a gold record. Gordy’s new company had launched the most successful and influential era in the history of popular music. Motown produced more than 110 number-one hits and countless “top ten” records during the next several years. Many of these songs were performed by artists that Gordy helped bring into the spotlight, including Diana Ross and the Supremes, the Jackson Five, Stevie Wonder, Smokey Robinson and the Miracles, the Four Tops, the Temptations, Gladys Knight and the Pips, and Martha Reeves and the Vandellas. Diana Ross and the Supremes were the most popular Motown group in the 1960s, although the Jackson Five proved to be the most lucrative and Gladys Knight and the Pips won the most Grammy awards.
Berry Gordy, Jr.
(Archive Photos/Lawrence Siskind.)
more than $8.5 million. His second film, also starring Diana Ross, was titled Mahogany; although it was fairly successful at the box office, it did not receive the critical acclaim of the previous film. Gordy continued to produce and direct films throughout the 1970s and 1980s, including Almost Summer (1978), The Wiz (1978), and The Last Dragon (1985). Gordy resigned as president of Motown Records in 1973 and, in 1988, sold the Motown record label to MCA, Inc. for $61 million. He retained control of the music publishing operation and film division, telling Daily Variety that he wanted to “ensure the perpetuation of Motown and its heritage.” Others are helping to preserve this heritage as well. Gordy’s sister, Esther Edwards, had collected Motown memorabilia over the years and donated them all to the Motown Museum, housed in the brick house at 2648 West Grand Boulevard in Detroit where Gordy first began his business. Michael Jackson assisted in the preservation of the items, by donating the $125,000 in profits from his Detroit “Bad” concert in 1990 to the Motown Museum.
In 1970, Gordy moved his company to Hollywood, California. Here he pursued his interest in film producing and directing, and in 1972 produced his first film, Lady Sings the Blues, starring Diana Ross. The movie was nominated for five Academy Awards and grossed
Gordy’s autobiography, To Be Loved: The Music, the Magic, the Memories of Motown, was published by Warner in 1994. In the New York Times Book Review,
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Social and Economic Impact
3 4 1
B e r r y
G o r d y ,
J r .
Chronology: Berry Gordy, Jr.
artists like Elvis Presley and the Beatles, Gordy started a new generation of music. His development of the “Motown sound” forced the music industry to stop publishing separate charts for rhythm and blues music and to incorporate all best-selling songs into one list. According to a reporter for Rolling Stone, “If not for Berry Gordy, Jr., most of Motown’s greatest artists would not have had music careers in the first place . . . and popular music, not to mention the business of popular music, would be very different today.”
1929: Born. 1953: Opened first record store.
Sources of Information
1959: Founded Motown Records. 1960: Released Motown’s first gold record. 1972: Produced first motion picture. 1973: Resigned as president of Motown.
Contact at: Motown Records PO Box 25009 Jackson, WY 83001-7000
1988: Sold Motown to MCA.
Bibliography
1988: Inducted into the Rock and Roll Hall of Fame.
Byers, Paula K. and Suzanne Bourgoin, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1997.
1994: Published autobiography.
Contemporary Authors. Detroit: Gale Research, 1996. Hawkins, Walter L. African American Biographies. Jefferson, NC: McFarland, 1992.
Milo Miles called Gordy “an African American cultural hero of historic stature.” This is partly because Gordy almost single-handedly moved so-called “race music” (the term widely used at the time for recorded music sung by black artists), or “rhythm and blues,” into the mainstream of American popular music. With the introduction of the new sound of Motown, which combined classical African American gospel singing with the new rock and roll sound coming from
3 4 2
B u s i n e s s
Miles, Milo. New York Times Book Review, 27 November 1994. Slonimsky, Nicolas. Baker’s Biographical Dictionary of Musicians, New York: Schirmer Books, 1984. Southern, Eileen. Biographical Dictionary of Afro-American and African Musicians. Westport, CT: Greenwood, 1982. Who’s Who Among African Americans. Detroit: Gale Research, 1996. Who’s Who in America, New Providence, NJ: Marquis Who’s Who, 1998.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Leon Gorman Overview Leon Arthur Gorman is the president of L.L. Bean, Inc., the world’s largest supplier of outdoor clothing and gear. The company’s business was built on catalog sales and was founded by Gorman’s grandfather, L.L. Bean, almost 100 years ago. But, when Gorman took the helm in 1967, L.L. Bean was ailing and not in the same shape it once was. By carefully reorganizing the company and introducing new marketing strategies, Gorman helped L.L. Bean increase annual receipts to nearly $900 million by the mid-1990s.
(1934-) L.L. Bean, Inc.
Personal Life Born on December 20, 1934 in Nashua, New Hampshire, Leon Arthur Gorman was the youngest of three sons born to John T. and Barbara (Bean) Gorman. His father worked as a corporate executive and his mother was the daughter of Leon Leonard Bean (1872-1967). Leon Leonard Bean founded L.L. Bean, Inc. and developed it into a mail-order clothing empire and established a family fortune. Gorman graduated from Bowdoin College in 1956 with a BA and immediately went to work as a merchandise trainee with Filene’s of Boston. While in Boston, he served as a lieutenant in the U. S. Naval Reserve from 1957 to 1960. Later, he was employed by L.L. Bean in its Freeport, Maine corporate headquarters. On February 1, 1964, Leon A. Gorman married nurse Wendy Goad. The couple have three children; Jeffrey, Ainslie, and Jennifer.
3 4 3
L e o n
G o r m a n
Leon Gorman standing next to a rack of Maine hunting boots in L.L. Bean’s Freeport, Maine factory. (AP/Wide World Photos, Inc.) Gorman is a director for the Central Maine Power Co. and is on the board of directors for the Pine Tree Council of the Boy Scouts of America. He is a trustee of the Maine Audubon Society and a member of the Portland (Maine) Chamber of Commerce. In 1992, Gorman won the Entrepreneur of the Year Award given by Ernst & Young.
Career Details Founded in 1912 by Leon Leonard Bean, L.L. Bean, Inc. made money selling the “Maine Hunting Shoe” to
3 4 4
B u s i n e s s
keep the feet of hunters, trappers, and outdoorsmen warm and dry. The business gradually expanded under the watchful eye of its founder to include clothing, hardware, and other outdoor necessities. As Americans sought a good way for the entire family to “get away from it all,” L.L. Bean. Inc.’s profits increased. The company’s strategy was to present a simple, natural, and sentimental view of American life to its customers. The company practiced “old-fashioned” Yankee trapper philosophies which included their 100 percent money-back if not satisfied, guarantee. In 1960 Gorman moved to Freeport to work in the family’s business where he served as the company’s vice
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
L e o n
president and treasurer. When Leon Leonard Bean died in 1967, it seemed the family fortune and the company that he helped create might die with him. According to Sports Illustrated, “(the company) had fallen into a profound snooze.” Of all L.L. Bean’s heirs, only Gorman wanted to take over the family business and he did not have much to work with. Sales had dropped to $3.5 million and profits had dropped to a mere $60,000. Gorman found that employee performance was poor because nearly everyone was of retirement age or older. The products the company sold were outdated and the quality had stumbled. The store in Freeport was shabby and old and needed renovation.
G o r m a n
Chronology: Leon Gorman 1934: Born. 1956: Graduated from Bowdoin College.
L.L. Bean had resisted change while he ran the company, insisting every time a suggestion for improving the store was made, “I’m eating three meals a day now, and I can’t eat four.”
1956: Became merchandise trainee with Filene’s of Boston.
Gorman set out to revamp the company and make it successful once again. He boosted its advertising budget, conducted marketing research, and built up the traditional base in mail-order sales. He spent $12 million on modernization; streamlined the company’s operations; and introduced a good employee retirement policy. He raised benefits and wages to boost morale and attract new employees.
1967: Took over control of L.L. Bean, Inc.
1957: Entered the U. S. Naval Reserve as a lieutenant. 1960: Appointed treasurer of L.L. Bean, Inc. 1985: Boosted L.L. Bean’s sales to the $300 million mark. 1992: Received Entrepreneur of the Year Award from Ernst & Young. 1997: Recognized as a trendsetter by the U.S. Department of Labor for refusing to do work with overseas sweat shops.
Gorman even encouraged employees to test L.L. Bean products themselves while on tax-deductible field trips. Many of L.L. Bean’s employees were avid sportsmen and immediately took Gorman’s advice.
1998: Supervised 180,000 daily catalogue orders and $1 billion in annual sales.
Gorman strove to create a work environment that was as comfortable as the clothing the company sold. Employees were encouraged to give input on how to better run the company and they still received regular and intensive training in L.L. Bean’s corporate culture. The company also started offering after-hour sessions to help the employees with personal development issues and it started a strong tuition reimbursement program.
the nationwide recession and the increases in postage costs, which hurt the mail-order business.
Within one year of implementing both internal and external improvements, annual sales at L.L. Bean, Inc. climbed to $5 million, and by 1975 this figure stood at $30 million. The enormously popular Preppie Handbook by Lisa Birnbach helped to set the tone for 1980s style and it dubbed L.L. Bean a “Mecca” for people who dressed in the “preppie” style. In 1981, sales soared by 42 percent and by 1985, L.L. Bean’s annual catalog and retail store sales passed the $300 million watermark. In addition to the growth in sales, the L.L. Bean store in Freeport, Maine that Gorman had totally renovated upon taking over from his grandfather had grown into the state’s second largest tourist attraction. More than 2 million people visited the store in 1985 and the figure continued to rise, with 3.5 million visitors counted in 1995.
To make up for the slow down in sales, layoffs at L.L. Bean, Inc. followed. This was a serious issue in a company that valued its relationship with its employees. But Gorman went into action quickly, cutting costs in some areas while expanding a few product lines and building up the enormously profitable Japanese market. By the mid-1990s, the company was continuing to grow, though not at the breakneck pace of the 1980s. Gorman has prepared L.L. Bean, Inc. for more modest growth in the late-1990s than what it experienced in the early-1980s. To this end, the company has set up highly favorable severance and early retirement programs for its employees to cut down on payroll costs. Meanwhile, the company’s presence in Japan continues to grow and it regularly receives orders from every corner of the globe.
In the early-1990s, L.L. Bean, Inc.’s sales started to taper off. This was partly attributed to changes in style, though the essence of L.L. Bean’s clothing was that it does not go out of fashion. More likely, the cause was
L. L. Bean, Inc. continues as a family enterprise, even with worldwide operations. It is one of the world’s largest mail-order businesses, with sales approaching $1 billion per year. In 1995, the company reported 4.5 million customer sales annually, and telephone representatives continue to report daily orders of 150,000. By 1998,
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
3 4 5
L e o n
G o r m a n
that figure had grown to 180,000 daily orders and over $1 billion a year in annual sales. Expanding sales continue via the company’s Internet web site, (www.llbean.com) and through expanded outlet stores worldwide. The main store in Freeport, Maine has been open for business 24 hours a day and 365 days a year ever since 1951.
Social and Economic Impact L.L. Bean, Inc. was one of the companies listed on the first United States Department of Labor “Trendsetters Report” in January 1997. The report honors companies who refuse to do business with overseas manufacturers that use “sweatshop” labor. “Sweatshop” labor is defined as utilizing the labor of men, women, and even children who work in highly unpleasant environments for very low wages. Most often this type of labor occurs in underdeveloped countries where labor unions or worker’s rights groups are not active. Gorman’s grandfather, L.L. Bean himself, formed the company on simple and solid values. “In running L.L. Bean on a daily basis,” Gorman said, “we have been most successful by applying what my grandfather called his Golden Rule: Sell good merchandise at a reasonable profit, treat your customers like human beings, and
3 4 6
B u s i n e s s
they’ll always come back for more.” Part of the genius of L.L. Bean, the company and the man, was to make an art of simplicity. This genius has since been carried on profoundly by his grandson.
Sources of Information Contact at: L.L. Bean, Inc. Casco Street Freeport, ME 04033 URL: http://www.llbean.com
Bibliography Geber, Beverly. “Training at L.L. Bean.” Training, October 1988. Gorman, Leon A. L.L. Bean, Inc.: Outdoor Specialties By Mail From Maine. New York: Newcomen Society, 1981. Haapaniemi, Peter. “Up to Speed.” Chief Executive Officer, July/August 1996. Kepos, Paula, ed. International Directory of Company Histories. Detroit: St. James, 1995. Miller, Paul. “A Lean Mean Bean.” Catalog Age, March 1997. Perez, Anabelle. “Trendsetters Lead ‘No Sweat’ Battle.” Sporting Goods Business, 27 January 1997. “Retailing’s Entrepreneurs of the Year.” Chain Store Age Executive, December 1992.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Jay Gould Overview Jay Gould worked his way from poverty to great wealth in nineteenth-century America by exploiting the worst aspects of laissez-faire capitalism, a doctrine that maintains the economy should be allowed to operate with minimal government interference. He came to prominence at a time when the U.S. business community was largely unformed and virtually unregulated. Bold, cunning, and often unethical in his dealings, Gould developed a reputation as one of the most notorious of the socalled “robber barons,” a derogatory term used to describe the businessmen of his era who were prepared to do just about anything in the quest for personal wealth and power.
(1836-1892) Entreprenuer
Personal Life A native of Roxbury, New York, Jay Gould was born May 27, 1836, on a small farm operated by his parents, John Burr Gould and Mary (More) Gould. Life for the family was difficult, and from an early age Gould resisted the idea of following his father into a profession that he found neither lucrative nor attractive. Thus, at the age of 13, he began working at a series of menial jobs, including stints as a clerk and as a blacksmith. Despite his lack of formal education, Gould achieved a measure of success rather quickly by drawing upon his tremendous personal energy and burning desire to make something of himself. By the age of 18, he had become a land surveyor in New York, Ohio, and Michigan, earning a great deal of money in the process
3 4 7
J a y
G o u l d
the firm, he brought in outside investors who bought out Pratt. Gould then began using the company’s money to speculate on other business ventures (an illegal practice), which immediately earned him the distrust of his new partners. When one of them committed suicide in 1859, chaos erupted and Gould used the opportunity to take over the tannery, touching off a battle for control that eventually ended up in court. While the case dragged on, Gould used the delay to strip the company of many of its assets. In 1860 Gould abruptly abandoned the tannery business (by that time, his money was largely invested elsewhere) and began speculating heavily on small railroad companies. He established himself as a major player in 1867 by becoming a director of the Erie Railroad, one of the largest on the East coast. In doing so, he assumed the role of insider rather than just an investor. This made it easier to gain access to information that allowed him to control more and more of the Erie Railroad.
Jay Gould.
At one point, in an effort to stop fellow speculator Cornelius Vanderbilt from taking over the company, Gould illegally issued 100,000 new shares of stock. This diluted Vanderbilt’s stake of ownership in the railroad and made it far more difficult for him to gain a controlling interest. Gould and two of his partners earned millions of dollars as a result of the scheme, but their dubious methods landed them in trouble with the law and forced them to flee to New Jersey with the company records.
(Archive Photos, Inc.)
and spending little. Within three years, he had saved $5000, a rather large sum for such a young man in midnineteenth-century America. Gould then invested in a leather tannery in Pennsylvania, thus launching his career as a speculator. Gould eventually grew tired of the leather business and left Pennsylvania for New York City. There he met Helen Day Miller, the daughter of a local businessman. The couple married on January 22, 1863, when Gould was 27. Despite his growing reputation for ruthlessness in business affairs, Gould was deeply devoted to his wife and the four children they eventually had together. In fact, throughout the rest of his life he rarely took time off from work except to be with his family and occasionally indulge in his hobbies of reading and gardening. Gould was only in his forties when his health began to deteriorate. He died of tuberculosis at the age of 57 on December 2, 1892, leaving behind $77 million (which represented the bulk of his estate) for his eldest son, George, to manage. Within 25 years, however, George Gould had lost all the money in bad business deals.
Career Details Gould’s first foray into the world of business came in 1858, when he was a mere 22 years old. His method of handling the Pennsylvania leather tannery he invested in with his partner, Zadock Pratt, foreshadowed many of his future strategies. Moving quickly to seize control of
3 4 8
B u s i n e s s
Gould then headed to Albany, New York, where he bribed state legislators to pass a law that could be applied retroactively to make what he had done to thwart Vanderbilt’s attempted takeover completely legal. After reaching a financial settlement with Vanderbilt, Gould found himself back at the helm of the Erie Railroad, which by that time was burdened with heavy debts. Once again, Gould resorted to underhanded means to enhance his own position. He bribed politicians to gain favorable treatment and spread false rumors to drive up the price of existing railroad stocks so that he could sell his holdings and post a quick profit. He also persisted in fraudulently issuing new shares of stock. Finally, the board of directors of the Erie Railroad grew weary of Gould’s manipulations and ousted him in 1872. While he left the company in much worse shape that it had been when he first appeared on the scene, he had seen his personal fortune increase substantially. Gould then turned his attention to the rapidly expanding rail systems serving the American West. In 1874, he became a director of the Union Pacific Railroad and soon took control of their operations. By issuing false claims about the company’s prospects, Gould drove up the value of its stock and earned an enormous profit when he sold his shares in 1879. He then used part of the money to buy up a number of other smaller railroad companies operating in the region. As of 1881, his holdings included more rail mileage than anyone else in the United States. By that time, Gould had already begun to expand into other areas. In 1879, for example, he bought the New
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J a y
G o u l d
York World newspaper, which he did not hesitate to use to advance his own agenda. In its pages, he cast doubt first on the financial well-being of the Western Union Telegraph Company and then on the Manhattan Elevated Rail Company. When their stock prices tumbled, Gould acted quickly to acquire both companies. Though he experienced various ups and downs in business throughout the 1880s, including a brush with bankruptcy around the middle of the decade, Gould always managed to rebound and make up for any losses he had sustained. By 1890, he had rebuilt his railroad empire and presided over a number of other firms.
Chronology: Jay Gould 1836: Born. 1858: Invested in leather tannery in northern Pennsylvania. 1860: Began speculating on small railroad companies.
Social and Economic Impact
1867: Became director of Erie Railroad.
The opportunistic tactics and sometimes criminal abuses of Gould and his fellow speculators during the late nineteenth century eventually prompted the United States government to become involved in overseeing and regulating big business. Until then, challenges to such illegal behaviors were rare. The rules of business were mostly self-imposed, and court action was agonizingly slow. In short, it took the blatantly outrageous activities of someone like Gould to underscore the need for government intervention to prevent any one person or groups of people from dominating a particular business and wielding excessive economic power.
1872: Ousted by Erie Railroad board of directors. 1874: Became a director of Union Pacific Railroad. 1879: Purchased New York World newspaper. 1881: Controlled more rail mileage than anyone else in the United States. 1892: Died.
Encyclopedia Americana, International Ed. “Jay Gould.” Fuller, Robert H. Jubilee Jim: The Life of Colonel James Fisk Jr. New York: Macmillan, 1928.
Sources of Information
Johnson, A. and Dumas Malone, eds. Dictionary of American Biography,”Jay Gould.”
Bibliography Ackerman, Kenneth D. The Gold Ring: Jim Fisk, Jay Gould and Black Friday 1869. New York: Dodd Mead and Co., 1988.
Klein, Maury. The Life and Legend of Jay Gould. Baltimore: The John Hopkins University Press, 1984.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
3 4 9
Katherine Graham (1917-) Washington Post
Overview Katherine Myers Graham is world renowned for her leadership, particularly during her 10 year reign as publisher of the internationally acclaimed Washington Post. During that time, Graham won a United States Supreme Court decision to publish excerpts from the United States government’s classified Pentagon study, known as “The Pentagon Papers.” She also supported investigative reporting of Watergate, resulting in the resignation of then U.S. President Richard Nixon.
Personal Life Katherine Myers was born on June 16, 1917 into a prominent New York City multi-millionaire family of Jewish and German decent. Her father, Eugene Meyer, was a banker who purchased the newspaper, Washington Post as a hobby and mother, Agnes (Ernst) Meyer was an author and philanthropist. Katherine’s education included the elite Madiera School in Greenway, Virginia, where she continued her growing interest in journalism by working on the school paper. Her higher education included a year at Vassar College. There she became uninspired with the traditional education she perceived she was getting and transferred to the University of Chicago, considered radical in the 1930s. During summer vacations, Katherine worked at the Post, but after she received her BA in history, she moved to California and worked as a waterfront reporter for the San Francisco News. She covered a strike on the waterfront, which would later serve as a valuable learning experience. A year later, Katherine followed through on her father’s suggestion to return to Washing-
3 5 0
K a t h e r i n e
G r a h a m
ton, where she became part of the editorial staff on the Washington Post. Earning twenty-five dollars a week, she handled the “Letters to the Editor” department and also wrote some 100 editorials. In 1939, Katherine met the love of her life, Philip Graham. Philip, two years Katherine’s junior, was not a stranger to poverty. His family struggled until they achieved a more prosperous lifestyle. His father, Ernest Graham, became a successful dairy farmer, later winning a seat in the Florida state senate. His mother, Florence, was a former school teacher who instilled the love of learning in Philip, encouraging reading throughout his upbringing, while he gained insight into politics from his father. Bright, eager, and with an unaffected, easy-going manner, Philip did extremely well at the University of Florida and went on to Harvard Law School. Because of his intelligence, he was able to become a law clerk, first to Supreme Court justice Stanley Reed and then to Felix Frankfurter. Katherine met him at a party where the aggressive and funny Philip immediately got the attention of the more subdued Katherine. The Dictionary of Literary Biography reported that he told her, “He was going to marry her, and did not want her father’s money.” Instead, they would “. . . move to Florida. He would go into politics and they would be so poor she would have only two dresses.” The couple was married on June 5, 1940. Traditionally, particularly in 1940, a woman was conditioned to believe that her role was to marry, stay at home, and raise a family. Because of Katherine’s wealthy upbringing, she had never learned to cook, but persevered, determined to be a model wife. She willingly deferred to her husband while he encouraged her to retain her job at the Post. At the same time, Katherine’s father, Eugene, encouraged Philip to consider taking over the Washington Post. But when World War II broke out, Philip enlisted. Although Philip’s dream was to have a career in politics, he agreed to his father-in-law’s offer before he went overseas. Meanwhile, Katherine’s father continually ignored his own daughter’s interest in the paper. After distinguishing himself in the US Army, where he was awarded the Legion of Merit for decoding Japanese military strategy and identifying bombing sites in the Philippines, Philip returned as a major. Subsequently, he became publisher of the Washington Post and he and Katherine were given 5000 shares of voting stock by her father, assuring the newspaper would remain in the family. Philip received the majority of the stock, while Katherine received the lesser share. Together the couple had four children, and Katherine settled into the role of wife and mother.
Katherine Graham.
(The Library of Congress.)
Philip’s outstanding successes were shadowed with a worsening illness called manic depression. Katherine valiantly tried to endure her husband’s symptoms over some five years, which included promiscuity, verbal attacks, outrageous behavior, and suicidal thoughts. Medical knowledge, particularly drug therapy, was not as sophisticated then and although the best of care was provided, depressed Philip Graham committed suicide by shooting himself on August 3, 1963. In the aftermath of shock, Katherine Graham was faced with the doubly formidable task of raising four children and taking care of her family business.
Career Details
Opportunities for Philip to capitalize on his leadership skills and enhance his reputation as a dynamic publisher were plenty. He countered the McCarthy era, noted for an unwarranted anti-communism campaign that ultimately persecuted innocent people, with a scathing editorial, likening McCarthy to a Salem witch hunter. This set the tone for a more liberal newspaper and enforced and allied the Democratic Party. Overwhelmingly,
After her husband’s death, Katherine Graham took control of her family’s business and made changes which included replacing the former editor of the Washington Post with innovative Benjamin C. Bradlee. Because of Bradlee’s reputation, new, bold, and enterprising reporting talent was attracted to the paper. This affected news coverage and gained worldwide attention. In 1971, despite a restraining order, Graham pursued publication of the famous “Pentagon Papers,” revealing United States government involvement in the Vietnam War. This resulted not only in attempted governmental censorship, but a US Supreme Court decision upholding the right for the Washington Post to publish the story.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
3 5 1
K a t h e r i n e
G r a h a m
Chronology: Katherine Graham
volvement was revealed culminating in the resignation of President Richard Nixon. In 1973 a Pulitzer Prize for public service was award to the Post. Katherine made the news again in 1975 when she was faced with a 139-day pressmen strike that disabled presses. Determined to keep the press running, she hired non-union pressmen. Graham turned the title of publisher over to her son, Donald, in 1979, but remained an enthusiastic advisor and consultant on all aspects of the corporation. At 81 years of age, she authored a best selling autobiography titled, Personal History.
1917: Born. 1938: Graduated from University of Chicago. 1940: Married Philip Leslie Graham. 1963: Became President of Washington Post Company. 1965: Hired Benjamin C. Bradlee as an editor. 1971: Supported publication of Pentagon papers. 1972: Supported Woodward and Bernstein reporting Watergate. 1973: Became CEO of Washington Post Company. 1973: Washington Post wins Pulitzer Prize for public service in uncovering the Watergate conspiracy. 1975: Took tough position against striking pressmen. 1979: Remained Chairwoman of Board. 1979: Became first woman publisher elected president of American Newspaper Publishers’ Association.
Social and Economic Impact One of the nation’s most powerful women, Katherine Meyer Graham emphasized freedom of the press. To be sure, she is an example of effective leadership, and “one who mastered the intricacies of profit margins, strategic planning,” according to the Dictionary of Literary Biography. The Washington Post promoted the hiring of minorities and women. She stated at a Women in Communications luncheon in 1984 that she recognized that for women to get ahead in business their close relationships sometimes suffered, adding, “But men in power have always been willing to pay this price.” Remaining board chairwoman, Katherine Graham managed to change and grow with each decade while following and achieving her dream of being a journalist.
1989: Fortune magazine named the Post Company one of 20 most profitable corporations. 1998: Authored best-selling autobiography Personal History.
Acquiring more confident public speaking skills, Graham made the decision to change the privately owned family company, forming a public corporation which successfully encouraged and attracted investors. Stock value soared. Another opportunity to report controversy came with the 1972 investigation of a burglary at the Democratic National Committee headquarters in Washington’s Watergate complex by courageous Washington Post reporters Bob Woodward and Carl Bernstein. As the investigative reporting continued, illegal governmental in-
3 5 2
B u s i n e s s
Sources of Information Contact at: Washington Post 2920 R St. NW Washington, DC 20007 Business Phone: (202)234-6000 URL: http://www.washpostco.com
Bibliography Cooper, Gloria. Columbia Journalism Review, May-June 1997. Green, Michelle. “Katharine Graham: A Publishing Power Broker Writes a Very Personal History.” People Weekly, 24 February 1997. Nelton, Sharon. Nation’s Business, June 1997. Platt, Adam. “Special Kay.” Harper’s Bazaar, February 1997. Solomon, Norman. The Progressive, June 1997.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Earl G. Graves Overview Earl Graves has emerged as an authority on black entrepreneurship through his successful magazine, Black Enterprise, and flourishing business ventures. He is one of the most recognized African American publishers in the United States and also has interests in radio stations across the country. Graves, an advocate of the black middle class, is a role model for aspiring African American business owners and future executives because he does more than just write about the American Dream, he is actively pursuing it.
(1935-) Black Enterprise Magazine
Personal Life Earl Gilbert Graves was born in 1935 in New York to Earl Godwin, a shipping clerk, and Winifred Sealy Graves. He graduated from Morgan State College in 1958 with a Bachelor of Arts degree in economics. On July 2, 1960, he married Barbara Kydd, and they eventually had three sons: Earl Gilbert, John, and Michael. All sons are married with children, and are very much involved with the business. Throughout his career, he has served on numerous boards, including Rohm & Hass Corp., New York State Urban Development Corp., Chrysler Corp., AMR Corp. (American Airlines), Federated Department Stores, National Supplier Development Council, Howard University, the Boy Scouts of America, and the Magazine Publishers Association. He also served as chairman of the Black Business Council. He received several awards over the years, among them: National Award of Excellence, U.S. Department
3 5 3
E a r l
G .
G r a v e s
first, in the early sixties, he worked in real estate and as the National Commissioner of Scouting for Boy Scouts of America in New York City. In 1965, Graves became an administrative assistant to Sen. Robert F. Kennedy of New York, a position he held until Kennedy was assassinated in 1968.
Earl G. Graves.
(Courtesy of Black Enterprise Magazine.)
of Commerce, 1972; Black Achiever Award, Talk magazine; Presidential Citation, “One of Ten Most Outstanding Minority Businessmen in the United States,” 1973; “Outstanding Citizen of the Year,” Omega Psi Phi fraternity, 1974; one of 200 “Future Leaders of the Country,” Time; “Outstanding Black Businessman,” National Business League; one of 100 “Influential Blacks,” Ebony; Poynter Fellow, Yale University, 1978; Free Enterprise Award, International Franchise Association, 1991; Entrepreneurial Excellence Award, Dow Jones & Co., 1992; Ernst & Young New York City Entrepreneur of the Year Award, 1995; and numerous awards from the Boy Scouts of America. In addition, he is the recipient of 37 honorary degrees.
Career Details When Graves graduated from Morgan University in 1958, he did a brief tour of duty in the U.S. Army, serving from 1958 through 1960, and reached the rank of captain. It was during this period that America was in social upheaval. In the South, Martin Luther King, Jr. was challenging the racist Jim Crow laws which, essentially, legalized separate-but-equal practices in that section of the country. In the North, a Muslim minister, Malcolm X, was shaking up the status quo, forcing blacks and whites to face up to racist practices. It was against this social backdrop that Graves entered the workforce. At
3 5 4
B u s i n e s s
At that time, Graves decided to strike out on his own, started a management consulting firm and, in 1970, he launched Black Enterprise. Launching a business publication targeted to an African American middle class seemed a bit far-fetched in 1970. Up until then, John Johnson had been the only African American to successfully publish magazines targeted to black readers. Johnson’s Ebony and Jet magazines were widely read throughout the black community; Essence magazine, targeted toward black women, was still an idea yet to be born. Clearly, Graves was pioneering new territory, yet he believed there was a void that needed to be filled. The idea for such a magazine was born from a concept for a newsletter, which Graves thought of while serving on an advisory board for the Small Business Administration. After tossing the idea around with some advertising people, he was convinced that he could turn his idea into a profitable magazine. “Gradually, the magazine took an identity of its own,” Graves said in Black Enterprise. “It gained a head of steam in terms of people being interested and wanting to see this thing make it. The bottom line was, there was a need for Black Enterprise.” There were challenges ahead, and obstacles, and there were many who did not see the need for a such a magazine. “In selling Black Enterprise, we had to take on the naysayers who said, ‘Oh, there are not enough black people out there interested in business, and there are not enough African Americans’,” Graves said in Black Enterprise. One of his biggest challenges was convincing white advertisers to market their products in a publication targeting black consumers. It was fairly easy to get the cigarette, liquor, and some entry-level car brands to advertise in the publication, as they traditionally advertised to black consumers. Attracting computer, credit card, investment banking, and stock brokerage firms to buy advertising in his publication was quite a different story. Many of these companies ignored black consumers or believed they could market to them through mainstream publications. The idea of advertising directly to a specific ethnic group was still very new 30 years ago. “The challenge was and continues to be formidable,” Graves said in Black Enterprise. “The seventies were the halcyon days when people were enormously optimistic about the progress that was going to be made. Now, not only has that progress slowed down, but there is a myriad of people who are trying to turn the clock back on civil rights and on the progress that has been made to the betterment of this entire country.”
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
E a r l
Equally important was the need to establish credibility in the black community as well as with mainstream America. Graves concedes that it was paramount from the start for the magazine to become a financial success. Failure to do so would extinguish any hopes of becoming an authority on black business. Through the years, the magazine has grown and prospered. In 1990, the year of its 20th anniversary, Black Enterprise had a circulation of 230,000 and annual revenues of more than $15 million. Its most enduring institution is the BE 100, which tracks the top black businesses in the United States. Graves believes it is important to monitor the growth and activity of black businesses. Since its inception, the combined revenues of the top 100 black-owned businesses have grown to $11.7 billion, up from less than $500,000 in 22 years. “There was no doubt in mind that the list would grow over the years, and I tell (white) people all the time, if you had gotten out of our way before, we’d be writing a much greater history,” Graves said in Black Enterprise. “Racism has held this country back, not just black people. When you look at the impact we have made in the fields of science, in education and the like, imagine what a great country this could be if we could get the issue of race out of the way.”
Graves has worked hard to overcome racism, refusing to allow bigotry to keep him from realizing his dreams. Once the magazine was up and running, Graves decided to branch out into other business ventures. By the 1980s, he had acquired radio stations in several cities. In 1990 Graves teamed up with former Los Angeles Lakers basketball star Earvin “Magic” Johnson to purchase the rights to Pepsi-Cola’s Washington, D.C. distribution operations. He is chairman and chief executive officer of that enterprise and is also a general partner of Egoli Partners, L.P., which owns the Pepsi-Cola franchise in South Africa. In 1990, the franchise distributed over 4 million cases of Pepsi annually in the District of Columbia and parts of Maryland, and has been estimated to be worth about $60 million. At the time, Graves and Johnson were Pepsi’s largest minority franchisees. At the age of 62, Graves published a how-to-book, his recipe for success entitled, “How To Succeed In Business Without Being White.” In the book, Graves talks about his journey to the top and attempts to dispel myths about racism in the business world. He also gives advice on how to run a successful business. In the book, he notes, “You can never ask a white person to buy your product or service without giving him or her a solid economic reason for doing it. Forget that it’s the right thing to do. In this day and age, doing the right thing doesn’t mean
L e a d e r
P r o f i l e s
G r a v e s
Chronology: Earl G. Graves 1935: Born. 1965: Administrative assistant to Senator Robert F. Kennedy. 1968: Organized Earl Graves Associates. 1970: Published first issue of Black Enterprise. 1990: Acquired co-ownership of Pepsi distributorship. 1994: Named to Federated Department Store’s board. 1995: Named to AMR Corporation’s board. 1997: Authored “How to Succeed In Business Without Being White: Straight Talk in America.” 1998: Appointed his eldest son company president.
a thing in the white business community. It has to make economic sense.”
Social and Economic Impact
B u s i n e s s
G .
f o r
Without doubt, Graves has emerged a vocal critic of practices that create unequal playing fields. Through the magazine, his book, and in public appearances, Graves consistently challenges black and white Americans to rise above small differences to reach their economic potential. Graves was once described by the Reverend Jesse Jackson in the Washington Post as the “primary educator in the country on black business—on trends and opportunities and the like.” In 1990 Graves praised the United Way of Scarsdale, New York, a charitable organization, for moving their kick-off dinner from a club that traditionally excluded blacks from membership. In a speech quoted by James Ferron in the New York Times Graves stated that the United Way’s action sent “an important signal of equal opportunity, that a primary cause of human suffering was the lack of equal economic opportunity in our minority communities.” In the year 2000 Black Enterprise will turn 30 years old, and Graves will be 65 years old. Unlike so many family-owned businesses—black or white—which neglect to groom a successor, Graves has already turned the publishing operations over to the next generation. In 1998, Graves appointed his eldest son, Earl “Butch” Graves, as president of Earl G. Graves Publishing, which publishes the magazine. The younger Graves,
S t u d e n t s
3 5 5
E a r l
G .
G r a v e s
who has a Masters degree in business administration from Harvard University and a Bachelor of Arts degree from Yale University, holds the title of chief operating officer. The youngest son, Michael, is developing as the top executive at the Washington, D.C. Pepsi Cola distributorship. Johnny, the middle son, leads the newest and highly successful division, Black Enterprise Unlimited. As Graves looks out into the future, he admits that the next generation of entrepreneurial leaders will face some tough challenges ahead. Perhaps not unlike what Graves faced when he set out some 30 years ago to create a publication that recognized the black middle class as a consumer and contributor to the nation’s economic fabric. Moreover, Graves did more than talk about how to do it, he actually went out and did it. And in so doing, made others realize that they too could succeed against many odds. “It has never been easy to lead a black-owned company in a business environment hostile to the ambitions of African Americans,” Graves said in a speech about management succession published in Black Enterprise. “It may get much tougher before it gets better for black entrepreneurs as we enter the twenty-first century. That’s why it is critical that we groom worthy successors to the mantle of executive leadership of our enterprises, large and small. If the young lions of Earl G. Graves Ltd. are any indication, the future of black business is in very good hands.”
3 5 6
B u s i n e s s
Sources of Information Contact at: Black Enterprise Magazine 130 Fifth Ave. NY, NY 10011 Business Phone: (212)242-8000
Bibliography Adell, Sandra, ed. Dictionary of Twentieth Century Culture. Detroit: Gale Research, 1996. “Black Enterprise Publisher Earl Graves elected to Board of Directors of AMR Corp. in Ft. Worth.” Jet, 10 April 1995. Contemporary Black Biography. Detroit: Gale Research, 1992 “”Earl G. Graves.” Jet, 13 June 1994. “Earl G. Graves, Founder and Publisher of Black Enterprise Magazine, Provides Encouraging, Concrete Advice in How to Succeed in Business Without Being White: Straight Talk on Making it in America.” Business Wire Online, 31 March 1997. Available from http://www.web2.iac-insite.com/insite. ““Earl Graves Jr. is Named President of Earl G. Graves Publishing Company.” Jet, 16 February 1998. Edmonds, Alfred, Jr. “Earl G. Graves: On the Record.” Black Enterprise, August 1995. Graves, Earl G. “Grooming Worthy Successors.” Black Enterprise, February 1998. Who’s Who among African Americans. Detroit: Gale Research, 1996/1997. Who’s Who in America. Marquis, 1997.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Jerry Greenfield Overview Jerry Greenfield, along with Ben Cohen, founded Ben & Jerry’s ice cream, which features delicious flavors with quirky names like Chubby Hubby; Coffee, Coffee BuzzBuzzBuzz; and Chunky Monkey. The pair are former hippies who started off with a little scoop shop in Vermont, and ended up infiltrating corporate America with their tie-dyed shirts and dedication to improving the world. Thanks to Ben & Jerry’s, people can eat ice cream and be socially responsible at the same time.
(1951-) Ben & Jerry’s Ice Cream
Personal Life Jerry Greenfield was born in 1951 in Brooklyn, New York, the son of a stockbroker. He grew up in Merrick, Long Island, where he met future business partner Ben Cohen in his seventh grade gym class in 1963. The pair became best friends after an incident in which they had trouble running a mile in seven minutes, and Cohen talked back to the gym teacher in protest. They both attended Calhoun High School in Merrick, where they double-dated in Ben’s Chevy Camaro convertible, decked out with an eight-track player. Greenfield was granted a National Merit Scholarship and went off to Oberlin College in Ohio to study medicine. Cohen had a jump on their future industry, having been an ice cream man in high school; Greenfield began scooping cones in the college cafeteria. After graduating from Oberlin, Greenfield applied to a number of medical schools but was turned down. He got a job as a lab technician in New York, where he per-
3 5 7
J e r r y
G r e e n f i e l d
With $8,000 of their own money and $4,000 in loans, Greenfield and Cohen opened Ben & Jerry’s Homemade ice cream parlor in Burlington, Vermont on May 5, 1978. It was housed in a converted corner gas station. Greenfield was responsible for making all of the ice cream, and his flavorful alternatives to the weary standards caused a sensation. Some of his creative flavors include Chunky Monkey (banana with chocolate chunks), Peanut Butter and Jelly, and Heath Bar Crunch. Two of the most popular flavors are Cherry Garcia, created in 1987 and named after Grateful Dead singer Jerry Garcia, and Chocolate Chip Cookie Dough. Ben & Jerry’s lowfat yogurt was test-marketed in 1991 and proved popular, and later, no-fat yogurt was rolled onto the market as well. In the effort, he told the New York Times, Greenfield functioned as the practical, day-to-day manager while Cohen was more of a risk-taker.
Jerry Greenfield wears a t-shirt to promote the Ben & Jerry’s product, “Peace Pop”. (AP/Wide World Photos, Inc.)
formed experiments on the mitochondria in beef hearts. During this time, he and Cohen shared an apartment. When Greenfield’s applications to medical schools were rejected a second time, he moved to North Carolina with his future wife, Elizabeth, and got a job in another lab. In 1976 Greenfield moved back to New York to team up with Cohen in starting a company, which had been their dream. In 1987, Greenfield and Elizabeth were married, and the couple had a son, Tyrone, in late 1988. Greenfield enjoys spending time with family and friends, and his hobbies include basketball and volleyball.
Career Details In 1976 Greenfield and Cohen decided to join forces and open their own business. “We were clearly not succeeding in our chosen fields,” Greenfield explained to Dreifus in the New York Times. “So we started considering different ways to support ourselves. Since we love to eat, we immediately thought of food.” After spending some time in upstate New York, they moved to Vermont in 1977 and invested $5 in a correspondence course in ice-cream making from Pennsylvania State University. They both received an A in the course and immediately started work on opening their own ice cream shop.
3 5 8
B u s i n e s s
The little shop became such a success that in 1980 Ben & Jerry’s rented space in an old mill and began packing pints of their product to sell to stores. In 1981 the company found new, larger headquarters in Burlington, behind a car dealer, and the first franchise dealer opened. That same year, Time magazine praised Ben & Jerry’s as “the best ice cream in the world.” Cohen and Greenfield were ex-hippies who became rich entrepreneurs, but being part of the “establishment” eventually made them uneasy. They considered selling the business, and in 1982, Greenfield moved to Arizona with his wife-to-be, Elizabeth, so that she could finish her doctoral degree. Despite their uneasiness, Cohen kept the cream flowing, opening the first out-of-state Ben & Jerry’s franchise in 1983. By 1984, sales were $4 million, a 120 percent increase from the previous year. In 1985, Greenfield returned to Vermont and became director of mobile promotions, which meant that he and Cohen drove around the country in a “Cowmobile” motor home to hawk their wares. Outside of Cleveland, Ohio, the vehicle caught fire and was demolished, but luckily neither was harmed in the blaze. Greenfield continued his position as Ben & Jerry’s director of mobile promotions when Cow II was unleashed on the nation in 1987. Also that year, President Ronald Reagan named the founders “U.S. Small Business Persons of the Year,” and the next year the company was awarded the Corporate Giving Award from the Council on Economic Priorities. In 1989, Ben & Jerry’s received the Lawrence A. Wien Prize for corporate social responsibility from Columbia University. Greenfield became vice-chair of the board in 1990, and with Cohen, attended various speaking engagements. In 1994, Greenfield and Cohen decided to hire someone else to run their business, launching a nationwide search for a new CEO and soliciting applications from anyone who wished to explain why they deserved the job. The “YO! I Want to Be CEO!” campaign generated much publicity for Ben & Jerry’s, but eventually the winner was selected in 1995 during a search conducted by a professional executive search firm.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J e r r y
G r e e n f i e l d
Social and Economic Impact Greenfield’s career is best characterized by Ben & Jerry’s commitment to social causes and to their workforce. Along with Cohen, Greenfield is active in Businesses for Social Responsibility, and practically wrote the book on how corporations can have a social conscience and still be profitable. In fact, Greenfield and Cohen did write a book: Ben & Jerry’s Double Dip: Lead with Your Values and Make Money, Too. They apparently know what they are talking about, as the company made $170 million in 1997. Even early on when Ben & Jerry’s was a single shop, the founders sponsored free movie festivals in Burlington. In 1985, in order to apply their newfound wealth to their long-held idealist values, Greenfield and Cohen set up the Ben & Jerry’s Foundation. Each year they donate 7.5 percent of the firm’s annual profit to benefit various community projects and nonprofit organizations. Greenfield and Cohen have also established “1 Percent for Peace,” a group that wants to see one percent of the national budget donated to peace-promoting causes. In wanting to make the world a better place, Greenfield and Cohen aspired to treat their workers better than most big companies. Greenfield instituted the Joy Gang, a company activity team that helps make the workday more enjoyable. They sometimes bring in food and a disc jockey to play music, or they may give away prizes. There is no company dress code, and even the top brass show up to meetings in jeans and T-shirts. Communication is stressed, and Greenfield and Cohen are active members in the organization, holding staff meetings regularly to give information and receive it. They also stress the value of social responsibility among members of their work force, encouraging people to be active in their community. Ben & Jerry’s also has a fair compensation package, hoping to lead the way for other corporations to more adequately reward workers. The top-paid employee may make no more than seven times the lowest-paid employee, and their salaries and benefits outpace most in their area. Childcare is readily available not only for employees’ children, but for any child under kindergarten age nearby, and benefits are extended to unmarried partners.
Chronology: Jerry Greenfield 1951: Born. 1963: Met Ben Cohen in gym class. 1977: Took correspondence course in ice cream making. 1978: Opened Ben & Jerry’s Homemade ice cream shop. 1980: Began distribution of ice cream pints to stores. 1981: Opened first Ben & Jerry’s franchise. 1985: Established Ben & Jerry’s Foundation. 1986: Launched “Cowmobile” traveling promotions vehicle. 1987: Introduced Cherry Garcia flavor. 1991: Test-marketed low-fat yogurt. 1994: Hired new Ben & Jerry’s CEO after humorous campaign.
Newsmakers, 1991 cumulation, Detroit: Gale Research, 1991. Rigby, Rhymer. “Tutti-Frutti Capitalists.” Management Today, February 1998, 54. Queenan, Joe. “Saved by the Belle.” Chief Executive, June 1994, 66. Raphel, Murray. “What’s the Scoop on Ben & Jerry.” Direct Marketing, August 1994, 23. Who’s Who in America, 51st edition, 1997. New Providence, NJ: Marquis Who’s Who, 1996. “Hoover’s Company Profiles.” Time Warner’s Pathfinder Network, Time Inc. New Media, 1998. Available from http://www. pathfinder.com/money/hoovers. Review of Ben & Jerry’s Double Dip. SimonSays.com, Simon & Schuster Consumer Group. Available from http:/www.simonsays.com.
Sources of Information
Ben & Jerry’s Ice Cream. “Jerry Greenfield, Co-Founder of Ben & Jerry’s Ice Cream, Frozen Yogurt, Sorbet & New Low Fat Ice Cream.” South Burlington, VT: Ben & Jerry’s Ice Cream, 1997. Available from http://www.benjerry.com.
Contact at: Ben & Jerry’s Ice Cream 30 Community Dr. South Burlington, VT 05403-6828 Business Phone: (802)651-9600
Bibliography Dreifus, Claudia. “Passing the Scoop: Ben & Jerry.” New York Times, 18 December 1994.
“Ben & Jerrry’s: Vermont’s Finest Ice Cream & Frozen Yogurt/Vermont’s Finest Timeline.” Ben & Jerry’s Ice Cream. South Burlington, VT: Ben & Jerry’s Ice Cream, 1997. Available from http://www.benjerry.com.
Laaba, Jennifer J. “Ben & Jerry’s: Caring Capitalism.” Personnel Journal, November 1992.
“All Natural Ben & Jerrry’s: Vermont’s Finest.” Ben & Jerry’s Ice Cream. South Burlington, VT: Ben & Jerry’s Ice Cream, 1997. Available from http://www.benjerry.com.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
3 5 9
Andrew S. Grove (1936-) Intel Corporation
Overview Andy Grove is a cofounder and chairman of the Intel Corporation, which supplies over 90 percent of the microprocessors used in the world’s computers. Under his guidance, the company switched from being a supplier of memory chips in the early 1980s to the powerhouse builder of computer “brains.” This decision made Intel one of the major players in ushering in the Information Age that has transformed almost every field of endeavor around the globe.
Personal Life Andrew S. Grove was born Andras Grof in Budapest, Hungary, on September 2, 1936. His father, George Grof, was a self-taught man who owned a dairy business, and his mother, Maria Grof, was a bookkeeper. As a child, Grove almost died from scarlet fever and suffered a middle-ear infection which damaged his hearing, but he later was able to undergo surgery to correct the problem. In 1944 during World War II, Grove’s father was sent to a labor camp, where he endured typhoid fever and pneumonia, while Grove and his mother obtained false papers and hid with a Christian family. He had to remember a new name (Andras Malesevics) and be careful to give it, instead of his real name, if asked. Grove’s father survived the camp and the family was reunited. However, post-war conditions in Europe were difficult. Communists took over Hungary, food and fuel were scarce, and Grove was under scrutiny for being Jewish and the son of a business owner. But he studied hard,
3 6 0
A n d r e w
S .
G r o v e
determined to make it to college. He joined a youth newspaper at age 14 and was passionate about journalism, but was cast out when one of his relatives was imprisoned without a trial. Grove decided that writing was too subjective and politically tainted, so he switched to the pursuit of science. Grove went on to college and excelled at chemistry. In 1956, however the Soviet Union’s Red Army invaded Budapest to squash a brewing revolution and prop up a puppet regime. Grove, as a university student, was worried that he would be arrested, so he and a friend fled to Austria. Because the Red Army was moving in the same direction, they paid a smuggler to move them along the back trails to the border. Grove later boarded a refugee ship bound for the United States with only $20 in his pocket when he arrived in New York City. He changed his name to Andrew Grove and lived with his aunt and uncle in Brooklyn. Enrolling at the City College of New York, he studied engineering and concentrated on learning English thoroughly—looking up unfamiliar words each night in the dictionary. In 1960, only three years after arriving, he graduated with his bachelor’s degree in chemical engineering. Grove went on to obtain his doctorate in chemical engineering at the University of California at Berkeley, finishing in just three years. Grove met his wife, Eva Kastan (also a Hungarian refugee), during a summer job while they were both waiting tables at a resort. They married on June 8, 1958, and have two daughters. Grove became a naturalized American citizen in 1962. The five-foot, nine-inch Grove pulled through a bout with prostate cancer in 1996 and stays fit. He works out each morning and enjoys biking, skiing, jogging, kayaking, swimming, and dancing; he also has maintained a lifelong passion for opera. In addition to his duties at Intel, he teaches a popular business course at Stanford University and is known for his nervous energy, his embrace of change, and his relentless drive. Grove has received numerous awards throughout his distinguished career. Some of his honors include a medal from the American Institute of Chemists (1960); two medals from the City College of New York (1980 and 1995); the Enterprise Award from the Professional Advertising Association (1987); and the George Washington Award from the American Hungarian Foundation (1990). In addition, in 1993 Grove was given the Achievement Medal from the American Electronics Association and named Executive of the Year by the University of Arizona. He was named a Fellow of the Academy of Arts and Sciences in 1994, and the following year was awarded the Heinz Family Foundation Award for Technology and the Economy and the John von Neumann medal from the American Hungarian Association. Grove was presented the Statesman of the Year Award from Harvard Business School in 1996, and he was Time’s Man of the Year and CEO Magazine’s CEO of the Year in 1997.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Andrew Grove showing off an Intel microprocessor. (AP/Wide World Photos, Inc.)
Career Details Because Grove had been such a standout while pursuing his Ph.D., he had many job offers upon his graduation in 1963. He was hired at Fairchild Camera and Instrument, which would later be renamed Fairchild Semiconductor, becoming assistant director of research and development in 1967. There he worked with Robert Noyce, the inventor of the integrated circuit, which was a breakthrough in computer chip design. Gordon E. Moore was also on board as head of research and development. At Fairchild, Grove developed a reputation for his research and technical work as well as for his busi-
S t u d e n t s
3 6 1
A n d r e w
S .
G r o v e
Chronology: Andrew S. Grove 1936: Born. 1956: Moved to United States from Hungary. 1963: Received Ph.D. in chemical engineering. 1967: Became assistant director of research and development at Fairchild Semiconductor. 1968: Helped found Intel. 1983: Wrote High Output Management. 1987: Became CEO of Intel. 1997: Became chairman and CEO of Intel. 1997: Named Time’s Man of the Year. 1998: Stepped down as CEO of Intel; continued as chairman.
ness skills of communication, organization, and leadership. It was no surprise when he was asked to be part of an exciting new venture. In July of 1968, Grove, Noyce, and Moore founded Intel Corporation (short for integrated electronics) in California’s Silicon Valley. The company produced memory chips for the large mainframe computers of the time. Grove was originally supposed to head up the engineering department, but the small size of the firm made it necessary for him to act as chief of operations as well. Workers often were at the office until midnight, and Grove became known as a demanding, tough-minded manager. Before surgery corrected his hearing problem, Grove was also known to claim that his hearing aid failed him when he disliked the subject of conversation, or he would take the device off altogether to indicate that he was no longer in the mood to listen. He did not tolerate tardiness, and once sent out a notice that employees were required to work a full day on Christmas Eve. The “Scrooge memo,” as it was known, caused hostility among workers, one of whom, according to Current Biography, returned the memo with the comment, “May you eat yellow snow.” Grove was promoted to company president in 1979. Despite his often gruff tactics, employees respected Grove for his intellect, problem-solving skills, and encouragement. He rejected special treatment, working in the same eight-by-nine foot cubicle as the rest of the com-
3 6 2
B u s i n e s s
pany, taking lunch in the cafeteria, and insisting that people call him Andy. Newsmakers quoted a summary of his management style given in the Los Angeles Times: “He combines a professorial love of intellectual exchange with an insistence on discipline and a take-no-prisoners attitude toward the competition.” In addition to over 40 technical papers and a 1967 textbook called Physics and the Technology of Semiconductor Devices, Grove in 1983 wrote High Output Management, which has been translated into 11 languages. He also wrote Only the Paranoid Survive in 1996. Grove’s contribution to the growth of personal computers is enormous. Originally Intel had focused on producing memory chips, but in the early 1980s began to suffer at the hands of Japanese competitors. In 1985 Grove proposed that Intel switch its core business to microprocessors and laid off 6,000 workers. It began making faster and faster chips; after the early and slow 286 chips, it made the 386, 386SX, 486, and then the Pentium and Pentium II chips that were accepted as the industry standard. The motto “Intel Inside” was noted on all computers with its chips. Grove was named chief executive officer (CEO) of Intel in 1987 and became chairman and CEO in 1997. Just over a decade after Grove became CEO, company revenue had increased tenfold, to more than $25 billion. In May of 1998, he stepped down as CEO, and company president Craig Barrett took the position, but Grove remained chairman. He told Business Week, “I was ready to change my routine. I’ll have more leeway in my schedule.” He said he planned to investigate the future of networking, as well as the use of computers in business, marketing, information, and entertainment.
Social and Economic Impact Almost every aspect of modern life has been affected by computer technology. Grove, as head of the Intel Corporation, has played an integral role in the resulting massive restructuring of the global economy and daily lives in both developed and developing countries. In the 1960s, some businesses used mainframe computers, which often took up an entire room or more and operated on binary punch cards. Today, it is difficult to find any business that does not use at least one computer for some aspect of its operations, and it is impossible to precisely measure the immense boost in productivity. What used to take days, such as searching for a piece of research, may now take minutes or seconds. Home lives are different as well. In 1997 Grove estimated in Billboard, “There are probably 40 to 60 million multimedia computers in people’s homes. And the number is growing by 25 to 30 million a year.” And the technology has become more and more powerful. In the early days of personal computers in the 1980s, simple orange or blue text on a dark screen was an amazing feat. During the
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
A n d r e w
next decade, machines were able to store and play music, three-dimensional graphics, and fully animated video images. Running the World Wide Web and e-mail are now a must, and even home users can print out photoquality full-color pictures. Alhough in 1994 Intel came under heavy fire when it was discovered that its Pentium chip had a bug that caused some mathematical calculations to fail, the company quickly recovered. In March of 1997 David S. Jackson reported in Time, “Intel CEO Andy Grove is already providing computer chips for 80 percent of the world’s personal computers. This year he’s aiming for the remaining 20 percent.” Sure enough, by April of 1998, U.S. News & World Report claimed that Intel was up to 90 percent of the market share. However, Intel began suffering some setbacks. In June of 1998 the FTC began pursuing possible antitrust actions against Intel, while software giant Microsoft was in the midst of a government antitrust suit as well. Since the two firms so thoroughly dominated the computer industry, they were often referred to collectively as “Wintel.” Also, due to a lag in demand for new computers, Intel announced in April of 1998 that it would lay off 3,000 workers. If Grove’s tough-as-nails attitude remains a part of Intel, it will be prepared to weather the economic and legal bumps and remain a major force in the technological and economic future, continuing to produce the tiny chips that change lives.
S .
G r o v e
Bibliography “Andy Grove Talks about His New Learning Curve.” Business Week, 13 April 1998. Contemporary Authors. Detroit: Gale Research, 1990. “A Conversation with Andy Grove.” Fortune, 7 July 1997. Croal, N’Gai and Jennifer Tanaka. “Intel Stays Inside.” Newsweek, 6 April 1998. Current Biography. New York: H. W. Wilson Co., 1998. Grove, Andy. “Only the Productive Survive.” Forbes ASAP, 3 December 1997. Holstein, William J. “Just Because He’s Paranoid.” U.S. News & World Report, 6 April 1998. “Inside Andy Grove.” Chief Executive, July 1997. Intel Corporation. “Andy’s Biography.” Santa Clara, CA: Intel Corporation, 1998. Available from http://www.andygrove.com. Jackson, David S. “Andrew Grove, President and CEO, Intel: Santa Clara.” Time, 3 March 1997. “The Microchip Is the Dynamo of a New Economy . . . Driven by the Passion of Intel’s Andrew Grove.” Time, 29 December 1997. Newsmakers, 1995 Cumulation. Detroit: Gale Research, 1995. “Q and A: Intel’s Andy Grove.” Billboard, 21 June 1997. Schlender, Brent. “A Conversation with the Lords of Wintel.” Fortune, 8 July 1996. “A Survivor’s Tale: Budapest: December 1956.” Time, 29 December 1997.
Sources of Information
Who’s Who in America. New Providence, NJ: Marquis Who’s Who, 1997.
Contact at: Intel Corporation 2200 Mission College Blvd. Santa Clara, CA 95052-8119 Business Phone: (408)765-8080 URL: http://www.intel.com
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
3 6 3
Daniel Guggenheim (1856-1930) American Smelting and Refining Company
Overview Daniel Guggenheim was one of America’s most powerful business leaders as well as one of the richest men in the world. His fame and fortune stemmed from the key role he played in exploiting the earth’s mineral resources and making them available almost exclusively to the United States. Although he subscribed to a style of management that was often harsh and dictatorial, he attempted to make up for his shortcomings as an employer by becoming a philanthropist (a person who donates money or other kinds of support to be used toward humanitarian efforts). He used his great wealth to endow universities, museums, opera houses, and other institutions for the betterment of mankind.
Personal Life Daniel Guggenheim was born in Philadelphia, Pennsylvania, on July 9, 1856. He was the second of seven sons born to Meyer and Barbara (Myers) Guggenheim, who had emigrated to the United States from Switzerland in 1847. Meyer Guggenheim had an enormous influence on his son’s life. Poor but ambitious, he worked a number of different jobs to support his growing family and was a peddler at the time of Daniel’s birth. Around that same time, however, he also went into business manufacturing stove polish and coffee essence. He ended up making a sizable sum of money selling his products on a wholesale basis to the Union army during the Civil War. He subsequently established an importing firm and eventually moved into the metallurgy industry.
3 6 4
D a n i e l
G u g g e n h e i m
Daniel Guggenheim shared his father’s business instincts and desire to succeed. Although small in stature (he stood barely five feet tall), he was gifted with boundless energy and self-assurance. Quick, bold, and adventurous, he had the demeanor of an European aristocrat and ordered others around like the general of an army. Guggenheim was totally convinced of the supreme value of material progress and desired above all to prosper financially. Thus, throughout his entire adult life, he worked a 16-hour day in pursuit of his goal. On July 22, 1884, at the age of 28, Guggenheim married Florence Schloss. He and his wife were the parents of three Children: Robert, Harry, and Gladys. Described as stern and puritanical, he was nevertheless a devoted family man. It was not until he had reached his mid-sixties that Guggenheim revealed any interest in the welfare of his fellow human beings. As a young man, he had never displayed a particularly spiritual or liberal bent. Yet as he neared the end of his days, he launched a number of philanthropic efforts, eventually gaining the admiration and respect of those who appreciated his willingness to share his wealth. He died at the age of 74 on September 28, 1930, at his home in Port Washington, New York.
Career Details
Daniel Guggenheim.
(AP/Wide World Photos, Inc.)
Changes in the law eventually made it more lucrative to operate mines outside the United States. Guggenheim responded by expanding his business empire into Mexico and South America. To thwart the competition
posed by other mining interests he encountered both at home and abroad, he sometimes resorted to various underhanded means, including bribery and dirty tricks. (At one point during his career, it was said that he had the power to topple governments by sending a single telegram.) In Alaska, for instance, Guggenheim mined copper and coal on land owned by the federal government that was not really his to exploit. Gifford Pinchot, the first head of the U.S. Forestry Service, denounced the practice and argued that the territory’s mineral wealth was the property of all Americans, not just one family. Using his influence on members of the Senate, Guggenheim was able to undermine Pinchot’s efforts and make sure his words fell on deaf ears. As a result of this kind of clever maneuvering, Guggenheim essentially controlled the mining and mineral refinement industries throughout most of North America by 1898. Three years later, the family’s Philadelphia Smelting and Refining Company merged with nearly a dozen other mining and/or smelting companies to become the American Smelting and Refining Company (ASARCO). At the head of the new firm were Daniel Guggenheim and his brothers. Guggenheim’s desire to make ASARCO the world leader in the mining industry was insatiable. He opened mining facilities on virtually every continent, ruling his company like a dictator and extracting vast quantities of mineral wealth from the ground as quickly and as cheaply as he could. He had no interest in the ecological impact of his operations, nor did he give a thought to the issue of workers’ rights.
B u s i n e s s
S t u d e n t s
Guggenheim was not a particularly good student at the Catholic high school he attended in Philadelphia. Even then, he was focused on practical matters and making money. At the age of 17, he was sent by his father to Switzerland to perfect his German language skills, study the manufacture of Swiss lace and the embroidery business, and serve as a buyer and representative for the family’s importing business. Guggenheim remained in Europe for 11 years before being called back home after his father’s modest investment in two lead and tin mines in Colorado resulted in a financial bonanza that demanded the entire family’s involvement. The mines had turned out to be enormously productive, so in 1888 the Guggenheims founded the Philadelphia Smelting and Refining Company and built their first smelting plant. Located in Pueblo, Colorado, it processed a number of different metals, including silver. In 1889 all of the Guggenheims moved from Philadelphia to New York City, which was considered the financial capital of the nation. From 1890 to 1923 Daniel (the most energetic and ambitious of the Guggenheim brothers) presided over the family business. The smelting operation alone soon posted profits of about $1 million a year thanks in part to a rise in the value of silver and Guggenheim’s ability to secure cheap railroad freight rates.
L e a d e r
P r o f i l e s
f o r
3 6 5
D a n i e l
G u g g e n h e i m
become the largest industry of its type in the world. But the profits he extracted from that venture might be considered obscene by current standards, and his careless treatment of his workers and the environment would prompt many people to condemn him outright.
Chronology: Daniel Guggenheim 1856: Born. 1873: Studied and worked in Europe. 1884: Returned to America. 1888: Founded Philadelphia Smelting and Refining Company. 1901: Merged with several other firms to create American Smelting and Refining Company. 1922: Left American Smelting and Refining Company. 1924: Daniel and Florence Guggenheim Foundation chartered. 1929: Awarded the first aeronautical medal by the American Society of Mechanical Engineers. 1930: Died.
Guggenheim’s plan, in short, was to own and manage the entire mining industry, from the digging of ore to the selling of the final product. By 1915, he had nearly achieved his goal—he controlled almost 80 percent of the world’s known silver, copper, and lead and had the power to dictate their prices on the open market. Guggenheim’s profiteering became so outrageous during World War I that President Woodrow Wilson and the U.S. Congress had to step in and fix the price of copper. Also of concern to some people were the increasing number of strikes against Guggenheim’s operations. Working conditions had come to resemble slave labor, fostering discontent among miners. In 1922 a rebellion within ASARCO saw Guggenheim come under fire for his ruthless and autocratic management style. Even members of his family abandoned him, worried that his misdeeds reflected poorly on all of them. Thus began the effort to redeem the Guggenheim name through philanthropy.
In 1924 the Daniel and Florence Guggenheim Foundation was chartered for “the promotion, through charitable and benevolent activities, of the well-being of mankind throughout the world.” Although the foundation existed only until 1929, it endowed many universities throughout the country and the world with aeronautical schools. (Guggenheim’s son, Harry, harbored a particular interest in high-altitude flight and rocketry and persuaded his father to support aeronautical-related endeavors.) Other monetary gifts were presented to European flying clubs, the Chilean government for aeronautical promotion, and the Library of Congress for the establishment of an aeronautical library. Guggenheim also donated money to the arts, some of which financed New York City’s Guggenheim Museum and free opera concerts in Central Park. In addition, he contributed funds for additions to Mount Sinai Hospital in New York City and the New York Botanical Gardens. By year-end 1929, the fund exhausted its funds and terminated activities. During this year, the American Society of Mechanical Engineers awarded Guggenheim its first aeronautical medal for recognition of his generosity to the advancement of aviation. In 1930 New York University bestowed him an honorary degree of Doctor of Commercial Science.
Sources of Information Contact at: American Smelting and Refining Company
Bibliography Davis, John. The Guggenheims: An American Epic. New York: William Morrow, 1978. Lomask, Milton. Seed Money: The Guggenheim Story. New York: Farrar, Straus, & Giroux, 1964. Marcosson, Isaac. Metal Magic: The Story of American Smelting. New York: Farrar, Straus, & Giroux, 1949.
Social and Economic Impact Guggenheim spent most of his life doing whatever was necessary to acquire vast sums of money and forge a dynasty that would outlive him. ASARCO did indeed
3 6 6
As he neared the end of his life, however, Guggenheim actively sought to repair his family’s tarnished reputation by sharing his immense wealth with others. It was a strategy that worked in the short term as well as in the long term, for his generosity helped temper the public’s view of the Guggenheims while providing for generations to come.
B u s i n e s s
O’Connor, Harvey. The Guggenheims: The Making of an American Dynasty. New York: Covici, Friede, 1937. Williams, Gatenby. William Guggenheim. New York: Lone Voice Pub., 1934.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J.C. Hall Overview In 1910, at the age of 18, Hallmark cards founder Joyce Clyde “J.C.” Hall packed two shoeboxes with imported postcards and headed to Kansas City, Missouri. He soon realized the increasing popularity of quality greeting cards and with brother Rollie began selling Christmas cards with the Hallmark label in 1913. Hall Brothers Inc., as Hallmark was known until 1954, was born.
(1891-1982) Hallmark Cards, Inc.
J.C. Hall personally selected and approved thousands of greeting card messages as Hallmark President. Reportedly, his personal favorite was, “I’d like to be the kind of friend that you’ve been to me.” Always emphasizing quality, Hall also picked the timeless Hallmark slogan, “When you care enough to send the very best,” back in the 1940s.
Personal Life Joyce Hall was born in David City, Nebraska in 1891. His father, George Nelson Hall, a preacher, died when Joyce was a child. Joyce and his siblings—older brothers Rollie and William and younger sister Marie— were raised by their semi-invalid mother, Nancy Dudley Houston Hall. As a child, Joyce was given the middle name Clyde by his oldest brother Rollie. He was usually referred to as J.C. after that. Even his Hallmark employees affectionately called him “Mr. J.C.” J.C. Hall began working at the age of eight. A year later, his entrepreneurial talent already showed. At age nine, he sold cosmetics and soap door to door for the Cal-
3 6 7
J . C .
H a l l
Hall’s death in 1982, he had 11 grandchildren and many great-grandchildren.
Career Details By 1913, J.C. Hall’s mail-order postcard business had expanded tremendously. He hired an employee and Rollie, Marie, and his mother moved to Kansas City to join him. Rollie and J.C. went into another partnership and formed Hall Brothers. In addition to the postcards, they began selling greeting cards with their own label in 1913. Rollie and J.C. expanded their product line to include Valentine greetings that year.
Joyce C. Hall.
Topping off a year of financial difficulties, a 1915 fire destroyed the Hall Brothers’ inventory, plunging them $17,000 into debt. Then, J.C. and Rollie’s largest supplier of greeting cards terminated their contract just before the 1915 Christmas season, forcing the brothers to supply their own greeting cards. This led them to realize that there was demand in the market for more attractive, personalized greeting cards than those sold at that time. In 1916, J.C. and Rollie purchased a small engraving plant. They began manufacturing greeting cards using the name Hall Brothers Paper Craft and a new American industry was born: sentiment for all occasions.
(Archive Photos, Inc.)
ifornia Perfume Company, which later became Avon. When J.C. was ten, the family moved to Norfolk, Nebraska, where Rollie and William had purchased a book and stationery store. In 1905, a Chicago salesman visited the store and convinced J.C. that there was money to be made in wholesaling postcards. J.C. invested his life savings of about $170 and convinced Rollie and William each to match his investment. Together, they founded the Norfolk Post Card Company, importing foreign postcards and selling them to local merchants. During school, J.C. was the company’s order filler and card sorter. During vacations, however, he took to the streets, selling both the postcards and a sawdust sweeping compound. J.C. Hall’s hard work earned him over $3500 by the time he graduated from high school in 1910. He had decided by then that Norfolk, Nebraska was too small for the enterprise he was building. He packed his postcards into two shoeboxes—hence the name of Hallmark’s Shoebox Greetings line—and headed to Kansas City. He continued selling postcards while he studied commercial law and penmanship at night at Spalding’s Commercial College. There, J.C. adopted the school director’s slogan, “Time is money—save time,” as his own, with a meaningful change: “Time is everything—save time.” Joyce Clyde Hall married family friend Elizabeth Ann Didlay on March 25, 1922. They had three children, Elizabeth Ann, Barbara Louise, and Donald Joyce. Hall was a member of the Christian Church and a regular churchgoer. He was a Mason (Shriner) and a Rotarian. J.C.’s wife, Elizabeth, died in 1976. At the time of Joyce
3 6 8
B u s i n e s s
The business grew and received an immense boost from World War I, as Midwesterners eagerly purchased “missing you” and other greetings to send to soldiers overseas. By the early twenties, Hall Brothers had opened specialty shops in Kansas City and Chicago and William had rejoined J.C. and Rollie in the family business. In 1922, Hall Brothers had a staff of 120 people and created their first logo, a torch and shield. That year, they marketed Rollie’s idea of using fancy wrappings on gift packages. This brought the growing business many large retail store accounts, paving the way for their next expansion. Hall Brothers Company Inc. was incorporated on June 11, 1923 as the company entered the national greeting card market. Just one year later, the company’s “Hallmark” cards had earned it a national reputation. As Hall Brothers continued its national expansion, Joyce Hall continued his visionary product development. After noticing that store greeting card displays were often concealed, unattractive, and unorganized, J.C. developed the Eye-Vision Display Fixture. This greeting card display, which has evolved into today’s greeting card display with some modification, boosted sales of the Hallmark cards tremendously. J.C. began a large advertising campaign in the late 1920s, heightening name recognition and sales of Hallmark cards. The Great Depression impacted Hall Brothers in much the same way as it did the rest of the country. Despite dwindling sales and fiscal losses, J.C. resisted implementing layoffs. Twice, Hall Brothers’ employees voted for 10 percent pay cuts to avoid any layoffs. As eco-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J . C .
nomic prosperity returned to the company and the country, full pay was restored. Even during the Depression, J.C. Hall worked to expand Hall Brothers’ market and product line. In 1931, Hall Brothers developed an international foothold, taking on the W.E. Coutts Company of Canada as an affiliate. Hall Brothers was the first company to use Walt Disney characters on greeting cards. In 1933, the Three Little Pigs were featured on a Hallmark card. Growth continued through the 1930s. In 1936, Hall Brothers moved to a six-story, million-dollar facility in Kansas City and by 1937, the firm employed over 950 workers. Determined to continue his company’s constant expansion, Joyce Hall pioneered using radio advertising for greeting cards. At his insistence, Hall Brothers sponsored many radio programs, beginning with the popular “Tony Won’s Radio Show” in the late 1930s. The firm sponsored many other programs, including the wartime “Meet Your Navy,” the Hallmark Radio Readers’ Digest, and the Hallmark Playhouse. In the 1940s, World War II provided additional growth for the Hall Brothers, as a nationwide market rushed to purchase greeting cards for soldiers. Hall Brothers even avoided rationing, to which other businesses were subject during the war. J.C. Hall convinced the government that greeting cards boosted national morale. It was during the 1940s that Joyce Hall selected “When you care enough to send the very best” as the company’s slogan and the five-point crown replaced the torch and shield as Hallmark’s emblem. Hall Brothers introduced the first greeting cards featuring the work of Grandma Moses and Norman Rockwell, as well as Christmas cards with the works of great masters. The 1940s included further expansion as three new facilities opened and the company approached production of one million greeting cards per day. By 1953, Hall Brothers Inc. had long surpassed the one million card milestone, producing about 1.5 million greeting cards daily. It added Sir Winston Churchill to its list of notable card artists and employed about 150 inhouse artists. In 1954, Hall Brothers Company, Inc. became Hallmark Cards, Inc. During the 1950s, J.C. Hall implemented many programs to benefit his predominantly female workforce, including low-cost nutritional lunches, group discussions, income tax counseling, and a personal service department. Hall also extended his media advertising during the 1950s, building on the success of his radio advertising. In 1951, the first Hallmark Hall of Fame television program was aired, Ahmal and the Night Visitors. It was the first network-sponsored program to be aired in color and the first opera written for television.
H a l l
Chronology: J. C. Hall 1891: Born. 1905: Invested in Norfolk Postcard Company. 1910: Moved to Kansas City, Missouri to find bigger postcard market. 1913: Distributed greeting cards with the Hall Bros. Logo. 1930: Developed Joyce Hall Prosperity Plan during the Great Depression. 1931: Expanded business to international markets. 1954: Hall Bros. became Hallmark. 1965: Opened Halls, Hallmark’s first showcase store in New York City. 1966: Retired and stepped down as Hallmark President and Chief Executive Officer. 1982: Died.
began buying Hallmark stock. Joyce Hall never offered shares of Hallmark for sale to the public, despite advice to do so. Today, Hallmark is one of the largest privately held companies in the United States. The employee profit-sharing plan owns one-third of Hallmark; that share was estimated in 1993 to be worth $960 million. Joyce Hall’s career began to wind down in the 1960s, but not before he tackled another enterprise—retail stores. As Hallmark’s product line expanded, Hall decided to open a showcase store in New York City. The Halls store opening on Country Club Plaza in 1965. Joyce Clyde Hall retired as Hallmark president and chief executive in 1966, turning the reins over to his only son, Donald Joyce Hall. He retained his position as Chairman of the Board until his death in 1982.
In 1956, J.C. Hall came up with yet another visionary idea—an employee profit-sharing plan. To encourage Hallmarkers (as company employees are called) in their work, he decided to share the company’s profits with them. The profit sharing plan has been a significant employee benefit ever since. In the late 1970s, the plan
In retirement, Hall stayed active. His prize project was the Crown Center Redevelopment Corporation, a $400-million city-within-a-city development in Kansas City. J.C. Hall hoped the project would add economic and cultural energy to the downtown area. It was yet another successful enterprise for J.C. Hall and the ground was broken on the project in 1968. The office complex opened in 1971 and the retail shops opened in 1973. On a more tragic note, the Crown Center Redevelopment Corporation owns the Kansas City Hyatt Regency Hotel,
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
3 6 9
J . C .
H a l l
the site of one of the worst American construction failures. Two suspended walkways in the hotel fell in July 1981, killing 114 and injuring nearly 200 others. At the time of Joyce Clyde Hall’s death in October, 1982, Hallmark was the country’s leading greeting card producer, manufacturing over 8 million greeting cards per day and amassing sales of over $750 million a year. Hallmark also owned Ambassador Greetings, the country’s number three greeting card company. Hallmark’s 20,000 card shops sold those cards, plus other Hallmark wares: gift-wrap, stuffed animals, birthday candles, many collectibles, and other products. By 1993, Hallmark employed a creative staff of over 700 employees—a staff that generates over 24,000 new cards per year. Hallmark has maintained its industry-leading position with estimated sales of $2.9 billion in 1992.
Social and Economic Impact During the Great Depression, Joyce Hall worked hard to develop a plan that would save the jobs of his employees. He also worked to help the nation return to prosperity. The 1930 Joyce Hall Prosperity Plan was embraced and promoted by Rotary Clubs throughout the country. Some newspapers credited Hall and his plan with aiding the country’s eventual economic recovery. The plan encouraged suppliers and customers to buy materials in advance, providing working capital for companies. According to Hall, his plan allowed people to keep working and earning wages and to keep the spending cycle going. J.C. Hall used his greeting cards and his successful business to further the fine arts. The Hallmark Gallery Artists Christmas cards featured works by great masters, such as Michaelangelo, da Vinci, and Rembrandt. Hall hoped these cards would bring the art of these celebrated painters to people who would not ordinarily see them. In 1949, Hall created the International Hallmark Art Awards, providing funds to artists worldwide and acquiring works for the Hallmark Fine Arts Collection. J.C. Hall also maintained 38 scholarships for students at the Kansas City Art Institute. In 1956, President Dwight David Eisenhower invited Hall and other prominent American businessmen to the White House for an important discussion. The meeting concerned establishing an organization to promote world peace. The resulting organization was called
3 7 0
B u s i n e s s
People-to-People. It was an effort involving American citizens dedicated to implementing mutual understanding, respect, and friendship in the pursuit of peace. J.C. Hall served on the group’s board of directors and was chairman of People-to-People’s executive committee. Joyce Hall was honored with many citations and awards during his life. In 1961, he was the first sponsor to receive an Emmy from the National Academy of Television Arts and Sciences. Queen Elizabeth II named him Honorary Commander of the Order of the British Empire that same year. The Kansas City Chamber of Commerce named him 1961’s “Mr. Kansas City.” He served on the Boards of Directors of the Eisenhower Foundation and People-to-People. In 1971, he was awarded the Eisenhower medal for international understanding. He was granted a citation from the Midwest Research Institute and the Distinguished Service Award from the University of Kansas. The National Association of Greeting Card Publishers recognized his immense contributions to the industry in 1974. He was elected to Fortune’s Hall of Fame for Business Leadership in 1977. J.C. Hall held honorary degrees from Kansas State University, the University of Missouri, the University of Nebraska and William Jewel College.
Sources of Information Contact at: Hallmark Cards, Inc. 2501 McGee St. Kansas City, MO 64108 Business Phone: (816)274-5111 URL: http://www.hallmark.com
Bibliography Candee, Marjorie Dent, ed. Current Biography Yearbook. New York: H.W. Wilson Co., 1953. A Centennial Tribute to the Memory of Joyce C. Hall. 1991. Flynn, Gillian. “Hallmark Benefits its Employees (aka: Owners). Personnel Journal, March 1996. Moritz, Charles, ed. Current Biography Yearbook. New York: H.W. Wilson Co., 1983. Page, Eric. “J.C. Hall, Hallmark Founder, is Dead.”The New York Times, 30 October 1982. “Summary: Donald Joyce Hall, Barbara Hall Marshall, Elizabeth Ann Reid” Forbes, 18 October 1993. Who Was Who in America. Chicago: Marquis Who’s Who, 1985.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
James Halpin Overview James F. Halpin led computer superstore CompUSA, Inc. out of the financial troubles that it found itself in at the beginning of the 1990s. After experiencing dramatic growth in the 1980s, CompUSA had begun to lag. The multi-billion dollar retailer known as ‘America’s Computer Superstore’ had become lethargic, and its bloated bureaucracy had brought it to the brink of declaring Chapter 11 bankruptcy. After CompUSA’s chief executive officer (CEO) resigned in the last few weeks of 1993, Halpin was left with the daunting task of turning around the company’s fortunes. Halpin’s strategy soon paid off. He turned CompUSA into an agile competitor that now dominates the fast-paced world of computer retailing.
(1951-) CompUSA, Inc.
Personal Life James F. Halpin was born in 1951 in Chicago, Illinois to Irish Catholic parents with a strong blue-collar background. Because of the family’s lack of money, Halpin never attended college, but instead went directly to work after he graduated from high school. In 1997, Halpin became one of corporate America’s most powerful people when he appeared at number 17 on Forbes magazine’s list of the top corporate executives in the retailing industry, with an annual salary of over $2 million. CompUSA also appeared at number 329 on Fortune magazine’s list of the top 500 companies in the United States for 1998.
3 7 1
J a m e s
H a l p i n
quickly for its own good. In the first quarter of 1993, the company reported losses of nearly $1 million. Although this was not much in proportion to the company’s volume, Morton resigned, thus paving the way for Halpin to come in and face the challenge of turning CompUSA around.
Chronology: James Halpin 1951: Born. 1971: Began working for Zayre Corporation. 1984: Appointed vice-president of Zayre Corporation. 1988: Became president of BJ’s Wholesale Club. 1990: Headed Waban Inc. 1991: Became president of Home Base. 1993: Took over presidency of CompUSA, Inc. 1994: Promoted to CEO of CompUSA.
Career Details At the age of 21, Halpin got a job unloading trucks for the Boston-based retailer Zayre Corporation for $2.60 an hour. Halpin quickly showed initiative and his hard working style endeared him to his employers. He did not stay on the loading dock for very long, but began moving up through the ranks of the company. By 1984, Halpin had been promoted to the position of vice-president and senior merchandising manager for the Zayre department store chain. His leadership at Zayre soon attracted others, and in 1988 Halpin left Zayre and became the president of BJ’s Wholesale Club. In 1990, Halpin left BJ’s Wholesale Club to briefly head Waban Inc. He left Waban in 1991 to become president of Home Base, a home improvement retail chain based in Irvine, California. Meanwhile CompUSA, the company Halpin was destined to head, was establishing itself as a leader in its industry. Founded as Soft Warehouse in Dallas, Texas in 1984, CompUSA was the first to adapt the “superstore” idea, pioneered by companies such as Office Depot, to the home computer and peripherals market. In January of 1989, a group of investors acquired CompUSA and placed the company under the leadership of former Home Depot executive Nathan Morton. Under Morton, the company grew even more rapidly than it already had up to that point. In just two years, from 1988 to 1990, sales increased from $66 million to $600 million. In December 1991, the company began selling stock to the public. But there were signs of stress on the horizon. The company may have already been growing a little too
3 7 2
B u s i n e s s
From Home Base, Halpin was recruited to become president of CompUSA in May of 1993. He immediately made much needed changes at the company. Halpin felt that CompUSA was focusing too much of its corporate energy on pomp and advertising and not enough on the bottom line. Halpin first got rid of CompUSA’s racing car sponsorship, then sold the company’s cable television show. He next fired 2,000 of the company’s store managers and replaced them with more experienced employees from other successful chain stores. This move raised the average age of a CompUSA store manager from 26 to 37 years old, an oddity in the young computer industry. But his new managers did well. Halpin initiated an incentives system that enabled some of his store managers to earn in excess of $100,000 a year. By 1994, Halpin had been promoted to CEO of CompUSA and had turned over the assembly of CompUSA’s Compudyne brand computers to an outside contractor. He replaced 17 of the 20 top management positions and eliminated some of the sideline businesses, such as software publishing, that the previous CEO had established. Only after he had done this and the company had stabilized did he begin to open more stores. Halpin revamped the new CompUSA stores. He redesigned the layout, and required an increase in the level of employees’ technical education. “CompUSA used to look like an old, tired record store,” Halpin told Business Week. “We’ve made it an exciting, interactive place to shop.” Halpin works closely with his chief operating officer (COO) Harold Compton, whom he recruited from Home Base. Another top CompUSA executive has said of the two men: “Jim [Halpin] is the visionary who can tell what changes need to be made” whereas “Hal [Compton] makes sure [things] get done.” Halpin is a strong negotiator but is very plain-spoken in motivating his management team. In October of 1995, Halpin took a seat on the board of directors at Invincible Technologies Corporation with the title of Outside Director. Invincible is a Massachusetts-based computer company that specializes in security applications, file servers, and data storage solutions for businesses that use large networks of computers. Halpin’s knowledge of both business and the computer industry helped Invincible rise to the top quickly as growing numbers of businesses sought to make their computer networks safe, fast and efficient. Like his predecessor Morton, Halpin came to CompUSA from a hardware superstore company. But he decided to apply a strategy different from his predeces-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J a m e s
sor’s, and he got different results. Because of Halpin, while competitors such as Best Buy, Neostar, Wal-Mart, and the Tandy Corporation experienced shrinking profit margins, CompUSA continued to grow. Whereas in 1994 CompUSA had posted a $16.8 million loss on $2.1 billion in sales, by 1996 it had an estimated $56 million profit from $3.8 billion in sales. By 1997, CompUSA had 134 stores nationwide and its net income rose 57 percent to $93.9 million and net sales had topped $4.6 billion. In the late 1990s, every CompUSA store generated sales of $1,388 per square foot of floor, two or three times more than other consumer electronics and office supply chains. This allowed CompUSA to employ a further 5,000 employees than before Halpin’s cuts and restructuring. Facing pressure from other computer chain stores, such as Dell Computer Corporation, Halpin introduced a system of direct marketing. CompUSA began selling custom-designed computers at a reasonable rate to a customer’s own specifications. This system, Halpin hoped, would allow CompUSA to tap into the 25 percent of the market that was controlled by independent vendors who build customized computers. Halpin called these vendors “the wicked screwdriver guys,” and introduced his company’s build-to-order service in late 1997. This service allowed customers to order a computer over the telephone to their own specifications and pick it up or have it delivered to them within a few days. “We are not a retailer. We are a computer conglomerate,” Halpin said of CompUSA’s move into offering its build-to-order service. To this end, CompUSA was not solely responsible for the computers that were built. Instead, CompUSA subcontracted the building of the computers to three independent contractors and then these finished computers were delivered to a CompUSA store for installation or delivery. This system cut down on CompUSA’s costs and increased its profit margin dramatically over other companies, such as Dell, that offered the same service but built the computer themselves.
H a l p i n
companies. He not only improved the way computers were sold, but he worked to make computers more accessible and understandable. CompUSA launched a highly profitable venture into customer training by offering computer classes at CompUSA stores. Although Halpin himself did not institute the program, he appears to have a desire to capitalize on this promising market. Speaking of his company’s future, he has placed an emphasis on the increasingly lucrative fullservice area of computer sales; “When we deliver, install, and teach you how to use your computer, once it’s sold, it stays sold.” All CompUSA stores now contain a computer repair shop and computer training classrooms for customers who have problems learning how to operate their computers. The company also offers a delivery service that includes a crew to install computer service. This, along with a direct sales force that solicits corporate, government, and educational customers directly, makes CompUSA an industry leader in computer sales and dramatically increases computer literacy rates throughout the nation.
Sources of Information Contact at: CompUSA, Inc 14951 North Dallas Pky., Ste. 10 Dallas, TX 75240-7570 Business Phone: (972)982-4000 URL: http://www.compusa.com
Bibliography “CompUSA.” In International Directory of Company Histories, Detroit: St. James Press, 1995. “CompUSA Seeks Profit Boost.” Business Marketing, January 1994. “Executives Step Up To Meet Tough Challenges In 1994.” Computer Reseller News, 3 January 1994. “Getting the Bugs Out.” Business Week, 22 July 1996.
Social and Economic Impact
“James Halpin.” Computer Reseller News, 18 November 1996.
Halpin’s vision helped rescue a floundering chain store giant and turn it into one of America’s premiere
Who’s Who In America 1997. New Providence, NJ: Marquis, 1996.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
3 7 3
John Hancock (1737-1793) Merchant, Political Leader
Overview John Hancock is most famous for the enormous signature he affixed to the Declaration of Independence. Before the Revolutionary War, Hancock was a respected merchant in Boston, and his involvement in several disputes leading up to the revolution helped pave the way for his leadership role in the Continental Congress; overall, however, he was an uninspired leader, lacking little in his personal style to match the flourish of his signature.
Personal Life John Hancock was born in the town of Braintree, Massachusetts, son of the Rev. John Hancock and Mary Hawke Hancock. John might have become a minister, but his father died when he was only seven years old, and his uncle Thomas Hancock adopted him. Growing up in the home of his childless aunt and uncle, John Hancock had a bright future ahead of him as the merchant Thomas Hancock was one of the wealthiest men in Boston. John Hancock attended Boston Latin School, and in 1754 graduated from Harvard University. As soon as he finished his schooling, Hancock went to work in his Uncle’s mercantile business. In 1760, when Hancock was 23, his uncle sent him to England to learn the importexport business under an associate there. A year later, he returned to Boston, and in 1763 became a partner in the family business. His uncle died in 1764, and John Hancock became the head of the firm, Hancock House. At
3 7 4
J o h n
H a n c o c k
that time it was the leading business of its kind in Boston, and with it Hancock acquired 100,000 pounds sterling. Many of his contemporaries described Hancock as vain and small-minded. Future President John Adams was particularly cutting, referring to him as “a man without a head and without heart—a mere shadow of a man.” In 1775, Hancock married Dorothy Quincy. He died without leaving a will on October 8, 1793, in Quincy, Massachusetts.
Career Details John Hancock started out with plenty of advantages, but he was not a particularly gifted businessman. In spite of everything his uncle had left him, he managed to lose his business in 1775, just 11 years after he had taken over Hancock House. Not all of this was his fault, because British rule was making it more difficult to run a successful import-export business. But Hancock was also an extremely poor manager, and he made a series of ill-advised decisions; nor did he have the discipline to stick with a certain course of action long enough to see it to fruition. But the commercial world’s loss was the political world’s gain, and in 1766, Hancock began his involvement in politics by winning election to the General Court of Massachusetts. He would hold a number of posts from then on, and in spite of his inability as a businessman, he would command great respect because of his wealth. Also, since he naturally found it easier to blame the British for his failures than to blame himself, he became an ardent foe of colonial rule. In 1768, when British forces in Boston harbor seized his ship, the Liberty, for alleged smuggling and brought Hancock to trial, he became a central figure in the growing independence movement. Soon he began to gravitate more and more toward the radical revolutionary circles of Samuel Adams, Thomas Paine, and others. In 1774, tensions became so bad that the British shut down Boston harbor; meanwhile, Hancock had become chairman of the Provincial Congress, making him in effect the leader of the state. A year later, General Gage for the British declared all rebels would be pardoned except for the very worst, and he specifically named Hancock and Samuel Adams as offenders. On April 18, 1775, Gage tried to seize the two, an act which marked the beginning of the Revolutionary War; Hancock and Adams meanwhile escaped from Boston. Soon afterward, the two went to Philadelphia as Massachusetts delegates to the Continental Congress, which elected Hancock its president. He would hold that office for the next three years. In spite of the fact that his presidency of the Congress made him the leader of the American colonies, Hancock was not a significant figure in the Revolution. He
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
John Hancock III.
(National Archives and Records
Administration.)
Chronology: John Hancock 1737: Born. 1763: Became partner in family business, Hancock House. 1764: Became head of Hancock House. 1766: Elected to Massachusetts General Court. 1774: Became Chariman of Provincial Congress. 1775: Closed the Hancock House. 1775: Elected President of Continental Congress. 1776: Became first signer of Declaration of Independence. 1780: Became first Governor of Massachusetts. 1793: Died.
S t u d e n t s
3 7 5
J o h n
H a n c o c k
wanted to head the Continental Army, and was disappointed when wiser heads judged him too lacking in imagination and resourcefulness to take on the demanding job that would fall to George Washington. In 1780, Hancock served in the Massachusetts constitutional convention, and became the first governor of the state. He held that office, running up the state’s debt just as he had mismanaged Hancock House, until 1785. Then, with a revolt brewing in the countryside due to his economic policies, he announced that he was too ill to run for reelection. He did, however, manage to serve two one-year terms in Congress, during which time his successor as governor put down the revolt, Shay’s Rebellion. Hancock then ran again for the governor’s seat and won, holding that position for a total of nine terms, until his death.
3 7 6
B u s i n e s s
Sources of Information Bibliography Fradin, Dennis B. John Hancock: First Signer of the Declaration of Independence. Hillside, NJ: Enslow, 1989. Fritz, Jean. Will You Sign Here, John Hancock. New York: PaperStar Books, 1997. Fowler, William M. Jr. The Baron of Beacon Hill: A Biography of John Hancock. Boston: Houghton Mifflin, 1980. Ingham, John. Biographical Dictionary of American Business Leaders H-M. Westport, CT: Greenwood, 1983. Miller, Frances A. John Hancock. Belmont, CA: Fearon/Janus, 1989. Van Doren, Charles, ed. Webster’s American Biographies. Springfield, MA: Merriam, 1975.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Ruth Handler Overview Ruth Handler was the mastermind behind the creation, marketing, and sales of the Barbie doll, first sold in 1959. Thirty years later, more than 800 million dolls in the Barbie family had been sold by Mattel, the company founded by Ruth Handler and her husband Elliot. In 1996 Barbie dolls and Barbie paraphernalia generated $1.7 billion dollars in revenue for Mattel.
(1916-) Mattel, Inc.
Personal Life Ruth Mosko was born on November 4, 1916, in Denver, Colorado. She was the youngest of ten children of Polish immigrants and was a tomboy who shunned dolls. Ruth’s Jewish father, Jacob Moskowicz, arrived in America via Ellis Island in 1907 where his name was shortened to Mosko. Because he was a blacksmith, he was shipped to Denver, center of the railroad industry, where blacksmiths were used for making and repairing tracks. Ruth’s mother, Ida Mosko, was 40 and in ill health when Ruth was born. From the age of six months, Ruth was raised by her eldest sister Sarah and her husband Louis Greenwald. When she was 16, Ruth met Elliot Handler at a B’nai B’rith dance. Elliot, who wanted to be an artist, was deemed a poor match by Ruth’s family. They envisioned him as a starving artist, and were relieved a few years later when Ruth decided to move to Los Angeles, where she had landed a job as a secretary for Paramount Pictures while visiting a friend. Elliot followed Ruth to California, enrolled in art school, and found a job designing light fixtures. In 1938 they were married. Shortly
3 7 7
R u t h
H a n d l e r
Ruth Handler autographs a copy of her book, “Dream Doll: The Ruth Handler Story.” (Courtesy of Ruth Handler.)
before their daughter Barbara was born in 1941, Ruth quit her Paramount job. Their son Ken was born in 1944. When Ken was six months old, Ruth decided she needed something to do besides take care of children. Within 25 years, the company she started, Mattel Creations, was a multimillion-dollar business. She was the first woman elected to the Toy Manufacturers Association board of directors and the first woman appointed to the Federal Reserve Board. President Richard Nixon appointed her to the National Business Council for Consumer Affairs and the Product Safety Committee. While at the height of her success, in 1970 Ruth lost her left breast to cancer, then struggled with depression, a loss of self-confidence, and an inability to find a prosthetic breast that made her look “even.” At the same time, Mattel was under investigation for illegal accounting practices. Just when it seemed that poker games in local cardrooms would be her sole preoccupation, Ruth Handler decided to manufacture and sell prosthetic breasts. In 1975, both Ruth and Elliot left Mattel. Elliot went back to art school. They spent their retirement alternating their time between their Century City penthouse condo and their Malibu beach house. Elliot painted; Ruth doted over her grandchildren and played bridge.
Career Details Elliot Handler was fascinated with new materials, especially an acrylic plastic called Lucite or Plexiglas
3 7 8
B u s i n e s s
that had been used only in the defense industry. When he and Ruth rented their first unfurnished apartment, all they could afford to buy was a bed, a table, and two chairs, so Elliot set to work designing some furniture and accessories that could be made from plastic. Ruth thought the sketches he produced were so good she encouraged Elliot to consider making up some samples for her to use in sales calls. The apartment came with half a garage (to be shared with a neighboring apartment), and the couple decided to locate the equipment needed to produce the samples in the garage. They made coffee tables, end tables, and lamps for their apartment, then used the leftover material to make hand mirrors, candle holders, cigarette boxes, and bookends. When those who shared the garage complained to the landlord, the Handlers were promptly evicted. Elliot quit his job and dropped out of school, they moved into another apartment, and they rented a small space that had been a Chinese laundry to house their workshop. Ruth, still working at Paramount, made sales calls with the samples during her lunch hour. “I found that I loved the challenge of selling,” Ruth recalls in her autobiography. “Adrenaline surged through me whenever I walked into a store with samples and walked out with an order.” The plastic business in the Chinese laundry attracted four partners and quickly rose to become a $2 million enterprise making giftware and costume jewelry. But by 1945 Elliot grew restless. A year earlier, Ruth had entered a business partnership with Harold “Matt” Matson, a friend from Elliot’s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
R u t h
first job in Los Angeles. They persuaded Elliot to be their designer, even though he had a full-time commitment to his costume jewelry company. The three named their company Mattel (“Matt” for Matson and “el” for Elliot). Fortunately for Mattel, Elliot’s desire to experiment with new products and continuously expand his business led to a dispute with his partners, so he sold his interest in the company and joined Mattel full time. Matson withdrew due to illness, while the Handlers continued to work together, building what was to become the number one toy manufacturer in the world. In its first full year of operation, 1945, Mattel showed sales of $100,000, mostly in dollhouse furniture. Their second year in business was not as good, since a competitor was able to undercut their price with dollhouse furniture made from molded plastic. Undaunted, the Handlers turned to other types of toys, including a miniature plastic ukulele and a toy piano. The ukulele rapidly lost market share due to a cheaper imitation from a competitor, and Mattel took a $60,000 loss on the piano because of excessive breakage during shipping. Their early problems taught the Handlers some poignant lessons in cutthroat price competition and product quality testing. They realized that a successful business had to produce unique and original products of superior quality and strength that could not be easily copied by competitors. “We never had any trouble selling our toys,” Ruth remembers in her autobiography. “The most difficult problem through the years was financing.” A shortage of capital and the refusal of banks to gamble on the struggling young firm put a music box project on hold, but a $20,000 loan from Ruth’s brother-in-law allowed Mattel to produce another winner. In 1955 yearly sales reached $5 million and the Handlers decided to take a risk that would forever change the toy business: sponsorship of a 15-minute segment of Walt Disney’s Mickey Mouse Club on the ABC television network. The 52-week $500,000 contract was equal to Mattel’s net worth at the time. The payoff was immediate. The company’s television commercials brought in mail sacks full of orders and made their brand name well known among their viewing audience. In another television link, Mattel introduced toy replicas of classic guns and holsters, exploiting the popularity of television Westerns. In 1959 Mattel made toy industry history with the introduction of the Barbie doll, the best-selling toy of all time. Named after the Handlers’ daughter, Barbie was 12 inches tall, with breasts and a curvaceous figure. Clothes and accessories had to be purchased separately. In subsequent years, additional dolls were added, including a boyfriend, the Ken doll, named after the Handlers’ son. The next season, Mattel entered the competitive large doll market with another winner, the first talking doll. That year, Mattel made its first public stock offering. Sales continued to soar, from $26 million in 1963 to more than $100 million in 1965. In 1968 another spectacular hit was introduced: Hot Wheels miniature model cars.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
H a n d l e r
Chronology: Ruth Handler 1916: Born. 1932: Married Elliot Handler. 1944: Founded Mattel Creations with Harold Matson. 1955: Signed a $500,000 contract for sponsorship of Mickey Mouse Club. 1959: Introduced the Barbie doll. 1970: Diagnosed with breast cancer and a mastectomy was performed. 1973: Witnessed Mattel’s first loss. 1975: Resigned as president of Mattel. 1978: Pled no contest to charges of false reporting to the SEC, fraud, and conspiracy.
Even though half of the product line was rendered obsolete in any given year, the company’s profits continued to multiply. To deal with the need to keep new products in the marketplace, Mattel had as many as 300 people in its Research and Design department. The Handlers feared that they were not going to be able to continue at their exponential growth rate without exposing themselves to more risk. To solve this problem, Mattel turned into a worldwide enterprise through a host of acquisitions that included Dee and Cee Toy Co., Standard Plastics, Hong Kong Industrial Co., Precision Moulds, Rosebud Dolls, A & A Die Casting Company, Monogram Models, Ratti Vallensasca and Mebetoys, H & H Plastics Co., Metaframe Corp., Ringling Bros. and Barnum and Bailey, and others. In 1968 Mattel reincorporated in Delaware and began work on a $50 million Circus World theme park in Florida. In a joint venture with Bob Radnitz, Mattel produced its first movie, Sounder. But the good times soon soured. Ruth described the major mistake made by Mattel in her autobiography: “We should have stayed in the toy business, accepted a slower growth rate, and resisted the temptation to acquire so freely. Our organization was not really equipped to evaluate and control so many diverse companies, and our internal auditing capability was inadequate to ferret out the problems in advance.” In 1970 Mattel’s plant in Mexico was destroyed by fire, which necessitated the cancellation of one-third of that year’s Christmas orders, and the following year a shipyard strike in the Far East cut off
S t u d e n t s
3 7 9
R u t h
H a n d l e r
their toy supplies during their busiest season. To maintain the appearance of corporate growth, the financial records showed as income millions of dollars of orders that had been placed but not fulfilled. For two years (1971 and 1972) Mattel issued false and misleading financial reports. In 1973 the company reported a $32 million loss just three weeks after stockholders had been assured that the company was in sound financial condition. Mattel’s stock plummeted and the Security and Exchange Commission (SEC) stepped in to investigate. Ruth, in charge of the company’s administrative and financial affairs, was indicted by a grand jury in 1978. She entered a no contest plea to the charges (false reporting to the SEC, fraud, and conspiracy) and was ordered to pay $57,000 in fines. Her 41-year sentence was suspended for a probation of five years, during which she was required to perform 500 hours per year of community service. Elliot, a product designer with no say in the day-to-day running of the company, was exonerated. The federal court ordered Mattel to restructure, while the firm’s bankers and creditors pressured the Handlers to resign. Shareholders then entered a series of class-action lawsuits. To settle, the Handlers turned over 2.5 million shares of their own stock, described by Ruth as “half of everything we’d worked for in the previous thirty years.” In 1980 the Handlers cashed in most of their remaining Mattel stock (worth $18.5 million), ending their involvement in the company they had founded. The company was able to reestablish itself and within a few years was again the world’s largest toy enterprise. Sales in 1997 were $4.8 billion, assets were $3.8 billion, and profits were $285 million.
Sources of Information Contact at: Mattel, Inc. 333 Continental Blvd. El Segundo, CA 90245-5012 Business Phone: (310)252-2000
Bibliography Handler, Ruth, with Jacqueline Shannon. Dream Doll: The Ruth Handler Story. Stamford, CT: Longmeadow Press, 1994. Ingham, John N., and Lynne B. Feldman. Contemporary American Business Leaders: A Biographical Dictionary. New York: Greenwood Press, 1990. Kepos, Paula, ed. International Directory of Company Histories. Detroit: St. James Press, 1993.
Social and Economic Impact When World War II ended, the toy market was bare and the baby boom, which would produce more than 77
3 8 0
million Mattel customers during the next 20 years, made the toy industry ripe for development. Before 1955 toy manufacturers relied primarily on retailers to show and sell their products, and advertising occurred only during the holiday season. Mattel was the first toy company to spend money on advertising year-round. The featured products all exceeded sales projections and the nature of selling toys changed radically. When Mattel’s product line and brand name became known to its young viewers and their parents, an ongoing demand for the toys forced retailers and wholesalers to carry them year-round. To handle the rapidly increasing demand for their products, Mattel hired its own “retail detail” people to visit stores, set up product displays, and monitor the rate of sales of the various products. Utilizing this feedback from the marketplace, Ruth Handler was able to constantly adjust production numbers based on retail sales, making her one of the first experts at sales forecasting and inventory control.
B u s i n e s s
Lord, M.G. Forever Barbie: The Unauthorized Biography of a Real Doll. New York: William Morrow, 1994.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
William Harley Overview William Harley and his partners, the Davidson brothers, took a simple vision and turned it into a company that produced motorcycles for customers worldwide. The Harley-Davidson name became an icon of American culture that has incurred a large and loyal following.
(1880-1943) Harley-Davidson, Inc.
Personal Life William Harley first began tinkering with the idea of producing a machine that would be easier to ride than a bike while in his early twenties. Along with brothers Arthur, William, and Walter Davidson, the four men designed the first Harley-Davidson motorcycle in a relative’s garage. Harley later returned to school in Milwaukee for the technical expertise that would enable him to modify and improve the machines he would build in the future.
Career Details The Harley-Davidson motorcycle was conceived in the early 1900s. Harley and a machinist friend, Arthur Davidson, designed the initial “motorized bicycle” in 1901. They were interested in creating an alternative that “took the work out of bicycling.” The first Harley-Davidson motorcycle had a single-cylinder engine, went no faster than 25 miles-per-hour, and used an empty tomato can for a carburetor. Davidson’s aunt created the later famous black and red logo and painted it on the first bike.
3 8 1
W i l l i a m
H a r l e y
The help of two other Davidson brothers was enlisted to replicate the bike. By 1903, the first three machines were completed and sold by the C.H. Lang dealership of Chicago. The foursome launched the business in a backyard garage. Building a motorcycle in the early 1900s presented challenges that the partners had to overcome, many similar to what Henry Ford and R.E. Olds were facing with manufacturing the automobile. Parts were not pre-made and had to be created from existing materials. This was an extremely labor-intensive task that took quite a lot of time. Gas stations had not yet been established, so fueling was a problem. Gas could only be purchased by the pint and only at drugstores. Regardless of these difficulties and inconveniences, the business grew quickly and the bikes gained a reputation as a sturdy and reliable machine for getting around. The company built its headquarters in 1906 and incorporated in 1907, the same year that the four partners produced 150 machines. By 1910 the company employed 149 people. The four partners continued to speed production and managed to become one of the largest producers of motorcycles in America by 1915. Harley-Davidson paid little attention to the promotional benefits of racing until 1908. While the bikes had been entered in races, it was generally assumed that when they won, it was because of their durability, not their speed. Walter Davidson decided to lay that perception to rest and raced the motorcycle in 1908, earning excellent scores in competition and achieving unprecedented gas mileage. Word of his racing success spread quickly and bike sales soared. Around this time, Harley completed a degree program in Madison, Wisconsin and returned to the company to put his knowledge to use in designing a more powerful bike. By 1911, the new machine was available to the public. At this time, most motorcycles were using a chain drive to provide power to the rear wheel, and Harley-Davidson’s chain drive model was completed and on the market by the end of 1912. As the company grew, so did the factory. The first space (28 feet by 80 feet) was expanded to 297,110 square feet, with 12,904 machines produced in 1913. More and more of the machines were used in racing events. World War I also created a new use for the machines and 20,000 of them were used in the war. In November of 1918 the first American to enter Germany crossed the border on a Harley-Davidson. The use of the machines in the war brought to light a new issue—a lack of people in the military that were able to repair and maintain the machines. To address the problem, HarleyDavidson set up a training class for the military in 1917. After the war, the training school continued its programs and trained Harley-Davidson mechanics into the 1990s. The 1920s saw continued growth for Harley and the company. Over 28,000 machines were produced in 1920 and dealers worked worldwide. At this point, the com-
3 8 2
B u s i n e s s
pany was the largest maker of motorcycles in the world. The company continued to improve on the machine and design new innovations, such as a teardrop shaped gas tank (designed in 1925) and a front brake (1928). The motorcycles continued to race, with one Harley-Davidson competitor in Fresno, California becoming the first person to win a race at speeds averaging 100 miles-per-hour. The 1920s also gave rise to Harley-Davidson jargon such as using the word “HOG” to refer to the bikes. The reference originated after the company factory team bought a mascot pig to each race. Spectators referred to the group as “the Harley Team and their hogs.” When the Depression hit the United States in 1929, Harley-Davidson was impacted much like the rest of the economy. By 1933, only 3,700 bikes were being produced. Harley and his partners, according to factory workers, kept as many of the factory staff as they could afford during the Depression by reducing everyone’s working week. When the country started to recover economically, Harley-Davidson was ready with a new innovation—a motorcycle model that used a 61 cubic inch overhead valve engine (referred to as the Knucklehead). By 1936, production had increased to 9,812 bikes. The onset of World War II greatly increased demand for Harley-Davidson motorcycles. At the end of the war, 90,000 bikes had been shipped overseas for the war effort. These bikes were specifically designed for Army use. In 1943 the military recognized the company with an Army-Navy E Award for excellence in wartime production. After the war, motorcycle consumers were able to turn their attention to pleasure riding again. HarleyDavidson responded to their needs with more innovations, including a new 74 cubic inch engine with hydraulic valve lifters and aluminum heads (nicknamed the Panhead). Well over 30,000 bikes were produced in 1948. The numbers continued to climb into the 1950s, which also saw the demise of Harley-Davidson’s biggest competitor—Indian. It was during this decade that Harley-Davidson introduced the Sportster model and successfully added the Duo Glide model, which included hydraulic rear shock suspension. At the end of the war, riders also created a tradition of customizing the bikes, which continued to become a trademark of the company. Customizing began when previous military Harley-Davidsons were revamped by veterans. Older versions of Harley-Davidsons were later restored, as in the company’s Civilian 45 model. By 1997 the company had annual sales of $1.8 billion, had experienced sales growth of 15 percent, and had employed 6,060 people. In the 1990s it remained the only major U.S. motorcycle manufacturer and offered 23 models of touring and custom bikes. Customers were willing to pay a substantial amount for their Harleys; a typical Harley bike cost $17,000 and took at least a year for delivery. The company captured 56.4 percent of the market for domestic super heavyweight motorcycles.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
W i l l i a m
H a r l e y
In 1997, however, it looked as if Harley-Davidson might be slipping in the market. Five years previously, Harley had commanded a market share of 71 percent, a number that it had not been able to achieve since. While Harley built its success on selling attitude, there were signs that traditional Harley customers were tiring of company attempts to sell related Harley merchandise such as golf balls, plates, and baby clothes. While Harley had successfully appealed to wealthy professionals in the 1980s and 1990s and had expanded its customer base beyond the original hard-core bikers, all these customers were aging in the 1990s. Harley produced less expensive machines, such as the $5,000 Sportster to attract younger customers, but sales of the model dropped by 19 percent in 1996. Similarly, Harley sold only 30 percent of its bikes abroad because many Europeans found the bikes too expensive. Harley’s merchandise expansion often caused dealers to take on expensive inventory that they were later forced to sell at discounted prices. Harley owners also spent lots of money paying independent repairmen or customizers to improve their bikes—money that HarleyDavidson never recouped after the sale of the bike.
met in Sturgis, South Dakota for an annual HarleyDavidson get together. By the 1990s, the company that Harley had cofounded had become a symbol of American culture. People from all walks of life owned and enthused over their Harley-Davidson machines, paying premium dollars for them. Though Harley’s dominance may have eased in the late 1990s, the company had created an American legend with thousands of followers.
Sources of Information Contact at: Harley-Davidson, Inc. 3700 West Juneau Ave. Milwaukee, WI 53208 Business Phone: (414)342-4680 URL: http://www.Harley-Davidson.com
Bibliography Bacon, Roy. The Illustrated Motorcycle Legends: Harley Davidson. Whitehorse Press, 1995. Fucini, Joseph J. and Suzy. Entrepreneurs. Boston: G.K. & Co., 1985. “Harley-Davidson. Background and History. Available from http://www.harley-davidson.com/company/background.html.
Social and Economic Impact When the Harley-Davidson partnership created their first bikes, the time was ripe in America for transportation innovations. That same year, several innovators, including Ford, Olds, Packard, and Cadillac were well into building automobiles, and the Wright brothers were taking flight for the first time. That environment inspired the Harley-Davidson founders to pursue transportation innovations to meet consumer demand. Harley-Davidson bikes became a cult symbol, made famous by the 1960s movie Easy Rider, which featured Harley-riding characters and a glimpse into the biking culture that had already become a fixture on the West Coast. Another movie, The Wild One, which starred Marlon Brando, fixed the Harley bike culture even more firmly in the minds of Americans. Harley-Davidson bikers throughout the United States formed riding clubs and
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
“Harley-Davidson, Inc.” Hoover’s Company Capsules, 2 June 1998. The History of the Harley Custom (1945-1969). Available from http://www.harley-exhibition.co.uk/Pages/aboutex2.html. Johnson, David. Family Affair: Four Men, One Dream. Cycle World, September 1993. Machan, Dyan. “Is Hog Going Soft?” Forbes Magazine, 10 March 1997. Neville, Lee. Database. U.S. News and World Report, 1 September 1997. Statnekov, Daniel K. Pioneers of American Motorcycle Racing, Chapter 6. 1996. Available from http://www.roadrunner.com/ maraz/lives6.html. William S. Harley. Available from: http://www.hog.ch/News/ Museum/1903...m%201903-1910/William%20Harley.htm.
S t u d e n t s
3 8 3
William Randolph Hearst (1863-1951) American Newspapers, Inc.
Overview Founder of one of the most extensive newspaper empires in history, William Randolph Hearst was a dominant and controversial figure in American journalism and politics for many years.
Personal Life An only child, William Randolph Hearst was born in a hotel in San Francisco, California on April 29, 1863. His father, George Hearst, was a self-taught geologist who made a fortune in mining before becoming involved in politics later in life. Hearst’s mother, Phoebe (Apperson) Hearst, became a philanthropist and was a regent of the University of California. Since his father was often away on mining trips, Hearst was raised mostly by his mother, and led a sheltered and privileged life as a child. His mother took him to Europe when he was 10 years old for tutelage in art and antiquities; in 1879 she sent him to St. Paul’s preparatory school in New Hampshire, which Hearst left abruptly two years later. He was tutored at home, then entered Harvard University in 1882. He did not stay long enough, however, to graduate: he was expelled in 1885 for a prank. While at Harvard, Hearst spent much of his time working on the school’s humor magazine, Lampoon, which he made into a money-making publication. After leaving Harvard, Hearst had the chance to manage his father’s ranches and mines, but instead began an apprenticeship as a reporter for Joseph Pulitzer’s newspaper, the New York World. In 1886, he finally
3 8 4
W i l l i a m
R a n d o l p h
H e a r s t
talked his father into turning his unsuccessful newspaper, the San Francisco Daily Examiner, over to him. In addition to his career in newspapers, Hearst also had some encounters with politics. He won election to the House of Representatives in 1902 and 1904, which proved to be his only two successes in the political arena. In 1904 he put great effort into a bid for the presidency, but didn’t get the nomination. The next year, he ran for mayor of New York City as an independent candidate. He lost that race, as well as the one for governor of New York in 1906, for which he ran as the Democratic candidate. The governor’s race was Hearst’s last major political campaign, although he remained involved in politics in a behind-the-scenes role, using his newspapers to garner votes for his preferred candidates. Hearst didn’t marry until 1903, a day before his 40th birthday. He had a long-term relationship up until that time with Tessie Powers, a waitress whom he had supported since his Harvard days. Hearst’s wife, 21-year-old Millicent Wilson, was a Broadway dancer, and they had five sons together. In 1917, however, Hearst met Marion Davies and began a love affair with her that lasted until his death. During the 1920s, he spent millions on her acting career, which never was a great success.
Career Details Hearst’s infamous career in journalism began with his publication the San Francisco Examiner in 1887. Hearst modeled the newspaper after Pulitzer’s World, which printed the most shocking, sensational news it could find (or create) in order to attract a large audience. Hearst’s newspaper placed a special focus on scandals and murders, but also attempted to expose injustice and corruption. He hired a talented and well-paid staff, and after running up a debt of nearly $800,000 an astronomical sum at the time the newspaper finally began to show a profit in 1890. Eventually the Examiner began to overtake the other local newspapers in circulation. In 1895, Hearst moved the Examiner to New York City and continued to “make up” news in order to gain the reading public’s attention. The same year, he purchased the decrepit New York Morning Journal. With the purchase of the Journal, Hearst began a circulation war with Pulitzer. He hired away several of Pulitzer’s best writers, including Arthur Brisbane, and slashed the price of the newspaper to one cent. Thus began what Hearst termed an era of “new journalism.” Later renamed “yellow journalism” by Ervin Wardman, Hearst’s new journalism was known for its use of crude, theatrical, and most often inaccurate accounts of sensational news, meant to appeal to a wide audience. Hearst and Pulitzer engaged in a circulation war during the next few years that ignored both truth and principle in journalism.
William Randolph Hearst.
(The Library of Congress.)
terprise was helped by the new technologies of the early twentieth century, including telephones, cables, cameras, faster presses, cheap paper, color printing, and better sorting and folding machines. He was able to print thousands of papers daily and sell them cheaply. In 1900, Hearst bought the Chicago American, followed soon afterward by the purchase of papers in Boston and Los Angeles (1904), Atlanta (1912), and San Francisco (1913). He also moved into the magazine business, founding Motor in 1903. He then purchased Cosmopolitan (1905), Britain’s Nash Magazine (1910), Good Housekeeping (1911), and Harper’s Bazaar (1912). Hearst also started nationwide services for supplying news and features with the creation of King Features Syndicate and the International News Service, both founded in 1910.
In 1900 Pulitzer gave up the field, and Hearst began a steady acquisition of newspapers. His newspaper en-
During the 1920s, Hearst branched out into the radio business, purchasing stations in Pittsburgh, Baltimore, and Milwaukee. In 1935 he consolidated his 90 newspapers under the name American Newspapers, Inc. At the time his assets were estimated at $197 million. His wealth started to erode due to several factors, however. One was his extravagant personal spending, which at its peak reached $15 million a year. In 1919, upon the receipt of his father’s fortune, he spent $50 million on New York real estate and $50 million on his art collection—the largest ever assembled by a single individual. In that year he also started construction on a 37-million-dollar castle in San Simeon, California. Combined with his refusal to sell any of his properties or cut salaries, Hearst’s extravagence had a serious impact on his financial situation.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
3 8 5
W i l l i a m
R a n d o l p h
H e a r s t
man.” Whatever the impact Hearst had on the future of journalism, he certainly had influence during the time he was in power, albeit less than he may have liked. Although he did have some power in national Democratic politics, his influence was due more to his status as a millionaire than as an opinion-maker.
Chronology: William Randolph Hearst 1863: Born. 1887: Took over father’s newspaper. 1895: Bought the New York Journal. 1903: Started in the magazine business, beginning with Motor. 1903: Began four-year stint in Congress. 1910: Created King Features Syndicate and International News Service. 1913: Started in motion picture business with newsreels. 1935: Incorporated his 90 newspapers. 1951: Died.
This impact was intensified by the effects of the Great Depression, and by 1937 Hearst faced a financial crisis. In June of that year, Hearst suddenly gave up control of several of his properties. His legal advisor, Clarence Shearn, became the sole voting trustee of Hearst’s stock in American Newspapers. Shearn immediately cut back by selling some of the newspapers and radio stations, shutting down one of the magazines, and liquidating parts of Hearst’s real estate holdings. He also halted construction on the castle that Hearst had begun in 1919 and sold many of the antiques that Hearst had collected to furnish it. The Hearst empire survived the crisis and as a result of wartime prosperity and corporate reorganizing, Hearst regained some control over his publishing enterprise. Although somewhat diminished, by the end of World War II Hearst’s publishing conglomerate was still the largest in the United States.
One example of the effect of Hearst’s yellow journalism came during the Cuban revolt against Spain and the resulting Spanish-American War. Hearst had early favored American intervention and printed stories in the Journal that played up sympathy for the Cubans and hatred for the Spanish, as well as sensationalizing the situation. When the American battleship Maine blew up in Havana harbor, Hearst immediately blamed it on the Spanish, although there was never proof that they were responsible, and demanded war. Hearst’s wish was granted when President McKinley declared war against Spain on April 11, 1898. Although historians disagree about how much influence Hearst and his newspaper had on bringing about the Spanish-American War, Swanberg insists that had it not been for Hearst’s effort, “there would have been no war.” An accidental effect of Hearst’s actions resulted in 1927 when Hearst newspapers printed unchecked, forged documents charging that the Mexican government had paid several U.S. senators more than $1 million to support a Central American plot to wage war against the United States. Hearst emerged from the scandal unaffected, but the fiasco led President Calvin Coolidge to appoint Dwight Morrow as ambassador to Mexico, and this move launched a new era in U.S.-Latin American relations. By the 1920s, Hearst owned 31 newspapers, and one in every four Americans read a Hearst newspaper. Hearst had become, according to John Ingham, “one of the bestknown, best-hated, and most thoroughly publicized figures in the land.” Many believe that his life was portrayed in Orson Welles’s classic film Citizen Kane, the release of which Hearst tried to suppress. He was unsuccessful, however, and the film was released in 1941, ten years before his death.
Sources of Information Bibliography Contemporary Authors. Detroit: Gale Research, 1986. Encyclopedia of World Biography. Detroit: Gale Research, 1997. Garraty, John A., ed. Dictionary of American Biography. New York: Charles Scribner’s Sons, 1977.
Social and Economic Impact The journalistic legacy Hearst left was not necessarily a positive one according to some critics. Many feel that the period of yellow journalism was not a shining moment in history, though some observers say that Hearst’s influence was not felt beyond the time when his approach to news went out of style, soon after his death. W. A. Swanberg, author of Citizen Hearst, called Hearst “essentially a showman and propagandist, not a news-
3 8 6
B u s i n e s s
Garraty, John A., and Jerome L. Sternstein, eds. Encyclopedia of American Biography. New York: HarperCollins, 1996. Ingham, John N. Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood, 1983. McGuire, William and Leslie Wheeler. American Social Leaders. Santa Barbara, CA: ABC-Clio, 1993 Who Was Who in America. Chicago: Marquis Who’s Who, 1966.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
John Heinz Overview Henry John Heinz started selling surplus produce from his family’s garden when he was eight years old. Many years later, his company, H. J. Heinz Company, had become the largest pickling and preserving house in America. During his time, Heinz was also known for his model factories, in which there was never a strike. In current times, people recognize the advertising slogan he created in 1856 that reminded buyers that Heinz offered “57 varieties.”
(1844-1919) H. J. Heinz Company
Personal Life Henry John Heinz was born on October 11, 1844, in Pittsburgh, Pennsylvania, and grew up in Sharpsburg, Pennsylvania. His parents, Henry Heinz and Anna Margaretha (Schmidt) Heinz, were both German immigrants. On his father’s side, Heinz was a direct descendant of John Lorenz Heinz, a successful winemaker from Bavaria, Germany. Through the generations, that estate had been reduced due to repeated subdivisions among heirs. Thus by the time the senior Henry became an adult, he was left to find his own way. He joined the tide of immigrants and moved to America in 1840. Anna Margrethe Schmidt, the daughter of a Burgermiester of a town near Hershfield, Germany, came to America in 1843. Heinz’s father was a brickmaker, and his mother spent much of her time gardening. His parents, who were strict Lutherans, hoped that their son would go into the ministry, but upon observing his business savvy, which became evident when he helped produce an income for the family from the backyard garden, they allowed him to follow his own interests. Heinz
3 8 7
J o h n
H e i n z
formal education consisted of a business course at Duff’s Business College, but that was only a starting point. At the age of 15, he became his father’s bookkeeper and assistant. When he came of age, his father made him a partner. At that time, brick making was a seasonal operation. Heinz could see greater possibilities and thus made various improvements, such as installing drying racks and heating flues. These changes allowed the company to produce bricks year round. He had a brick making company of his own briefly, and always maintained an interest in bricklaying. The enterprise he showed at age eight, however, by selling produce from his mother’s garden, led him to the career that he followed for the rest of his life. He continued to raise and sell produce. Here again, he implemented new ideas in growing, for example, expanding into the use of hotbeds and intense cultivation. By 1860 he had several employees and made three wagon deliveries every week to grocers in Philadelphia. In 1869 he and a friend formed a partnership to bottle and sell horseradish, a business that went bankrupt in 1875.
Henry John Heinz.
(AP/Wide World Photos, Inc.)
always gave credit to his strict and principled upbringing for helping him to succeed in business. Heinz married an Irish girl, Sarah Sloan Young, in 1869, and they had five children, four sons and a daughter. Heinz started life as a Lutheran, then became Methodist, then went to Presbyterianism. Politically, he voted Republican in the national elections, but locally he declared himself an independent. An avid worker for civil reform, Heinz was also very involved in religious and community activities. He served as chairman of the executive committee of the World’s Sunday School Association in 1913. He was one of the founders of the Western Pennsylvania exposition society and a member of the Pittsburgh chamber of commerce, as well as several charitable and educational organizations. He supported the YMCA and was president of the board of trustees at Kansas City University. To honor his mother, he gave the University of Pittsburgh a building to be used exclusively for “the religious and social activities of the student body of the university” in 1914. He also had an interest in social reform and was a member of the Japan Society of New York and the Inter-Racial Council. Heinz traveled extensively, both in America and overseas. His foreign experiences included Mexico, Europe, the West Indies, Egypt, and Turkey.
Career Details Throughout his career, Heinz was innovative and had an intuitive sense for business and marketing. His
3 8 8
B u s i n e s s
A year later Heinz tried again, with his brother, John, and his cousin, Frederick, as partners, and this time he was more successful. The company of F & J Heinz was formed in 1876 to produce pickles, condiments, and other prepared foods. The firm was reorganized in 1888 as the H. J. Heinz Company. By 1896 the company made so many different products, Heinz created the advertising slogan “57 varieties,” which became an American colloquialism. In 1905 the company was incorporated with Heinz as president where he served until his death. At that time H. J. Heinz was the largest pickling and preserving business in the world. In addition to his enormous success as producer of prepared foods, Heinz was considered an advertising and merchandising genius. He set up New York’s first large electric sign in 1900, which consisted of a 40-foot-long green pickle and contained 1200 electric light bulbs. Heinz’s artistic touch in creating and developing attractive labels and bottles was credited for the success of his products, although the fact that he insisted on packaging only the highest quality product also had an influence. Heinz also made a point of exhibiting at national and international food expositions, which helped his products become well known. His exhibits were impressive; at the World’s Columbia Exposition in Chicago in 1883, Heinz won a gold medal and several other awards for 18 of his products.
Social and Economic Impact The main Heinz plant was built in 1889, and by 1919 there were 25 branch factories located all around the United States and in other countries, including Canada, England, and Spain. The company maintained warehouse and distribution centers in all major U.S. cities. H. J.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J o h n
H e i n z
Heinz had its own bottle, box, and can factories and its own seed farms. Each year the company processes the yield from 100,000 acres; at least 1,000 of those acres were cultivated by the firm itself in Muscatine, Iowa. The service of 100,000 people was needed to cultivate and harvest the crops that the company used, and the company employed around 6500 people directly. At the turn of the century, H. J. Heinz was the largest producer of pickles, vinegar, and ketchup, the largest grower and producer of mustard, and the fourth largest packer of olives. Heinz was also known for his excellent factories. In Pittsburgh he constructed an elaborate complex of factories that encompassed over seven acres of floor space. It became a tourist attraction, as people would come to watch the white-coated employees pack the products. He won several awards for his factories, including one from the International Brotherhood of Electrical Workers who called it “a utopia for working men.” Heinz also supported the Pure Food Act, which proposed to regulate conditions in food processing factories such as his. The rest of the industry tried to stop the legislation, but Heinz felt it was so important that he even sent his son to Washington to campaign in favor of the act. H. J. Heinz Company remained a family business even after Heinz’s death. Heinz’s son Howard Heinz (1877-1941) succeeded his father as president of the company in 1919 and served in that position until his death. Thereafter, Howard’s son, Henry John Heinz II was president from 1941 until 1959, at which time he became chairman of the board. His son, Henry J. Heinz III (b. 1938) graduated from Yale and was the product manager in charge of marketing for H. J. Heinz from 1965 to 1970, at which time he was elected to the U.S. Congress.
Chronology: John Heinz 1844: Born. 1860: Developed business of growing and selling produce. 1869: Formed a partnership to make and sell horseradish. 1876: Started F & J Heinz. 1888: Reorganized company as H. J. Heinz Co. 1889: Won first medal awarded in Europe to an American pickler. 1896: Introduced “57 varieties” advertising slogan. 1905: Incorporated H. J. Heinz Co. with Henry John Heinz as president. 1919: Died.
Bibliography Ingham, John N. Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood, Press 1983. The National Cyclopedia of American Biography. New York: James T. White, 1937. Webster’s New Biographical Dictionary. Springfield, MA: Merriam-Webster, 1988.
Sources of Information
Who Was Who in America, Chicago: A. N. Marquis Co., 1943.
Contact at: H. J. Heinz Company 600 Grant St. Pittsburgh, PA 15219 URL: http://www.heinz.com
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
3 8 9
Leona Helmsley (1920-) The Helmsley Palace Hotel
Overview Dubbed by many in the press as the “Queen of Mean” due to her demanding, aggressive persona, Leona Helmsley reigns supreme over one of New York City’s most luxurious hotels, the Helmsley Palace located in midtown Manhattan. Married to the late billionaire Harry Helmsley since 1972 and berated by some due to her seeming lust for the spotlight, Leona has sometimes found her personal accomplishments as a savvy businesswoman overshadowed by the mystique that has grown up around her since marrying the much older Helmsley. Leona’s ultimate fall from grace occurred in 1989, when she was accused and then convicted of income tax evasion. Forced to trade her luxurious penthouse apartment for a prison cell while serving 21 months of her four-year sentence, Helmsley has since returned to New York City and to business as usual.
Personal Life Leona Helmsley was born Leona Mindy Rosenthal in New York City on July 4, 1920. The daughter of a local hat manufacturer, Helmsley graduated from New York City public schools and then enrolled in the English program at the city’s Hunter College. The ambitious and attractive young woman decided after her sophomore year, however, that there were quicker ways to achieve success, so she left Hunter for the more lucrative profession of modeling. After working as a model for a number of years—Helmsley would be one of several Chesterfield cigarette girls to grace that company’s print ads—she married attorney Leo Panzirer in 1939, and had a son, Jay.
3 9 0
L e o n a
H e l m s l e y
After their son was grown, Helmsley and Panzirer divorced, and the 42-year-old Leona was forced to reenter the job market. In 1962 she got a job as a receptionist at the New York real estate firm of Pease & Elliman, working under the name Leona Roberts. At Pease & Elliman she quickly advanced, moving into positions as saleswoman, broker, and ultimately senior vice president during her seven years with the firm. From there, Leona founded her own firm, Sutton & Towne Residential, where she again proved her abilities, earning as much as $400,000 in sales commissions during a single quarter of 1968. Two years later, Leona was offered a position as vice president at Brown, Harris, Stevens, a subsidiary of the Helmsley-Spear property management concern. The company’s co-owner, Harry Helmsley, was attracted to much more than Leona’s professional abilities; within a year Harry—a kindred driven spirit who had begun his own successful career in New York City real estate in 1925 as an office boy and rent-collector—divorced his first wife of 33 years and made his new vice president his new wife. Leona Helmsley did not let being married to a man worth approximately $5 billion stop her from continuing to advance her own career. While she continued to devote her time and energy to her job with Brown, Harris, Stevens during the first few years after her 1972 marriage, she also became increasingly interested in the creative opportunities that presented themselves in another line of her husband’s business: hotel ownership. After Harry built the Harley Hotel near Grand Central Station in the mid-1970s (naming the hotel after a combination of the first syllable of “Harry” and “Leona”), Leona grew even more fascinated. When a face-lift was scheduled for the interior spaces of the prestigious, Helmsley Park Lane Hotel, Leona drew up and presented her own design ideas, which her husband liked far better than those of the professional interior designers he had originally contracted for the project. As her flair for management became increasingly apparent, Helmsley soon found herself in charge of her husband’s newly acquired national chain of Hospitality Motor Inns, selected Sheraton Inns, and assorted other hotels scattered throughout a dozen states. In 1980 Leona was named president of Helmsley Hotels, Inc. Under Helmsley’s capable management, occupancy rates among the Helmsley-owned hotels around New York City topped the city’s averages within three years. Her relentless attention to detail and her diligence in ensuring that her own high standards have been maintained by the nearly 5,000 employees she oversees has paid off in financial, if not always personal, terms. Considered a harsh taskmaster by many Harley Hotel staff, Helmsley has always maintained that her greatest joy in her work was not making money or amassing power, but rather the opportunity to work near the man to whom she remained devoted until his death in 1997.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Leona Helmsley.
(Reuters/Peter Morgan/Archive Photos.)
Career Details Coming from a background in real estate, with little college and several years spent at home as a wife and mother, Helmsley worked hard to have her accomplishments taken seriously when she was made president of the 21-hotel Helmsley chain. But the consistent rises in occupancy rates accomplished under her direction forced people to respect her capabilities as a manager, even if many quibbled about her methods. Helmsley has kept a firm hand on almost every aspect of running the hotels. “I can tell you what’s going on at each hotel, when a lifeguard’s goofing off or when a maid’s not doing her job,” she told an interviewer in New York. “You’re dealing with people who don’t live here, whose name isn’t on the building, who get away with what they can. I give them reason to want to get away with less. If something is wrong, the first time, I ask them to change it. The second time, I ask an octave higher. The third time, I ask the person if they want me to do it. The fourth time, if things aren’t absolutely right, they’re fired.” Tales of Helmsley’s unexpected visits, white-glove inspections, and job-related interrogations have become legendary, but perhaps less well known has been her motivation: her ultimate concern for customer comfort. She taste-tests food prepared in her hotel kitchens, anonymously phones hotel reservation desks to monitor staff efficiency, and keeps a close eye on customer comment cards. As the caption states in one of the many ads in which she appears touting the quality aspects of the
S t u d e n t s
3 9 1
L e o n a
H e l m s l e y
Chronology: Leona Helmsley 1920: Born. 1962: Began nine year career with the New York City real estate firm Pease & Elliman. 1967: Founded real estate firm Sutton & Towne Residential. 1970: Named Woman of the Year by the New York Council of Civic Affairs. 1972: Married real estate developer Harry Helmsley. 1980: Became president of Helmsley Hotels, Inc. 1988: Received 47-count indictment for tax evasion. 1989: Convicted of income tax evasion and sentenced to 21 months in prison. 1994: Released from prison and moved to Scottsdale, Arizona. 1997: Husband, Harry Helmsley, died at age 87.
Helmsley chain: “I wouldn’t settle for a staff that didn’t put guests first. Why should you?” The print adds appearing in most of the nation’s upscale glossy magazines during the 1980s transformed the photogenic Helmsley into something of a media star, and the reaction they received from the press did little to enhance her public persona. Portrayed as aggressive, paranoid, and despotic, the “Queen of Mean” received little sympathy from a disgruntled media when she was charged with income tax evasion in April of 1988. Although her husband would be charged with her, when the convictions came down the following year it would be Leona, then 68, who would take the fall and serve out a 18-month sentence in a Danbury, Connecticut, prison; Harry was deemed incompetent to stand trial. Released in 1994, Helmsley and her by-then ailing husband retired to their second home in Scottsdale, Arizona, where Leona was still required to perform 750 hours of community service as a condition of her early parole. At the conclusion of the full 21-month sentence, she returned to New York City to celebrate, throwing a party for 35 loyal friends at the Park Lane Hotel. Observers were impressed by her ability to rise from her humiliation seemingly unfazed, acting in the proud, confident manner characteristic of her during the strongest
3 9 2
B u s i n e s s
years of her rule. Quipped guest Mike Wallace to People Weekly, “I was astonished at how good she looked. I hear she did 100 push-ups and 100 sit-ups that day.” The only break in Helmsley’s cool came when a guest proposed a toast praising Leona’s grace under pressure; at that point she clung to the arm of her beloved Harry standing at her side and burst into tears of emotion. Helmsley’s two-year jail term did not soften the media’s attitude toward her. After her return to the business world, her alleged transgressions once again dotted New York City papers. The Village Voice accused her of conning fellow prison inmates into doing her chores for her while serving out her sentence. Accusations by Helmsley’s attorney, Nathan Dershowitz, that the hotel queen’s legal bills remained unpaid, also found their way into the headlines. In 1995, reports circulated that the then 74-year-old Helmsley was ordering the domestic staff at her Scottsdale home to take over completion of the annual 250 hours per year of community service she was obligated to over three years, which included such tasks as stuffing envelopes and wrapping presents for patients at a local hospital. By the late 1990s, her prison term completed, Helmsley began to take a strong role in managing not only the hotel chain of which she was still president, but her now seriously ailing husband’s other numerous business interests as well. The core of Harry Helmsley’s empire is Helmsley-Spear, a property management firm that renovates and maintains all the buildings owned by the real estate tycoon—including the Empire State Building and the Flatiron Building—through a web of limited partnerships. Leona’s sudden, aggressive interest in property management was seen by other partners in HelmsleySpear—particularly those to whom she had once promised to sell the company after her husband’s death— as what an Economist writer characterizes as an attempt to “loot” the parent company before those partners could have an opportunity to purchase the firm. When her husband died in January of 1997, a suit was in process against the Helmsleys, charging that Leona had either overcharged Helmsley-Spear for products and services or transferred money-making management assignment to her own firm, Helmsley-Noyes. For her own part, Mrs. Helmsley was viewed as maneuvering assets to retain control over the highly profitable company in anticipation of her husband’s death. The comment that she was once reported to have made, that only the “little people” pay taxes, caused many in the press to anticipate yet another chapter in the continuing saga of Leona Helmsley versus the Internal Revenue Service.
Social and Economic Impact Helmsley’s rise to fame—and infamy—has kept her a controversial figure. While some admire her competitive drive and claim that the media has unfairly criticized her for qualities that are admired in men, others point out
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
L e o n a
that Helmsley has only herself to blame for her downfall. Many feel that she has flaunted her wealth and power to diminish those around her. Even the lavish “I’m Just Wild about Harry” parties Helmsley threw each March to celebrate her husband’s birthday seemed to stretch beyond affectionate gestures into purposeful ostentation. The media coverage of Helmsley’s trial for tax evasion many claimed seemed to focus more on personality than legal matters. While charges against Helmsley and her associates included fraud, conspiracy, and falsifying business records, the media focused on elements of ostentation and extreme bad taste. Examples included numerous high-ticket items (including a $45,000 clock intended as a birthday gift to Harry), a satin and chiffon “hotel uniform,” and millions of dollars worth of renovations to the couple’s 26-acre, 28-room estate in Greenwich, Connecticut, which were all written off against the income of the hotel chain, according to triumphant media reports.
H e l m s l e y
getting all the attention,” she once told New York magazine in praise of her beloved Harry. And when asked about the best part of her job, the hard-nosed businesswoman would answer, “At 4:30 or so when Harry picks me up.” Despite the controversy that surrounded them, after Harry’s death in 1997, a resilient Leona would characterize their life together in one word: “magical.”
Sources of Information Contact at: The Helmsley Palace Hotel 455 Madison Ave. New York, NY 10022 Business Phone:
Bibliography Bohner, Kate, ed. “Leona’s World.” Forbes, 20 May 1996. “Harry Helmsley’s Legacy.” Economist, 11 January 1997.
A woman of clear contrasts, Helmsley has throughout her career been portrayed by the press as ruthless, difficult to deal with, and dishonest. This version of Helmsley, however, remains in stark contrast to the loving, affectionate wife that interviewers would sometimes uncover if they asked about her relationship with her husband. Although Harry was many years older than his second wife, not even the media could successfully paint her as a gold digger. “Other men wouldn’t put up with my
Newman, Julie. “Leona, Free at Last.” People Weekly, 14 February 1994.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
“Love of Her Life: Right to the End, Leona Helmsley Was Just Wild about Harry.” People Weekly, 20 January 1997. Luscombe, Belinda. “Helping Hands.” Time, 26 June 1995. Maas, Jane. Adventures of an Advertising Woman. New York: St. Martin’s Press, 1985.
3 9 3
John Hendricks (1952-) Discovery Communications, Inc.
Overview John S. Hendricks, founder, chairman, and chief executive officer of Discovery Communications, Inc., made a fortune in the cable TV business, taking about 10 years to turn his TV programming company into a $700 million a year business. Though not a television professional when he came into the business, Hendricks succeeded by knowing how to recruit the right people in the right areas: marketing, programming and public relations. His Discovery Channel eventually became a staple of cable systems throughout the country. He continually sought new opportunities for his company, exploring technological advancements, like digital cable TV and cyberspace.
Personal Life Hendricks was born in West Virginia in 1952. He earned a bachelor’s degree in history, graduating magna cum laude in 1973, and received an honorary doctorate from the University of Alabama at Huntsville. John Hendricks and his wife, Maureen, have two children. Hendricks has served on the following boards: National Academy of Cable Programming, National Cable Television Association, Omniview Corp., International Television and Radio Foundation, Academy of Television Arts & Sciences, James Madison Council, Library of Congress, National Council, National Museum of Natural History, Smithsonian Institution, Lowell Observatory, National Cable Television Center and Museum, Foundation for Minority Interests in Media, Inc., and Excalibur Technologies.
3 9 4
J o h n
H e n d r i c k s
Hendricks, a strong supporter of education and an advocate of the First Amendment, became the first corporate leader to receive the National Education Association’s Friend of Education award for “innovations in education and technology and greatly expanding educational opportunity for America’s schoolchildren.” In the past, the award was given to national figures like President Lyndon Johnson and Supreme Court Justice Thurgood Marshall. In 1996, he received the Media Institute’s Freedom of Speech Award for “promoting the vitality and independence of American media and communications.” Hendricks has addressed the National Press Club, has been featured in Business Week magazine, and has made appearances on television programs, such as the CBS Evening News, CNN’s Crossfire, Larry King Live!, and PBS’ Technopolitics.
Career Details Before launching The Discovery Channel, Hendricks was not unfamiliar with the broadcasting and communications fields. He had served as president of the American Association of University Consultants, which he founded. As a private consulting organization, the AAUC is involved in television distribution and marketing of educational programs and services. Hendricks amassed a large client list during his tenure, including colleges, universities, and educational film distributors. Along with his AAUC duties between 1974 and 1980, Hendricks served as director of corporate relations for the University of Maryland. Prior to that, from 1973 to 1974, he served as director of community and governmental relations for the University of Alabama in Huntsville. When Hendricks started Discovery in 1982, he invested $20,000 of his own money for the initial financing provided by an investment bank and a New York insurance company. To develop the new cable service, he incorporated his company, then called the Cable Educational Network Inc. The Discovery Channel first aired on June 17. In 1986, Hendricks got further assistance when cable operators Telecommunications, Inc., Cox Cable Communications, and Newhouse Broadcasting invested in his company. From there, Discovery Channel became Discovery Communications, Inc. (DCI) and grew to include overseas, multimedia and online ventures. DCI, which is headquartered in Bethesda, Maryland, also expanded into retailing when Hendricks purchased a Texasbased chain of stores called the Discovery Stores and The Nature Company.
John Hendricks.
(AP Photo/Rhoda Baer.)
across the globe. It also branched out into other programming areas with The Learning Channel and the Animal Planet Channel. In 1996, Hendricks announced that Discovery was joining forces with the British Broadcasting Corporation (BBC) to spend more than $500 million to produce new programming and to begin satellite and cable channels worldwide, including a U.S. channel that would feature drama and performing arts programming produced by the BBC.
DCI has since become one of the largest cable television networks in the world. By the late 1990s, it was serving over 114 million subscribers in 145 countries
In 1997, Discovery premiered its first feature film, The Leopard Son, a documentary about a leopard cub living in the Serengeti. That same year, DCI bought the
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
3 9 5
J o h n
H e n d r i c k s
one of the fastest growing midsize networks in North America, reaching over 60 million subscribers in the United States and over 5 million subscribers in Canada by the end of the 1990s.
Chronology: John Hendricks 1952:Born. 1973: Graduated from the University of Alabama in Huntsville. 1973: Served as director of community and governmental relations, University of Alabama for two years. 1974: Served as director of corporate relations, University of Maryland for six years. 1982: Started the Discovery Channel. 1986: Secured investments from cable operators. 1989: Discovery launched Discovery Europe. 1991: Purchased the Learning Channel. 1997: Discovery bought the Travel Channel. 1998: Discovery’s revenues reached $700 million.
Travel Channel and was in the process of developing even more new networks.
Social and Economic Impact As the founder of Discovery Channel, Hendricks created America’s first cable network designed to provide world-class documentary programming in the areas of nature, science and technology, history, human adventure and world exploration. Hendricks’ expressed objective is to fulfill a social responsibility to enrich the culture. The growth of Discovery Communications, Inc. has been rapid and vast. In 1985, it started out with a revenue of $200,000 for the entire year. In 1998, revenue increased to $700 million. Hendricks accomplished this by recognizing technological possibilities and taking full advantage of opportunities. The company went international in 1989 and started Discovery Europe. In the late 1990s, Hendricks took his company into the multimedia and online areas and looked toward the digital spectrum as the next expansion frontier. When Hendricks bought The Learning Channel in 1991, the acquisition complemented his Discovery Channel, as it offered viewers of all ages education in an entertaining format. The Learning Channel quickly became
3 9 6
B u s i n e s s
Now more than just a television cable channel, Discovery takes advantage of the increasing interactivity of communications and distribution vehicles in order to reach larger audiences. DCI has the capability of holding dialogues with viewers in living rooms, corporate boardrooms, and classrooms throughout the world. Hendricks is particularly concerned with education. His company’s Discovery Channel School teams with companies to provide content, connectivity, and training resources for educators. The list of assets Hendricks has at his disposal to accomplish his mission is impressive. DCI is a privately held, diversified media company that operates several distinct business units. These include Discovery Networks U.S., consisting of Discovery Channel, The Learning Channel, Animal Planet, and The Travel Channel as well as the package of Discovery digital services, including Discovery Science Network, Discovery Travel & Living Network, and Discovery Civilization: The History and Geography Channel. The company also includes Discovery Networks International, with its 19 different feeds of 15 separate Discovery networks transmitted worldwide in 18 languages; Discovery Enterprises Worldwide, consisting of Discovery Channel Multimedia, Discovery Channel Online, Discovery Channel Video, Discovery Channel Publishing and Discovery Channel Education; Discovery Retail, consisting of 110 stores of The Nature Company, 18 Discovery Channel Stores and three Scientific Revolution stores; and Discovery Channel Pictures, the theatrical and large-format film division of DCI; and a wholly owned subsidiary, Your Choice TV. Hendricks envisioned a long list of non-fiction specialty programming for when cable expands into the digital format. Discovery has the technological advantages to support the move into digital broadcasting. DCI channels can share programming content, which would keep costs down. Discovery also benefits from its large investors, Liberty Media and Cox Communications
Sources of Information Contact at: Discovery Communications, Inc. 7700 Wisconsin Ave. Bethesda, MD 20814 Business Phone: (301)986-0444 URL: http://www.discovery.com
Bibliography “Arena Anchor Plans Another Three-Level Store.”Washington Post, 23 October 1966 “At Heart, Discovery CEO Still an Entrepreneur.” Washington Business Journal, 22 December 1995.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J o h n
H e n d r i c k s
“Cable Pioneer Discovers Value of Putting Substance Over Style.” Washington Times, 23 December 1996.
Hendricks, John S. “Responsibility: It’s the Right Thing to Do.” Broadcasting and Cable, 20 October 1997.
Cheshire, Mark. “Travel Channel Getting New Owner.” Daily Record, 11 September 1997.
“John S. Hendricks.” Available from http://www.gsb.georgetown.edu/dept/undergra/programs/pastdis.htm.
“Discovery’s Age of Exploration.” Business Week, 7 October 1994.
“John S. Hendricks.” Available from http://www.ceoforum.org/ bios/hendricks.html.
“Excalibur Technologies Announces Election of John S. Hendricks to Board of Directors.” Available from http://www.excalib.com/news/excapress/hendricks.html.
“Sen. Patrick Leahy and Discovery’s John S. Hendricks.” Available from http://www.mediainst.org/banquet.htm.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
3 9 7
Milton Hershey (1857-1945) Hershey Foods Corporation
Overview Although Milton S. Hershey never attended school beyond the fourth grade, he founded what was in 1904 the world’s largest single entity engaged solely in the manufacture of chocolate and cocoa—Hershey Chocolate Company. He literally built the town of Hershey, PA, investing much of his fortune in the town and founding two schools in the community. Today the Hershey Company is still an active manufacturer of chocolate bars and other food products.
Personal Life Milton Snavely Hershey was born on September 13, 1857, to Henry H. Hershey, an itinerant speculator, and Fannie B. (Snavely) Hershey. His ancestors were Swiss and German and had settled in Pennsylvania in the early 1700s. He began his life in his grandfather’s farmhouse near Derry Church, Pennsylvania. and eventually returned to his birthplace and built the town of Hershey. Due to his father’s fairly unsuccessful career, the family moved often, and within eight years Hershey had attended seven different schools. He dropped out of school after the fourth grade. At the age of 14, Hershey took his first job as a printer’s devil for a newspaper in Lancaster, Pennsylvania. He lost the job within a year and then became an apprentice to a confectioner in Lancaster in what would later become his life’s work. Hershey married Catherine Sweeney, a New York City shop girl, in 1898. The couple was childless, but in
3 9 8
M i l t o n
H e r s h e y
1909 they decided to house and educate four orphan boys. This venture marked the beginning of the first school that Hershey would establish.
Career Details After four years of learning the confectioner’s trade, Hershey went into business for himself in Philadelphia. Beginning in 1876, Hershey made and sold candy, but the business did not pay, and he gave it up in 1882. Hershey worked for a Denver, Colorado caramel company for a while. He then ran a candy store with his father, but that business eventually collapsed. He made another attempt at the candy business in New York City, a venture that failed in 1886. Hershey finally found his niche when he established the Lancaster Caramel Company in Lancaster in 1888. He used a new method he had learned in Denver of making caramels with fresh milk. An importer from England was impressed with the candy and placed a large order. From there, Hershey’s business grew rapidly. Within three years, Hershey became one of the wealthiest men in Lancaster. He continued his manufacture of caramel candy, which he concocted himself, throughout the 1890s, and enjoyed considerable success. In 1893, Hershey was so fascinated by the German chocolate-making machinery demonstrated at the Chicago International Exhibit that he bought his own equipment. He began experimenting with making his own chocolate, and in 1894 Hershey Chocolate Company became a subsidiary of his caramel business. He expanded this component of his business, and in 1900 decided to concentrate on the production of chocolate. He sold his caramel business to his chief rival, the American Caramel Company, for $1 million. When he sold the company, he retained the chocolate making equipment, and set out to mass produce chocolate to satisfy what he believed to be an expanding market.
Milton S. Hershey.
(UPI/Corbis-Bettmann.)
In 1942, Hershey resigned as the president of the Hershey Corporation, but he remained chairman of the board until near the end of his life. Before his death in 1945, Hershey saw the production of a variety of chocolate products that are still produced today, including Hershey’s Kisses, Mr. Goodbars, Hershey’s Syrup, and Reese’s Peanut Butter Cups. Hershey began a company that has provided us with products that have become part of American traditions.
With the expansion of his business, Hershey found he needed more space. He started construction on a new plant in Dauphin County, Pennsylvania, on his homestead of 500 acres. The business eventually expanded into 12,000 acres, and by the time of his death Hershey’s company was using 400,000 quarts of milk a day in the manufacture of milk chocolate. This required the milk supply from 30,000 cows a day. In addition, almonds were grown in California for use in the milk chocolate almond bars that had become so popular. The company had become the world’s largest manufacturer of chocolate. Profits had gone from $622,000 in 1901 to $55 million in 1945. Part of Hershey’s success was due to his perfection of the milk chocolate and almond milk chocolate bar, which he first sold for a nickel each. He did not advertise his product; his philosophy was “quality is the best advertising.” The Hershey Chocolate Company was incorporated in 1941, with Hershey as the main stockholder and chairman of the board.
A year after Hershey built the new plant in Pennsylvania, 1500 were in his employ. By the time of his death, this number had increased to 3800. In addition to the employment opportunities offered by his plant, Hershey had an immeasurable impact on the development of the town of Hershey and the surrounding community. With his own money, Hershey built schools, churches, stores, a bank, an amusement park, a zoo, a football field, an inn, golf courses, and a dancing pavilion. He even developed a trolley-system to bring in workers from neighboring towns. In 1930, to help provide employment during the Depression, Hershey initiated a long-range project to build a large community building, a hotel, an office building, a sports arena, a new school, and a 17,000-seat football stadium. Childless himself, Hershey became, in many ways, father to the community of Hershey. Because
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Social and Economic Impact
3 9 9
M i l t o n
H e r s h e y
designated 50 million dollars to build the Milton S. Hershey Medical Center, the medical school for Pennsylvania State University. Upon his death, Hershey left the bulk of his stock to the Milton Hershey School Trust, which is still the major stockholder in Hershey Foods.
Chronology: Milton Hershey 1857: Born. 1876: Started his own candy-making business. 1888: Started Lancaster Caramel Company. 1893: Established Hershey Chocolate Company. 1900: Sold caramel business and started to concentrate on the manufacture of chocolate.
Milton S. Hershey’s philanthropic efforts have had long-lasting effects that continue to reach people today. The Hershey Industrial School is now called the Milton Hershey school and still provides education for many children. The Hershey company has retained his philosophy of generosity. The company offers educational materials to teachers and funds the Hershey Youth Program, sponsoring youth involvement in athletics. In 1995, 50 years after his death, the U.S. Postal Service put Hershey on a stamp as part of their Great Americans series. The Postmaster General at that time commented, “It is a fitting tribute to a man whose generosity and caring have left such a lasting mark on our world.”
1903: Constructed new plant in what would become Hershey, PA. 1909: Founded Hershey Industrial School for Boys. 1938: Opened tuition-free Hershey Junior College. 1945: Died.
Contact at: Hershey Foods Corporation 100 Crystal A Dr. Hershey, PA 17033 Business Phone: (717)534-6799 URL: http:/www.hersheys.com
the town was not incorporated, Hershey maintained control and set rules that he believed would benefit the community. For example, he insisted that each company store earn only a moderate profit, and he rented houses to the employees at low rates.
Bibliography
Hershey also had a great effect on education, which has carried over into the present time. In 1909, Hershey established the Hershey Industrial School for Boys, which was a school for orphaned boys between the ages of four and eighteen. Hershey’s goal of the school was to avoid an institutional atmosphere, and to give the boys a personal environment in which they could gain confidence. In 1918, Hershey donated $60 million as a trust fund for maintenance of the school. Later, in 1938, Hershey founded another school, the Hershey Junior College for girls and boys. His large gift in 1918 to the trade school left it in a very good financial position. In 1963, the school
4 0 0
Sources of Information
B u s i n e s s
Current Biography Yearbook. New York: H. W. Wilson, 1945. “Hershey unwrapped in chocolate town.” Stamps, 30 September 1995. Ingham, John N. Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood, 1983. “Milton S. Hershey.” Hershey, Pennsylvania: Hershey Foods Corporation, 1998. Available from http://www.hersheys.com. The National Cyclopedia of American Biography. New York: James T. White, 1947. Van Doren, Charles, ed. Webster’s American Biographies. Springfield, MA: G. & C. Merriam Co., 1974. Webster’s New Biographical Dictionary. Springfield, MA: Merriam-Webster, 1988. Who Was Who in America. Chicago: A. N. Marquis, 1963.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Tommy Hilfiger Overview Tommy Hilfiger is the chief designer and cofounder of the Tommy Hilfiger Corporation, which designs and markets clothing and accessories for men, women, and children. Hilfiger’s designs, based on classic styles, helped him and his partners build a fashion company rivaling the success of designers Calvin Klein and Ralph Lauren.
(1952-) Tommy Hilfiger Corporation
Personal Life Tommy Hilfiger was born March 24, 1952, in Elmira, New York. His father, Richard, was a jeweler, and his mother, Virginia, is a former nurse. He married Susan Cirona in 1980, whom he met when she came to work in his first store, People’s Place. Together they have four children, Abby, Richard, Elizabeth, and Kathleen. In 1997, Hilfiger published his first book, titled All American: A Style Book by Tommy Hilfiger. Hilfiger developed an interest in fashion design while running his first boutique, People’s Place, in Elmira, New York. While working there he was responsible for all of the store’s decorations, and Hilfiger decided he preferred selling and designing clothing. He found a manufacturer that would make clothing according to his specifications, and began his design career. The store closed in 1979 due to bankruptcy, but Hilfiger continued the pursuit of his design career.
4 0 1
T o m m y
H i l f i g e r
Tommy Hilfiger waves to the crowd as he walks on a runway.
ing, especially the Ivy League look of chinos, madras, and oxfords.
Career Details When Tommy Hilfiger discusses his inspiration for designing such a popular line of clothing, his “leave-itto-Beaver” upbringing in Elmira, New York comes up frequently. As one of nine children, he grew up in a middle-class five-bedroom home collecting sports equipment, guns, cowboy hats, and wearing Billy-the-Kid brand jeans, all things he views as part of the “American” image. He also recalls how at 16 he loved to wear his service station uniform, which had a large automobile graphic on it. This may have had some impact on his prolific use of large graphics and logos in his designs. Also around age 16, he became interested in cloth-
4 0 2
(AP/Wide World Photos, Inc.)
B u s i n e s s
Hilfiger started his first clothing business during his senior year in high school, selling bell bottoms and candles in a small shop he opened in Elmira. He eventually began designing his own merchandise, and expanded the business to include 10 shops across upstate New York. Unfortunately, his first business venture ended in bankruptcy. Afterwards, Hilfiger and his wife, Susie, moved to New York City to look for design work. By 1985, he was considering offers to work for Perry Ellis and Calvin Klein, but declined them both. It was then that Mohan Murjani offered him a job and his own clothing line. It was also at this time that Hilfiger, having been through
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
T o m m y
H i l f i g e r
stages where he designed fashionable 1970s and 1980s trendy clothing, returned to his preppy roots. As he states in All American, “Picturing a more New England, outdoorsy, and classic campus look that I knew would last, I launched Tommy Hilfiger.” In 1989, Hilfiger left Murjani International. He began searching for money to expand his own private label. He teamed up with Silas Chou, who had the financial resources to build a company but needed a brand name to sell. The two signed up former Ralph Lauren executives Lawrence Stroll and Joel Horowitz and formed Tommy Hilfiger, Inc. Capitalizing on Polo’s success with the preppy look, Hilfiger designed casual men’s and boys sportswear in brighter colors with a looser fit.
Chronology: Tommy Hilfiger 1952: Born. 1971: Opened People’s Place in Elmira, New York. 1981: Founded 20th Century Survival.
Hilfiger admits it was Silas Chou that pushed the company toward such rapid expansion and success. Tommy Hilfiger, Inc. went public in 1992. In 1995, they licensed Pepe Jeans USA, and in 1996 began distributing women’s clothing. In late 1997, Tommy Hilfiger opened his first store on Rodeo Drive in Beverly Hills, and a second store in London in early 1998.
1982: Started Click Point—designed women’s clothing.
Tommy Hilfiger clothing was available in stores throughout the United States, Canada, Mexico, Japan, Central and South America, Europe, and the Far East. In his book, All American, Hilfiger explains his success in foreign markets by saying, “When I started to travel the world, I saw the fruits of American labor everywhere I went, the products and logos that are the trademarks of our industry and our culture. In the most exotic places in the world, you will see people wearing Levi’s and drinking Coca-Cola, obsessing over 1950s cars, and sporting cowboy shirts and boots, or wearing the rugged clothes we made for the great outdoors. No matter how different the customs, the world is tuned in to the signature emblems of the American lifestyle.”
1989: Formed Tommy Hilfiger, Inc. with Silas Chou.
By 1997, Tommy Hilfiger was co-chairman of a $316 million company. His own salary that year was almost $8.5 million. Hilfiger claims he never doubted his eventual success as a designer, and was only surprised it took him so long.
Social and Economic Impact
1985: Hired by Mohan Murjani to oversee design of Coca-Cola clothing line. 1986: Launched Tommy Hilfiger clothing line, backed by Murjani. 1992: Tommy Hilfiger Corp. is made public. 1997: Opened Tommy Hilfiger store on Rodeo Drive. 1997: Published All American: A Style Book.
His initial target market was men between the ages 18 and 25 with taste for high quality, designer clothing. Tommy Hilfiger, Inc. also manufactured its own clothing and was able to keep marketing and distribution costs down. Because of this, Hilfiger was able to offer high quality clothing, comparable to Polo, but at prices more accessible to the American public. Hilfiger’s clothing appealed to a wide market. Billed as a “cross-over” artist, Hilfiger’s designs were seen on everyone from Bill Clinton to Snoop Doggy Dog to the Spice Girls. He enhanced the basic preppy look in some cases simply by splashing his own name across the clothing, using brighter color palettes, and making his clothing slightly looser than traditional styles.
When Tommy Hilfiger first launched his clothing line, he decided to send himself right to the top. With the help of a publicity agent, he announced his arrival on the fashion scene in 1985 as one of “the 4 great designers for men,” along with Calvin Klein, Perry Ellis, and Ralph Lauren. Critics thought he was incredibly presumptuous and “tasteless.” Hilfiger was an unknown, and had never attended design school. Though he was regarded as an overnight success, it wasn’t until several years later, after forming Tommy Hilfiger, Inc. with Chou that Hilfiger truly made his mark on the industry.
No longer limited to his men’s line, in the mid- to late 1990s Hilfiger began expanding clothing lines to include products for women, children, and teenagers. He also offered a range of accessories and fragrances. Many of these additional product offerings were made possible through licensing agreements. For example, Tommy and Tommy Girl colognes were manufactured by Aramis, to whom he licensed the Tommy Hilfiger name. Tommy Hilfiger did not exclude customers seeking more specialized, high-end alternatives. To address that market, Hilfiger designed dressier, more expensive product lines that were marketed through specialty shops.
Hilfiger’s vision for his clothing centered around combining classic American styles with an updated look.
Hilfiger kept his hand in promoting his designs as well. He hosted fashion shows and autograph sessions, and
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
4 0 3
T o m m y
H i l f i g e r
conducted briefings for sales personnel via satellite. He educated retailers about Hilfiger products and how to display them. Hilfiger also solicited feedback directly from consumers and used that to influence future clothing lines. Hilfiger’s influence on the fashion industry has been widespread. Retailers were devoting increasing amounts of floor space to highlight his designs. Even before Hilfiger began marketing women’s clothing, women purchased it straight out of the men’s department. In fact, Hilfiger’s first attempt at women’s clothing failed because the line was too formal, not close enough in style to his classic, casual men’s look. Hilfiger redesigned the line, staying truer to his roots, and met with success. Hilfiger also found great success in the 1990s market because of the shift toward “business casual” dress codes in the work force. One of the Tommy Hilfiger Corporation’s primary goals was to build a “global designer brand.” As of 1998, Tommy Hilfiger products could be found in leading department and specialty stores throughout the United States, Canada, Mexico, Japan, Central America, South American, Europe, and the Far East. To further their goal of global expansion, the company looked for industry
4 0 4
B u s i n e s s
leaders in markets that shared Tommy Hilfiger, Inc.’s vision for worldwide growth when arranging licensing agreements. Tommy Hilfiger’s personal role in that vision was to make sure the company’s designs remained fresh and continued to appeal to their respective markets.
Sources of Information Contact at: Tommy Hilfiger Corporation 25 W. 39th St. New York, NY 10018-3805 Business Phone: (212)840-8888
Bibliography Doebele, Justin. “A Brand Is Born.” Forbes, 26 February 1996. Hilfiger, Tommy with David A. Keeps. All American: A Style Book by Tommy Hilfiger. New York: Universe Publishing, 1997. “Tommy Hilfiger Corporation.” Hoover’s Online. June 1998. Available from http://www.hoovers.com. Tommy Hilfiger Corporation 1997 Annual Report. New York: 1998.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
William Hilton Overview William Barron Hilton is chairman of the board of Hilton Hotels Corporation, a worldwide system of over 260 hotels and casinos that host more than 40 million guests annually. Among the company’s many notable properties are the Hilton Hawaiian Village in Honolulu, Hawaii, and the legendary Waldorf-Astoria in New York City. Hilton assumed control of the family firm after his father’s death in 1979, and since then he has helped it to grow and prosper to the point where it ranks as one of the country’s largest holders of real estate.
(1927-) Hilton Hotels Corporation
Personal Life William Barron Hilton was born in Dallas, Texas, on October 23, 1927, the second of three boys. His father, the son of Norwegian immigrants, was Conrad Nicholson Hilton, the legendary founder of the Hilton hotel chain. His mother, Mary (Barron) Hilton, had married Conrad in 1925, some six years after he opened his first hotel. In 1935, the Hilton family relocated to southern California in the wake of the hotel chain’s tremendous growth. Conrad and Mary eventually divorced, and in 1941 Conrad married Hungarian-born actress Zsa Zsa Gabor. Their union produced a daughter before it, too, was dissolved. As a young man, William Barron Hilton showed little interest in following his father into the hospitality industry. He served as a Navy photographer during World War II, then started his own business upon returning
4 0 5
W i l l i a m
H i l t o n
If business is good, people say it’s because of the assets Conrad put together. If business is bad, it’s . . . Barron Hilton’s fault.” Hilton did not originally gravitate to his father’s line of work. In 1946, following a stint in the service during World War II, he went into business for himself selling orange juice products in southern California as the operator of a citrus distributorship. Five years later, he joined the operations department of his father’s company. (Conrad Hilton thought it best for his son to start at the bottom of the corporate ladder.) The young man showed initiative and talent and in 1954 assumed the role of vice president. In 1960 Hilton turned his attention to a very different type of business when he established the Los Angeles Chargers football team of the American Football League (AFL). The following year, he moved the team to San Diego, California, and served as its president until 1966.
William Barron Hilton.
(Corbis-Bettmann.)
home. It was not until the early 1950s that he finally went to work for Hilton Hotels. A pilot since 1947, Hilton is an aviation enthusiast who uses his leisure time to pursue his hobby. In addition to flying and ballooning, he enjoys hunting, fishing, and amateur photography. He and his wife, Marilyn (Hawley) Hilton, have eight children and numerous grandchildren. Hilton is a member of many organizations and serves on the boards of a number of nonprofit groups. He is, for example, a member of the Conquistadores del Cielo, the PEACE Foundation Council, the International Order of St. Hubert, and the National Honorary Advisory Committee of the Naval Aviation Museum Foundation. He serves as the director for the Conrad N. Hilton Foundation, the Southern California Visitors Council, and the Executive Council on Foreign Diplomats. He is an honorary director of the Great Western Council and of the Boy Scouts of America. Hilton also serves as a trustee for the City of Hope at the Saint John’s Hospital and Health Center Foundation in Santa Monica, California, the World Mercy Fund, the Eisenhower Medical Center, and the Criminal Justice Legal Foundation.
Career Details “It isn’t easy being Barron Hilton,” noted a writer for Forbes magazine in 1988. “His performance is measured not only against tough competitors like Marriott and Hyatt but also against the record of his father . . . .
4 0 6
B u s i n e s s
That same year saw him take on the dual roles of president and chief executive officer for Hilton Hotels Corporation. In 1970, he bought two Las Vegas hotels, thus marking the beginning of the company’s involvement in the gaming industry. (Such interests now account for 46 percent of the firm’s revenues.) Upon the death of his father in 1979, Hilton took on the additional title and responsibility of chairman of the board. Although Hilton inherited the company his father had founded and remained the person in charge of running it, he was not entirely happy with the terms of the will. The bulk of Conrad’s 13.5 million shares of company stock (which constituted the majority of the family’s wealth) had gone to the Conrad N. Hilton Foundation, a charity organization set up to aid Catholic nuns. Hilton fought to gain access to those shares and in a 1989 settlement was granted the rights to 4 million of them. Combined with his own personal holdings, this gave him control over more than 25 percent of the outstanding stock in Hilton Hotels Corporation. The remaining shares were split between the foundation and a 20-year trust, of which Hilton is the executor. Hilton dabbled with the idea of selling his interest in Hilton Hotels Corporation in 1989 and again in 1995 so that he could retire. On both occasions, he felt the bids were too low, prompting him to remain with the company. In 1995, however, Hilton hired financial whiz Stephen F. Bollenbach from the Walt Disney Company to serve as president of Hilton Hotels, making him the first person outside the family to head the company. (Hilton retained the title of chairman.) Much was made of the transfer of power and, since confidence in Bollenbach was high, the market responded favorably. Shares of Hilton stock rose 21 percent within 2 days of the announcement that he had joined the chain. Hilton is now viewed as the company’s indisputable master strategist. But that was not always so. During the 1970s, as other chains plunged ahead with plans to de-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
W i l l i a m
H i l t o n
velop luxury hotels and vacation resorts, he was criticized for being too timid because he preferred to sit back and watch his competitors’ successes and failures before making any moves of his own. Hilton adopted a similarly cautious approach during the 1980s, when it seemed that everyone else in the business was either building or buying. Instead, he decided to sell. In 1985, for example, as Texas teetered on the brink of an economic bust, he sold his interest in Houston’s Shamrock Hilton. The following year, he sold off two-thirds of his shares in the Chicago Hilton and Towers. And in 1987, he sold his interest in the Dallas Hilton and also gave up 50 percent of his stake in the Beverly Hilton to Merv Griffin for $50 million. Hilton now owns or partially owns just a few choice properties (such as New York City’s Waldorf-Astoria) and manages or franchises the rest of the hotels bearing the Hilton name. His decision to sell in the midst of a building boom was initially regarded by many in the industry as foolhardy, but numerous other hotel chains soon followed suit. And the remarkable rise in the value of Hilton stock through the period proved that the chairman of the board was indeed a savvy strategist. His characteristic prudence was not as much in evidence during the 1990s, however. “Barron Hilton has undergone an awesome change in style, trading in his cautious stance for a gambler’s studied swagger,” declared a writer for Financial World in 1992. Noting the rise of gambling on Indian reservations nationwide, Hilton calculated that state and local governments would eventually move to legalize gaming as a source of revenue. Leaving his competitors in the dust, he led the pack with construction of new casinos and proposals for gambling complexes. In January 1996, Hilton announced a global expansion program designed to bring the company’s total room inventory to 100,000 by the year 2000. This goal was well within reach only a year later, when Hilton Hotels Corporation claimed to operate 16 casinos and 240 hotel properties with nearly 100,000 rooms. Some of the credit for this success could be attributed to the firm’s 1996 acquisition of the Bally Entertainment Corporation in a deal worth some $3 billion. The global expansion project has had a positive effect on the bottom line at Hilton Hotels Corporation. Net income earnings during the first quarter of 1998 were reported to be $77 million, an increase of 12 percent over the same period a year earlier. Given the chain’s continued growth under the management of Barron Hilton, the company seems assured of financial success well into the twenty-first century.
Chronology: William Hilton 1927: Born. 1946: Established citrus juice distributorship. 1951: Joined Hilton Hotels Corporation. 1954: Named vice president of Hilton Hotels Corporation. 1960: Founded Los Angeles Chargers football team. 1961: Moved football team to San Diego, California. 1966: Named president and chief executive officer of Hilton Hotels Corporation. 1979: Named chairman of the board of Hilton Hotels Corporation. 1982: Made first appearance on Forbes magazine’s list of the “400 Richest People in America.” 1995: Stepped down as president of Hilton Hotels Corporation. 1996: Announced global expansion program for Hilton Hotels Corporation.
It develops, owns, manages, and/or franchises hotels, hotel-casinos, resorts, and vacation-ownership resorts. In addition, it enjoys worldwide recognition thanks to its many overseas facilities and gaming operations. And through its various subsidiaries, it also has interests in designing and furnishing hotels and providing computer reservations for both hotel rooms and rental cars. As owner of more than one-fourth of the company’s shares with the right to exercise his executive privilege over a majority of the remaining shares, Barron Hilton presides over a vast and powerful empire of some 260 hotels and casinos that employ almost 62,000 people. His personal wealth is now estimated to be over $600 million, enough to make him a regular on Forbes magazine’s list of the “400 Richest People In America” since 1982.
Sources of Information Social and Economic Impact Boasting a name that has become nearly synonymous with the word “hotel,” Hilton ranked as the sixth largest company of its kind in the United States in 1997.
Contact at: Hilton Hotels Corporation 9336 Civic Center Dr. Beverly Hills, CA 90210-3604 Business Phone: (310)278-4321 URL: http://www.hilton.com
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
4 0 7
W i l l i a m
H i l t o n
Bibliography “Dr. Jekyll and Mr. Hilton.” Financial World, 26 May 1992. Hilton Gaming News. Beverly Hills: Hilton Hotels Corporation, Winter 1996. Hilton Hotels and Resorts: 1996/1997 Photography Directory. Beverly Hills: Hilton Hotels Corporation, 1996. “Hilton Hotels Corp.: The Sleeping Giant Wakes.” National Real Estate Investor, February 1997. Hilton Hotels Corporation: 1995 Annual Report. Beverly Hills: Hilton Hotels Corporation, 1996. Hilton Hotels Corporation Fact Sheet. Beverly Hills: Hilton Hotels Corporation, February 1996.
“Honeymoon Hotelier: Hilton’s Stock Quickly Doubled After Stephen Bollenbach Took Over as CEO. Now He Must Deliver.” Financial World, 21 January 1997. “It Ought to Be No Contest: Hilton vs. ITT.” Fortune, 3 March 1997. “New Baron Now Calls Hilton Shots.” Hotel and Motel Management, 4 March 1996. “New Hilton Chief: Chain Will Grow by Investing in Hotels and Gaming.” Travel Weekly, 27 May 1996. “Rumors at the Inn: The Wall Street Sharks are Circling Hilton Hotels, Eager to Break Up the Family Dynasty.” Financial World, 4 April 1989. “The Son Also Rises.” Forbes, 25 January 1988.
Hilton Items. Beverly Hills: Hilton Hotels Corporation, Winter 1996.
4 0 8
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Charles Elmer Hires Overview Charles Elmer Hires, who developed a beverage he called “root beer” in 1875, was the first soft drink entrepreneur. His company paved the way for giants such as Coca-Cola and Pepsi. A Philadelphia-based pharmacist by profession, Hires was only 24 when he created his world-famous concoction, which he originally sold as dry concentrate that needed to be mixed with water and several other ingredients. He later went on to develop a second successful business as a noted manufacturer of condensed milk.
(1851-1937) Hires Root Beer
Personal Life Charles Elmer Hires was born on August 19, 1851, on his family’s farm outside of Roadstown, New Jersey. He was the sixth of 10 children of John Dare Hires and Mary (Williams) Hires, who counted among her ancestors Martha Washington, wife of President George Washington. Despite such distinguished ties, the Hires family was not a wealthy one. Young Charles had very little formal education and held his first job before he reached his teens. Hires was married twice, first to Clara Kate Smith in 1875 and then, following her death in 1910, to Emma Waln in 1911. He had two daughters and three sons, one of whom, Harrison Streater Hires, served as vice president of Charles E. Hires Company from 1923 to 1948. Hires was a Republican and a devout Quaker who financed the restoration of the Merion Meeting House in Merion, Pennsylvania, where William Penn had worshipped. He even wrote a book about the project entitled
4 0 9
C h a r l e s
E l m e r
H i r e s
Chronology: Charles Elmer Hires 1851: Born. 1869: Opened own pharmacy. 1875: Produced beverage mix called “root beer.” 1876: Marketed root beer at Centennial Exposition in Philadelphia. 1890: Founded Charles E. Hires Company. 1893: Marketed ready-to-drink bottled versions of root beer. 1896: Began organizing companies to manufacture condensed milk. 1918: Sold condensed milk interests to Nestlè. 1937: Died.
A Short Historical Sketch of the Merion Meeting House (1917). Hires died of a stroke on July 31, 1937, at his home in Haverford, Pennsylvania, while preparing to leave for a fishing trip. He is buried in Westminster Cemetery near Cynwyd, Pennsylvania.
Career Details Hires was only 12 years old when he went to work at a local pharmacy. Intrigued by the profession, he moved to Philadelphia four years later to take a similar job. By 1867, Hires was working at a wholesale drug house while attending night classes at the Philadelphia College of Pharmacy and the Jefferson Medical College. He then headed to the town of Bridgeton, Pennsylvania, where he helped operate a local pharmacy in partnership with two other men. The venture was short-lived, however, and Hires soon moved back to Philadelphia. In December 1869, at the age of only 18, he borrowed some money and opened his own pharmacy. Not long after launching his business, Hires happened to make a fortunate discovery. Workmen in his neighborhood were digging the foundation for a building when they came across a strange-looking, clayish type of soil. Hires knew that this material was “fuller’s earth,” a popular item at the time for removing grease spots from wool clothing. He arranged to have a large
4 1 0
B u s i n e s s
amount of the unusual clay brought to his house and dumped into his cellar, where he and a helper shaped it into cakes and packaged it as “Hires Special Cleaner.” He then sold his product to wholesale drug houses and managed to earn $6,000, a fairly substantial sum of money in those days. The success of Hires Special Cleaner enabled the young pharmacist to pay off all of his debts. In 1875, Hires and his bride were honeymooning at a New Jersey boarding farm when they tasted the landlady’s special pie mixture of sassafras bark, wintergreen, sarsaparilla root, hops, juniper berries, pipsissewa, and other herbs. Hires returned home with the recipe for this sweet concoction and soon began experimenting with it. Assisted by two medical college professors, he was able to develop and then market a dry concentrate of the recipe that could be mixed with water, sugar, and yeast to produce a sweet drink. As was common practice at that time, Hires sold his soft drink not merely as a refreshing drink but as a sort of medicine. It also represented a morally upright alternative to beer and liquor, an important plus lending to the strong anti-alcohol sentiments that were then sweeping the nation. In fact, Hires originally planned to market his product as “Hires Herb Tea” but changed his mind after receiving a piece of invaluable business advice from a friend, Dr. Russell H. Conwell. A minister, author, and founder of Philadelphia’s Temple University, Conwell reportedly told Hires that tough Pennsylvania coal miners would never drink herb tea, but they would drink something with “beer” in the name. On the basis of this suggestion, Hires named his concentrated mix “root beer.” Hires introduced the new concoction in 1876 at the Centennial Exposition in Philadelphia. It was a great success, prompting him to start selling it outside the local area through pharmacy soda fountains or as a mix to be brewed at home. Before long, customers were able to purchase 25-cent packages of the concentrate, enough to make 5 gallons of root beer. By the early 1880s, Hires began selling three-ounce bottles of root beer in liquid form. He advertised heavily in local newspapers like the Philadelphia Public Ledger and quickly created a booming market for his product. Realizing that root beer’s appeal could easily extend beyond the Philadelphia area, Hires decided to promote his drink to a nationwide clientele. He thus became the first person to purchase a color advertisement on the back page of the Ladies’ Home Journal. (At the time, Coca-Cola was barely known outside its hometown of Atlanta, Georgia.) Hires Root Beer soon became America’s soft drink. In 1890, Hires abandoned the pharmacy business entirely and incorporated his prosperous enterprise as the Charles E. Hires Company. Three years later, he introduced a ready-to-drink bottled version of root beer. However, it ran into some opposition from anti-alcohol groups such as the Women’s Christian Temperance Union (WCTU),
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
C h a r l e s
whose members did not like to see the word “beer” used in the product’s name. Nevertheless, by 1895 Hires Root Beer was sold exclusively in its bottled version. While he continued to serve as president of his soft drink company, Hires began focusing his attention elsewhere in 1896. Over a 10-year period, he organized several condensed milk companies. He then devoted another dozen years to pioneering a number of new processing techniques. His experiments resulted in a product that boasted a longer, more stable shelf life, thus making it safer and healthier. In 1918 Hires sold his condensed milk interests to Nestlè but held on to his role as president of the Charles E. Hires Company. Procter and Gamble later purchased Hires Root Beer, which is still on store shelves well over a century after it made its debut.
E l m e r
H i r e s
proven to be very lucrative in the years since Hires Root Beer was the most popular soft drink in the country. Less well known but no less significant are the contributions Hires made to the manufacture of condensed milk. Using his knowledge of pharmacy and medicine, he was able to reduce the risks of contamination during the canning process and deterioration once the milk was on the shelf. This resulted in a product that consumers could be sure was safe and healthy. Hires thus ranks among the pioneers in that field as well.
Sources of Information Bibliography Fucini, Joseph J. and Fucini, Suzy. Entrepreneurs: The Men and Women Behind Famous Brand Names and How They Made It. Boston: G.K. Hall, 1985.
Social and Economic Impact Although Charles Elmer Hires did not technically “invent” root beer, he displayed a certain creativity and persistence—plus a genius for marketing and advertising—that turned a concoction of roots, bark, and herbs into America’s first major soft drink. His initial attempts were a far cry from the easily accessible, ready-to-drink beverages of the modern age. The finished product gave rise to an entirely new industry. Now dominated by giants such as Coca-Cola and Pepsi, that industry has
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Ingham, John N. Biographical Dictionary of American Business Leaders. Vol. H-M. Westport, CT: Greenwood, 1983. Schuyler, Robert Livingston, ed. Dictionary of American Biography. Vol. 22, Supplement Two. New York: Scribner’s, 1958. Van Doren, Charles. Webster’s American Biographies. Springfield, MA: Merriam, 1979. Who Was Who In America. Vol. 4, 1961-1968. Chicago: Marquis Who’s Who, 1968.
S t u d e n t s
4 1 1
Herman Hollerith (1860-1929) Engineer and Inventor
Overview Herman Hollerith made a major contribution to the development of the modern digital computer with his tabulating machine. An early model of his invention was first used in 1890 to tabulate medical statistics gathered by the United States Army. That same year, the United States Census Bureau adopted Hollerith’s tabulating system for its 1890 census. By the time the 1900 census was completed using a revised model, the tabulating machine had saved American taxpayers $5 million and did in less than two years what would have taken eight years of hand tabulating. This was the beginning of modern data processing. The company Hollerith formed to manufacture the tabulating machine eventually became International Business Machines (IBM).
Personal Life Herman Hollerith was born February 29, 1860, in Buffalo, New York. His parents, George and Franciska Hollerith, were German immigrants. After attending City College of New York, Hollerith continued his studies at the Columbia University School of Mines. His first full-time job was for the United States Census Bureau, which was gearing up for the 1880 census. Hollerith came to the census job with some statistical experience; as a student at Columbia, he had worked for the statistician William Petit Trowbridge. At the Census Bureau, he met John S. Billings, director of the Census Bureau’s division of vital statistics, who first suggested to Hollerith that a mechanical means should be invented to count the vast and rapidly increasing quantities of raw data that was generated in their work.
4 1 2
H e r m a n
H o l l e r i t h
After the 1880 census, Hollerith worked as an instructor in mechanical engineering at the Massachusetts Institute of Technology. Then he moved to St. Louis, Missouri, where he experimented with railroad braking systems. He traveled by train to St. Louis and a few years later he traveled by train back to Washington, D.C. He could not help but notice that the conductor would punch various bits of information into each passenger’s ticket, including place of boarding and destination. In Annals of the History of Computing, Friedrich W. Kistermann points out that in the same way the conductor used a paper ticket, “Hollerith’s first test of his tabulating system used punched cards, one for each person, as the data medium, with the holes being punched with a simple conductor’s hand punch.” In 1884 Hollerith returned to Washington, D.C., to work for the U.S. Patent Office. During his off hours, he began to build a tabulating machine, hoping it would be ready in time for the 1890 census. Initial tests of the punch card system were made in the recording and counting of mortality statistics in several large cities. Hollerith’s invention had to compete against two others, but he was the clear winner since his system took less than half the time required by the two competing systems. Using his invention as the basis of a dissertation, Hollerith received a Ph.D. from Columbia University in 1890, and the Franklin Institute of Philadelphia honored Hollerith as the person with the outstanding invention of the year. That same year, 1890, Hollerith married Lucia Talcott. Hollerith worked for the Census Bureau from 1890 until 1896, when he established his own company. During his lifetime, Herman Hollerith secured 30 U.S. patents, plus many from foreign governments. He also worked on several other inventions, including an electrically activated brake system for trains. During competitive testing, though, his system was beaten by a steamactivated system invented by Westinghouse. In 1929 he died at the age of 69 from heart disease, and was survived by his wife and their six children.
Herman Hollerith.
(The Library of Congress.)
Career Details Herman Hollerith was not the first to design a mechanical calculator. That honor goes to Charles Babbage, an English mathematician. Babbage conceived of a mechanical calculator in 1823, but he was unable to raise the funds needed to manufacture the machine. Babbage incorporated a system of punch cards into his design similar to that used in the Jacquard loom, invented in 1745 in France. Jacquard’s loom used punched cards to control the weaving of the cloth so that any desired pattern could be obtained automatically.
trical charge). Signals were transmitted only when electrical current passed through a hole in the card, making a closed circuit. Rolls of perforated tape were used as the non-conducting medium, but later Hollerith switched to cards that were the same size as dollar bills of that time; this change allowed him to incorporate money storage cases in his equipment.
Initially called a press, Hollerith’s tabulating machine incorporated an electric sensing device that recorded the number of holes at specific locations in nonconductive material (material that does not carry an elec-
Hollerith’s tabulating machine worked in a threestep process. First, it punched holes in small cards in a variety of patterns based on data keyed in by an operator; each hole represented a different response to a question (for example, age in a census survey, number of pounds of rice in a railroad freight car, cause of death in a mortality survey). Next, the operator ran the cards
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
4 1 3
H e r m a n
H o l l e r i t h
1895 Hollerith went to Berne, Switzerland, to comment on a technical paper about his invention to a gathering of members of the International Statistics Institute.
Chronology: Herman Hollerith 1860: Born in Buffalo, New York. 1880: Began working for the United States Census Bureau. 1890: Finished construction of his tabulating machine and won a contract with the Census Bureau. 1896: Established Tabulating Machine Company. 1911: Firm became Calculating-Tabulating-Recording Company. 1914: Hired Thomas J. Watson as manager. 1921: Retired; sales reached $13 million. 1924: Company changed name to International Business Machines Corporation (IBM). 1929: Died in Washington, D.C.
through the machine’s sorter, which distributed them according to relevant categories (for example, all persons ages 20-29 in one pile). In the third step, while the cards were being sorted, they were also counted by an accounting machine as a way of keeping track of the results for each category. Electro-mechanical tabulators, like those in oldfashioned adding machines, counted the signals. Using this method, raw data could be tabulated for numerous categories (as many as fit on the card) at the same time and with great speed. Dial counters were installed on the machine, one counter associated with each hole on the punched card. Each counter advanced by one unit whenever an electrical signal passed through the hole in the card corresponding to that dial. Each dial had two hands, much like a clock, with the longer hand representing tendigit numbers and the shorter hand representing one-digit numbers. Operators recorded the totals for each dial at the end of every processing session. For the 10 years between the l890 census and the l900 census, Hollerith continued to perfect the tabulating machine. During that period, his system was adopted for census processing in Canada, Norway, and Austria. In 1891 his system was used by the British for their census. European scholars noticed the significance of Hollerith’s invention sooner than those in the United States. Technical articles about the tabulating machine were published throughout Europe in five different languages. In
4 1 4
B u s i n e s s
Upon his return to the United States in 1896, Hollerith founded the Tabulating Machine Company (TMC) in New York City, and continued to improve on his basic machine, while manufacturing and selling both the machines and the cards. Besides recording and counting, newer models included a mechanical feeding device, automated card punching, and the ability to sort and add. These machines, with their new enhancements, were soon used to record railroad freight statistics and agricultural yields. Patents and sales of the tabulating machine and other inventions made Hollerith a millionaire. In 1911 TMC merged with two other companies (Computing Scale Company of America and International Time Recording Company) to become the Calculating-TabulatingRecording Company (CTR). In 1914 CTR hired a new manager, Thomas J. Watson, a man already well-known in business circles. He had begun working for John Patterson at National Cash Register (NCR) in 1895 and by 1910 was general sales manager. NCR then transferred Watson to a second company set up to compete with NCR; this company’s real purpose, though, was to eliminate NCR’s competitors. In 1912 both Watson and Patterson were convicted of violating the Sherman Antitrust Act; Patterson promptly fired Watson. Watson never admitted any wrongdoing, and in 1915 the government dropped its case with the threat of a jail sentence now past, Watson was made president of CTR. Watson understood immediately the importance of Hollerith’s work and that CTR’s future lay in its tabulating division. Scales and clocks were useful items, according to Watson, but the United States would soon be a nation of office workers in need of basic tools like the tabulating machine. He pushed hard during his first five years at the company to make CTR the industry leader in tabulating design. Remington Rand, Burroughs, and NCR were CTR’s competitors, but from the beginning CTR steered clear of mass-produced, low-priced office products like typewriters and simple adding machines, concentrating instead on the design of large tabulating systems for government agencies and growing national businesses. CTR’s salespeople were trained to be well dressed and courteous; they were told that they were selling not just a product but a service. A completed sale was just the beginning of the salesman’s job; in effect, he had to become a partner in the customer’s business, and together they designed a tabulating system for that particular organization. In a pattern that still holds today, many customers remained loyal because they trusted and, to an extent, relied upon the CTR salesman’s knowledge of their business. The sales staff actually dominated the company, ensuring that new technology was based on the needs of customers and not the reverse.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
H e r m a n
The business practices that propelled IBM into a billion dollar company began early in CTR’s history. The company focused on large-scale, custom-built systems, an inherently less competitive segment of the business. Most of the tabulating machines were leased rather than sold, which was more profitable. Agreements dating back to the mid-1910s with chief competitor Remington Rand prevented the two companies from falling into competitive squabbles. When Hollerith retired in 1921, sales were at $13 million and CTR was the clear leader in its specialized field of tabulating machines. The company’s name was changed to International Business Machines Corporation in 1924. By 1932, 85 percent of the tabulating machines in use were made by IBM.
H o l l e r i t h
Versions of Hollerith’s card tabulating machine still have a place in modern data processing. They are widely used in voting machines. Hollerith’s machines were actually the first digital devices: information was represented by the presence or absence of holes on cards. The development of computers applies the same digital principle, but modern machines have memory. So Hollerith’s invention was the forerunner of the computer, a device which affects virtually every facet of modern life.
Sources of Information Bibliography “Herman Hollerith.” World of Invention. Detroit: Gale Research, 1994.
Social and Economic Impact In both Europe and the United States near the end of the nineteenth century, growing urban centers were propelling the growth of businesses with national distributions. The ability to monitor and analyze large batches of data was increasingly critical to the success of these enormous businesses, especially the railroads and food processors. The tabulating system invented by Herman Hollerith, besides being the direct ancestor of modern data processing systems, completely revolutionized the work of both statisticians and businessmen, who were now able to analyze huge quantities of data.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Kepos, Paula, ed. International Directory of Company Histories. Detroit: St. James Press, 1992. Kistermann, Friedrich W. “The Invention and Development of the Hollerith Punched Card.” Annals of the History of Computing, 1991. Reid-Green, Keith S. “The History of Census Tabulation.” Scientific American, February 1989. Starr, Harris E., ed. Dictionary of American Biography, New York: Charles Scribner’s Sons, 1944. Van Doren, Charles, ed. Webster’s American Biographies. Springfield, MA: G. & C. Merriam Co., 1979.
S t u d e n t s
4 1 5
Ron Howard (1954-) Imagine Entertainment
Overview Beginning his acting career before his second birthday, Ron Howard has represented an entire generation of baby boomers on film and television. American TV viewers watched Howard grow from the clean-cut, frecklefaced Opie Taylor on The Andy Griffith Show, into adulthood as the equally clean-cut Richie Cunningham on the popular Happy Days sitcom, after which the star left acting to work behind the camera as a film director. With such popular films as Apollo 13, Parenthood, and Cocoon to his credit, Howard has transcended his initial image as a naive farmboy and gone on to create sophisticated motion pictures that continue to reap major rewards at U.S. box offices.
Personal Life With both parents working in the film industry, it was no surprise that Ronald William Howard would make acting and directing his life’s work. The older of two sons born to actor and director Rance Howard and actress Jean Howard, Ron was born in Duncan, Oklahoma, on March 1, 1954. His screen debut occurred 18 months later, in the film Frontier Woman; it would be followed by several other professional performances throughout his childhood, arranged through the Howard family’s connections to stage and screen. Remaining calm and composed even on the set, the young Howard gained a solid reputation with directors and was offered a succession of film and television roles. By the late 1950s, his career had become the focus of his family’s efforts; when young Ronny got a job as a regular cast
4 1 6
R o n
H o w a r d
member on the popular Playhouse 90 television show, the entire Howard clan left their Midwest home for Hollywood. Howard’s early fame instilled in the naturallyshy actor a strong element of self-confidence and also made it clear that a life in films would have to be an open book to both the press and the public. As Howard later remarked in an interview in Playboy, “I honestly can’t remember when I was anonymous. I learned to write so I could give autographs.” Howard was soon a hot young commodity on television sets, as roles on The Danny Kaye Show, Dr. Kildare, The Fugitive, The F.B.I., The Big Valley, and I Spy came his way. Acting opportunities in films also materialized: a 10-year-old Howard appeared in 1962’s The Music Man and a year later, in The Courtship of Eddie’s Father. Such high-visibility roles attracted the attention of TV producer Sheldon Leonard, who cast the pre-teen as the son of Mayberry, North Carolina, sheriff Andy Taylor, played by veteran actor Andy Griffith, on the popular Andy Griffith Show. So successful was Howard in the role of Opie that viewers continued to identify him with the character throughout much of his adult career. Although Howard grew up in a nontraditional manner, his parents attempted to instill whatever sense of normalcy they could in his childhood. Unlike other television stars, he did not have to travel the country to promote his series, and was able to attend local public schools, where the novelty of being an actor wore off and he soon became just another kid. By the time Howard reached high school in Burbank, California, The Andy Griffith Show had run its course, and he could settle down and concentrate on playing varsity basketball like an average teen. His role in the 1973 American Graffiti would change all that, however, as the George Lucas-directed film became a hit and Howard’s face once again became a symbol of nostalgia to his generation. His role in Graffiti would be somewhat reprised in the hit television sitcom Happy Days, in which a then 20-year-old Howard played a middle class teen from Milwaukee, a straight man to a wide assortment of lovably eccentric characters. The series, which also nurtured the career of actor Henry Winkler, ran from 1974 through the last years of the decade. Film directing had been a hobby of Howard’s since his high school days; armed with a Super-8 movie camera, he had even won second prize in a film contest for high school students sponsored by Kodak. After his high school graduation, he enrolled in the University of Southern California’s film school, but left before completing the course of study due to acting commitments. The rest of his cinematic education would come on the set, where he spent countless hours with other actors, directors, and producers. Howard’s first significant non-acting work would be in 1977’s Grand Theft Auto, a film he co-wrote with his father and which received production assistance from veteran producer/director Roger Corman. The film also received reviews that were encouraging enough to persuade Howard—now married to high school sweet-
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Ron Howard.
(AP/Wide World Photos, Inc.)
heart Cheryl Alley and expecting the first of their four children—that he had a future as a film director.
Career Details The modest success of Grand Theft Auto allowed Howard to finance three films for television on which he could hone his directoral skills; the last of these in 1981 was Skyward, which featured noted screen legend Bette Davis. The following year, Howard would direct Happy Days’ co-star Winkler in his second feature film, Night Shift, which focused on two night attendants at the city
S t u d e n t s
4 1 7
R o n
H o w a r d
Chronology: Ron Howard 1954: Born. 1955: Made film debut as an 18 month-old toddler in Frontier Woman. 1959: Cast as a regular on the television series Playhouse 90. 1960: Starred as Opie Taylor in The Andy Griffith Show. 1973: Starred in the nostalgic hit film American Graffiti. 1974: Starred in the television comedy series Happy Days. 1977: Directed his first film, Grand Theft Auto. 1981: Received Emmy Award nomination for television movie Through the Magic Pyramid. 1986: Cofounded production company Imagine Entertainment with Barry Grazer. 1995: Directed Tom Hanks in blockbuster Apollo 13.
morgue who dream up an idea to make some extra cash by operating a prostitution ring out of their grisly place of business. While the film received mixed reviews, critics did approve of Howard’s lighthearted comic touch, an approach that would become even more prevalent in his next film, Splash. Splash was considered the film that established Howard as a serious director. Starring Darryl Hannah, Tom Hanks, and John Candy, the film not only boosted the budding careers of its young co-stars, but also captured the hearts of critics and viewers alike. In a review for Newsweek, film critic David Ansen called Splash “a romantic comedy that is truly romantic and truly comic, a deft blend of hip satire and fairy-tale charm.” Howard continued this positive rapport with viewers through his next film, Cocoon, which featured an impressive lineup of more mature acting talent—Jessica Tandy, Hume Cronyn, Don Ameche, Brian Dennehy, Maureen Stapleton, and Wilford Brimley among them—in the story of a group of retirees who become physically recharged after sharing a pool in their Florida retirement community with a group of alien beings. By the late 1980s, Howard had left behind elements of fairy tale and fantasy and become slightly more earth-
4 1 8
B u s i n e s s
bound in his films. The 1989 film Parenthood, for example, presents a more realistic view of child rearing. Howard and the three other men who sat down to write the film’s screenplay had the experience of raising 15 children between them and developed these experiences into a hit script. Starring popular comedian Steve Martin, Keanu Reeves, Jason Robards, and Mary Steenburgen, Parenthood was an immediate success with both critics and viewers, grossing $135 million at the box office. Through the 1990s, Howard has expanded his subject matter. Backdraft, an action film about Chicago firefighters, starred Kurt Russell, and the quasi-historical motion picture Far and Away starred Nicole Kidman and Tom Cruise. Far and Away has been the only Howard film to lose money, and the director’s 1994 return to comedy in The Paper drew critical sighs of relief, although reviewers were still cautiously wondering whether Howard had lost his sure touch. It would take Apollo 13 to reassure them, and reassure them it did. The 1995 film, which covers the tense moments during the 1970 manned mission into space, received high marks for its sophistication and restraint, and was hailed as among Howard’s best directorial work. Howard saw Apollo 13 in terms of its human drama. “The bittersweet quality of astronaut Jim Lovell’s experience definitely drew me in,” Howard explained in Time. “Here was a guy, arguably the best-equipped individual to walk on the moon, and the opportunity was pulled out from under him. It was devastating, and we can all relate to that kind of disappointment.” In addition to his work as a director, Howard’s partnership with producer Brian Grazer has resulted in the success of Imagine Entertainment. Introduced by a friend in 1977, the two men quickly realized that they made a good team; by the mid-1980s they had decided to take their film production partnership public to further finance both Howard’s pictures and those of other directors. Imagine produced several television series and pilots as a public company, until Howard, realizing that his responsibilities to company shareholders were beginning to conflict with his goals as a director, chose to return the company to private ownership.
Social and Economic Impact Howard’s approach to his task as director seems to be as down-to-earth as the characters he once played on television. His films, which are tinged, rather than saturated, with warm-hearted messages of compassion and caring, are driven by the characters that they portray. While his first few directorial efforts were constrained by budgetary considerations, Howard consistently assembles a strong cast for each of his films, making his works strong box office draws. Unlike many child actors, Howard successfully transcended the image of Opie Taylor that shadowed him throughout his career. But he has still retained a “nice
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
R o n
guy” image as a director. While that image makes him popular to work for, Howard has also recognized that critics could see it as a handicap if it appeared to constrain his subject matter in any way. As he told Playboy, the nudity in his first film, Night Shift, was included partly to erase any vestiges of his “goody two shoes” image. As a director, Howard has a reputation for being reasonable but very much in control. He can be credited with jump-starting the careers of actors Michael Keaton, then an unknown doing stand-up comedy whom Howard featured in Night Shift and The Paper, as well as Tom Hanks, whose first major film role was in Splash.
H o w a r d
stuff of memories, what makes life worth living . . . . I find those moments rewarding as a moviegoer.” Such an approach has resulted in films that earn consistent approval from audiences.
Sources of Information Contact at: Imagine Entertainment 1925 Century Park E., Ste. 230 Los Angeles, CA 90067-2701
Howard consistently strives to create films that reach audiences on an entertaining and accessible level. Unlike some film directors whose more mature work has evolved along experimental or philosophical lines, Howard has preferred to maintain a mainstream cinematic standard. “I know I carry a sensibility born out of the kind of popular entertainment I grew up being a part of,” he told Playboy. “That’s part of my outlook. Likable characters. And there’s the celebration of the human spirit. I look around, I talk with people, look at their lives, read the paper, and notice even with my own life that there are those moments when a person feels victorious. They feel they’ve achieved something very difficult. That’s the
Ressner, Jeffrey. “Nice Guy at Mission Control.” Time, 3 July 1995.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Bibliography Bizoni, Piers. “The Film Director Ron Howard Is Riding High on the Back of Apollo 13.” Independent, 18 September 1995. Contemporary Theatre, Film, and Television. Detroit: Gale, 1994. Cunningham, Kim. “A Ron by Any Other Name.” People Weekly, 1993. Denby, David. Newsweek, 12 March 1984. Playboy, May 1994.
4 1 9
Howard Hughes (1905-1976) Hughes Aircraft Company
Overview Howard Hughes was one of the world’s wealthiest men; he was also one of its most eccentric. After a flamboyant career as a Hollywood film director, Hughes indulged in his passion for flying by founding a company to manufacture innovative planes. He owned most of Trans World Airlines (TWA) until 1966. During the 1960s he invested in real estate, particularly in Las Vegas, where he owned, for example, the well known Sands Hotel. But drug addiction and deteriorating mental and physical health forced Hughes into seclusion, even from his own business associates. In the last years of his life he was in hiding from the world, plagued by strange obsessions. After living as a recluse for more than 20 years, Hughes left no direct heir to his substantial fortune.
Personal Life Howard Robard Hughes, Jr., was an only child. His father had developed and patented an important oil drilling bit and founded the Hughes Tool Company. Hughes’ mother died when he was 16, and when his father died three years later, he found himself sole heir to his father’s industrial fortune. Hughes convinced a Texas court to declare him of legal age, and he took control of the family business. He married Ella Rice in 1925; they divorced four years later. During the 1930s and 1940s Hughes had many love affairs, some with prominent actresses. Then he married Jean Peters in 1957. That union was a marriage in name only, and they divorced in 1971. Having spent most of his final years addicted to drugs and avoiding publicity, Hughes died
4 2 0
H o w a r d
H u g h e s
while in route from Acapulco, Mexico to a hospital in Houston. Howard Hughes is remembered for his money and his eccentricity. In the early part of his career, he was known as a flamboyant daredevil. He was a man who had everything, and followed his dreams. He was a shrewd businessman, a movie maker, a pilot, and an inventor. The wealth he inherited as a youth allowed him to do far more than most people dream of. And he had an overwhelming desire to become a legend in his own time. He wanted to do more than anybody else did. This compulsion led him to test-fly the planes he built and direct the films he produced. He wanted to be viewed as a man who would succeed at whatever he attempted to do. But as he became ill, Hughes felt he had to control everything in his life. Increasingly he lost touch with his grander schemes and focused on his immediate surroundings. His obsession with germs is legendary— having doors and windows sealed with tape, forcing attendants to follow daily rituals, and spreading paper towels on everything around him as a form of insulation— and is now considered a classic case of an obsessivecompulsive disorder. In the last 20 years of his life, Hughes was a prisoner of his obsessions. Most of the empire Hughes presided over dissolved at his death. Because he left no will, the estate was tied up in litigation for years. Most of his money went to his arch enemy, the Internal Revenue Service (IRS). Concrete evidence surfaced after Hughes’ death of his many underworld ties, both to the CIA and to the Mafia. He was involved in Watergate through secret contributions to the Nixon administration, and documents stolen from his California headquarters showed Hughes’ intent to defraud, bribe, and intimidate in a variety of instances to promote his schemes.
Career Details Howard Hughes was not a particularly strong student, though he did have considerable mechanical aptitude. Although he took courses at the Rice Institute in Houston and at the California Institute of Technology (Cal Tech), he never earned a bachelor’s degree. Instead he left school to take over his family business at age 19. But Hughes apparently felt that he was not needed at Hughes Tools, and he soon left to embark on a career in Hollywood. Hughes was not an immediate success, but he persevered. Of his many accomplishments in the movie industry, some of the most-noteworthy were discovering Jean Harlow, introducing Jane Russell, and purchasing controlling interest in RKO Pictures Corporation. He produced and directed many films, some of the most successful ones being Hell’s Angels, Two Arabian Knights, Scarface, and The Outlaw. During his years in Hollywood, Hughes was linked romantically to many women, among them Katharine Hepburn, Olivia DeHavilland, Lana Turner, Ava Gardner, and Ginger Rogers.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Howard Hughes.
(The Library of Congress.)
During his movie-making career, Hughes developed an interest in aviation. He received his first pilot’s license in 1928. Shortly after receiving his license, he attempted to fly a Thomas Morse scout plane, a plane he had never flown before, and subsequently crashed. The legend of Howard Hughes states that he walked away from the crash unhurt, but as reported by Donald L. Barlett and James B. Steele in Empire: The Life, Legend, and Madness of Howard Hughes, “actually, Hughes was pulled unconscious from the crumpled plane, one cheekbone crushed. He spent days in hospitals and underwent facial surgery.” Hughes’ fascination with planes led to his founding of the Hughes Aircraft Company in 1932. One of Hughes’ dreams was to set aircraft records, and he did. He established several speed and endurance records in the 1930s. He set a world speed record in 1935, transcontinental speed records in 1936 and 1937, and a world flight record in 1938. In 1939 he began work on an experimental military aircraft, and in 1942 he received a contract to design and build the world’s largest plane, a wooden seaplane, later nicknamed the “Spruce Goose,” which was supposed to serve as a troop carrier in the second world war. These successes enabled the Hughes Aircraft Company to become a major defense contractor after World War II. Working for the government proved quite profitable, but Hughes did not want to pay taxes on his earnings, so he created a sophisticated tax shelter, the nonprofit Howard Hughes Medical Institute. Later he sold his home in Los Angeles to avoid paying California income tax.
S t u d e n t s
4 2 1
H o w a r d
H u g h e s
organization would do a thing without prior approval; now executives began to use his name freely and make decisions in his stead. Hughes was addicted to codeine, and his mental illness was becoming more and more apparent.
Chronology: Howard Hughes 1905: Born. 1908: Father filed patent for revolutionary oil-drilling bit.
Behind the scenes, many of his associates were jockeying for position, attempting to gain control of Hughes’ vast network of operations. Hughes eventually ended up assigning attorneys of his choosing as his proxies, giving them the power to do everything but sell the stock or change the names of his businesses. Having given up dayto-day control, Hughes secretly moved to the Bahamas. After this he lived in luxury hotels in several countries, always under conditions of extreme secrecy, until his death in 1976.
1924: Acquired 100 percent control of Hughes Tool. 1938: Established new record for around-the-world flight. 1955: Sold RKO to General Tire for an estimated $25 million. 1966: Sold 6.5 million shares of TWA for $546 million. 1967: Acquired control of Desert Inn Hotel and Casino. 1972: Sold oil-tool division of Hughes Tool for $150 million. 1976: Died aboard airplane en route to Houston hospital.
Hughes wasn’t only interested in military aircraft; he was involved in commercial airlines as well. In 1939 he first acquired stock in Transcontinental & Western Airlines—later named Trans World Airlines (TWA). By the end of the next year, Hughes owned 78 percent of the company. His large stake in the company sparked an antitrust suit in 1963. By that time, Hughes was so unwilling to show himself in public that he missed his court appearances. This led to a default ruling against him, and he was forced to sell his TWA stock. But Hughes used the $566 million accumulated from this sale to fund a new venture in Las Vegas real estate. By the late 1960s Hughes’ empire was one of the most powerful private political machines ever in operation in the United States. According to Barlett and Steele, “For more than two decades the IRS had granted it one special favor after another. So, too, had the Department of Justice, the Civil Aeronautics Board, the Department of the Interior, the army, the navy, the airforce, and any number of lesser agencies and departments.” Hughes used money to get his way and avoid the laws and regulations that ruled other corporations. This network of connections was a mix of alliances, secret deals, understandings, and secret contributions. When Hughes started using drugs, however, he lost a good deal of control over the running of his businesses. In 1970 Hughes lost control of his empire altogether. During the height of his power and control, nobody in his
4 2 2
B u s i n e s s
Social and Economic Impact Perhaps Howard Hughes’ most lasting contribution was Hughes Aircraft, one of the most prominent defense manufacturers in the United States. The company was responsible for many innovative designs in weapons systems, missiles, satellites, and lasers. But Hughes Aircraft was badly managed, both during Hughes’ lifetime and after his demise. Hughes’ dictatorial meddling caused many of his leading executives to quit the company, and several of them went on to found rival companies. After Hughes’ death, Hughes Aircraft continued to be a major industry player. But sloppy management led to costly and perhaps unsafe products. In 1984 the Department of Defense suddenly announced it would not take delivery on any more Hughes missiles, citing outrageous cost overruns and shoddy quality control. A government audit revealed scores of abuses at the company, and it was quickly sold. General Motors ran it as GM Hughes Electronics—later named Hughes Electronics. By the late 1990s, Hughes Electronics had become the world’s leading manufacturer of satellites.
Sources of Information Bibliography Barlett, Donald L. and James B. Steele. Empire: The Life, Legend, and Madness of Howard Hughes. New York: W.W. Norton & Company, 1979. Brown, Peter Harry and Pat H. Broeske. The Untold Story of Howard Hughes. New York: Penguin, 1996. Byers, Paula K. and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1998. Drosnin, Michael. Citizen Hughes. New York: Holt, Rinehart and Winston, 1985. Phelan, James. Howard Hughes: The Hidden Years. New York: Random House, 1976.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
H. Wayne Huizenga Overview Harry Wayne Huizenga has a reputation in business like that of Midas, the king in Greek mythology who could turn objects into gold. In Huizenga’s case, he was able to literally turn trash into money, and has built a number of successful businesses, starting with Waste Management in the 1970s. He followed this up with a struggling video chain called Blockbuster, which he turned into a conglomerate so huge that it is larger than the 99 smaller video chains put together. After selling Blockbuster to entertainment giant Viacom, Huizenga entered the rapidly growing automobile superstore market. Meanwhile he built an empire of sports franchises, including baseball’s Florida Marlins; hockey’s Florida Panthers; and football’s Miami Dolphins, making him the only individual to own three professional sports teams.
(1939-) Huizenga Holdings
Personal Life Harry Wayne Huizenga was born at the Little Company of Mary Hospital in Evergreen Park, a suburb of Chicago, on December 29, 1939, the first child of Gerrit Harry Huizenga, a cabinetmaker, and Jean (Riddering) Huizenga. Huizenga’s parents were strict Dutch Reformed Christians, and did not allow the future owner of Blockbuster Entertainment to read the comic pages of the local newspaper or to attend movies. Young Huizenga had to sneak out of the house whenever he wanted to attend a movie or a dance. In early 1953, the Huizenga family moved to Fort Lauderdale, Florida, where his father hoped to take advantage of the real estate boom occurring in southern Florida by working as a building contractor. In Octo-
4 2 3
H .
W a y n e
H u i z e n g a
Wayne Huizenga holds stacks of video cassettes inside a Blockbuster store. ber of 1954, Huizenga’s parents divorced and his mother was given custody of young Huizenga and his younger sister, Bonnie, but they reconciled and remarried in 1978. Huizenga married Joyce VanderWagon, whom he had met while attending high school, on September 10, 1960 in Chicago, Illinois. They have two children, Wayne, Jr. and Scott, but the couple divorced in 1966. Huizenga then married Martha (“Marti”) Jean Pike, a former secretary in his office, on April 17, 1972, and adopted her two children from a previous marriage, Pamela and Raymond. Huizenga is a member of the Republican political party and lives in south Florida. He enjoys golf and collecting antique cars, and is also involved in a number of charitable activities, including Easter Seals and the Juvenile Diabetes Foundation.
4 2 4
B u s i n e s s
(UPI/Corbis-Bettmann.)
Huizenga’s many awards include the Entrepreneur of the Year award for 1989 from the Wharton School at the University of Pennsylvania and the Silver Medallion Brotherhood Award from the Broward Region National Conference of Christians and Jews in 1990. In 1990, he was voted Man of the Year by the Juvenile Diabetes Foundation, and an endowed teaching chair in his name was established at Broward Community College.
Career Details In 1953 Huizenga graduated from Pine Creek School, a private high school where he had played third base for the baseball team and linebacker and center for the foot-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
H .
ball team. Soon afterward he began to call himself by his middle name, Wayne. After briefly driving bulldozers and three semesters at Calvin College in Grand Rapids, Michigan, in 1957 and 1958, Huizenga joined the Army for a short time. Huizenga then moved back to Florida, where he was given a job by one of his father’s friends as a garbage truck driver in Pompano Beach, Florida. Huizenga’s uncles were all part of Huizenga and Sons, a Chicago garbage-hauling business established by Huizenga’s grandfather. Huizenga worked for them for a few years between high school and college; then, heeding the advice of his father, who said: “You can’t make any real money working for someone else,” he decided to start his own garbage collection business.
W a y n e
H u i z e n g a
Chronology: H. Wayne Huizenga 1939: Born. 1953: Moved to Fort Lauderdale, Florida. 1962: Created Southern Sanitation Service.
On February 14, 1962, Huizenga incorporated Southern Sanitation Service and, with $5,000 he had borrowed from his father-in-law, purchased a single used garbage truck and 20 commercial accounts from Wilbur Porter of Porter’s Rubbish Service in Broward County, Florida. The 25-year-old Huizenga would collect trash from 2:00 a.m. until 12:00 p.m., and then canvass the neighborhood soliciting new business. Huizenga had started his trash company at a time of rapid growth in southern Florida; using the combination of hard work, aggressiveness, and Florida’s new right-to-work laws, he steadily increased his business. Under his stewardship, the small trash company called Southern Sanitation grew rapidly.
1968: Renamed company Waste Management, Inc.
By 1968, Huizenga had transformed Southern Sanitation Service into Waste Management, Inc. (now known as WMX Technologies), which became the largest garbage collection company in the world. He accomplished this by merging with three garbage collection businesses in Chicago, including his uncles’ business. The company went public in 1971, raising $3 million with its stock offering, and Huizenga as chief executive officer (CEO) built it into a vast enterprise. In 1972, Huizenga bought 90 competing trash collection companies in just nine months. This positioned Waste Management, Inc. as the leading trash collecting business in the world, with revenues in excess of $1 billion a year. Huizenga also negotiated contracts to collect trash in such distant places as Argentina and Saudi Arabia.
1994: Sold shares of Blockbuster Entertainment Corporation.
By 1983, Huizenga was ready to get out of the leadership role of Waste Management, Inc. He was tired of commuting between the company’s headquarters in Oak Brook, Illinois, and his home in Fort Lauderdale, and he no longer wanted to be tied to a desk. In 1984 he resigned, taking with him 3.7 million shares of stock worth approximately $100 million. He retired for only a few weeks before starting on his next venture; he began buying hotels, office buildings, pest control businesses, warehouses, and lawn care services. By the end of 1986, Huizenga and his new company, Huizenga Holdings, had bought more than 100 businesses that generated $100 million in annual income.
1972: Waste Management, Inc. became largest trash collecting business. 1984: Resigned from Waste Management, Inc. 1987: Purchased Blockbuster Video. 1991: Granted baseball expansion team Florida Marlins. 1992: Granted hockey expansion team Florida Panthers. 1993: Purchased Spelling Entertainment Group and Republic Pictures Corporation.
1994: Became sole owner of NFL’s Miami Dolphins and Joe Robbie Stadium. 1997: Announced proposed sale of Florida Marlins.
into Blockbuster Video, a Dallas, Texas-based chain of eight video-rental stores and 11 franchises. In 1987, Huizenga and his partners bought a 43 percent interest in the business for about $18 million, and he began to build it at an astonishingly fast rate. Inspired by Ray Kroc of McDonald’s and his pioneering franchising concepts, Huizenga set out to make Blockbuster the McDonald’s of the video rental world. He would buy up competing video-rental stores in the same market and offer the customers large, well-lit stores offering at least 8,000 video titles to rent. Blockbuster advertised itself as “America’s video store” and removed all NC-17 and X-rated titles. It even removed crude language from movie trailers it showed in its stores.
In late 1987, Huizenga was persuaded by John J. Melk, an executive at Waste Management, Inc., to look
Huizenga’s strategy worked again and, by the end of 1991, Blockbuster had more than 2,000 stores and had surpassed its closest 99 competitors combined in annual revenue from video rentals. Blockbuster also had expanded worldwide, with stores in Canada, Austria, Mexico, Puerto Rico, Chile, Venezuela, Spain, the United
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
4 2 5
H .
W a y n e
H u i z e n g a
Kingdom, Italy, Japan, Guam, Australia, and Japan. By 1994, when Huizenga sold his share of the newly named Blockbuster Entertainment Corporation to Viacom, Inc. (owners of MTV) for $8.4 billion, it had 3,700 stores. Huizenga’s next target was sports, which he pursued as diligently as he had his previous businesses. In 1989, he began purchasing various interests in major league sports, including 15 percent of the National Football League’s (NFL) Miami Dolphins and, in 1990, 50 percent of Miami’s Joe Robbie Stadium in Dade County, Florida. Four years later he purchased the remaining shares of both the team (for $138 million) and the stadium. In an effort to increase patronage at the stadium, Huizenga spent $10 million to improve the field and construct an adjoining picnic area. In 1991, armed with $25 million that he had raised by selling 10 percent of his Blockbuster stock, Huizenga successfully beat out 10 other cities to gain Major League Baseball’s (MLB) newest franchise and the first professional baseball team in Florida history, the Florida Marlins. The Marlins, which eventually carried a price tag of $95 million, played their first game in 1993 at Joe Robbie Stadium and became World Series Champions in 1997. Several months before the championship games, however, on June 27, 1997, Huizenga had announced that he would sell the Marlins and take a $39 million loss, but would not sell them to anyone who would take them away from Miami. Realizing also that, southern Florida was home to millions of transplanted northeasterners and Canadians, Huizenga spent $50 million to win Miami a National Hockey League (NHL) expansion team, the Florida Panhers, in 1992. In 1994, Huizenga paid $40 million for hundreds of acres between Miami and Fort Lauderdale on which to construct a sports and entertainment complex called Blockbuster Park. The locals christened it “Wayne’s World,” and many local residents and environmentalists were not in favor of its construction. Even though many saw it as the biggest competitor to the Walt Disney World complex located outside of Orlando, Florida, Huizenga scrapped his plans after the buyout of Blockbuster Entertainment Corporation by Viacom. In 1993, Huizenga spent $140 million to purchase 54 percent of Spelling Entertainment Group, which holds the rights to such movies as Rambo and its sequels, as well as the Dynasty television program. Later that year, through Blockbuster, Huizenga gained 78 percent ownership of Spelling during its acquisition of Republic Pictures Corporation. He also secured a 49 percent interest in the chain of indoor playgrounds known as Discovery Zone. Huizenga’s Republic Industries owns AutoNation USA, the leading auto superstore, and many other automotive-related businesses; its 1997 sales were estimated at more than $3 billion. On May 13, 1997, the Republic board announced that it was moving its stock trading from NASDAQ to the more prestigious New York Stock Exchange. In addition to Republic and his sports interests, Huizenga is also chairman of a rapidly emerging hotel chain, Extended Stay.
4 2 6
B u s i n e s s
Social and Economic Impact Huizenga has said of his start in the trash-hauling industry, “The garbage business is a real good business to cut your teeth on.” Punctuality and maintaining a regular schedule may not be as important in other businesses, “but that garbage has to be picked up every Monday or every Thursday. You’ve got to be there. So I grew up in a business where there were no excuses.” Huizenga has not been inclined to take or to give excuses; his upbringing in the Calvinist faith, which holds that personal success is a sign of divine favor, has made him a hard worker verging on workaholism. He has always shown more enthusiasm for building a business than for managing it once it was built. In the early days of Waste Management, Inc., Huizenga would collect garbage all night and morning, return home and shower, and then go out to drum up new business. But, once Waste Management became a huge enterprise, he wanted out. After leaving Waste Management, he still could not sit still for long, even though he had planned to retire with his wife Marti to a vacation house in North Carolina. Huizenga had to keep moving, and soon he was involved in Blockbuster; but, after building that business, he quickly got out of it, and moved on to the next challenge, Republic and its automotive superstores. Whether with Waste Management, Blockbuster, Republic or one of his many sports franchises, Huizenga’s strategy has been the same: to build aggressively, chiefly through purchasing existing businesses and bringing them under the corporate imprint. This is particularly evident with Blockbuster, which seemingly overnight swallowed thousands of “mom and pop” video stores across the United States. Huizenga is a strict adherent to the franchising concepts pioneered by such companies as McDonald’s. A result: all Blockbusters look and feel the same, with bright colors, spacious aisles, and attractive displays. These stores were not necessarily as attentive to the needs of their customers as the old corner video stores had been; and dazzled customers did not always realize that they were paying higher rental fees. As Huizenga observed, “This is nothing like the trash business . . . . If someone rents a movie and doesn’t like it, they blame Hollywood, not Blockbuster. There are very few problems with customers.” Critics have charged that, in his aggressive buyout strategy, Huizenga provides a formula for rapid growth that tapers off as soon as he quits buying up businesses. Usually this happens just before he gets out of the particular enterprise, as he did with Blockbuster. Whether this charge is true or not, it is clear that, as Huizenga said in an interview with the Miami Herald, “I like being a builder. I don’t like being a manager.”
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
H .
W a y n e
H u i z e n g a
Sources of Information
Kerwin, Kathleen, et al. “Hurricane Huizenga.” Business Week, 24 February 1997.
Contact at: Huizenga Holdings 450 E. Las Olas Blvd., Ste. 1500 Fort Lauderdale, FL 33301-2227
Picker, Ida. “Wayne Huizenga, Conglomerateur.” Institutional Investor, April 1997.
Bibliography
The Wall Street Journal, 14 May 1997.
Connelly, Mary. “How Republic Became a Believer In Reincarnation.” Advertising Age. 7 April 1997.
The Wall Street Journal, 27 June 1997.
Taylor, Alex III. “Car Wars: Wayne Huizenga vs. Everybody.” Fortune, 9 June 1997.
DeGeorge, Gail. The Making of a Blockbuster: How Wayne Huizenga Built a Sports and Entertainment Empire From Trash, Grit, and Videotape. New York: John Wiley, 1996.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Wernie, Bradford. “Huizenga Developing Primer In Selling and Renting Cars.” Auto Marketing, 7 April 1997. Who’s Who In America 1997. New Providence, NJ: Marquis, 1996.
S t u d e n t s
4 2 7
Lido Anthony Iacocca (1924-) Chrysler Corporation
Overview Lee Iacocca was one of the best-known personalities in corporate America during the 1980s. The onetime top executive with the Chrysler Corporation enjoyed a long list of auto-related achievements before his rise to celebrity, and his impact on the industry was widespread. Easy financing, the Ford Mustang, the minivan, the sportutility craze, and even the 1998 Chrysler merger with German carmaker Daimler-Benz can all be traced to Iacocca’s vision. The author of two best-selling autobiographies, Iacocca has been described as brash, profane, headstrong, and a genius.
Personal Life Lido Anthony Iacocca was born on October 25, 1924 in Allentown, Pennsylvania. His parents, Nicola and Antoinette, were both Italian immigrants. His father, who had only an elementary-school education, ran a hot dog stand called the Orpheum Wiener House, but later sold real estate and ran one of first rental-car agencies in the country. Nicola’s son was equally enterprising: 10-year-old Lido worked as a freelance delivery person outside the local grocery store, and then began working long hours in a fruit market at the age of 16. Iacocca and his family, like many others of their generation, were tremendously impacted by the Great Depression and the bleak economic prospects of the 1930s. This experience focused his outlook on life and fueled in him a desire to succeed. He wanted to be one of the men
4 2 8
L i d o
A n t h o n y
I a c o c c a
Lee Iacocca talks to workers at a Chrysler assembly plant during the launch of a new platform series. (Reuters/Arne Glassbourg/Archive Photos.)
who made the decisions, not one of the workers laid off by them. His family instilled in him a desire to rise above Allentown’s blue-collar world. He was sometimes teased by other children, and was friendly with a few classmates of Jewish faith who suffered similar ostracism; many years later, Iacocca would name the automotive industry’s first Jewish vice-president. A bout with rheumatic fever as a child made Iacocca ineligible for military service during World War II, which was a difficult position for a young and apparently fit man at the time. His father’s increasing prosperity paid for college at Lehigh University, and he graduated with an engineering degree in 1945. Iacocca was then offered a coveted spot in the Ford Motor Company’s engineertrainee program, but declined so that he might earn a graduate degree from Princeton University, for which he had won a fellowship. In 1956 Iacocca married Mary McCleary, with whom he had two daughters. Unlike other top-level auto industry executives, he did not go into the office on weekends and rarely brought work home. Mary Iacocca died of diabetes in 1983, which devastated him. He married former flight attendant Peggy Johnson in 1986; they were divorced a year later. Iacocca later married Los Angeles restaurateur Darrien Earle, but that marriage also ended in divorce. Iacocca remains close to his two daughters, Lia Nagy and Kathy Hentz, and enjoys homes in Italy, New York City, Palm Springs, and Colorado.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Career Details Iacocca began his career at Ford in 1946 in Dearborn, Michigan, but quickly realized that engineering was not his forte. He was forced to almost beg for a job in the sales division, since the corporate climate at the Big Three automakers (Ford, Chrysler, and General Motors) discouraged moves between divisions. Finally, Iacocca managed to get a job on the sales and marketing staff of Ford’s Eastern United States district, headquartered outside Philadelphia. It was also around this time that he changed his name to “Lee.” Iacocca first came to the attention of upper management in the mid-1950s, when he created a financing plan that vaulted the Philadelphia district from last place in Ford sales in the country to number one. His “56 for 56” sales promotion put keys in the hands of new-car buyers who qualified for financing with just a $56 downpayment. The promotion was soon implemented nationwide, and Iacocca was promoted to district sales manager of the Washington, D.C. area. By 1960, he had been promoted to vehicle marketing manager. That same year, Iacocca was promoted to vice-president, making him one of the youngest top-level executives in the history of the automotive industry. The company’s new president, Robert McNamara (who later left Ford to become U.S. Secretary of Defense during the Vietnam War), chose Iacocca to succeed him as vicepresident and general manager of the Ford Cars and
S t u d e n t s
4 2 9
L i d o
A n t h o n y
I a c o c c a
Chronology: Lido Anthony Iacocca 1924: Born. 1945: Received engineering degree. 1946: Hired by Ford Motor Company. 1960: Became one of the youngest vice-presidents in automotive industry history. 1964: Oversaw launch of the Ford Mustang. 1970: Named president of Ford. 1978: Fired by Henry Ford II. 1979: Named chair of Chrysler. 1984: Chrysler introduces minivan. 1992: Retired from Chrysler. 1995: Involved in failed attempt to gain control of Chrysler.
Trucks Division. Iacocca was just 36 and still a relative newcomer at the company’s world headquarters; with the new post, he assumed control of 11,000 employees. He gained considerable attention, but also faced some very thinly veiled resentment. Iacocca soon proved himself ready and able for the job. In one of his many pioneering moves, he created the Fairlane Committee to study future car-buying trends and to develop a vehicle in response. Iacocca pushed for a sportier redesign of the reliable Ford Falcon, and in 1964 introduced the Mustang. It was a huge success, and made Iacocca a household name: both he and the car appeared on the covers of Time and Newsweek. “The Mustang mirrored the youth and vitality of the early 1960s,” wrote Doron P. Levin in Behind the Wheel at Chrysler: The Iacocca Legacy. It also brought in $1.1 billion in revenues during its first two years in production. Such success initially made Iacocca a favorite of Henry Ford II, grandson of the company founder. Iacocca became executive vice-president of the company’s North American automotive operations in 1967, and was named president in 1970. But Henry Ford II reportedly came to resent Iacocca, who was reputed to be brash, opinionated, and sometimes difficult to work with, and Ford soon began to fear that Iacocca would succeed him when he died. According to Iacocca, the heir attempted to undermine Iacocca and his plans, rejecting, for in-
4 3 0
B u s i n e s s
stance, Iacocca’s idea to design and market a small passenger van. In addition to the tension between Iacocca and Ford, Iacocca’s tenure as president also had some notable setbacks. For example, his small, fuel-efficient Pinto initially a popular seller, was found to have fuel tanks that ignited if the Pinto was involved in certain types of collisions. A government safety investigation and massive recall killed the car, as well as some of the company’s credibility. Henry Ford II fired Iacocca personally in July 1978, reportedly saying, “I just don’t like you.” The deposed president was given a transition office in a parts warehouse, a stinging insult. But just a few months later, Iacocca was hired by the Chrysler Corporation as president and chief operating officer. His appointment was confirmed by the Chrysler board on the same day the company announced its worst quarterly loss ever: a staggering $159 million. By his own accounts Iacocca didn’t realize just how badly Chrysler was faltering when he agreed to take the job. By the time Iacocca was named chair of Chrysler in 1979, he had put in place a massive reorganization. He fired some executives, hired others away from Ford (such as Gerald Greenwald, the first vice-president of Jewish heritage in the auto industry) and shut down the 5,000worker main Dodge plant. An old, decrepit facility, the plant had helped several generations of Detroit residents to achieve prosperity over the years, and its closing alarmed many, not just its displaced workers. Chrysler was still near bankruptcy, and Iacocca went to Washington and petitioned Congress for $1.2 billion in loan guarantees. He spoke before hostile senators, and even brought in the mayor of Detroit to testify. But many remained opposed: such financial assistance to save a nearbankrupt company was almost unheard of in American business history. Iacocca was a compelling advocate for his company, however. Finally, recognizing that President Carter needed Detroit votes in his 1980 reelection bid, and that the loans would help Chrysler to meet newly-imposed federal fuel and safety standards, Congress eventually approved the loans. During the early 1980s, Iacocca helped to engineer a turnaround for the company. After making massive layoffs, he managed to win major concessions from the powerful United Auto Workers union in wages and benefits. To show solidarity, he paid himself only $1.00 a year. The K Car and several new models turned the company’s fortunes, and on July 13, 1983 (five years to the day after Iacocca’s dismissal from Ford), Chrysler paid back its government loans in full, seven years ahead of schedule. Chrysler’s success continued with the introduction of the Dodge Caravan minivan in 1984, which again illustrated Iacocca’s savvy interpretation of demographics. Baby boomers were reproducing in record numbers, and the fuel-efficient, sliding-door vehicle catered to a generation of suburban mothers and their grocery parcels and unwieldy child-safety seats. In 1986, Chrysler bought
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
L i d o
American Motors, the last surviving U.S. automaker outside of the Big Three, and with it received an unusual subsidiary named Jeep. First designed for military use during World War II, Jeeps were rugged vehicles; Chrysler retooled the basic design of a popular “sport-utility” model, launching the Jeep Grand Cherokee in 1992. Again, Chrysler had another huge hit with the American buying public, and a minivan-vs.-sport-utility debate raged among consumers well into the decade. Soon after, Iacocca retired from Chrysler, but not before pushing for a new car program (the L/H series, which produced such popular models as the Intrepid, Concorde, and LHS). The program created confidence and propelled the company into profitability again at the time of his exit. Iacocca remained a major stockholder in Chrysler, and in 1995 became involved in a bitter battle waged by another major shareholder, Las Vegas financier Kirk Kerkorian, to gain control of the company. Iacocca placed his shares on Kerkorian’s side in the war, and he was roundly criticized for doing so. The move seemed a bit uncharacteristic, since in his two books, Iacocca: An Autobiography and Talking Straight, Iacocca had previously condemned such corporate raiding, claiming that it destroyed American jobs. In 1998 Iacocca became chair of the Koo Koo Roo chain of restaurants, which boasted 52 eating establishments in California, Nevada, Florida, and Washington, D.C. He was also involved in the electric-car market in California.
A n t h o n y
I a c o c c a
Iacocca’s influence in the slow-moving world of automotive-industry economics stretched far beyond his exit from Chrysler. For example, he was the visionary behind the Chrysler Technology Center which later catapulted the automaker to the top position in research and development among the Big Three. This superiority was one of the significant attractions for German automaker Daimler-Benz when it agreed in early 1998 to merge with Chrysler. The 1998 merger betweeen Chrysler and DaimlerBenz merger had been hinted at for some time. Some observers said that what Iacocca did at the automaker during his reign had prepared it for just such a move. As chair, wrote Barbara Seaman and Ron Stodghill II in Time, Iacocca had “dreamed of creating what he called Global Motors, a fully integrated international car and truck builder and seller....Specifically, Iacocca’s Global Motors was to be an alliance of Chrysler and Volkswagen (or Fiat or Renault if VW didn’t want to play)....” Seaman and Stodghill wrote about Iacocca’s vision of a fleet of vehicles with multinational pedigrees sold at joint dealerships around the globe, and noted that, while Iacocca had long since retired, “Global Motors lives again as Daimler-Chrysler.” Iacocca has been involved in some charitable activities, most notably the 1986 Statue of Liberty restoration and centennary project. Proceeds from his two books were donated to the Iacocca Foundation, which contributes to diabetes research. He is also active in the Iacocca Institute at Lehigh University, which emphasizes competitiveness in the global marketplace.
Sources of Information
Social and Economic Impact Iacocca has been hailed as the savior of the American automotive industry. Although his detractors are many, his achievements are numerous. He was one of the first industry executives to champion safety features in cars, and the vehicles produced under his tenure (the Mustang, the minivan, and the Grand Cherokee) set the standard for other automakers, and virtually defined, and redefined, a generation and its car-buying habits.
Bibliography
Though he has often weathered criticism for relishing the perks of his position a bit too much, Iacocca was a fresh departure from the stereotypical stodgy auto executive. He enjoyed great popularity during his stint at Chrysler, in part because of television ads that gave consumers the idea that the once-ailing automaker was in the capable hands of a strong, tough-talking leader. Such advertising was also a first among the usually colorless automotive executives, who were content to remain unrecognizable to their thousands of employees and car buyers. Iacocca was even mentioned as possible presidential candidate in the 1980s.
Levin, Doron P. Behind the Wheel at Chrysler: The Iacocca Legacy.New York: Harcourt Brace, 1995.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Byers, Paula K., and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography. 2nd ed. Detroit: Gale Research, 1998. Contemporary Authors. Volume 125. Detroit: Gale Research, 1989. “Lee Iacocca’s Next Challenge? Boston Globe Online, 31 March 1998. Available at http://www.boston.com.
Newsmakers. Detroit: Gale Research, 1993. Rigby, Rhymer. “America’s Biggest Auto-Ego.” Management Today, December 1997. Seaman, Barbara, and Ron Stodghill II. “Here Comes the Road Test.” Time, 18 May 1998. Available at http://www.pathfinder.com/ time/magazine/1998/dom/980518/business.here_comes_the_6.html. Smith, David C. “What’s Next for Lee?” Ward’s Auto World, January 1993. Wyden, Peter. The Unknown Iacocca. New York: Morrow, 1987.
S t u d e n t s
4 3 1
Masaru Ibuka (1908-1997) Sony Corporation
Overview A pioneer in the electronics field, Masaru Ibuka, along with Akio Morita, founded the Sony Corporation as Tokyo Tsushin Kogyo K. K. (Tokyo Telecommunications Engineering Company) in May of 1946. Ibuka paved the way for many of the inventions used in communications, overseeing the development of the transistor radio, transistor television, Sony Trinitron color television, home videotape recorder, Betamax videocassette system, and video projection system.
Personal Life Masaru Ibuka was born April 11, 1908, in Nikko, Japan, in the Tochigi Prefecture, to Tasuku and Sawa (Furuta) Ibuka. He attended Waseda Senior High School and then went on to Waseda University, where he studied engineering. He obtained a bachelor of science degree in 1933. On December 20, 1936, he married Sekiko Maeda, who was the daughter of Tamon Maeda, an associate of Prince Fumimaro Konoe. This connection proved to be useful, since Konoe served a number of terms as prime minister of Japan. Ibuka and his wife had two daughters and a son but later divorced. On August 31, 1966, Ibuka married Yoshiko Kurosawa, his childhood sweetheart. The reunion won him a reputation for being quite romantic. Ibuka enjoyed golf and writing and penned a biography of his friend Soichiro Honda, who founded the Honda car company. He was also interested in children and wrote a number of books on early childhood educa-
4 3 2
M a s a r u
I b u k a
tion, including The Zero-Year Child in 1970 and Kindergarten is Too Late in 1971. To promote science education in elementary and junior high schools, he used a corporate account to create the Sony Fund for Education. Active in a number of groups, Ibuka was chairman of the Boy Scouts of Nippon from 1985 to 1994. He was also a counselor for the Japan Institute of Invention and Innovation (serving as president from 1972 to 1991) and president of the Japan Audio Society from 1979 to 1992. Ibuka suffered a sharp decline in health in 1992 and was confined to a wheelchair, but continued listening in on Sony company reports. He died on December 19, 1997 at his Tokyo home. Ibuka was decorated by the emperor of Japan with the medal of honor with blue ribbon, 1960; the First Class Order of the Sacred Treasure, 1978; the First Class Order of the Rising Sun with the Grand Cordon, 1986; and the Order of Culture, 1992. Admired worldwide, Ibuka received the distinguished contribution award from the Institute of Telecommunication Engineers (ITE), 1964; Founders Medal, ITE, 1972; Gold Mercury Award from Italy, 1973; and Commander First Class of the Royal Order of the Polar Star from the King of Sweden, 1986, all for his work in the field of electronics. He also held several honorary doctorates.
Career Details After completing his degree in 1933, Ibuka got a job as a research engineer with the Photo-Chemical Laboratory, a firm that recorded and processed motion picture film. That same year, he won a prize at the Paris Exhibition for his modulated light transmission system, a form of neon light. Hailed as a genius, he was already showing signs of the great innovations that were to come. Ibuka later worked at Japan Optico-Acoustical Engineering Company as the chief of the radio section from 1937 to 1940, then served as managing director and chief engineer at the Japan Measuring Instruments Company during World War II, from 1940 to 1945. There, he created an amplifier that made it possible to locate submarines from an aircraft. He also helped work on research for heat-seeking missiles. During his wartime service he met Akio Morita, a representative of the Imperial Navy, and the two stayed in contact after the war ended. In 1946 Ibuka set up the Tokyo Telecommunications Research Laboratories in a bombed-out department store in the Nihonbashi area of the city. Soon, Morita, who was also a physicist, joined the fledgling operation. With a staff of 20, they began by repairing electronics while trying to come up with their own products. They worked with recent technology, such as magnetic tape, trying to develop uses for it. Around 1949 or 1950 they made the world’s first tape recorder, weighing in at 75 pounds. They sold it to a noodle company to entertain the cus-
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Masuru Ibuka holds a transistor radio, which Sony believed to be the smallest in the world in 1958. (AP/Wide World Photos, Inc.)
tomers, but it would be years before the machine would fully catch on. As the company grew, Ibuka was named president in 1950 and continued to spearhead designs, including the transistor radio, the Trinitron color television, and video recording. The company changed its name to Sony Corporation in 1958, after the word “sonar” or its Latin root, “sonus.” In 1971, Ibuka took the position of chairman, then in 1976 became honorary chairman. In 1994, he was bestowed the respectful title of founder and chief advisor.
S t u d e n t s
4 3 3
M a s a r u
I b u k a
Chronology: Masaru Ibuka 1908: Born. 1933: Graduated from Waseda University. 1933: Invented a modulated-light transmission system. 1946: Founded Tokyo Telecommunications Engineering Corp. (changed to Sony Corp in 1958). 1949: Developed magnetic recording tapes. 1952: Obtained license for transistors from Western Electric Co. 1967: Supervised development of Trinitron Color Television. 1971: Became chairman of Sony Corp. 1976: Named honorary chairman of Sony Corp. 1997: Died.
Social and Economic Impact Before the creation of Sony, Japanese manufacturing had a bad reputation. Goods produced by Japanese electronics firms were considered cheap imitations of American or European products. But Sony changed that perception. Ibuka, together with Morita, built Sony into a world leader in electronics. Ibuka, realizing he lacked management and business savvy, made Morita chairman of the company so Ibuka could concentrate on attracting bright and imaginative talent to the firm. Rather than recruiting only the top graduates, Ibuka looked for people who were “neyaka,” which loosely translates as optimistic, open-minded, and possessing a great range of interests. “I’ve never had much use for specialists,” Ibuka noted in Fortune in 1992. “Specialists are inclined to argue why you can’t do something, while our emphasis has always been to make something out of nothing.” Throughout its history, Sony has encouraged its employees to move around within the corporation to prevent stagnation and cocky attitudes. The company has also focused on products that were more than just handy. In Ibuka’s obituary on the Sony web site, company president Nobuyuki Idei remarked, “Mr. Ibuka has been at the heart of Sony’s philosophy. He has sowed the seeds of deep conviction that our products must bring joy and fun to users.” Ibuka’s first big breakthrough came with the transistor radio in the mid-1950s. Subscribing to the theory
4 3 4
B u s i n e s s
that function follows form, Ibuka wanted to create a handheld portable radio. An American firm, Western Electric, held the patent for transistors but claimed that the technology was only useful in hearing aids. Ibuka, however, figured he could use transistors in radios and licensed the technology. The TR-55 transistor radio first appeared sometime around 1955 and was an instant hit. Sony soon set up production facilities in the United States, Great Britain, Holland, Hong Kong, and other nations. The invention made headlines when Japan’s Prime Minister Eisakiu Sato presented French Prime Minister Charles de Gaulle with one of the radios as a gift, prompting de Gaulle to label him “the transistor salesman.” Sony followed the transistor radio with success after success, blazing a trail that other companies would follow. Sony developed innovative and popular new products that other electronics firms began to copy. In 1960, for instance, Ibuka’s team manufactured the first transistor television set, which featured the round screen and simple design that became one of the symbols of the 1950s retro look. Another major innovation was the Sony Trinitron, introduced in 1968, which greatly improved the technology of color television. Ibuka led the research and development team on that project. In 1965, Sony began selling the first consumer video tape recorder, and in 1971, Ibuka helped devise color video projection. In 1975, Sony rolled out the Sony Betamax, the world’s first home video recording system, after Ibuka insisted to engineers that it must be no larger than a paperback book. Although Betamax was eventually phased out in favor of the longer-playing VHS, Ibuka is remembered as a vanguard in home video. He was also instrumental in producing various semiconductor devices, which allowed the manufacture of miniature components. Though Ibuka stepped back to become honorary chairman of Sony in 1976, his ideas have lived on. In 1979, the Sony Corporation first introduced the Walkman portable headset stereo, which has become a mainstay in American culture. With NV Philips, a Dutch company, Sony developed the compact disc audio system, which would replace the larger and less durable LPs as the preferred medium for music. The first CD player came out in 1982, and in 1984, the world saw the Sony Discman for the first time, which was the CD version of its popular Walkman. In 1983, Sony marketed the first consumer camcorder, followed by the first digital VTR in 1985. Sony’s holdings now also include a music recording company, magazines, games, movies, and video. The list of contributions that Sony will provide the world will undoubtedly grow, thanks to the farseeing Ibuka and his commitment to fun.
Sources of Information Contact at: Sony Corporation 7-35 Kitashinagawa 6-chome, Shinagawa-ku Tokyo, Japan 141
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
M a s a r u
Bibliography
I b u k a
Schlender, Brenton R. “Technology: How Sony Keeps the Magic Going.” Fortune, 24 February 1992.
Contemporary Authors. Detroit: Gale Research, 1981. The Daily Telegraph, 22 December 1997. Gibney, Frank Jr., and Sebastian Moffett. “Features: Sony’s Vision Factory from the ‘Eel’s Bedroom’ to Your Living Room.” Time, 10 March 1997.
“Sony Cofounder Dies at 89.” Television Digest, 22 December 1997. “Sony History.” Sony International (Europe) GmbH, 1998. Available from http://www.sony-europe.com/museum.
Kirkup, James. “Obituary: Masaru Ibuka.” Independent, 22 December 1997.
Who’s Who in Engineering, Washington, DC: American Association of Engineering Societies, Inc., 1988.
“Masaru Ibuka 1908-1997.” Tokyo, Japan: Sony Corporation, 1998. Available from http://www.sony.co.jp/ibuka-e.html.
Who’s Who in the World. New Providence, NJ: Marquis Who’s Who, 1996.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
4 3 5
Michael Ilitch (1929-) Little Caesars Enterprises
Overview Michael Ilitch, Chairman of Little Caesars Enterprises Inc., worked with his wife, Secretary-Treasurer Marian Ilitch to build their pizza business into a 4,700unit chain. The company is a conglomerate that has a variety of entertainment holdings, which have included the Detroit Redwings, a professional hockey team, and the Detroit Tigers baseball team.
Personal Life Ilitch was born in July 1929, in Detroit, Michigan. His father was Sotir Ilitch, an immigrant from Macedonia, who was employed as a tool-and-die worker at the Chrysler Corporation. As a youngster in Detroit, Ilitch showed athletic promise and played baseball in high school. He had a dream of one day playing professional ball and, in fact, he was recruited to play shortstop for the Detroit Tigers during his senior year. The team offered Ilitch $5,000 for the season, but he refused, asking instead for twice that amount. The Tigers turned him down. At that point, Ilitch joined the Marine Corps., serving for the next four years. He had hoped to join the Tigers after his military stint, willing to play for the amount of their initial offer, but the team was no longer interested in him. As Ilitch said in an interview reported in 1993, “I was so excited to play baseball again that I signed with the Tigers for the same money they had offered four years before. But I was 22. I wasn’t a hot prospect anymore.” For the next three years, Ilitch played
4 3 6
M i c h a e l
I l i t c h
on several of the Tigers’ farm leagues. It was during this time that, on a blind date, he met an airlines reservation clerk named Marian; the two would marry a year later, in 1955. Ilitch was 25 when he left baseball and entered the work force. With only a high school diploma, he sold aluminum awnings door-to-door and had a variety of odd jobs, including working at a bar on the west side of Detroit. It was there Ilitch learned how to throw a pizza. During this period, Ilitch and his wife managed to save $10,000, which they used as capital to open a pizza parlor in Garden City, Michigan. The couple started a family that eventually grew to seven children; the family would all become involved to a greater or lesser extent in the pizza business. In addition to his business and sports interests, Ilitch was an avid promoter of his hometown, and in many ways, the feeling of Detroit residents was reciprocal. Ilitch bought and began renovating a historic downtown theater, The Fox, which is now a top-grossing enterprise. He continued to purchase a variety of restaurants and Olympic Arenas, Inc. (OAI), a sports management company. He also became involved in Detroit politics, making generous donations to Coleman Young, the longtime mayor of that city. One magazine ranked Ilitch the most powerful person in Michigan, placing him above the governor as well as Chrysler president, Lee Iacocca. A number of Ilitch’s contributions have been philanthropic. In 1988, he started a food program to feed the hungry. For his efforts, he received the Presidential Citation for Volunteerism from the George Bush Administration. His other charities have included adopt-a-school programs, The Special Olympics, the March of Dimes and the Muscular Dystrophy Association. In his spare time, Ilitch enjoys lifting weights and working out.
Career Details Ilitch and his wife opened their first pizza restaurant in 1959 in a strip mall with $10,000 they had saved. He suggested they call the restaurant “Pizza Treat,” but it was Marian who insisted on “Little Caesar,” the nickname she had given her husband when they were first married. Ilitch baked the pizzas, while his wife handled the finances. Business was brisk, encouraging the couple to open a second store two years later. A short time after that, they sold their first franchise.
Mike Ilitch catches a baseball on the pitcher’s mound at Tiger Stadium in Detroit, Michigan, after announcing his purchase of the team. (AP Photo/Lennox Mclendon.)
At that time, Ilitch had significant savings and began searching for a major sports franchise he could pur-
chase. He originally hoped to buy the Tigers. The team went up for sale in the early 1980s, but pizza competitor Tom Monaghan, founder of Dominos, was given an exclusive bid on the baseball team. Instead, Ilitch turned to hockey. He purchased the Detroit Red Wings for $8 million in 1982. Over the next five years, the Red Wings became one of the sport’s most valuable franchises, capturing three division championships and nearly taking the national title. Ilitch brought his marketing savvy into the sport by giving away free cars during the Red Wings’
B u s i n e s s
S t u d e n t s
Because carry-out food was still an innovative idea, the Ilitch’s had little competition; still, the business grew slowly. By1969, they had opened 50 stores. It was in the 1970s that the business really flourished, increasing to 300 stores by the early 1980s.
L e a d e r
P r o f i l e s
f o r
4 3 7
M i c h a e l
I l i t c h
cludes Olympic Arenas Inc., the management company for Joe Louis Arena, which is the home of the Red Wings; Glen Falls Civic Center, home of the Wings’ farm team, and Cobo Arena, home of the Rockers. There are Little Caesars’ concessions in all three arenas.
Chronology: Michael Ilitch 1929: Born. 1952: Played on Detroit Tigers’ farm system. 1950s: Sold aluminum awnings. 1959: Opened first Little Caesar’s Restaurant. 1962: Sold first Little Caesar’s franchise. 1982: Purchased Detroit Red Wings. 1992: Purchased Detroit Tigers.
games. He also recruited. The efforts paid off; ticket sales jumped from 2,100 to 16,000 over a five-year period. In 1992, Financial World Magazine tagged the Red Wings the most valuable franchise in the NHL and estimated the team’s worth at $70 million. Ilitch worked with the team to develop a family spirit. When the NHL players went on strike in 1992, he said in an interview reported in Newsmakers that he had approached the players and had “...pitched my heart out in there. I suggested we be entrepreneurs together, that we come up with something new, that we make sure no players had to do what I did when their sport was over— go door to door . . . . I said the same thing to our players the night before the strike vote. I said the biggest reason I owned a team was the overused word, ‘family.’” Ilitch became known throughout the NHL for the generous bonuses he would give his players. One night, he handed everyone on the team $5,000 in thanks for their play, and awarded Steve Yzerman a $50,000 bonus after exceptional play one night. Team members were flown to games in a private jet, and one Christmas Ilitch left VCRs on the locker room benches for everyone on the team. Hockey was not the only sport in which Ilitch became involved. In 1992 he made sports headlines for the second time when he offered $85 million cash to purchase the Detroit Tigers, which Monaghan, his longtime Domino rival, had offered for sale. The offer was quickly approved by the National League owners. For Ilitch it was the realization of a childhood dream, and it also put this usually shy man into the spotlight. At the time of the ball club purchase, Ilitch had an estimated net worth of $280 million. Along with the two sports teams and the theater, Ilitch’s portfolio also in-
4 3 8
B u s i n e s s
Within the business world, however, Ilitch was becoming as well known for his marketing expertise as he was for his pizzas. It was a natural ability Ilitch seemed to have from the time he and Marian opened their first pizza parlor. On opening night of Little Caesars, Ilitch kicked off the festivities by giving the first customer a free meal. He was so delighted with the response that he did the same for the second customer and was on his way to the third when his wife intervened and asked the customer to pay. “That’ll be $1.99,” she reportedly told him. In the 1990s, Ilitch came up with the advertising campaign and marketing strategy that would cause the pizza chain to stand out from the rest of its competitors: “Pizza! Pizza!” and “Two great pizzas; one great price!” Ilitch spent $55 million on advertising in 1990, and he continued to far outspend his competitors, with the exception of pizza giants, Dominos and Pizza Hut. The results paid off. In five years, the number of Little Caesars’ stores escalated, from 300 to 4,500. The store became international, with outlets opening in England, as well as Puerto Rico and Canada. In 1992, sales increased 25 percent over that one-year period, topping $2.1 billion at the year’s end. Ilitch and his wife Marian have been partners in all of their enterprises. Even while raising the couple’s seven children, she continued to retain her position as chief financial officer of the company. In fact, it was she who drafted the deal with the Tigers as well as managed the couple’s numerous investments and acquisitions. USA Today ranked her the most powerful executive in the NHL in 1991. The Ilitch children were also involved with the business; when they were young, during business discussions at meals and other family times, and as they got older, in executive positions. At one time or another, all of the Ilitch children worked for Little Caesars; five stayed with the company and have held executive positions. Chris Ilitch, group vice president, and one of the couple’s sons, described his father in a 1995 interview with Nation’s Restaurant News: “My father has a tremendous marketing sense, an ability to build sales, and a vision of what consumers want. My mother has the ability to handle the accounting.”
Social and Economic Impact Ilitch made a number of business decisions which, in many ways, paved the way for pizza to become one of the largest food enterprises in the United States. He was one of the first restaurateurs to attempt a food enterprise that was solely carry-out. At the time he opened his first store, most restaurants were sit down, with only a few even offering their food to go. In the 1970s, how-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
M i c h a e l
ever, women began entering the workplace in larger numbers than ever before. That decade coincides with the take-off of the Little Caesars chain. Women suddenly had less time to cook and began to search for meal alternatives that were both simple and inexpensive. Ilitch and his Little Caesar pizza shops met the need on both fronts. Certainly, there was nothing simpler than carry-out pizza. Ilitch had raised a large family himself and was well aware of how much it could cost to feed everyone. From the beginning, he would undercut the pizza prices of his competitors, often reducing the cost as much as $.50 per pizza. Then in the 1990s, Ilitch introduced the two-for-one deal for which the company became famous, and in keeping with his goal of feeding a family for less than $10. Throughout the years, Ilitch has engendered the same loyalty from his employees as he does from his family and his hockey and baseball players. It’s clear to everyone that he is a man who earned the things he has achieved primarily through hard work, and he rewards those same efforts in the people who work for him. Many start off as hourly employees, and ultimately rise through the ranks to management positions.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
I l i t c h
Ilitch makes a point of keeping up with his stores— engaging not just the employees but also the customers in conversation. In 1994, the company introduced a subsidized day care center, understanding, first-hand, how difficult it can be to earn a living and still care for a growing family.
Sources of Information Bibliography “Little Caesars Pizza Chairman of the Board Michael Ilitch Receives Silver Plate Award.”PR Newswire, 22 May 1995. “Marian & Michael Ilitch: Secretary-Treasurer and Chairman, Respectively, Little Caesars Enterprises, Detroit.” Nation’s Restaurant News, January 1995. “Marian & Michael Ilitch.” Nation’s Restaurant News, January 1995. Walsh, Ami. “Mike Ilitch.” Newsmakers,1993 Cumulation. Detroit: Gale Research, 1993. Who’s Who in America. 1998. New Providence, NJ: Marquis Who’s Who, 1997.
S t u d e n t s
4 3 9
Steve Jobs (1955-) Apple Computer
Overview Maverick computer innovator Steve Jobs, along with his friend and partner, Steve Wozniak, formed the Apple Computer Company in the late 1970s. They pioneered the design and development of desktop computers for the general public. The creation of the Macintosh computer in the mid-1980s ushered in a new era of tremendously widespread user friendly machines. After being ousted from Apple, Jobs went on to form the NeXT Computer Company. He also bought Pixar Animation Studios, where Toy Story, the first wholly computer generated and animated film, was created.
Personal Life Jobs was born in 1955 and was put up for adoption by his unwed parents shortly after his birth. Paul and Clara Jobs of Mountainview, California, adopted him. The elder Jobs was a machinist who worked on lasers, while his wife was an accountant. Jobs and his parents moved to Los Altos, California, before he entered high school. A statement the preteen Jobs made to his parents allegedly precipitated the move: he said that he wouldn’t return to school in Mountainview, so his parents decided to move. While a high school student, Jobs contacted William Hewlett, the president of Hewlett Packard, and asked for some parts for an electronics project. Jobs not only obtained the parts he desired; he was offered a summer job at Hewlett Packard. Jobs graduated from high school in 1972 and briefly attended Reed College in Portland, Oregon. In 1974, he
4 4 0
S t e v e
Steven Jobs.
J o b s
(Archive Photos, Inc.)
went to work for Atari Incorporated as a video game designer. After saving some money from his stint at Atari, Jobs was able to embark on a spiritual sojourn to the Indian subcontinent during the summer of 1974. While in India, Jobs sought to immerse himself in the Eastern way of life. A bout with dysentery in the autumn of 1974 cut his trip short and Jobs moved back to California and into a commune.
Career Details
niak, an acquaintance of his from Hewlett Packard. Wozniak was starting to develop what would become the prototype for the Apple Computer series. Jobs had persuaded him to market his designs and prototypes and the two of them began, in earnest, to develop what would ultimately become the first Apple Computer. Jobs and Wozniak worked on the Apple I in Jobs’ garage and by 1976 they offered models for sale. The most uniquely innovative feature of the $700 machine was its single board read-only memory (ROM), which instructed the computer to load and read other programs from outside sources.
By 1975, Jobs started to get involved with the Homebrew Computer Club, which was headed by Steve Woz-
The development and sale of the Apple II, which retained the unique features of its predecessor in an up-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
4 4 1
S t e v e
J o b s
and a hard drive. The less than stellar sales of the Macintosh were instrumental in bringing about Jobs’ forced resignation from Apple.
Chronology: Steve Jobs 1955: Born. 1955: Adopted. 1975: Joined Homebrew Computer Club. 1976: Formed Apple Computer Company with Steve Wozniak. 1977: Unveiled Apple II computer. 1984: Introduced Macintosh computer. 1985: Resigned from Apple. 1985: Formed NeXT Computer Company. 1986: Bought Pixar Animation Studios. 1997: Named interim chief executive officer (CEO) of Apple.
dated format, began in 1977. Jobs then got in touch with the former marketing manager at Intel and brought him to Apple. Jobs began to encourage independent programmers to create software for the Apple II, and soon everything from business management tools to video games became available for use on the Apple II. First year sales for Apple were almost $3 million. Impressive as that was, it paled in comparison to the figures reached by the beginning of the 1980s. By 1980, sales had ballooned to $200 million, and the phenomenal success of Apple helped to usher in the revolutionary personal computer era. Throughout the 1980s, Apple was forced to continuously update its systems in order to stay ahead of the competition. Jobs and Apple faltered a bit with the release of the Apple III in 1980. The model was riddled with technical and marketing problems and as a result, sold poorly. In 1983, Jobs pitched Lisa as the computer for business people who had limited computer expertise. Lisa did not sell well due to its high price and the increased competition from IBM who, by 1983, had gained half of Apple’s market share. In 1984, Apple released the Macintosh computer. Envisioned as the computer that would revitalize not only Apple but the computer industry as well, the Macintosh floundered at first. The initial downfall of the Macintosh in business circles was its lack of a letter-quality printer
4 4 2
B u s i n e s s
Social and Economic Impact Mounting pressure at Apple set the stage for Jobs’ resignation, in 1985, although he still remained chairman of the board of directors of the company. Shortly after Jobs left Apple, he formed the NeXT Computer Company. In 1988, the NeXT computer boasted a number of innovations, including extremely quick processing speeds, a superb graphics and sound system, and an optical disk drive. Despite all of these innovations, however, sales of the NeXT computer fell flat, due to its steep price, black and white screen, and inability to network. Not to be deterred, Jobs pressed on with NeXT, changing the focus from hardware to software. NeXT eventually gained some prestige by helping to facilitate the establishment of the World Wide Web in the 1990s. In 1986, Jobs acquired Pixar Animation Studios for $10 million from filmmaker George Lucas. Jobs poured large amounts of his own money into Pixar to develop and establish it as a premiere movie studio. His $50 million investment in Pixar paid off as the first wholly computer-animated film Toy Story was a certified smash hit when it was released in 1995. By 1997, Jobs’ 80 percent share of Pixar was worth $1 billion. By 1996, Jobs was looking to sell NeXT and more fully concentrate his efforts on Pixar. He eventually sold it to Apple for $400 million. At the time, Apple was in need of an updated operating system and NeXT had one to offer, plus NeXT had developed an association with Internet users that Apple desired as well. Apple also acquired Jobs as a part-time consultant for Apple’s Chief Executive Officer (CEO) Gilbert Amelio. Commenting on his return to Apple, Jobs told Steve Lohr of the New York Times Magazine, “It was like the first adult love of your life; something that is always special to you no matter how it turns out.” Jobs was instrumental in engineering the joint agreement between Apple and its great rival, Microsoft. Both companies agreed to cooperate on selected marketing and technological issues of mutual interest. In September of 1997, Jobs was named interim CEO of Apple. After his return, he implemented the eighth version of the Macintosh operating system, developed a dialogue with Microsoft, and eliminated Apple’s clone licensing program. Emphasizing the past appeal of Apple, Jobs told Lohr, “Great products are a triumph of taste; of trying to expose yourself to the best things humans have done and trying to bring those things into what you are doing.”
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S t e v e
J o b s
“Creating Jobs.” New York Times Magazine, 12 January 1997.
Sources of Information
“Picking Up the Pieces of a Shattered Dream.” Computer Weekly,18 February 1998.
Contact at: Apple Computer 10260 Bandley Drive Cupertino, CA 95014
Byers, Paula K. , and Suzanne Bourgoin, eds. Encyclopedia of World Biography. Detroit: Gale, 1998. “Steven P. Jobs.” PC Magazine, 16 December 1997.
Bibliography
“Steven P. Jobs.” World of Invention. Detroit: Gale, 1994.
“Apple Names Steve Jobs as Interim Chief Executive.” InfoWorld, 22 September 1997.
“Well Steve, What’ll It Be?” Business Week, 30 March 1998.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
4 4 3
John H. Johnson (1918-) Johnson Communications; Johnson Publishing Company Inc.
Overview From extremely poor beginnings, which included living on welfare as a child, John H. Johnson started a publishing business and turned a $500 loan into a $300 million success. Johnson, who publishes Ebony and Jet, is one of the 400 richest men in America.
Personal Life John Harold Johnson was born in 1918 into poverty. He spent the early part of his life in a tin roof house near the levees in Arkansas City, Arkansas. When he was six, his father was killed in a mill accident. Johnson recalled in Current Biography that he probably had an unhappy childhood, but did not know any different because he had nothing to compare it to. Educational opportunities for African Americans were limited in Arkansas, and because of segregation there were no local schools that Johnson could attend after the eighth grade. He loved learning so much that he chose to repeat that grade, rather than going without school. Convinced that the North offered better economic and educational opportunities, the Johnson family moved to Chicago in 1933 in the midst of the Depression. Johnson was able to continue on to high school, but his mother and stepfather were unable to secure employment and the family was forced to go on welfare for two years. Johnson’s stepfather then landed a job with the Work Projects Administration and Johnson also secured employment with the National Youth Administration. He later graduated from DuSable High School in Chicago.
4 4 4
J o h n
Though Johnson endured teasing in high school for his country mannerisms, it only made him more determined to succeed. He showed leadership abilities early on, making the honor roll and serving as student council president and yearbook editor. His work with the yearbook and the school paper inspired him to pursue journalism as a career. Prior to graduation, Johnson was invited to speak at a Chicago Urban League function for African American high school seniors with notable academic records. It was there that the African American businessman Harry Pace, president of Liberty Insurance, took notice of Johnson, offering him a scholarship and a job, which allowed Johnson to attend college. Johnson began work for Pace’s company, attending school at night and rising quickly in the organization. Johnson married Eunice Johnson in 1941. They later adopted two children. Peers described Johnson in a number of ways. Interviewers found him easy to talk to and cheerful and eager as a young boy. One employee recalled that Johnson seemed open but was essentially unreachable. But another former employee credited working for Johnson as a valuable educational experience that she, as an African American, could not have gotten anywhere else. Johnson won a number of awards and served in a number of positions in the civic and business communities. He was the vice president of the National Urban League, the national vice chairman of the United Negro College Fund, and served on the boards of various businesses, including Greyhound. He won a number of awards for his contributions to the African American community and was tapped for his talent on several international missions in the late 1950s and early 1960s. He represented the United States of America at independence ceremonies in Africa during the 1960s. He also served on the advisory board of Harvard Business School. The African-American community showed their appreciation in 1994 of Johnson’s efforts by inducting him into the first Arkansas Black Hall of Fame. The induction took place in a ceremony which raised funds at $100 a plate for scholarships that would benefit Arkansas high school seniors who had hopes of becoming entrepreneurs. Johnson’s achievements were widely recognized by industry peers. He was awarded the 1994 Communications Award from the Center for Communications. The award recognized Johnson for his success in giving African Americans a voice and inspiring African American youth. Alfred Sikes, chairman for the Center for Communications, recognized that Johnson “rose from disadvantaged circumstances to achieve success both in business and national service during a time when great obstacles were placed in his path.”
H .
J o h n s o n
Chronology: John H. Johnson 1918: Born. 1941: Married Eunice Johnson. 1942: Started Johnson Publishing Company. 1945: Ebony first published. 1966: Started Johnson Communications. 1993: Published autobiography. 1994: Awarded Center for Communication’s 1994 Communications Award. 1994: Inducted into Arkansas’ Black Hall of Fame. 1996: Awarded Medal of Freedom Award with Rosa Parks and nine other recipients. 1997: Inducted into Junior Achievement national Business Hall of Fame.
ton praised Johnson for giving African Americans a voice through his publications. Clinton called Johnson a “humble man” who “continues to inspire young African Americans to succeed against the odds and to take advantage of their opportunities.” Johnson was recognized for his contribution to the business community in 1997. He was inducted into the Junior Achievement National Business Hall of Fame, an honor which recognized business leaders for their success and ability to inspire. Fellow inductees included Ruth Handler, co-founder of Mattel, and John F. Welch Jr., CEO of General Electric.
Career Details
In 1996 President Clinton awarded Johnson and 10 other recipients, including African American civil rights activist Rosa Parks, the Medal of Freedom Award. Clin-
When Johnson was hired by Harry Pace to work for Liberty Life Insurance, he got to see first hand the day-today operations of an African American owned business. Johnson began to think about running a business of his own. He was quickly promoted at the insurance company and within two years had risen to the position of assistant to Pace. But Johnson wanted to publish a magazine for African Americans similar to Readers Digest . With a $500 loan obtained using his mother’s furniture as collateral, Johnson published the first issues of Negro Digest in 1942. The name was later changed to Black World.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
4 4 5
J o h n
H .
J o h n s o n
Within six months, the new magazine had a circulation of 50,000. It covered African American contemporary issues as well as history and the arts and gave aspiring African American writers the chance to contribute and be published. Johnson continued to produce new magazines, even though the business community was largely segregated and dominated by whites. Coming from a background with a number of barriers, Johnson’s success may have been fueled by his belief that “the only failure is failing to try.” To gather experience about publishing, he talked to everyone in the business that would share information, including some highly successful publishers like Henry Luce. In his autobiography he recalled how he had managed to get past Luce’s secretary to set up a meeting with Luce. “I told his secretary that I was president of my company.” He went on to explain that the president of America would meet with the smallest country in the world, so it was only natural that the president of a large publishing company would talk to Johnson, the owner of a small company. Johnson also stressed that he did not want a job and was not soliciting donations. It worked. The magazine that would ultimately become the backbone of Johnson Publishing, Ebony, was first published in 1945. Johnson had a vision of publishing a periodical that would “continue the struggle for excellence and a proper appreciation of the beauty, genius, and unlimited possibility of African Americans,” he has said. Johnson wanted to do away with negative racial stereotypes and provide the African American community with positive images. Initially, the magazine focused on glamour but later went on to emphasize achievements in the African American community. Ebony, whose name was coined by Johnson’s wife, Eunice, was well received and easily sold out of its initial press run of 25,000 copies. Designed to look like an African American Life, the magazine emphasized African American successes and portrayed history that present-day African Americans could take pride in. Ebony was active in covering the civil rights movement of the 1960s and Johnson’s staff sometimes took incredible risks to report on stories that portrayed the struggle. The magazine covered the famous Dr. Martin Luther King “I have a dream...” speech, and later documented his funeral after he was assassinated. Ebony also covered major African-American personalities. Ebony was at times criticized by African American militants for what they termed its soft stance on civil rights issues and the slant that it took to avoid alienating its up-and-coming African American readers. The integrity of the research in the periodical was also questioned. But African American psychologist Kenneth B. Clark pointed out that, “It is almost impossible to measure the morale lifting value of such a magazine. The mere fact of its existence and success has been an inspiration to African American masses.” In 1950, Johnson Publishing produced Tan, a magazine for African-American women. In 1951 Jet debuted,
4 4 6
B u s i n e s s
a weekly news source. These were followed by Ebony Junior for children and African American Stars. None of these, however, came close to matching the success of Ebony. Johnson made changes in the magazine’s production that reflected the influence of the times. Staffers replaced typewriters with computers. In 1971, the entire staff of Johnson Publishing moved to the Loop business district in Chicago, previously an area occupied only by Whiteowned businesses. By 1995 the magazine had a circulation of 2,000,000 and readership of more than 11.7 million per issue. In 1993, Johnson published his autobiography, Succeeding Against the Odds: The Autobiography of a Great American Businessman. In it he told of his rise from welfare recipient to one of the 400 richest Americans. Johnson’s company eventually grew into a $300 million operation which included publications (Ebony, Jet, and EM magazines), as well as a number of cosmetic lines, hair products, radio stations, a travel agency, and a traveling fashion show.
Social and Economic Impact African American businesses in America face challenges that other, non-African American business owners do not have to face. African American business leaders, such as Johnson, were pioneers that started businesses when segregation and other racial barriers were nearly insurmountable. Even as recently as 1994, African American businesses prepared for the impact of a conservative legislature on Affirmative Action policy. Businesses, which made up the Black Enterprise 100, the 100 largest African American businesses in America, worried that the largely Republican legislature would reverse years of progress in Affirmative Action policies. However, African American companies were also positively impacted by societal changes such as the economic upswing. In 1993, for example, all businesses listed on the BE 100, on which Johnson’s company ranked second, saw total employment increase by 20 percent, due to the economic recovery. Johnson’s career was notable in that he was one of the first African American executives, and therefore, a pioneer. According to Benjamin Ruffin, chair of the Business Policy Review Council, a group which represented African American executives of Fortune 500 companies, “African Americans who helped break down color barriers and were early pioneers in corporate America have most often remained as unsung heroes and heroines.” The Council honored Johnson as one of these pioneers, with an award in 1996. As an African American businessman, Johnson impacted not only the publishing community, but branched into other industries including Fashion Fair Cosmetics, Ebony Cosmetics, Supreme Beauty Products,
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J o h n
H .
J o h n s o n
radio stations in Chicago and Louisville, Kentucky, and television programming.
Connors, Cathy. “Black Magazines are a Big Business.” New York Amsterdam News, 6 January 1996.
Johnson’s willingness to pursue his business goals at a time when African American businessmen in the United States were few and the barriers to their success were numerous, proved to be a profitable venture. In hindsight, his timing was critical to his success. Other African American magazines that were launched shortly after Ebony did not survive; they failed for lack of advertising support. In 1997 Johnson Publishing had sales of $326 million and employed 2,662 people. By 1995 Johnson’s daughter, who helped contribute to the company’s growth, was installed as CEO of Johnson Publishing and was, according to news accounts, positioned to take over the company when her father retired. Johnson’s radio broadcasting company, Johnson Communications, had estimated sales in 1997 of $1,600,000 and employed 35 people.
DePaulo, Lisa. “Meet the World’s Richest Heiresses!” Redbook, 1 August 1995. “The Ebony Story.” Ebony, November 1995. Edmond Jr., Alfred. “Evolution Not Revolution.” Black Enterprise, 30 June 1995. Egyir, William. “Five Business Pioneers to Receive Honors.” New York Amsterdam News, 27 January 1996. Hoxha and Kieregaard, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1998. “Jet and Ebony Founder, Chairman and CEO John H. Johnson and Civil Rights Pioneer Rosa Parks Receive Medal of Freedom Award.” Jet, 23 September 1996. “John H. Johnson Among Six Inducted into This Year’s Junior Achievement National Business Hall of Fame.” Jet, 19 May 1997. “John H. Johnson Receives Communication Award During Gala in New York.” Jet, 27 March 1995. Johnson, John H. “Founder’s Statement.” Ebony, November 1995.
Sources of Information
Mangelsdorf, Martha E. “Succeeding Against the Odds: The Autobiography of a Great American Business.” Inc., October 1993.
Contact at: Johnson Communications; Johnson Publishing Company Inc. 820 South Michigan Avenue Chicago, IL 60605 Business Phone: (312)322-9225 URL: http://www.ebonymag.com/jpcindrex.html
“Million Dollar Database.” Dun & Bradstreet, Inc. Dun & Bradstreet, 1997. Available from http://www.dnbmdd.com/netbrs/ pgate...rangelo=1&x_rangehi=14&x_scope=tag. Mortise, Charles, ed. Current Biography Yearbook 1968. New York: HAW. Wilson Company, 1968.
Bibliography “Arkansas’ First Black Hall of Fame Names Six Renowned Achieves as First Inductees.” Jet, 10 January 1994.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
“Succeeding Against the Odds, John H. Johnson Autobiography, Now Available in Paperback.” Jet, 15 March 1993. The Writers Directory. Detroit: St. James Press, 1996.
S t u d e n t s
4 4 7
Linda Johnson Rice (1958-) Johnson Publishing Company
Overview At the age of 29, Linda Johnson Rice became one of the youngest publishing executives in the country when she was named president and chief operating officer of the Johnson Publishing Company in 1987. Today, she is one of the few African-American women to hold such a position. Rice played an integral role in the development of several Johnson products, including Ebony Cosmetics and “E-Style” Catalog, items designed to reach the market of international African-American women. She has also developed new products, including the videotape series Ebony/Jet “Guide to Black Excellence,”. This venture into broadcast media demonstrates Rice’s will to take her company into the twenty-first century.
Personal Life Linda Johnson was born on March 22, 1958, in Chicago, Illinois, and was adopted by John H. Johnson and Eunice W. Johnson when she was three. She began preparing for her publishing career at the age of six, frequenting the offices of the Johnson Publishing Company, which her father founded in 1942. While she was a child, Johnson played around in the fashion department of Ebony magazine where she visited with her mother who was the secretary-treasurer and fashion editor. Throughout her teenage years and into college, Johnson accompanied her mother on trips to fashion shows in Paris, where she learned some of the intricacies of the fashion industry. She worked as an intern during the summer while she attended the University of Southern California, where she earned a bachelor’s degree in journalism.
4 4 8
L i n d a
J o h n s o n
R i c e
After graduating in 1980, she joined Johnson full-time as a vice president and fashion coordinator. She entered the family business on her own and in no way felt pressured by her parents to do so. Johnson married S. Andre Rice in 1984, and they have one daughter, Alexa Christina. She had one brother, John Jr., who suffered from sickle-cell anemia, and died in 1981 when he was 25. Although John Jr. was two years older than Rice, he was not interested in becoming a publisher like his father, so he did not compete with Rice for a prominent role in the company. Even without sibling competition, Rice knew that she would still face many challenges, especially in business-related activities. As a result, she enrolled at Northwestern University’s J.L. Kellogg Graduate School, where she earned a M.B.A. in management in 1987. “She didn’t need it [a graduate business degree] for me but for herself,” John Johnson said to Renee Edelman, a writer for Working Woman magazine. “It is difficult to establish credibility [in the business world],” he said. The master’s degree “was a way to answer possible critics.” In her free time, Rice enjoys horseback riding, and has won awards in equestrian hunting and jumping events. She is a big basketball fan who regularly attends Chicago Bulls’ home games. She also likes to swim and play tennis. Rice enjoys collecting art and is active in various charitable organizations, including the Boys & Girls Clubs of Chicago and the United Negro College Fund. Rice is a member of the National Association of Black Journalists, a trustee of the Museum of Contemporary Art, and is on the board of directors of many companies, including Continental Bank Corp., the Magazine Publishers of America, and Bausch & Lomb.
Career Details When Linda Johnson Rice traveled to Europe to learn about the fashion industry, she did more than just observe her mother’s work. She took on an active role during the couture showings by helping select models for the show. When she was 23, she traveled overseas by herself to select clothes for Johnson Publishing Company’s Ebony Fashion Fair. Rice described this as the one incident that helped instill the confidence she needed to succeed in the business world. “That was a turning point . . . I saw I could do it,” she said in an interview with Working Woman’s Edelman.
Linda Johnson Rice.
(AP/Wide World Photos, Inc.)
her to attain success at her current position as president and chief operating officer. “It really taught you how to think through a problem. How to recognize what the problem is. How to come up with different strategies to solve the problem. How to look at the competition and the barriers to entry, as they call it. And then how to come up with a conclusion for it. And I think that was very important,” Rice said in an interview with Ebony.
When Rice graduated from USC in 1980, she began to work very closely with her father to learn what he did on a daily basis and to get a better understanding of the company as a whole. In the beginning, she followed him around, attended important meetings, and reviewed all of his mail. Eventually, she learned about other important areas of the company, such as advertising, circulation, and Fashion Fair Cosmetics. Rice believes it was her graduate work at Northwestern, however, that enabled
Rice learned a lot from her father’s tutelage and from graduate school, and has proven that she is fully capable of running the Johnson Publishing Company, as the company’s $337 million revenue in 1997 shows. Rice believes that her management style is an important aspect to the success of the company. She stresses that strict at-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
4 4 9
L i n d a
J o h n s o n
R i c e
Chronology: Linda Johnson Rice 1958: Born. 1964: Began frequenting Johnson Publishing Company with father. 1980: Graduated from University of Southern California. 1980: Became vice president, Johnson Publishing Co. 1981: Went overseas to choose clothes for Ebony Fashion Fair. 1984: Married S. Andre Rice. 1987: Earned M.B.A. from Northwestern University. 1987: Promoted to president and chief operating officer of Johnson Publishing Co.
tention to detail and employee relations are fundamental qualities for a supervisor. Rice set an example for all executives when she decided to work behind the counter to promote Fashion Fair products at one Chicago store. It is this kind of leadership that Rice hopes will help her to lead Johnson for the next 50 years. Rice talked about the images that black companies have in the Ebony interview, saying that many people have an image of AfricanAmerican companies as being unprofessional and disorganized. I don’t think that is true at all if you look at us,” Rice said. People are amazed . . . Johnson Publishing Co. has always had a first-class image. And until the day I die, I want to keep that image.”
Social and Economic Impact
Currently, Johnson has more than 2,000 employees and continues to be the U.S. top publisher of AfricanAmerican oriented magazines. Ebony, along with Jet and Ebony South Africa, reach 20 million readers in 40 countries. Magazines will continue to be the main business of Johnson, Rice maintains. In an interview with Lambeth Hochwald of Folio magazine, Rice responded to a question asking how magazines such as Vibe and The Source have impacted Ebony’s or Jet’s mission: “I think somebody’s got to be cutting-edge. It just depends how you want to market your magazines and how big you want them to be. We look upon competition as what it is. It’s there, you pay attention to it, but you don’t live by it. You have to go on and grind it out day to day and do the best you can with your magazine every single day.”
Sources of Information Contact at: Johnson Publishing Company 820 S. Michigan Ave. Chicago, IL 60605 Business Phone: (312)322-9200 URL: http://www.ebonymag.com/jpcindex.html
Bibliography
Linda Johnson Rice has big plans for Johnson Publishing Company. Through direct-mail campaigns and advertising she hopes to expand the business’ circulation. She has already helped to develop products that will reach African-American women around the world, and she has
4 5 0
also become involved in television specials and documentaries. The Ebony/Jet “Guide to Black Excellence” is a videotape series featuring prominent African Americans designed to inspire young African Americans to enter into entrepreneurial and leadership roles. Rice thinks that there are many opportunities for African-American entrepreneurs, especially in broadcast journalism and as owners of radio and television stations. “In regards to black people, we have a treasure trove of information that nobody else really has,” she said in an interview with Lynn Norment. In a 1990 interview in Fortune magazine, Rice said, “There are more opportunities today for the black entrepreneur than in many years. They have learned how to acquire capital, how to put together business plans, and how to start enterprises. There is still some discrimination in lending practices, and certain bank officers will have petty prejudices. A black entrepreneur has to be equally if not more prepared than a white to get his fair share of loan money.”
B u s i n e s s
Contemporary Black Biography. Detroit: Gale Research, 1995. “Folio: The Magazine for Magazine Management.” IAC Insite, 1 July 1997. Available from http://IAC-insite.com. “Linda Johnson Rice” Notable Black American Women. Detroit: Gale Research, 1996.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Robert Johnson Overview Robert Wood Johnson was the head of the famous Johnson & Johnson Company, a supplier of health care and baby products founded by his father. He was known as a humane employer, a wartime administrator, an author, a philanthropist, and a liberal business leader. His name survives today not only in the company itself, but also in the philanthropic functions of the Robert Wood Johnson Foundation.
(1893-1968) Johnson & Johnson Company
Personal Life Robert Wood Johnson’s life began on April 4, 1893, in New Brunswick, New Jersey, home of his father’s Johnson & Johnson business headquarters. A son of Robert Wood and Evangeline Armstrong Johnson, young Johnson attended Lawrenceville School and Rutgers Preparatory School but did not attend college, choosing instead to begin working for his father at the age of 17. Rising eventually to president and then chairman of the board, Johnson was dedicated to the company’s success and equally dedicated to the welfare of the employees. He declared in a 1947 speech, according to an article in Coronet magazine, that business should never forget the plight of ordinary workers. To ignore them, he said, “is as foolish as it would be to ignore public health, crime, and the need for education.” Apart from his heavy business commitments, Johnson found time for a number of hobbies. He enjoyed flying, beginning with an old biplane in 1919, then an early monoplane, an autogiro, and later his own company plane. He also enjoyed tennis and hunting but preferred
4 5 1
R o b e r t
J o h n s o n
National Conference of Christians and Jews (1958), and the Executive of the Year Award from the American College of Hospital Administrators (1965). He was a patron of the American Museum of Natural History and, most importantly, the initiator of the Robert Wood Johnson Foundation, a major supporter of health-related causes.
Chronology: Robert Johnson 1893: Born. 1910: Graduated from Rutgers Preparatory School. 1918: Became vice president at Johnson & Johnson. 1920: Elected mayor of Highland Park, New Jersey. 1931: Became vice president and general manager at Johnson & Johnson. 1932: Became president of Johnson & Johnson. 1938: Started term as chairman of the board. 1942: Entered U.S. Army Ordnance Department.
Those who wrote about Johnson during his lifetime portrayed an energetic man who constantly looked for new experiences. “The General,” as he was called after his wartime service, was well respected by colleagues and employees and had a strong devotion to duty. He was sometimes unconventional but had an engaging personality and a good sense of humor, which served him well even with political and business opponents. He is remembered today for his business successes and especially for championing small business and the rights of the individual. Johnson lived in Princeton, New Jersey, and had three wives: Margaret Shea, Elizabeth Ross, and Evelyne Vernon, to whom he was married at the time of his death on January 30, 1968. He had a daughter, Sheila, a son, Robert W. Johnson Jr. and five grandchildren.
1942: Promoted to brigadier general. 1943: Appointed chairman of the Smaller War Plants Corporation. 1943: Married third wife, Evelyn Vernon. 1944: First book, But, General Johnson, published. 1947: Or Forfeit Freedom was published. 1949: Robert Johnson Talks It Over was published. 1968: Died.
yachting, winning several cups in competition. He once raced and cruised from Hudson Strait to the Caribbean and on another occasion crossed the Atlantic to Spain. Johnson also had a vital interest in Republican politics, once serving as the mayor of Highland Park, New Jersey. He felt that his experience in small-town politics taught him a great deal about human psychology; on one occasion, for example, he personally went to the home of a resident who had complained about uncollected garbage—and Johnson himself loaded up the garbage and took it to the town dump. Although he steadfastly refused to run for Congress in 1948, he maintained an interest in political issues throughout his life. In addition to his business and political interests, Johnson believed in the importance of good works. A practicing Episcopalian whose religion was more than just a tradition, he worked with ministers, priests, and rabbis to improve management-labor relations. He received numerous awards throughout his life, among them the People to People Award from President Eisenhower (1957), the Gold Medal of Merit from the Veterans of Foreign Wars (1959), the Brotherhood Award from the
4 5 2
B u s i n e s s
Career Details As a son of the founder of Johnson & Johnson, young Johnson gravitated naturally toward his father’s company. Following the lead of Englishman Joseph Lister, who had identified airborne germs as sources of infection, the elder Johnson and his brothers had developed the first adhesive surgical plaster and tape and the first ready-made, sterile, sealed surgical dressings. The company filled a very real need. Before Lister’s discoveries, some hospitals reported postoperative mortality rates as high as 90 percent. Johnson & Johnson vastly improved products available for antiseptic surgery and post-surgical care, and the company fast became the best-known name in health care supplies in the United States. By the 1890s Johnson & Johnson was calling itself “The Most Trusted Name in Surgical Dressings.” The younger Johnson spent several years as a youth doing hard mill work in various areas of the Johnson & Johnson factory, from the plaster shop to the adhesive tape department. The company continued to diversify during the early decades of the 1900s, buying a textile mill and adding the Band-Aid adhesive bandage and Johnson’s Baby Cream to its product line in the 1920s. After going on an around-the-world tour in the early 1920s, Johnson and his brother J. Seward Johnson convinced the company that it should look into selling their products in an international market. Soon Johnson & Johnson Ltd. was set up in Great Britain. Later, during Johnson’s tenure in executive positions, the company also expanded into Australia (1931), Sweden (1956), and Japan (1961). Johnson became a vice-president by the age of 25 and president of the company in 1932, replacing his un-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
R o b e r t
cle, James W. Johnson. Suspicious of unwieldly bureaucratization in industry, Johnson initiated a policy of decentralization, giving divisions and affiliates a great deal of autonomy in their operations. It was said that he embarked on this policy after once calling a meeting of all executives involved with a particular product. Dismayed that they numbered 27, he then and there decided to reorganize to eliminate inefficiency. Divisions under Johnson’s leadership eventually included such names as Surgikos, Inc. (surgical packs and gowns), the Personal Products Division (sanitary napkins), Ortho Pharmaceutical Corporation (birth control products), and Ethicon (sutures). In 1959 Johnson & Johnson bought McNeil Laboratories, a producer of prescription drugs, and Cilag-Chemie, a Swiss pharmaceutical company. In 1961, the company acquired Janssen Pharmaceutical. Retiring in 1963, Johnson stayed with the company after that as chairman of the board. At the time of his death in 1968, Johnson & Johnson had some 90 plants and $700 million in sales in 120 countries. During World War II, Johnson became rationing administrator for the state of New Jersey, then a colonel assigned to Army Ordnance. He was promoted to brigadier general in 1942, becoming known thereafter as “the General” to employees and friends alike. He then became chief of the New York Ordnance District and later chairman of the War Production Board and of the Smaller War Plants Corporation (SWPC), over the strong objections of Senator Harry S. Truman of Missouri, who thought that big business would have too much control of government contracts under Johnson’s leadership. Johnson set out to prove Truman wrong, moving immediately to guarantee more contracts for small plants. In a speech in 1943, he condemned the building of larger and larger defense plants, when smaller plants could serve the nation’s purposes well. He was eventually credited with bringing more government contracts to small businesses in New York state and northern New Jersey. Political wrangling, however, began to negate the SWPC’s effectiveness. In September 1943, Johnson resigned his position. Despite the frustrations of the job, most agreed that he had done well in a difficult assignment. Johnson’s first book, But, General Johnson (1944), detailed his experiences in Washington, condemning bureaucracy and centralization in a good-humored way. The second, Or Forfeit Freedom (1947), proclaimed many of Johnson’s reform ideas and critiqued the industry of his day. Johnson also published Robert Johnson Talks It Over in 1949 and was one of the authors of Human Relations in Business in 1950.
J o h n s o n
tled “Try Reality,” in which he urged other industrialists to adopt new policies of corporate responsibility to their employees and to the world at large. He later created the Johnson & Johnson, credo stating that its first responsibility was to its consumers; the second, to its employees; the third, to the community and environment; and the fourth, to the stockholders. Johnson and his successors believed that the stockholders would be well served if the company met the first three responsibilities. Johnson & Johnson’s credo attracted wide media attention and was acclaimed as a future-oriented approach to business practices. To this day, Johnson & Johnson is known for its humane personnel policies, such as liberal family leave and on-site day care. At times Johnson disappointed his more conservative business colleagues with his liberal approach. His belief in union-management cooperation defied traditional business practices of the times. Within management, he disliked people who never disagreed with him and did not retaliate against dissenters. His policy of decentralization also went against the current thinking among other large industries whose divisions were increasingly becoming less autonomous. Johnson also promoted a higher minimum wage, improved factory conditions, and the responsibility of business to society. Under the leadership of Robert Johnson, the contributions of the company to the social and economic wellbeing of Americans were considerable. Continuing in his father’s tradition of providing quality health care products, he improved some older products such as baby powder and baby cream and made them best-sellers; and his policy of diversification has made the company the great success it is today, employing over 91,000 people in its worldwide operations. At all times, Johnson was idealistic in his approach to business and the people who worked for him. According to his obituary in the New York Times, Johnson once said, “We build not only structures in which men and women of the future will work, but also the pattern of society in which they will work. We are building not only frameworks of stone and steel but frameworks of ideas and ideals.”
Johnson had a uniquely people-centered approach to business operations. In 1935, he wrote a pamphlet enti-
The Robert Wood Johnson Foundation is his enduring legacy. Arising not only from his business interests, but also from his humanitarian concern for patients, the foundation was begun in 1972 from a $1.2 billion bequest from Johnson and $2 billion in grants. The foundation issues a grant to help Americans get basic health care, improve health services to the chronically ill, and reduce the harm caused by substance abuse. The phrase “made possible by the Robert Johnson Wood Foundation” is also commonly attached to health-related programs on the Public Broadcasting System and in other media outlets. The goals of the foundation reflect Robert Wood Johnson’s own sense of personal and corporate responsibility for the health of the whole society.
B u s i n e s s
S t u d e n t s
Social and Economic Impact
L e a d e r
P r o f i l e s
f o r
4 5 3
R o b e r t
J o h n s o n
Johnson and Johnson. Company History. Available from http://www.johnsonandjohnson.com
Sources of Information Contact at: Johnson & Johnson Company One Johnson and Johnson Plz. New Brunswick, NJ 08933 Business Phone: (732)524-0400 URL: http://www.jnj.com
New York Times, 31 January 1968. Oswald, George. “Johnson of J & J: Industry’s Rebel.” Coronet, October 1949.
Bibliography
Robert Wood Johnson Foundation Homepage. Available from http://www.rwjf.org/jabout.htm and http://www.rwjf.org/library/ jlib.htm.
Current Biography Yearbook. New York: H.W. Wilson Co., 1943.
Who Was Who in America. Chicago: Marquis Who’s Who, 1973.
International Directory of Company Histories, Chicago: St. James Press, 1991.
4 5 4
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Quincy Jones Overview After beginning his career as a teenage jazz trumpeter of note, Quincy Delight Jones, Jr., has gone on to become a virtual one-man musical entertainment powerhouse. He boasts a string of stellar credits not only as a musician but also as a composer, arranger, producer, and entrepreneur. And as one of the first African American executives of a major recording company, Jones helped bring jazz into the mainstream by successfully fusing it with the musical traditions of many different cultures. In the process, he broke down many of the barriers that had previously excluded African Americans from certain segments of the music industry.
(1933-) Quincy Jones Entertainment Company
Personal Life Quincy Delight Jones, Jr., was born on March 14, 1933, in Chicago, Illinois. His father, Quincy Delight Jones, Sr., worked as a carpenter to support his family during the Great Depression, a period of tough economic times that lasted throughout the entire 1930s. His mother, Sarah Jones, was in and out of mental hospitals during most of her son Quincy’s formative years, and it was not until he was an adult that he developed a close relationship with her. Jones’ parents divorced soon after his younger brother, Lloyd, was born, and both boys ended up being raised by their father and his new wife. Jones’ stepmother already had three children of her own prior to marrying Jones’ father and gave birth to three more during the marriage.
4 5 5
Q u i n c y
J o n e s
on I was permanently hooked on music,” Jones remarked years later. The two soon became friends and formed a jazz combo that performed at nightclubs and weddings in the Seattle area. Before long, Jones was composing and arranging their music. After graduating from high school, Jones studied at Seattle University and then won a music scholarship to attend the famous Berklee College of Music in Boston, Massachusetts. Once he completed his course work at Berklee, he headed to New York City to try his hand at creating recording arrangements for jazz musicians. It was around this same time (the mid-1950s) that Jones began touring with the big bands of Dizzy Gillespie and Lionel Hampton. His travels took him across the globe, and while playing in Europe, he decided to make his home in Paris. There Jones studied with Nadia Boulanger and Olivier Messiaen and served as the musical director at Barclay Disques. He also composed music for Harry Arnold’s Swedish All-Stars in Stockholm and directed the music for Harold Arlen’s production “Free And Easy” during its three-month swing through Europe in the early 1960.
Quincy Jones.
(Imapress/Archive Photos.)
When Jones (or “Q” as his friends called him) was 10 years old, the family moved to Bremerton, Washington, a suburb of Seattle. By this time, World War II was raging in both Europe and Asia, and Bremerton was filled with soldiers and sailors waiting to be shipped off to fight somewhere across the ocean. This rather chaotic environment and the small town’s busy night life helped foster Jones’ early love of music. Jones has been married and divorced three times, including a liaison (1974-86) with actress Peggy Lipton, best known for her roles in the television series The Mod Squad and Twin Peaks. He has five children: Jolie, Martina-Lisa, Quincy III, Kidada, and Rashida. But Jones’ workaholic lifestyle has made him somewhat of a stranger to his family. Only recently has he begun to set aside time to spend with his children.
Career Details Even as a boy, Jones displayed a special talent for music. At only 13, he met up with a group of other young musicians in the Seattle area who were interested in jazz and began playing the trumpet. He also dreamed of one day composing and arranging his own pieces. His first teacher was a 15-year-old fellow musician named Ray Charles. He explained the basics to his eager pupil, including how a group of musicians could observe the same rhythm while playing different notes. “From that moment
4 5 6
B u s i n e s s
While living in Paris, Jones also became acquainted with a number of African American writers who had more or less gone into exile to escape racism at home. Among those he counted as friends were Richard Wright and James Baldwin. They helped raise his consciousness on the subject of race and race relations and made him more keenly aware of his African American roots. Jones returned to the United States in 1960. After taking part in an unsuccessful American tour with 18 musicians from the “Free And Easy” production, he hired on as the musical director for Mercury Records in New York City. In 1964, Jones became the first African American executive in a white-owned recording company when Mercury Records named him vice-president. In addition to his administrative responsibilities, he sat in on recording sessions with the Mercury orchestra and wrote and arranged music for popular performers such as Sammy Davis, Jr., Andy Williams, Sarah Vaughan, Peggy Lee, and Aretha Franklin. He also arranged and conducted the music for It Might As Well Be Swing, an album featuring the Count Basie Band and Frank Sinatra. Jones was a pioneer at Mercury in another important way. Never a purist, he liked to experiment with creative fusions of jazz (which was itself a blend of African rhythms, European traditions, quadrilles, blues, country, and marches) and other musical forms, including pop, classical, and rock and roll. Through his composing and producing, Jones was able to integrate jazz into American culture (specifically the entertainment industry) like no one else before him. In 1965, Jones became the first African American composer of a motion picture soundtrack upon the release of Sidney Lumet’s The Pawn Broker. This film was his
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Q u i n c y
first foray into Hollywood and garnered much praise for its music. Two years later, Jones composed the music for both In Cold Blood and In the Heat of the Night. Both were nominated for an Academy Award, but Jones was advised not to compete with himself and chose In Cold Blood to represent him. While he did not win an Oscar that year, he has continued to compose for motion pictures and has more than 50 film musical scores to his credit. On several occasions since 1971, Jones has exercised his creativity on the small screen as well. He wrote the theme songs for the television series “Ironside,” “Sanford and Son,” and “The Bill Cosby Show,” and in 1977 he composed the musical score for the hugely successful miniseries “Roots.” In 1973, Jones co-produced a special program for the CBS network entitled “Duke Ellington, We Love You Madly.” It was a project of the Institute for Black American Music, a foundation established by Jones, Isaac Hayes, Roberta Flack, and others involved in the music business to promote recognition of black contributions to American music in general. The show featured performances by Peggy Lee, Count Basie, Aretha Franklin, Joe Williams, Sarah Vaughan, and a 48-piece orchestra conducted by Jones.
J o n e s
Chronology: Quincy Jones 1933: Born. 1946: Began playing trumpet. 1964: Became vice-president of Mercury Records. 1965: Composed soundtrack for The Pawn Broker. 1967: Composed soundtracks for In Cold Blood and In the Heat of the Night. 1977: Composed theme for Roots 1980: Established Qwest Records and released The Dude. 1982: Produced Michael Jackson’s Thriller album. 1990: Founded Quincy Jones Entertainment Company.
Feeling somewhat burned out by the mid-1970s, Jones took a bit of a break from composing to explore his talents as a vocalist. He made his singing debut on the 1973 Valerie Simpson album You’ve Got It Bad. The title track remained on the music charts for most of that summer. The following summer, Jones released his very own album, Body Heat, which stayed at the top of the charts for over six months and sold over one million copies. It contained the hit songs “If I Ever Lose This Heaven,” “Soul Saga,” and “Everything Must Change.”
1993: Established QDE (entertainment company) and started publishing Vibe magazine.
Just weeks apart in 1974, Jones suffered two nearfatal cerebral aneurysms (a bursting of blood vessels in the brain) and underwent surgery to repair the damage. He was back at work within six months touring with a 15-member band. But his close brush with death profoundly changed Jones’ attitude about life. He emerged from his ordeal with a renewed sense of purpose and a philosophy that emphasized balance. As he put it, “Now, I just do exactly what I love.”
During much of the 1980s, Jones kept very busy as a producer for some of the biggest names in the music business, including Frank Sinatra, Donna Summer, and James Ingram. He also produced and wrote the music for Michael Jackson music videos and albums, including the 1982 mega-hit Thriller, which sold over 40 million copies and still ranks as the best-selling album of all time. Jones won three Grammy Awards for his work on that particular project.
Energized by this change of outlook, Jones teamed up with his band to record an album entitled Mellow Madness that featured Stevie Wonder and other notables on vocals. He also became involved in additional projects that reflected his interest in fusing jazz with other forms of music. One such attempt was The Wiz, an African American version of the classic story The Wizard of Oz. Released in 1978, it starred Diana Ross and Michael Jackson. Then, in 1980 Jones made the album The Dude featuring an all-star lineup of musical talent. It earned him 12 Grammy Award nominations, five of which he won.
In 1985, Jones scored another success in Hollywood with his compositions for the soundtrack to The Color Purple. This motion picture by famed director Steven Speilberg was an adaptation of the Alice Walker novel of the same title.
Not long after The Dude came out, Jones signed a deal with Warner Brothers Records to start up his own label, Qwest Records. It released Jones’ own recordings
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
1998: Dissolved QDE.
(1989’s Back on the Block was the first) as well as several albums by others that he produced. The company even branched out into television station ownership.
Jones turned his attention to other matters in 1986, when a devastating famine in east Africa became the subject of global concern. In an effort to help the victims, he wrote a song entitled “We Are the World” and gathered together a huge star-studded chorus to perform it. Sales of the resulting single raised $50 million for famine relief. The 1990s saw Jones establish the Quincy Jones Entertainment Company, which marked his return to tele-
S t u d e n t s
4 5 7
Q u i n c y
J o n e s
vision. It produced the series “The Fresh Prince of Bel Air” for NBC as well as a series of syndicated talk shows hosted by Jones’ friend, civil rights leader Jesse Jackson. In 1993, Jones branched out in yet another direction as the founder of Vibe, a magazine devoted to the African American music scene. Later that same year, he signed a deal with David Salzman to form a joint venture called QDE (Quincy Jones/David Salzman Entertainment). Its goal is to provide entertainment on the Internet and various types of multimedia and interactive programming. QDE proved to be very successful and even expanded into film and television production before the partners split in 1998. Despite his moves into other forms of entertainment, Jones had not abandoned music. In 1995, for example, he released an album entitled Q’s Jook Joint. It featured collaborations with Stevie Wonder, Sonny Bono, and his old friend Ray Charles. The next year, Jones released an album of instrumental music called Cocktail Mix.
his longtime love of jazz—that appeals to the widely varying styles and tastes of the mainstream as opposed to a specialized audience. Jones has been able to savor his success from his position at the helm of an ever—widening entertainment empire that reaches people not only through music but also via television, films, and videos. One of the biggest challenges Jones has had to face along the way is racism. It has figured in his roles as a business executive, record producer, and aggressive advocate of African American musical projects. He has also been the target of criticism from those who claim that he compromises true jazz by fusing it with other forms of music in his search for mass-market appeal at a time when pop, rock, and rap dominate the airwaves. As Jones remarked in the early 1990s, however, “My lifetime project...involves putting this whole AfricanAmerican thing together into a single cohesive musical expression. I’ve been working on it for twenty years, and I may need another twenty to get through . . . . It’s keeping me up, invading my dreams.”
Social and Economic Impact Jones’ unique sound, a fusion of jazz and other musical forms, has left an indelible imprint on American culture. His original compositions for movies and television, coupled with his many contributions as both songwriter and producer to the worlds of jazz, pop, rock, and rap, all testify to the depth of his talent. So, too, do the more than two dozen Grammy Awards he has received in recognition of his expertise. Equally notable is his commitment to bringing African American music and musicians to the forefront and underscoring their influence and accomplishments. Throughout his long career, Jones has avoided stereotyping himself or his music. Instead, he has strategically marketed a certain approach to music—one tinged with
4 5 8
B u s i n e s s
Sources of Information Contact at: Quincy Jones Entertainment Company 10880 Wilshire Blvd., Ste. 2110 Los Angeles, CA 90024
Bibliography Billboard Magazine, 3 July 1993. Billboard Magazine, 12 February 1994. Downbeat Magazine, October 1992. Entertainment Weekly, 19 January 1996. Rolling Stone Magazine, 12 April 1978. Rolling Stone Magazine, 2 November 1978.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Michael Jordan Overview
(1963-)
Michael Jordan is one of the greatest basketball players of all time. He has won an NCAA basketball championship, two Olympic gold medals, six NBA (National Basketball Association) championship titles, and is certainly the most well-known athlete of the late 1980s and 1990s. It has been claimed that he has single-handedly, fundamentally changed the sports business in the 1990s. “What was once a clubby parochial business with relatively narrow appeal is today a thriving, global, high-tech industry that attracts fans of all ages, ethnic groups, and cultures,” reports Fortune magazine. “Stadiums are multimedia marketing platforms. Games are valuable programming, fought over by broadcasters around the world as networks and cable channels proliferate. And Jordan is at the center of it all.” Desire, drive, and determination has made Michael Jordan one of the most successful, most popular, and wealthiest celebrities of his generation.
Personal Life Jordan was born on February 17, 1963, in Brooklyn, New York, and was raised in Wilmington, North Carolina. Growing up, he always excelled at sports. Jordan has many fond memories of youth baseball, especially when he hit the game-winning home run in a Babe Ruth tournament. Reportedly, Jordan’s father, James, always dreamed that his son would become a professional baseball player. In what has become a part of classic contemporary sports legends, it is common knowledge that in high
4 5 9
M i c h a e l
J o r d a n
important part in his personal and professional life. In July of 1993 his father was murdered in North Carolina. Three months later, Jordan announced his retirement from the NBA, citing the desire to spend more time with his family and friends and the desire for some sort of life outside of the spotlight. Some aspects of Jordan’s private life were initially kept from the public, though they later became common knowledge. In 1988 he had a son with Juanita Vanoy, but he did not marry her until the boy was almost a year old. Jordan also became known as a heavy gambler. And for years Jordan was criticized for his involvement with Nike because of allegations of its mistreatment of employees, especially women and children, in its Asian plants. Nevertheless Jordan is an idolized figure and a role model for a generation.
Career Details Like most professionals in the NBA, Michael Jordan prepared himself for his career by playing college basketball. In his first season at North Carolina he became only the second Tarheel player to start every game as a freshman and was named the Atlantic Coast Conference (ACC) Rookie of the Year in 1982. Jordan led the ACC in scoring during his sophomore and junior years, and was also named the College Player of the Year by Sporting News after both seasons. Although he had three outstanding college seasons, the success Jordan was to have in the NBA was not entirely apparent, for he was only the third player chosen in the 1984 draft—Hakeem Olajuwon and Sam Bowie were chosen before him.
Fans surround Michael Jordan as he walks off the basketball court. (AP/Wide World Photos, Inc.)
school, the varsity basketball team cut Jordan during his sophomore year. Jordan himself cites that incident as one of the most important in his life. Not making the team tested Jordan’s willingness to work for his goals. He made the team his junior and senior years, and after high school accepted a scholarship to the University of North Carolina. He played for three seasons at North Carolina and then made himself available for the NBA draft in 1984. He was chosen third by the Chicago Bulls. In 1989 Jordan married Juanita Vanoy, and they have three children: Jeffrey Michael, Marcus James, and Jasmine Mickael. Jordan’s family, particularly his father, always played an
4 6 0
B u s i n e s s
Jordan, however, experienced immediate success in the NBA. He was named to the All-Star Team in his first season and also became Rookie of the Year. A broken foot, the only serious injury of his career, sidelined Jordan during most of his second season. He returned in time for the playoffs, and set an NBA playoff scoring record with 63 points in his second playoff game. He averaged 37.1 points per game during his third season, winning the first of seven consecutive scoring titles. Jordan’s run was only interrupted by his retirement. Winning awards and honors—earning MVP of the All-Star Game, winning the slam dunk contest, being named league MVP—began to become commonplace for Jordan starting in 1988. During that year the player who was originally only viewed as an offensive weapon was named Defensive Player of the Year as well as the MVP of the league. That season he was the first player to ever lead the league in both scoring and steals. Through 1998, Jordan was named to the All NBA first team ten times, and named to the All NBA Defensive First Team eight times.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
M i c h a e l
In 1989 Jordan led the Bulls to the Conference Finals. Although it would be two more seasons before the Bulls would win the championship, the team had arrived. The Bulls won the NBA championship three successive years, from 1991-93, defeating the Los Angeles Lakers, the Portland Trailblazers, and the Phoenix Suns. Jordan was voted MVP of the finals all three times. After winning the 1992 finals, Jordan led a group of NBA players who played for the U.S. Olympic basketball team. This team which paired Jordan with other superstars like Magic Johnson, Larry Bird, Patrick Ewing, David Robinson, and Karl Malone—became known as the “Dream Team.” The team easily won the gold medal, winning by an average margin of victory of 43.7 points. One month after watching his son lead Chicago to its third straight NBA title in 1993, James Jordan, Michael’s father, was murdered. Michael Jordan was grief stricken. This tragedy, combined with increasing media scrutiny over his gambling, left him feeling depleted and disenchanted with his life as a basketball superstar. Stating that he had nothing left to accomplish, he announced his retirement from the NBA in October of 1993. Jordan retired as the all-time leading scorer in the history of the Chicago Bulls. The next year he changed sports, joining the Chicago White Sox minor league baseball team. He spent 17 months in the minors and followed and scrutinized his every move. All in all, his career as a baseball player was short-lived and unspectacular. His 17 months in the minors did provide a much-needed break from basketball and gave Jordan an opportunity to regain his passion for the game. His return to the NBA was chronicled in two bestsellers: Bob Greene’s Rebound: The Odyssey of Michael Jordan, and Sam Smith’s Second Coming: The Strange Odyssey of Michael Jordan—from Courtside to Home Plate and Back Again. When Jordan first returned to the Bulls in the 19941995 season, both he and his team played inconsistently at first. The Bulls reached the playoffs and advanced to the conference semi-finals to face the new talk of the league, Shaquille O’Neal, star of the Orlando Magic. Jordan prevented the Bulls from winning the first game by making two errors in the final 18 seconds. At this point the great Michael Jordan was viewed as only human. The Orlando Magic defeated the Bulls four games to two. The 1995-1996 season was built on the type of playing on which records are made—the Bulls finished the regular season 71-10, an NBA record, and Jordan earned an eighth scoring title. The Bulls won their fourth NBA title that season, defeating the Seattle Supersonics. The following season Jordan led the Bulls to another title, this time defeating the Utah Jazz. In the 1997-98 season, it looked like the Bulls might not even make the finals, for Indiana pushed the Bulls to seven games in the Eastern Conference Finals. But Jordan and the Bulls endured and met the Jazz again, emerging as champions.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
J o r d a n
Chronology: Michael Jordan 1963: Born. 1978: Cut from high school varsity basketball team. 1982: While playing for North Carolina, hit “The Shot,” the game winning jumper that defeated Georgetown in the NCAA finals. 1984: Picked third in the NBA draft and led U.S. Olympic Team to gold medal. 1985: Named NBA Rookie of the Year. 1986: Returned from an injury to score an NBA record 63 points in a single playoff game. 1987: Won first of seven straight NBA scoring titles. 1991: Led the Chicago Bulls to the first of six NBA Championship Titles. 1993: Retired from the NBA to pursue career in professional baseball. 1995: Returned to NBA.
Social and Economic Impact When Jordan was drafted by the Chicago Bulls, they were a lackluster team, seldom drawing more than 6,000 fans to a home game. Jordan quickly turned that around. His style of play, incredible leaping ability, and his hang time thrilled fans in basketball arenas across the country. Michael Jordan’s success initially meant more money for the Chicago Bulls, who began selling out their games at home and on the road. Hard core and casual fans were interested in an opportunity to marvel at history in the making. Early on, Jordan was signed to a longterm contract, though while still under contract, new, unproven players were making millions more. Finally Jordan received the contract he deserved, a one-year $30 million contract for the 1997-98 season, the highest single-season contract in the history of professional sports. Jordan’s success not only meant more money for the Bulls, it meant more money for the NBA, especially in marketing Jordan’s jersey, with his old number 23 and the new number 45 after he returned from baseball. Jordan reportedly did more for the financial success of the NBA than Larry Bird and Magic Johnson did in the late 1970s.
S t u d e n t s
4 6 1
M i c h a e l
J o r d a n
Personally, Jordan earned more money from endorsements than he did from playing basketball. Companies like Nike, Wilson, Gatorade, Coke, McDonald’s, Hanes, and General Mills all wanted him to be associated with their products. Between Air Jordans and other shoes and apparel, it is estimated that Jordan products have brought in $2.6 billion for Nike. Michael Jordan’s endorsement of Hanes underwear was expected to exceed $10 million annually. Developed by Bijan, Michael Jordan cologne has generated worldwide sales of $155 million as of mid-1998. A popular catch phrase that began in the mid-1980s was “I wanna be like Mike.” No mention of a last name was needed. In addition to his endorsements, Jordan has opened three restaurants named after himself; the huge basketball on the roof clearly identifies the place. Jordan also starred with Bugs Bunny in the half-animated feature film Space Jam which brought in an estimated $440 million in box office tickets and video sales. Michael Jordan’s money is also put to humanitarian uses. He personally established several charities—the Jordan Institute for Families and Night Ministry. After his father was murdered, Jordan and the Chicago Bulls established the James Jordan Boys and Girls Club and Family Life Center, which aids Chicago-area youth. The Michael Jordan Flight School was established to serve as a summer basketball camp for boys and girls between the ages of eight and 18. In 1997 Michael Jordan, in conjunction with Nike, introduced his own brand of athletic shoes and apparel. The Air Jordan series had been Nike’s most profitable
4 6 2
B u s i n e s s
shoes since they were introduced in the mid-1980s. Jordan told Newsweek that this new business would “keep me in touch with the game” after he retires. Reportedly Jordan has repeatedly stated that he is not interested in either coaching, managing, or owning his own NBA team. He has not expressed interest in broadcasting either.
Sources of Information Contact at: Michael Jordan 1901 West Madison Street Chicago, IL 60612
Bibliography Byers, Paula K. and Suzanne M. Bourgoin, eds. Encyclopedia of World Biographies. Detroit: Gale Research, 1998. Greene, Bob. Rebound: The Odyssey of Michael Jordan. New York: Viking Penguin, 1995. Holstein, William. “Jordan Hits the Rroad.” U.S. News & World Report, 2 February 1998. Jordan, Michael. Rare Air: Michael on Michael. San Francisco: Collins Publishers, 1993. Kornbluth, Jesse. “Michael Jordan: Presiding on Olympus, He’s Bullish on Privacy.” People, 17 May 1993. Samuels, Allison. “Mike on Mike.” Newsweek, 22 September 1997. Smith, Sam. Second Coming: The Strange Odyssey of Michael Jordan—from Courtside to Home Plate and Back Again. New York: HarperCollins, 1995.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Donna Karan Overview Donna Karan has earned a reputation as an innovative marketer and world-class fashion designer with her label Donna Karan New York. Formerly a co-designer of Anne Klein, her small start-up company expanded into a fashion empire during the 1980s.
(1948-) Donna Karan International Inc.
Personal Life Donna Karan was born Donna Faske on October 2, 1948, in Forest Hills, New York. Her mother was a model and her father a clothes retailer. As a youngster, Karan became obsessed with fashion and attended Parson’s School of Design. She left the school without graduating to take an assistant’s job at Anne Klein, however, and in 1987 she received an honorary fashion degree from the school. In addition to overseeing designs for many years, she also handled the financial duties of her growing business. Karan married Long Island retailer Mark Karan in 1974, and together they have one child, Gabrielle. The couple divorced in 1978, but have remained good friends. In 1983, Karan married sculptor Stephan Weiss. They maintain homes in Manhattan and on Long Island, New York.
Career Details After being hired for a summer job at the Anne Klein Company, Donna Karan obtained permanent work as an associate designer for the firm. Japanese fashion financier
4 6 3
D o n n a
K a r a n
ation of New York award (1988), and a Woolmark award (1992).
Donna Karan.
(Archive Photos/Jason Trigg.)
Takihyo Tomio Taki, who was managing the company after the founder’s death, recognized Karan’s talent and drive. He named her and Louis Dell’Olio co-designers and together this team garnished many industry awards for their sporty womenswear collections. In 1982, the company introduced the successful Anne Klein diffusion line. Shortly thereafter, Karan left to found her own company with husband Stephan Weiss. They headquartered the new firm in New York City. The first Donna Karan Collection, launched in 1985, received critical acclaim. The following years brought an expansion of offerings: swimwear in 1986, a hosiery collection in 1987, the DKNY bridge line in 1988, and, in 1991, the DKNY menswear collection. The following year, Karan founded the Donna Karan Beauty Company, a fragrance and cosmetics division. Since then the company has evolved further, introducing lingerie and a children’s line, DKNY Kids. The Karan empire is now global, with over 300 foreign accounts, including 27 freestanding Donna Karan stores. With a strong following in the Far East and Japan, the company opened an 8,000square foot flagship store Queen’s Road in Hong Kong. Other recently opened international locations include Kuwait City, Rome, Geneva, Moscow, Shanghai, Johannesburg, Stockholm and Amsterdam. The fashion industry has consistently recognized Karan’s expertise. She has been the recipient of numerous COTY awards (1977, 1981, 1984, 1985), several Council of Fashion Designers of America awards (1985, 1986, 1990, 1992), a Fashion Footwear Associ-
4 6 4
B u s i n e s s
The 1990s presented Karan with difficult business decisions in her role as chief executive officer (CEO). One of her more controversial moves was a plan to take the company public with a stock offering. The first obstacle towards this goal was the company’s rapid expansion, which left the firm with more debt than warranted by its cash flow. With late deliveries and unexpected demands that the company could not meet, the financial outlook worsened. Karan herself described these times as a “vicious cycle.” It soon became obvious to Wall Street that the firm was not strong enough to proceed with the initial public stock offering. Meeting the challenge head-on, Karan restructured the company’s debt so that growth could continue. New products were added to the beauty and home lines, increasing sales. In addition, a licensing contract was signed for jeans aimed at the baby boomer population. The stock offering at $24 per share took place in 1996, and expansion continued. The cost outlay for the growth eclipsed sales, though, and the company was again in turmoil. Other issues complicated the tenuous situation. The sale of the fragrance and cosmetics division took longer than expected, and there were problems with the jeans licensing agreement. Conflicts over production schedules and product mix kept the company from pursuing this lucrative market. At the 1997 stockholder meeting, the company estimated $100 million in lost revenue due to the collapse of the deal. The result was a fall in the company’s stock price that left investors demanding the imposition of more cost controls. Karan once again acted decisively by restructuring her role in the company. In a move hailed by Wall Street, she resigned as chief executive officer and named former Polo Ralph Lauren group president, John Idol, to the post. Significantly, he reports not to Karan but to the board of directors. With his previous background in licensing, Idol brings the expertise needed to expand market share. In this way, Karan successfully split her managing and designing duties, while retaining the title chairwoman of the company. In recent moves, the company segmented DKNY Women’s and its $311 million sales volume into five separate labels, all at different price ranges. They are D, priced between designer and bridge; DKNY, for wide distribution to department stores; DKNY Classics, which focuses on casual dress; DKNY Active; and DKNY Jeanswear. The segmentation of the men’s bridge line is planned for 1998.
Social and Economic Impact Karan has left her mark as a businesswoman, marketer and designer in the fashion industry. With annual sales in the hundreds of millions, the Donna Karan Com-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
D o n n a
pany is one of the world’s premier fashion retailers. By presenting interchangeable designs, she has appealed to the casual, work, and designer markets. She has stated that if one has the fundamentals underneath—bodysuits, unitards, bodywrap styles and stretch fabrics—these basics can be put together in endless ways. In addition, many see her clothes as neither specifically day nor night, summer nor winter, which adds to consumer appeal. Her launch of DKNY, the casual line of lower-cost clothes, brought her designer name and styles to working women looking for affordable but fashion-conscious clothing. In the early 1990s, she also incorporated urban trends and put together the Essentials Collection that sold well and prompted a similar men’s line. Her Woman to Woman marketing campaign won acclaim for appealing to stylish, elegant working women. Karan is a well-known celebrity with many fans in the entertainment and political worlds. President Bill Clinton often wears her suits, as does singer/actress Barbara Streisand and other Hollywood stars. Karan has offered couture lines with women’s dresses at $2,000 and men’s suits at $2,500. And, for those inclined to spend more, there is the Donna Karan Collection—a limited edition signature label. Items include luxurious detailing and hand-painted or hand-dyed fabrics, beginning at $6,000. Karan has said that she sees designing as an extension of herself as a woman and that clothes should be simple. They are, she says, an expression of the many roles she has had to balance: wife, mother, friend, and businesswoman. Her goal, she emphasizes, is to simplify dress to make life easier and to add comfort, luxury, and durability.
K a r a n
Chronology: Donna Karan 1948: Born. 1966: Joined Anne Klein and Company as designer. 1974: Named co-director of design of Anne Klein and Company. 1982: Launched Anne Klein II diffusion line. 1985: Founded Donna Karan New York (DKNY). 1986: Added swimwear line. 1987: Added hosiery collection. 1988: Introduced DKNY bridge line. 1991: Introduced DKNY menswear collection. 1992: Founded Donna Karan Beauty Company (fragrances and cosmetics).
Bibliography “As Holders Moan, Donna Paints Bright Picture.” Daily News Record, 13 June 1997. Byers, Paula K. and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1998. “Donna’s Global Agenda.” Women’s Wear Daily, 8 October 1997.
Sources of Information
Martin, Richard, ed. Contemporary Fashion. Detroit: Gale Research, 1995.
Contact at: Donna Karan International Inc. 550 7th Ave. New York, NY 10018 Business Phone: (212)789-1500
B u s i n e s s
L e a d e r
P r o f i l e s
Pendergast, Sara, ed. Contemporary Designers. Detroit: Gale Research, 1997.
f o r
S t u d e n t s
4 6 5
Will Keith Kellogg (1860-1951) Kellogg Company
Overview Will Keith Kellogg invented corn flakes, one of the most popular types of breakfast cereal. He had a genius for business and developed advertising campaigns that were considered to be ahead of their time. He was one of the first advertisers to make use of test markets and product sampling, and to use modern, four-color magazine ads. Despite his reputation for being a difficult person, he was extremely generous in his philanthropic endeavors.
Personal Life Willie Keith Kellogg was born in Battle Creek, Michigan, on April 7, 1860. He changed his first name to Will in 1938. His parents, Ann Janette Kellogg and John Preston Kellogg, who were Seventh Day Adventists, had 16 children—Willie Keith was their seventh child. He grew up in Battle Creek among a community of Seventh Day Adventists who were known for their austere life style and their preoccupation with health. Kellogg was a shy boy with very few friends. He had no specific interests or hobbies, nor did he display any particular talent. Kellogg was not academically gifted either; in fact, his school teachers thought that he was a slow learner, and by the time he was a young teenager, he had dropped out of school to work for his father’s broom company where he spent about eight years as a salesman. In 1880, Kellogg married Ella Davis, and the following year, he took a three month business course at
4 6 6
W i l l
Parson’s Business College in Kalamazoo, Michigan. After finishing the business course, he obtained employment at the nationally famous Battle Creek Sanitarium, which was run by his older brother, John Harvey Kellogg, M.D. Dr. Kellogg had taken over the Adventist Health Reform Institute and had renamed it Battle Creek Sanitarium. Will Kellogg worked there as a bookkeeper, shipping clerk, and cashier, and also performed various other administrative duties. John H. Kellogg believed that his patients could achieve good health through a good diet. He wrote several books on “biologic living” that promoted his theory on health and nutrition. Dr. Kellogg advocated that certain conditions and ailments could be treated with hydrotherapy, plenty of exercise, and a strict vegetarian diet. He experimented with nuts and grains to produce tasty alternatives to meat and potatoes, and came up with granola in 1877. He also developed peanut butter, protein substitute foods, and a grain substitute for coffee. Will Kellogg helped his brother promote his health foods, his books, and his theories. He ran a subscription service for the health books, and managed the Sanitas Nut Food Company, which developed the first patented process for making a flaked, cooked wheat cereal. This discovery had come about by accident in 1894, when a batch of cooked wheat was inadvertently left out over night and had dried. Instead of throwing out the dried dough, Kellogg ran it through the company’s rollers, which usually processed freshly-cooked grain into a large sheet. When the dried grain was processed in this way, it turned into flakes. Will Kellogg convinced his brother to bake the flakes and to serve them with milk. The cereal was so popular that, after patients left the sanitarium, they ordered the flakes by mail. Later, the two brothers experimented in making flakes using other grains, and introduced corn flakes in 1898. John Kellogg did not treat his younger brother very well. He expected Will to shine his shoes and shave his whiskers, and was not generous with his wealth. John lived in a huge house on a large parcel of land, and while his sanitarium grossed more than $4 million a year, he paid Will only $87 a month. In 1906, at the age of 46, Will broke away from his brother to start his own business. He found that he had a keen business sense. He was driven to become successful. Perhaps his fierce determination stemmed from the particular family dynamics that affected Will Kellogg so strongly—he was, for years, an underdog to his flamboyant brother, John. Will Kellogg developed his delicious cereals and advertised heavily. He was known for his large billboards and his beautiful cereal boxes, some of which were designed by the famous artist Norman Rockwell. Eventually, Will Kellogg became one of the country’s most wealthy citizens.
K e i t h
K e l l o g g
Chronology: Will Keith Kellogg 1860: Born. 1881: Took a business course at Parson’s Business College. 1894: Developed first flake cereal. 1898: Invented corn flakes. 1903: Established the Battle Creek Toasted Flake Company. 1930: Established W.K. Kellogg Foundation. 1938: Retired from business. 1951: Died.
pany for 17 years and had patented more than 200 packing processes, including one using wax paper. After banishing his son from the firm, Kellogg decided to groom his grandson, John L. Kellogg, Jr,. for president. In time, however, Will Kellogg became displeased with his grandson and demoted him, which subsequently led to John L., Jr.’s suicide. In 1943, John H. Kellogg wrote a conciliatory letter to his brother, acknowledging that he had treated him badly, but Will did not read the letter until after John died several years later. Despite Kellogg’s unhappy family life, he was involved in numerous philanthropic activities for which he is remembered. He retired from his company in 1938, and was blind for the last ten years of his life. He spent most of his retirement years at his Arabian horse farm in Pomona, California. Will Kellogg died in Battle Creek on October 6, 1951, at the age of 91.
Career Details
Kellogg’s relationships with his associates and friends have been described as stern and domineering. He even fired his second son, John L. Kellogg, because John left his wife. John had worked for the cereal com-
While Will Kellogg worked for his brother, at Battle Creek Sanitarium, he acquired the necessary business skills which helped him later, when he formed his own company. After Will and his brother accidentally discovered the wheat cereal flake, they experimented with other grains such as barley, oats, and corn. In 1898, the brothers introduced corn flakes. It was the corn flake that made Will’s fame and fortune. Initially, corn kernels were flattened into flakes, but they were tough and rela-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
4 6 7
W i l l
K e i t h
K e l l o g g
tively tasteless. Will tried using corn grits which made a more flavorful and crispy flake. Will recognized the money making potential of the flaked corn cereal and wanted to sell the product to retail grocery stores, but John never agreed. As a result, Will founded his own company, the Battle Creek Toasted Corn Flake Company, in 1903. He further developed the corn flake by adding malt, sugar, and salt. Kellogg had a particular flair for promoting his product. He advertised heavily, initiating slogans and phrases to promote brand identification. For example, in 1907, Will Kellogg introduced an ad campaign that was considered to be risqué at the time. He proclaimed that “Wednesday is Wink Day in New York.” Every woman who winked at her grocer on a Wednesday received a free box of corn flakes. Sales of the product increased drastically. Kellogg invested a great deal of money on advertising—he built electric bill boards and commissioned well-known artists to design his cereal boxes.
Social and Economic Impact The development of the corn flake changed the breakfast habits of Americans. The popularity of the Kellogg brother’s cereals spawned a breakfast cereal rush in Battle Creek around the turn of the century. Several competing companies opened in the area. Charles W. Post, who was at one time a patient at the Battle Creek Sanitarium, set up business in Battle Creek and developed Postum, a coffee substitute and Grape Nuts, both of
4 6 8
B u s i n e s s
which remain on the grocery shelves a hundred years later. Post’s cereal business gradually grew into the General Foods Corporation. Dozens of other factories, less long-lived, were set up as well. In 1930, Will Kellogg created the Kellogg Foundation. The Kellogg Foundation was initially formed to provide medical care to children around the world. The organization’s mission today is “to help people help themselves through the practical application of knowledge and resources to improve their quality of life and that of future generations.” Kellogg also supported numerous schools, bird sanctuaries, experimental farms, biological and conservation labs, and medical clinics. His big red Kellogg’s signature is recognized all over the world.
Sources of Information Contact at: Kellogg Company 1 Kellogg Sq. Battle Creek, MI Business Phone: (616)961-2000 URL: http://www.kelloggs.com
Bibliography Fucini, Joseph J., and Suzy Fucini. Entrepreneurs. Boston: G.K. Hall & Co., 1985. Garraty, John A., and Jerome L. Sternstein. Encyclopedia of American Biography. New York: HarperCollins, 1996. World of Invention. Detroit: Gale Research, 1994.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
William Russell Kelly Overview William Russell Kelly capitalized on businesses’ needs for temporary clerical and office support, and turned the idea into the billion dollar Kelly Services, Inc. The company evolved as industry needs changed, and temporary services were expanded to include marketing, labor, and technical support.
(1905-1998) Kelly Services, Inc.
Personal Life William Russell Kelly was born in British Columbia, Canada, in 1905. As a teen he attended the Gulfcoast Military Academy and graduated in 1922 at the age of 16. Kelly continued his education, at Vanderbilt University and then graduated from the University of Pittsburgh. He went on to hold a number of jobs including auto salesman and accountant, and was a fiscal management analyst during service in World War II. He married Margaret Adderley and adopted one son, Terrence Adderley. Kelly died of cancer at the age of 92 in Fort Lauderdale, Florida, in 1998.
Career Details When World War II ended and Kelly returned to civilian life, he envisioned reams of paperwork being generated as people returned to business. He decided to start his own business in Detroit, Michigan, reasoning that the after-war demand for automobiles would bolster the industry, increase paperwork, and create a need for typing, filing, duplicating, and mailing.
4 6 9
W i l l i a m
R u s s e l l
K e l l y
As a “Kelly Girl”, a worker could always decline an assignment if pressing needs, such as a sick child, made leaving the house difficult.
Chronology: William Russell Kelly 1905: Born. 1925: Graduated University of Pittsburgh. 1946: Started Russell Kelly Office Service in Detroit, Michigan. 1952: Added first branch office in Louisville, Kentucky. 1955: Changed company name to Kelly Girl Services, Inc. 1962: Took company public. 1962: Introduced marketing, labor, and technical temporary services. 1966: Changed company name to Kelly Services, Inc. 1985: Developed Dexterity Indexer System to evaluate temporary light industrial workers. 1987: Developed PC-Pro System to train temporary employees on computer software. 1998: Died.
Using $10,000 in personal savings and hiring two employees, Kelly started Russell Kelly’s Office Service in 1946. The business got off to a slow start. While it was true that post-war life had created an abundance of new paperwork, companies preferred to handle the paperwork internally and set up in-house offices to do so. But Kelly had a breakthrough in his take on the trend when a frantic client asked him to send one of his employees over to help out in a pinch. Kelly glimpsed the possibilities of a new slant on his business—providing temporary personnel that would go into companies and provide administrative or clerical support in-house. The concept worked. Not only did companies want the service, but women were ready and willing to work as temporary employees. Women had been encouraged immediately after the war to stay at home and save jobs for the returning men, though they had entered all sorts of professions while the male workforce was off fighting. Many women maintained the desire to work in some sort of professional capacity after the war, even though it was frowned upon. For these women, working as a Kelly temporary worker was a way for them to occupy the roles of housewife and career woman simultaneously.
4 7 0
B u s i n e s s
Kelly Services continued to grow. In 1952, Kelly added another office in Louisville, Kentucky. In 1955, the company had branch offices in 29 cities. At this time, Kelly changed the name of his company to Kelly Girl Services, Inc. In the 1950s, the company had annual gross revenues of $7 million annually and placed up to 20,000 women annually in temporary positions. By the 1960s, the company employed about 84,000 “Kelly Girls”. Kelly intentionally pitched the company to attract his profile of a typical Kelly Girl: a housewife in her late 30s or older, with two to three children. He appealed to these women’s desire to enter the workforce. Kelly suggested that a job as a temporary would give these women the experience they needed to function in the work world. Women who had never worked, or who had not been employed outside the home for the years their children were young, were encouraged to sharpen their skills through temporary work before going on to look for a permanent job. The pitch was successful, and Kelly’s workforce grew. The company expanded its focus in the 1960s and added temporary placement services for marketing, labor, and technical workers. This new emphasis drew more male applicants and revenues jumped to $46 million. By 1965, the company had placed 15,000 men in temporary positions. As more males joined the Kelly workforce, the name Kelly Girl was no longer appropriate, and in 1966 the company changed its name to Kelly Services, Inc. In the 1980s, Kelly Services had more than 750 offices around the world. Kelly’s success also attracted competitors, which in 1970 included more than 1,000 other firms that cumulatively placed more than 1 million personnel annually and had total revenues of $1.5 billion. In the years since its inception, Kelly Services refined its selection and placement process. Kelly staff interviewed prospects for temporary work and evaluated them on appearance, demeanor and skills to find the best match for employment. The company guaranteed its services 100 percent, a unique feature in the industry. In the 1980s, the company established a video training network, which standardized training and saved the company money. The company went on to develop other training programs for their temporary workers, including the Dexterity Indexer System (which evaluated light industrial workers) and the PC-Pro System (which trained temporary employees in the use of computer software). The company also began the Encore program, in 1987, which recruited retired workers into temporary service.
Social and Economic Impact Kelly’s concept of offering temporary employment services was, in hindsight, perfectly timed. Between 1940
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
W i l l i a m
and 1945, the number of working women in the United States increased by more than 50 percent. And 75 percent of these women were married. Kelly’s business venture initially employed mainly women, and capitalized on the desire of women to work in a way that would not disrupt their obligations at home. Aiding the company’s rapid growth was an explosion in the need for clerical services from the 1950s well into the 1970s. Between 1950 and 1974, the number of female clerical workers increased 250 percent in the United States. Although male clerical workers also increased during this time, the numbers were hardly as drastic, from 3 million in 1950 to 3.4 million by 1974. Many of the new female clerical workers in the years after the war were married and had children, and the number of working mothers in general increased 400 percent in the decades after World War II. Opinion on the concept of temporary workers—both from experts in the industry and from the workers themselves—remained mixed. One expert found the concept demeaning, commenting that “a temporary worker in many situations seems to be merely another type of moveable office equipment. When work is characterized by such alienating qualities, what place does it have in the lives of the workers?” Industry analysts suggested that temporary work demeaned women and gave them less leverage than they already had in the workplace. But while some women agreed, others enjoyed the freedom that temporary work brought to employment. These women were able to say no to a job with less risk than a permanent employee might incur. And some workers have commented that as long as the work itself was not particularly interesting or challenging, it was better to do it on a temporary basis.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
R u s s e l l
K e l l y
Kelly Services’ financial figures also reflected the exponential growth in the industry. In 1986 the company was the first temporary services agency to pass the $1 billion mark in revenue. By 1987, revenue had increased to $1.6 billion and the company maintained a list of 525,000 temporary employees. Kelly Services, though surrounded by competitors, captured almost 10 percent of the market for temporary services and remained one of the largest players in the industry. By 1996, the company achieved sales in excess of $3 billion. With an estimated net worth of $540 million, Kelly was named as 1 of America’s 4 richest men from 1985 to 1997, by Forbes magazine. He served as chairman of the board for Kelly Services, Inc. until his death in 1998.
Sources of Information Contact at: Kelly Services, Inc. 999 W. Big Beaver Rd. Troy, MI 48084 Business Phone: (248)362–4444 URL: http://www.kellyservices.com
Bibliography Ingham, John N., and Lynne B. Feldman, eds. Contemporary American Business Leaders. New York: Greenwood Press, 1990. “Kelly Services Founder William Russell Kelly Dies at Age 92.” Dallas Morning News, 5 January 1998. Who’s Who in America. New Providence, NJ: Marquis Who’s Who, 1996. “William Kelly; Temporary Jobs Pioneer.” Los Angeles Times, 3 January 1998.
S t u d e n t s
4 7 1
Calvin Klein (1942-) Calvin Klein Inc.
Overview No single individual has helped American fashion come into its own more than designer Calvin Klein. In the late 1960s Klein reinvigorated the fashion industry just when it appeared to have been abandoned by a generation of anti-fashion youth. In 1972 Klein began creating his flexible collections of interchangeable separates that were elegant as well as casual. Known as a designer of jeans, perfumes, underwear, and provocative advertisements, Klein has succeeded in reinventing himself and American fashion with each passing year.
Personal Life Calvin Richard Klein was born in the Bronx, New York, on November 19, 1942. The son of Leo and Flore Klein, Calvin showed an early interest in fashion design. He rejected more traditional boyhood activities, and chose to spend his time on sewing and drawing instead. He also spent a great deal of time at Loehmann’s, a highfashion discount store in the Bronx, to look at the Norman Norell samples and other designer garments. Klein attended New York’s High School of Art and Design and graduated from the Fashion Institute of Technology in 1962. Klein has been married twice. From 1964 to 1974 he was married to Jayne Centre, by whom he has a daughter, Marci. In 1996 Klein separated from his second wife, Kelly Rector, whom he had married in 1986.
4 7 2
C a l v i n
K l e i n
Career Details After leaving school in 1962, Klein apprenticed for designer Dan Millstein in New York City’s celebrated garment district. In 1968, with backing from his childhood friend Barry Schwartz, Klein founded his own company called Calvin Klein Ltd., which later changed to Calvin Klein Inc. Focusing at first on outerwear, Klein prospered after receiving a substantial coat order from retailer Bonwit Teller. Several years later, Klein was successful enough to buy out his former mentor Millstein and occupy his offices. In 1972 Klein expanded his offerings to include women’s sportswear. Working in a neutral palette that Barbara Lippert of Adweek once described as “modern, subdued, [and] monochromatic,” he introduced a signature line of separates such as sweaters, skirts, dresses, shirts, and pants that could be intermixed for a complete day and evening wardrobe. “I felt that the American lifestyle had changed,” Klein explained. “For the most part, women today spend their time and energy working in addition to participating in all aspects of home and community. Their lives have changed and there is little time for wardrobe planning.” His clothes were perfectly suited for women who wanted the look of an outfit with the versatility of separates. In the late 1970s, Klein was known as a young, wealthy, handsome, and talented designer who often appeared in his own advertisements. Sales of his blue jeans began to slowdown, however, until he unveiled a controversial new advertising campaign. The advertisements, which first ran in 1980, featured teenage model Brooke Shields delivering the tag line, “Nothing comes between me and my Calvins.” The advertisements were highly effective and his jeans sales nearly doubled. Many were offended by Klein’s use of an adolescent model in a sexually suggestive advertisement, however. With the success of the 1970s, Klein’s brand appeal led to a host of licensing agreements for such lines as men’s wear, accessories, lingerie, hosiery, and eyewear. He subsequently expanded into fragrances, including such scents as Obsession, Eternity, Escape, CK One, and CKBe. Of these, his unisex fragrance CK One has been particularly successful. Klein also developed a line of housewares. In the early 1990s, Calvin Klein sold his company’s underwear and jeans divisions to reduce debt. Since that time, the firm has prospered and expanded into global markets. Klein is known for his marketing talents and has hired such famous photographers as Richard Avedon, Diane Arbus, Bruce Weber, and Irving Penn for his photography shoots and television commercials.
Calvin Klein.
(Archive Photos, Inc.)
moderate price. “ Klein went on to win two more Coty awards in 1974 and 1975, and on June 25, 1975, he was elected to the American Hall of Fame of Fashion. Professional honors continued in the 1980s when Klein won Council of Fashion Designers of America (CDFA) awards in 1982, 1983, and 1986. In 1994 the CDFA presented Klein with unprecedented dual awards for both men’s wear and women’s wear. In 1996 he was named one of Time magazine’s 25 most influential Americans. Even with numerous awards and enormous commercial success, Klein found himself at the center of controversy again in the mid-1990s. A Klein advertising campaign featuring young, nonprofessional models in intimate poses drew condemnation in 1995. Klein eventually withdrew the advertisements that critics had likened to child pornography. With the century drawing to a close, Klein was at the helm of an enterprise that in 1996 generated $2.5 billion in wholesale volume. His various lines held worldwide appeal, and Klein boutiques provided retail presence in the United States, Europe, the Middle East, and Asia. Klein told Lisa Lockwood in Women’s Wear Daily, “[G]lobal expansion is a strategy that will take us beyond 2000 to accomplish what we’ve set out to do.”
Calvin Klein has enjoyed acclaim throughout his career. As early as 1973, Klein was chosen by 400 fashion reporters as winner of the Coty American Fashion Critics Award. The citation commented on Klein’s “innate but nonconformist sense of classic line . . . and his unique understanding of today’s blend of casualness, luxury, and
Calvin Klein almost single-handedly elevated the status of the United States in the world of fashion de-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Social and Economic Impact
4 7 3
C a l v i n
K l e i n
Chronology: Calvin Klein 1942: Born. 1962: Graduated from Fashion Institute of Technology. 1968: Established Calvin Klein Ltd. 1972: Introduced sportswear line. 1973: Won first Coty award. 1975: Inducted into the American Hall of Fame of Fashion. 1994: Received dual CFDA awards for women’s wear and men’s wear. 1996: Named one of Time magazine’s 25 most influential Americans.
Klein has also been an innovator as a marketer of fashion. His costly and controversial advertising campaigns have, throughout his career, thrust the fashion world into popular culture. The resulting publicity has undoubtedly helped Klein expand his empire from clothing to fragrances and housewares. In the process, he has changed the way fashion is marketed industry-wide. In 1994 he told Bridget Foley of Women’s Wear Daily, “If people set out to be controversial, they’ll never make it. But if something is really good, interesting, and thought-provoking, you get into risk-taking and pushing boundaries and questioning values, and it can be, in the end, controversial. We need newness and excitement in fashion. That’s what it’s about—that’s what puts the fun in clothes.” The social impact of Klein’s work extends to the philanthropic efforts he has supported, including donating some of his vast earnings to such programs as the Rape, Abuse, and Incest National Network (RAINN) and AIDS charities.
Sources of Information Contact at: Calvin Klein Inc. 205 West 39th St. New York, NY 10018 Business Phone: (212) 719-2600
Bibliography sign. He brought simplicity, elegance, and luxury to clothing at a time in the early 1970s when gaudy economy was the trend. He used natural fibers like cotton and wool in place of the popular and less expensive synthetics of the day such as polyester and rayon. Klein also rejected the wild use of color so prevalent at that time; he favored neutral earth tones. In terms of fashion design, Klein’s greatest innovation could be the look referred to as “casual chic.” This style relied on the use of separates that could be mixed and matched to create a variety of outfits. Klein gave these casual clothes his fine attention to detail that had been previously reserved for formal couture. He told Lockwood in Women’s Wear Daily, “I’ve always had a clear design philosophy and point of view about being modern, sophisticated, sexy, clean, and minimal. They all apply to my design aesthetic.”
4 7 4
B u s i n e s s
Foley, Bridget. “Back on Top.” Women’s Wear Daily, 4 February 1994. Ingrassia, Michelle. “Calvin’s World.” Newsweek, 11 September 1995. Jacobs, Laura. “Pret-a-Poor Taste.” New Republic, 2 January 1995. Kaplan, James. “The Triumph of Calvinism.” New York, 18 September 1995. Lippert, Barbara. “Calvin Between the Covers.” Adweek, 9 May 1994. Lockwood, Lisa. “Calvin’s Credo.” Women’s Wear Daily, 22 July 1997. Ozzard, Janet. “CK Jeans Rides Again: Global Push Planned to Cap the Comeback,” Women’s Wear Daily, 30 May 1996. Prud’homme, Alex. “What’s It All About, Calvin?” Time, 23 September 1991.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Philip Knight Overview In less than a decade, Philip Knight converted a sneaker sales and manufacturing business into an international conglomerate. Nike shoes, equipment, and sports apparel are sold throughout the world and are endorsed by top athletes in virtually every sport.
(1938-) Nike, Inc.
Personal Life Philip Hampson Knight was born February 24, 1938 in Portland, Oregon, the son of William W. and Lota (Hatfield) Knight. William Knight was the publisher of the Oregon Journal, a newspaper which has subsequently closed its doors. As a youngster, Philip Knight— nicknamed “Buck”—was too small to compete in contact sports, so instead, he became a runner. When his father refused to offer him a job at the paper, Knight found work at the opposing paper as a sports scores tabulator. Each day, he ran the seven miles from his job back to his house.” Knight’s interest in running continued during his undergraduate years at the University of Oregon where he was a member of the track team. He distinguished himself as a miler, with 4:15 as his best time. It was at Oregon that Knight first met Bob Bowerman, the school’s track coach and the man who would later help Knight design his famous Nike running shoe. After graduating from Oregon with a BBA in 1959, Knight went on to earn his masters in Business Administration at Stanford University. While at Stanford, Knight wrote his master’s thesis on running. If Ameri-
4 7 5
P h i l i p
K n i g h t
moved away from home. Knight and his wife live in Oregon, along with numerous pets. In 1982 Knight was named Oregon Businessman of the Year and was selected as one of 1988’s Best Managers by Business Week magazine. He is a Republican and an Episcopalian.
Career Details Unable to shake his preoccupation with running shoes, Knight finally contacted Bowerman, his former Oregon coach. The coach had been working for years attempting to develop a running shoe that could compete with those manufactured in Japan. After some talk, Knight and Bowerman became convinced they would market existing Japanese shoes to American athletes, and undercut the market, which had previously been dominated by European manufacturers, especially Puma and the German-made adidas. While continuing to work for the accounting firm, Knight and his coach began to pursue their running shoe dream. Both men initially invested $500, and created Blue Ribbon Sports, named after the label on a popular beer bottle. The fledgling company was housed in a storefront in a working class section of Portland. Knight devoted his nights and weekends to the new endeavor, which primarily imported and sold Japanese-made Tiger running shoes. As the business grew, Blue Ribbon Sports was named the national distributor of Tiger. At that point, Onitsuka, the Japanese company, also demanded a majority share of Blue Ribbon and threatened to revoke its distributorship if Knight and Bowerman refused to comply.
Philip Knight, surrounded by Nike tennis shoes, proudly displays a pair. (Courtesy of Nike, Inc.)
Knight graduated from Stanford in 1963 and worked for a number of years at the accounting firm of Cooper & Lybrand in Portland. During his tenure there, however, he remained interested in athletic shoes.
That year, the Olympic trials were held in Eugene, Oregon, and Knight and Bowerman convinced several of the marathon runners to try wearing the new Nike shoes. The runners wearing adidas finished in the first three places, but the Nike runners captured the next four slots. Knight touted this in advertising, which contended that “four of the top seven finishers” in the Olympics wore Nikes. Suddenly runners from across the country began asking for Nike shoes. Not only was this a boost for business, it also sold Knight on the importance of advertising and convinced him that the company needed to develop a shoe of its own.
On September 13, 1968, Knight married Penelope Parks; the couple had two sons, Matthew and Travis, and a foster daughter. The children are grown and have
It was Bowerman who first came up with the idea of the waffle design on the soles of running shoes—soon a Nike trademark. For years, he had tried to come up with
cans become more oriented toward fitness, Knight surmised, a shoemaker could produce an athletic shoe which would find a market with both professional athletes and the public at large. This thesis would ultimately be the blueprint for Nike.
4 7 6
Instead of bowing to the ultimatum, Knight and Bowerman scrambled to find a replacement shoe. Knight was able to find an equally low-cost manufacturing company in Japan and ordered production of the new shoes to begin. Needing a name for his new product, Knight picked Nike, after the Greek Goddess of Victory. It was he who suggested the addition of the “swoosh,” which has subsequently become the company’s trademark.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
P h i l i p
a sole that would be both durable and provide the needed traction. His inspiration came one Sunday, when he saw the design on his wife’s waffle iron and decided that this was the key to meeting both his design needs. This came after much trial and error, including putting holes through shoes, in an attempt to lighten the weight. The shoe caught on, and its development coincided, as Knight had predicted, with the increase in weekend runners and fitness advocates. Athletics had moved off the field and into mainstream life.
K n i g h t
Chronology: Philip Knight
Nike sales dramatically increased in the period between 1972 and 1976, rising from $2 million to $12 million in those 4 years. But there seemed to be no leveling off after that, with profits rising to $200 million in 1979 and surpassing the $1 billion mark by 1984. The shoes had also far surpassed their biggest competitor, adidas, in sales. In order to meet the increased demand for products, Knight found additional suppliers in the Far East. In that period, more than 85 percent of the Nike products were manufactured abroad. This enabled Knight to keep a ceiling on expenses and overhead, but it resulted in sharp criticism from some who felt that overseas workers were being severely exploited, particularly in comparison with some of the endorsement prices that top athletes were being paid. Knight tended to brush off the criticism, contending that his company was supplying jobs to workers who might otherwise be unemployed.
1938: Born.
Nike went public in 1980, in order to raise monies for capital expansion. Knight received 46 shares of Nike stock, while Bowerman was left with just 2 percent. At that time, the company began to expand its product line, adding sports apparel and children’s shoes. But the company failed to anticipate the surge in women’s exercise and aerobics which would come in the 1980s, and they didn’t initially design shoes to meet that market. Aerobics would require a lightweight shoe with added cushioning and support in the toe area, as opposed to athletic shoes, which place that support in the heel. This lack of foresight, combined with a general decline in jogging, brought a halt to the meteoric sales the company had experienced. The aerobics oversight made it possible for Reebok to capture virtually the entire market, pitting that label in tough and long-standing competition with Nike. Knight did attempt to rally from this loss, finally turning his attention to aerobics and designing shoes to match the activity. The company also began to make shoes for people who were not exercisers or athletes—attempting to expand its customer base to people who walked and would wear the shoes recreationally.
In the early 1990s, Knight made structural changes in the company, including the promotion of general manager Tom Clark to company president. Clark had been a championship runner and had a strong bond with Knight. In the year and a half after Clark’s promotion, Nike sales skyrocketed, with gross margins at record levels.
By 1985, running shoe revenues fell sharply from $240 million in the previous year to $120 million. By 1987, Reebok’s sales had surpassed Nike’s. At this critical point in the company’s growth, Knight boosted sales again with celebrity endorsements and an aggressive advertising campaign, which included slogans like, “Bo knows,” “It’s gotta be the shoes,” and, certainly, “Just Do It.” This last slogan continues to be used and has been adopted into everyday vocabulary. Company sales re-
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
1959: Completed his BBA at the University of Oregon. 1963: Earned his MBA at Stanford University. 1964: Began importing athletic shoes; cofounded Blue Ribbon Sports. 1978: Changed the company name Blue Ribbon Sports to Nike. 1983: Became chairman and CEO, Nike.
bounded, and by 1988 Knight himself was worth an estimated $400 million.
Social and Economic Impact Early on in his excursion into running and athletic shoes, Knight discovered the power of advertising, which would ultimately bring the company back from its downward spiral in the 1980s. Beginning with those first Oregon Olympic trials, Knight had always sought professional athletes to both wear and endorse his shoes. Because of his own college involvement with running, Knight had a reputation on the track, which he used to secure runners like Steve Prefontaine and Alberto Salazar. As the Nike line expanded from running to athletic shoes, Knight was just as persistent in garnering endorsements from nationally recognized athletes. In the 1980s, both Jimmy Connors and John McEnroe were wearing Nikes when they faced one another at Wimbledon. At the 1992 Olympics, several members of the United States “Dream Team” refused to come to the medals platform to receive their gold medals, unless they were allowed to wear Nikes—this, despite the fact that
S t u d e n t s
4 7 7
P h i l i p
K n i g h t
Reebok had been the team sponsor on record. While Knight came under fire for this, sales of Reebok increased thanks to the visibility.
to delete several scenes in the film, especially one in which Knight admits to employing foreign workers as young as 14.
Certainly, the greatest advertising coup the company made was signing former Chicago Bull’s basketball superstar Michael Jordon. His endorsement of Nike brought the company’s basketball shoes into the inner city, onto playgrounds and into schools, elevating Nike from an athletic shoe to a status shoe in some circles.
Overriding employment issues, though, is the fact that through his shoes and athletic clothing, Knight and Nike revolutionized the sports apparel industry, making name-brand sportswear a status symbol, on the track, in the gym, and on the street. The now-famous “swoosh” Nike logo can be seen in countries around the world and is an almost universally recognized clothing symbol.
Other Nike superstar endorsers have included Andre Agassi, Charles Barkley, Deion Sanders, Monica Seles, and Alonzo Mourning. Knight has certainly not been without his detractors. His company has continued to field criticism regarding Knight’s pursuit of the cheapest labor possible and his use of overseas workers to meet that end. In 1998, this issue was raised pointedly in Michael Moore’s documentary film, “The Big One.” Moore had previously made a name for himself in the documentary film medium in 1989, when he made the film, “Roger and Me,” in which he focused on the closing of the General Motors plant in his hometown of Flint, Michigan, and the subsequent loss of 30,000 jobs. In “The Big One,” Moore turns his attention to Knight, whom he followed around, on camera, for 3 weeks in 1996. In the 89-minute film, which was shown at the January 1998 Sundance Film Festival, Knight admits he has never visited any of his overseas manufacturing plants and also explains that he uses foreign labor because Americans would be unwilling to make shoes. According to Moore, Nike officials asked the filmmaker
4 7 8
B u s i n e s s
Sources of Information Contact at: Nike, Inc. 1 SW Bowerman Dr. Beaverton, OR 97005 Business Phone: (503)671-6453 URL: http://www.nike.com
Bibliography Footwear News, 4 December 1995. “You are What You Wear. Nike’s Phil Knight Isn’t Selling Shoes; He’s Selling Attitude.” Forbes, 14 October 1996. “Phil and Roger and Me: Nike’s Knight Lands on Michael Moore’s Skewer.” Newsweek, 30 March 1998. Who’s Who in America. New Proividence, NJ: Marquis Who’s Who, 1997.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Blanche Knopf Overview A leading American publisher, Blanche Knopf played a key role in twentieth century publishing in America. By promoting the books of European, Hispanic, African-American, and feminist authors, Blanche Knopf fostered a new cultural and intellectual climate for American reading audiences.
(1894-1966) Alfred A. Knopf, Inc.
Personal Life Born on July 30, 1894, in New York City, Blanche Wolf was the only child born to Julius W. Wolf, a wealthy jeweler, and Bertha Samuels. She attended New York’s Gardner School and had her own French and German governesses, which provided Knopf with a good command of language and literature. Blanche met her future husband, Alfred A. Knopf in 1911 while vacationing with her parents on Long Island. They married in 1916 and two years later, they had a child, Alfred A. Knopf, Jr. who also became a publisher. The Knopfs spent most of their lives running Alfred A. Knopf, Inc., the publishing business they had started in 1915. Blanche, the director and vice president of the company, quickly discovered that her life’s work would be difficult. When Blanche Knopf became a leader in the publishing industry, there were no female peers. She endured ongoing sexism from the male-dominated publishing industry and was openly discriminated against. She was denied membership to the Publisher’s Lunch Club and the Book Table, two powerful groups for maleonly members of publishing houses to share their ideas.
4 7 9
B l a n c h e
K n o p f
Blanche Wolf Knopf.
(AP/Wide World Photos, Inc.)
When Knopf was invited to speak on the future of women in the publishing industry at a women’s college, she rejected the offer because, she said, there was “no future worth mentioning.”
4 8 0
writers. Knopf Inc. published paperbound editions of lesser-known writers, which was less of a financial risk for the publisher but gave the authors exposure.
Fortunately, she had a flair for social interaction, and a love of negotiating and strategic bargaining. These qualities, along with being extremely intelligent, ensured her success in the highly competitive, male-dominated publishing era of the early twentieth century.
Knopf received many awards for her efforts to publish European and South American writers. She was honored with the Order of the Southern Cross, and the French government made her Chevalier de la Legion d’Honneur in 1949, as well as Officer de la Legion d’Honneur in 1960.
Though she was known to possess an explosive temper and a tough, war-like style in pursuing her business, she was also said to be one of the most generous and encouraging publishers toward young, gifted, but unknown
Blanche Wolf Knopf died in New York City on June 4, 1966. She was active as an editor until she died, despite losing much of her eyesight in mid-career. Even though she was not able to read new manuscripts as she got older,
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
B l a n c h e
K n o p f
she had others read the manuscripts to her, and made all the final choices of books to be published herself.
Career Details Along with her husband, Blanche Knopf founded and began building the world-famous publishing house, Alfred A. Knopf, Inc., in 1915. Indirectly, Knopf became one of the most formidable publishers of her day, specializing in new streams of ideas for the American reading public. She sought and discovered new talent in South America, Europe, and the United States. Blanche Wolf Knopf, indirectly, was able to challenge and alter the streams of American thought during the first half of the twentieth century. Some of the earliest European books published by Knopf include four plays by Emile Augier, a book of short stories by Guy de Maupassant, and Gogol’s Taras Bulba. In 1916, they published W. H. Hudson’s Green Mansions, which turned out to be very profitable for both publisher and author—it was the company’s first best seller. The popularity of Green Mansions also made Blanche’s logo, a Bolzoi (Russian Wolfhound), the recognizable “Knopf” symbol. Beginning in 1920, Blanche Knopf made annual trips to Europe to scout out new material. In 1921, she became the vice president and director of Alfred A. Knopf, Inc. and during the following decades, published the works of Sigrid Undset, Thomas Mann, Kahlil Gibran, Knut Hamsun, Mikhail Sholokhov, Angela Thirkell, Elizabeth Bowen, Elinor Wylie, Allan Sollitoe, and Katherine Mansfield. She also published American authors. Among Knopf’s favorties were Dashiell Hammett, James M. Caine, William Shirer, Robert Nathan, and the works of Willa Cather, who was one of Blanche Knopf’s closest literary associates. Alfred A. Knopf, Inc. also published literature of the Harlem Renaissance. Langston Hughes, in particular, was a favorite of Knopf’s, and the two became close friends. The publication of African-American writers introduced a new spectrum of thoughts and images. When the work of the psychoanalyst, Sigmund Freud, became popular and very much sought after, it was Knopf who secured the rights and returned from Europe with his manuscript of Moses and Monotheism.
Chronology: Blanche Knopf 1894: Born. 1911: Met Alfred A. Knopf. 1915: Started Alfred A. Knopf, Inc. with Alfred A. Knopf. 1916: Married Alfred A. Knopf. 1921: Became director and vice president of Alfred A. Knopf, Inc. 1957: Named president of Alfred A. Knopf Inc. 1966: Died.
After World War II, Knopf returned to Europe in search of new authors. She was a Francophile, and published many French authors such as Andre Gide and Jules Romain. She also introduced the American public to the works of Jean-Paul Sartre, Albert Camus, and published the seminal work of mid-twentieth century feminism: The Second Sex, by Simone de Beauvoir—the book that dealt with the powerful and provocative issues of lesbianism, prostitution, and the nature of sex-role limitations. Blanche Knopf published, in effect, the major works of existentialism, Freudian psychoanalytic thinking, and European modernism in fiction. Knopf was known for her high level involvement in the company and worked at all phases of publishing. She solicited authors, found translators, read manuscripts, designed books, and wrote advertising copy. Knopf books were noted for their variety of typefaces, colorful jackets, beautiful bindings, and the use of good paper. In particular, Blanche Knopf was extremely careful when choosing translators. For example, to ensure consistency, she had Helen T. Lowe-Porter translate the complete works of Thomas Mann.
With the advent of World War II, travelling to Europe was no longer an option for Knopf. She then turned to focus on the writers of Latin America. By the mid1930s, very few Latin writers had been published in the United States. Knopf traveled extensively throughout Central and South America and arranged for the work of such authors as, Jorge Amado, Eduardo Mallea, Gilberto Freyre, and Germán Arciniegas to be translated. Thus began the tradition of excellent, quality translations for which the Alfred A. Knopf publishing house became renowned.
It is significant that Blanche Knopf chose to publish books from other countries and that she published so many new authors during a time in American life when the politics of the country had become quite conservative and cautious. She and her husband had built
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Social and Economic Impact
4 8 1
B l a n c h e
K n o p f
a publishing firm that published not just books, but books that changed lives, books that truly challenged the minds and imaginations of several generations of Americans. She published The Second Sex at a time when America was most conspicuously conservative, puritanical, and aggressively anti-communist. It was not only a book about a new controversial resurrection of the feminist movement, it was also a book written by a woman who had been a communist and who was living with one. It also was a book that dealt probingly into male sexism and into the roots of the kind of puritanical thinking that dominated the American scene of that era. In short, like other books she had brought to America, Knopf delivered to the reading public an intellectual and cultural blockbuster, a book to change the way that people thought. She introduced ideas and issues that came to revolutionize American thinking and behavior. Her efforts were seen as both very controversial and emancipating.
4 8 2
B u s i n e s s
Sources of Information Contact at: Alfred A. Knopf, Inc. 201 East 50th St. New York, NY 10022 Business Phone: (212)751-2600 URL: http://www.randomhouse.com
Bibliography Current Biography Yearbook. New York: H.W.Wilson Co., 1957. Fadiman, Clifton. Fifty Years: Being a Retrospective Collection. New York: Alfred A. Knopf, 1965. Flora, Peter. “Carl Van Vechten, Blanche Knopf, and the Harlem Renaissance.” Library Chronicle of the University of Texas, 1992. Kaufman, Stanley. “Album of the Knopfs.” The American Scholar, 1987. Lewis, Randolph. “Langston Hughes and Alfred A. Knopf, Inc., 1925-1935.” Library Chronicle of the University of Texas, 1992. Postgate, John. “Glimpses of the Blitz.” History Today, 1993.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Raymond Kroc Overview Founder of the immensely successful McDonald’s franchise operation, Ray Kroc was a pioneer of the modern fast-food restaurant industry. He introduced management innovations that are now standard in the business, such as implementing assembly line methods and employing a parttime, teenage labor force to produce a rigorously standardized menu at a low cost. Kroc’s formula allowed him to build an initial investment of a few thousand dollars into a giant, international corporate empire. At the time of his death, the chain’s annual sales totaled over $8 billion.
(1902-1984) McDonald’s Corp.
Personal Life The son of relatively poor parents, Ray Kroc was born in Chicago, Illinois, on October 2, 1902. He went to public schools in Oak Park, Illinois, a suburb of Chicago, but did not graduate, leaving school to open his own music store. When World War I began, he lied about his age to serve as an ambulance driver for the American Red Cross. A variety of jobs and 3 wives followed. He and his first wife, Ethel Fleming, a homemaker, had a daughter, Marilyn, who died in 1973. Kroc then married Jane Dobbins Green, a secretary whom he divorced. His third wife was Joan Smith, an organist and philanthropic foundation director. Ray Kroc died of heart failure in San Diego on January 14, 1984.
Career Details After serving in World War I, Kroc returned home and became a ribbon novelty salesperson and a jazz pi-
4 8 3
R a y m o n d
K r o c
starting a franchise operation based on their restaurant. After some negotiation, the McDonald brothers agreed to join Kroc in a partnership. In exchange for one-half of one percent of the gross, Kroc was granted the use of the McDonald name, concept, and symbol, the golden arches, along with unlimited franchise sales rights. Ray Kroc opened the first of the chain of McDonald’s restaurants on April 15, 1955 in Des Plaines, Illinois. Small by today’s standards, this restaurant, now the world’s first “Hamburger Museum,” was a little red and white tile affair where root beer was poured from a wooden barrel, potatoes were peeled in the restaurant, and local vendors supplied fresh hamburger meat. The mascot, now long forgotten, was Speedee, a hamburgerbun-faced creature. On that first day, Kroc’s restaurant had sales of $366.12. By 1961 there were over 130 outlets, and in that year Kroc bought out the McDonald brothers for $2.7 million. From these humble beginnings emerged an empire which by 1984 had 8,300 restaurants in 34 countries with sales of more than $10 billion.
Raymond Kroc.
(The Library of Congress.)
anist, playing with the Isham Jones and Harry Sosnick orchestras. In 1922 he went to work for the Lily-Tulip Cup Company, but soon left to become musical director for one of Chicago’s pioneer radio stations, WGES. There he played the piano, arranged the music, accompanied singers, and hired musicians. Kroc was not satisfied, however, and the real estate boom in Florida soon found him in Fort Lauderdale, selling property. When the boom collapsed in 1926, Kroc was so broke that he had to play piano in a nightclub to send his wife and daughter back to Chicago by train. He later followed them in his dilapidated Model-T Ford. Kroc then returned to Lily-Tulip as a salesman, later becoming Midwestern sales manager. In 1937 he came upon a new invention: a machine that could mix five milk shakes at one time, called the “multi-mixer.” When LilyTulip turned down the opportunity to distribute the mixer, Kroc founded his own company to serve as exclusive distributor for the product in 1941. Many years later, in 1954, Kroc heard of a drive-in restaurant in San Bernardino, California, owned by Richard and Maurice D. McDonald, which was operating eight of his multi-mixers. Curious as to how they could possibly use so many machines in a small establishment, Kroc found the brothers were doing a remarkable business selling only hamburgers, french fries, and milk shakes, while using the principles of the assembly line as their basis for production. Kroc, from his years in the paper cup and milk shake business, recognized the potential opportunity and approached the brothers about
4 8 4
B u s i n e s s
Ray Kroc revolutionized the restaurant industry in much the same way that Henry Ford had transformed the automobile industry a generation earlier. Kroc’s greatest achievement was the ability to mass-produce food uniformly in astounding quantities, and then to convince millions of Americans that they needed to buy this food. To accomplish the first objective, Kroc reduced the food business to a science. Nothing was left to chance in the logistics of the McDonald’s operations, which were carefully researched by sophisticated methods. Each McDonald hamburger, made with a 1.6-ounce beef patty, not more than 18.9 percent fat, is exactly .221 inches thick and 3.875 inches wide. All other aspects of the operation are equally rigidly controlled. Kroc also relentlessly stressed quality, banning fillers, such as soybeans, from his hamburgers. The other side of the McDonald’s story is the success of its franchising, marketing, and advertising. Threequarters of the McDonald’s restaurants are run by franchise-holders. By 1985 each franchise cost about $250,000 and ran for 20 years, after which it reverted to the company. When choosing franchise-holders, Kroc always looked for someone good with people. He said, “We’d rather get a salesman than an accountant or even a chef.” The franchise owners were then intensely trained at McDonald’s “Hamburger University” in Elk Grove, Illinois, where a training course led to a “Bachelor in Hamburgerology with a minor in french fries.” The company also provided a lengthy manual that outlined every aspect of the operation, from how to make a milk shake to how to be responsive to the community. The capstone of the McDonald’s operation, however, was advertising. Hundreds of millions of dollars were poured into advertising, to the point where the head of another fast-food company said in 1978 that consumers were “so preconditioned to McDonald’s advertising blanket that the hamburger would taste good even if they left the meat out.”
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
R a y m o n d
Despite its astounding success, and despite the fact that the company worked hard to project a charitable and community-oriented image, McDonald’s came under attack on several fronts. A number of communities refused to allow its restaurants in their area, seeing it, as one commented, as a “symbol of the asphalt and chrome culture.” The company was also criticized for its extensive use of part-time teenage help, and especially for the $200,000 which Kroc donated to Richard Nixon’s reelection campaign, since the administration soon after recommended amending the minimum wage law to provide for a “youth differential.” This would have allowed employers to hire teenagers at 80 percent of the minimum wage. The architecture of the buildings and the nutritional content of the food were additionally assailed, although nutritionist Jean Mayer said, “As a weekend treat, it is clean and fast.” In the mid-1970s Kroc turned his energy from hamburgers to baseball, buying the San Diego Padres. He owned the team from 1974-79, but had less success at this endeavor. During the season opener in his first year as owner, the Los Angeles Times reported that Kroc took over the stadium’s public address system and apologized to the fans in attendance for a series of errors by the Padres, saying, “This is the most stupid baseball playing I’ve ever seen.” This prompted a new rule in major league baseball prohibiting anyone but the official announcer from using the public address system during a game. In 1979 he gave up operating control of the team, saying with his typical crustiness, “There’s a lot more fun in hamburgers than in baseball. Baseball isn’t baseball anymore.” Kroc was credited with promoting and developing the team, which reached the World Series five years after it, the same year in which Kroc died. Each player wore a black armband with the initials R.A.K. to commemorate the late owner.
Social and Economic Impact The 1960s witnessed the rise of an entire fast-food restaurant industry modeled on McDonald’s production techniques, with fierce competition between rival franchise chains. In 1977 when he teamed with Robert Anderson to write Grinding It Out: The Making of McDonald’s, Kroc called his start in the hamburger business a “happy accident.” Kroc stressed QSC—quality, service, and cleanliness. In later years “value” also became a core item, and because he felt personally responsible for maintaining high standards, he would frequently make unannounced visits to local franchises to ensure all operations met his goals. Kroc and subsequently, McDonald’s, promoted a staff of jubilantly cheerful, all-American youth. A staunch advocate of the free enterprise system, he liked to attribute his success to the democratic virtues of persistence and determination. Kroc also became known for his blunt speech, domineering personality, and impatience with those unwilling or unable to follow his driving work pace.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
K r o c
Chronology: Raymond Kroc 1902: Born. 1937: Began distributing multi-mixer machines. 1954: Visits a McDonald’s restaurant for the first time. 1955: First McDonald’s franchise opened in Des Plaines, Illinois. 1961: Bought out the McDonald brothers for $2.7 million. 1961: Established Hamburger University. 1969: Formed Kroc Foundation. 1974: First Ronald McDonald home built in Philadelphia. 1974: Purchased San Diego Padres baseball team. 1977: Co-authored Grinding It Out: The Making of McDonald’s.
Kroc estimated that dozens of successful franchise owners had become millionaires thanks to McDonald’s. Kroc was also successful because he allowed employees and franchise owners to state ideas and make decisions; he was a forefather of the “empowerment” movement. Bill Carlino, in Nation’s Restaurant News, reported that Kroc once said, “If a company has two executives who think alike, one of them is unnecessary.” Some of McDonald’s signature items, like the Big Mac, Filet-OFish, and Egg McMuffin weren’t developed by the corporate chefs in the test kitchens but by licensees. Irv Klein, a veteran operator, summed up Kroc’s success by stating, “What Ray did was help create an industry. He had a built-in sensor that allowed him to understand the public and the people who worked for him. He came into this business later in his life but at the right time.” The Kroc Foundation was established in 1969 to support medical research on diabetes, arthritis, and multiple sclerosis (MS), three diseases that had personally affected the entrepreneur: Kroc’s daughter Marilyn died of diabetes, he suffered from diabetes and arthritis, and his sister had MS. Under the direction of his wife Joan, the Kroc Foundation also initiated Operation Cork (Kroc spelled backward) in 1976 as a national educational program to help the families of alcoholics. In the mid-1970s, McDonald’s restaurants joined with professional athletic
S t u d e n t s
4 8 5
R a y m o n d
K r o c
teams in building Ronald McDonald houses associated with children’s hospitals across the United States to provide temporary housing for families of children undergoing medical treatment away from home. By 1996 the golden arches of McDonald’s were, as reported in Nations Restaurant News, “the second-most widely recognized trademark in the world, behind CocaCola.” In the United States alone it is estimated that 96 percent of Americans between ages 16 and 65 have eaten at least once at a McDonald’s restaurant and that McDonald’s was the first job for 1 in 15 Americans. Kroc cut a commanding figure, with his thin hair brushed straight back, his custom blazers impeccable, and the bulky rings on his fingers glinting as he ate his hamburger with both hands. Aware of his abrasiveness, he once commented: “I guess to be an entrepreneur you have to have a large ego, enormous pride, and an ability to inspire others to follow your lead.”
4 8 6
B u s i n e s s
Sources of Information Contact at: McDonald’s Corp. McDonald’s Plz. Oak Brook, IL 60521 Business Phone: (708)575-3000 URL: http://www.mcdonalds.com
Bibliography Byers, Paula K., and Suzanne M. Bourgion, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1998. Carlino, Bill. “Ray Kroc.” Nation’s Restaurant News. February 1996. Love, John F. Mc Donald’s: Behind the Arches, Revised ed. New York: Bantam Books, 1995. Romeo, Peter. “Re-ordering Ray’s Kitchen.” Restaurant Business, 15 February 1998.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Edwin Land Overview Edwin Land was the inventor of the Polaroid/Land camera, an invention that developed pictures a few minutes after they were taken. A major scientist and inventor of the twentieth century, he patented over 533 inventions, most of them related to Polaroid optics, such as glare-free sunglasses, and a form of three-dimensional photography used by the military. He was also known for his speed in developing inventions and creating solutions to problems on demand. In fact, the Polaroid Corporation flourished largely because Land and his associates loved to solve problems.
(1909-1991) Polaroid Corporation
Personal Life Edwin Herbert Land was born on May 7, 1909, in Bridgeport, Connecticut, the only child of Harry and Martha F. Land. Edwin’s father operated a scrap metal salvaging business and Land grew up in comfortable financial and social circumstances, idolizing Michael Faraday, and English scientist, and dreaming of becoming an inventor. He met and married Helen Maislen in 1929. In 1940 Jennifer, their only child, was born. The Land’s loved their daughter deeply, and they spent much time together, especially traveling around America. Land left Harvard in 1927. He frequently resided in New York and was deeply occupied with his personal research on light and optics. His parents provided him with an allowance so he could pay his bills while pursuing research. He returned to Harvard to work on his degree in 1929, where his research was already well known to oth-
4 8 7
E d w i n
L a n d
Edwin Land demonstrates the Land Poloroid. ers. He was granted permission to use a laboratory to conduct his research and tried to improve the techniques of polarizing light. Passionately devoted to the use of science to bring about technological inventions for mankind, Land was awarded many honors. During the later period in his life, he received virtually every science prize one could achieve and obtained at least six honorary doctorate degrees from notable universities, including Yale, Tufts, Columbia University, Loyola, and Washington University. He was also awarded a doctorate degree from his alma mater, Harvard, from which he dropped out of as an undergraduate. In 1963, he was awarded the Presidential Medal of Freedom, and in 1977, he was made a member of the Inventor’s Hall of Fame by the American Patent office.
4 8 8
B u s i n e s s
(The Library of Congress.)
Land became a visiting professor and a fellow at MIT’s School for Advanced Study. He also became a member of Harvard’s visiting committees for astronomy, chemistry, and physics. Land retired, in August of 1982, to devote more of his time to the many projects for disadvantaged children that he had started in the 1960s and to the Rowland Institute for Science. Land died on March 1, 1991.
Career Details In 1926 while walking down Broadway in New York City, New York, Land was overwhelmed by the glare
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
E d w i n
coming from a passing automobile’s headlight. Perceiving that bright lights might pose a safety hazard, Land began to channel his interests into the area of optics, particularly the field of “polarization.” Polarization is the breaking up of light into its separate components to get useful results, such as reducing the hazards caused by glaring lights. A very intelligent young man, he was able to enter Harvard University at age seventeen, in 1926. In 1828 a prism was invented that polarized light for use in optical instruments. These prisms became very expensive and most ongoing research had concentrated on developing even larger and more effective prisms for polarizing light. Land decided instead to use multiple smaller prisms packed tightly together to create the same effect as a single large prism. His technique, forcing the plastic containing the artificial crystals through small holes, ensured that they would be aligned in the proper direction for the polarizing of light. He presented his finding in a paper at Harvard in February of 1932. Later in 1932, short one semester from graduating, Land abruptly quit school to open his own consulting commercial laboratory along with George W. Wheelwright III, a physics professor at Harvard and one of Land’s former teachers. In 1937 Land founded the Polaroid Corporation, which soon became the leading establishment in the field of optical instruments. His ability as an inventor was matched by his ability as a businessman. He licensed his method of polarizing light to the American Optical Company for sunglasses with polarized lenses, to the Eastman Kodak Company for camera filters, and to Bausch and Lomb Company for optical instruments. Land’s scientific inventions made his company a fortune, and with this money he began to purchase competing patents for his company. At the New York World Fair in 1939, Land attempted to prove to American auto manufacturers the advantages of polarized headlights. While renting space in the Chrysler booth, Land showed audiences a twelveminute film demonstrating the advantages of polarized headlights. Although over 150,000 would see the film, auto manufacturers never bought Land’s system. Land would enjoy better luck with his Polaroid Day Glasses and a contract to install polarized windows on Union Pacific’s Copper King railcars. Following these successes, Land moved his company and its 240 employees from its first home in Boston to Cambridge, Massachusetts, in early 1940. During World War II, Land was involved through the Defense Research Committee in supplying the government with many polarized kinds of equipment, including goggles and a three-dimensional photography system to enhance reconnaissance efforts. Land also helped to develop elements of guided missile systems for rockets. Two employees of his organization, Robert Woodward and William Doering, developed synthetic quinine, the only cure for malaria, and synthetic cortisone. Both were useful in the war effort, and these two
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
L a n d
Chronology: Edwin Land 1909: Born. 1926: Attends Harvard University. 1927: Pursues independent research on polarization rather than return to Harvard for his sophomore year. 1929: Returns to Harvard and begins patent process for his polarizing material. 1932: Leaves Harvard to found Land-Wheelbright Laboratories. 1937: Forms Polaroid Corporation. 1947: Develops the instant camera. 1977: Inducted into the National Inventors Hall of Fame. 1982: Retires. 1991: Dies.
men received a Nobel Prize in 1965 for their creation of the synthetic cortisone. In 1947 Land developed what would be his landmark invention. After years of work, on February 21 1947, he demonstrated his Polaroid/Land camera at a meeting of the Optical Society of America. The world could now take pictures and see the results within minutes. This instant camera also linked aperture size with the camera’s shutter speed, taking much of the guesswork out of photography. It was an instant success with the consumer and large orders for these cameras began to roll into Polaroid. For this and other inventions, Land was awarded the coveted Holley Medal of the American Society of Mechanical Engineers in 1949. In the same year, he developed a new optical system that enabled scientists at the Sloan-Kettering Institute to observe living human cells in their natural color. Land also began working with the military to develop new ways to prevent another surprise attack similar to the attack on Pearl Harbor in Hawaii.
Social and Economic Impact In the 1960s, Land began work in disadvantaged poor African American communities along the east coast. He
S t u d e n t s
4 8 9
E d w i n
L a n d
also founded the Rowland Institute for Science and provided considerable donations to universities to be directed toward scientific research and the development of scientists. These donations were almost always made anonymously and two of his favorite institutions for these monetary gifts were the Massachusetts Institute of Technology (MIT) and Harvard University. Land is remembered not only for his philanthropic donations but also for the inventions that have shaped the world and the way we see it.
Bibliography Berg, Howard. “Edwin H. Land.” Physics Today, April, 1992. Land, Edwin. “A New One-Step Photographic Process.” Journal of the Optical Society of America, February, 1947. Land, Edwin. “Thinking Ahead: Patents and New Enterprises.” Harvard Business Review, Sept./Oct., 1959. Olshaker, Mark. The Instant Image. New York: Stein and Day, 1978. Wensberg, Peter C. Land’s Polaroid. New York: Houghton Pub., 1987.
Sources of Information Contact at: Polaroid Corporation 549 Technology Sq. Cambridge, MA 02139 Business Phone: (781) 386-2000 URL: http://www.polaroid.com
4 9 0
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Estee Lauder Overview In 1946, Estee Lauder founded a cosmetics company that has since become one of the most successful and imitated ventures in this highly competitive field. Her line of fragrances, skin care products, makeup, and men’s toiletries is an international concern that in 1997 employed almost 15,000 people and grossed $3.4 billion. Many of the company’s top executives are second and third generation family members, also an exceptional feat in the industry. “By a combination of good luck and good judgment, Estee Lauder has become that rarest of species: a beauty business with a powerful personal image that is strong enough to outlive its founder in a way that Elizabeth Arden or Helena Rubinstein could not,” wrote fashion expert Suzy Menkes in her International Herald Tribune column in 1996.
(1908-) The Estee Lauder Companies, Inc.
Personal Life While Lauder has always refused to reveal her actual age, her unauthorized biographer, Lee Israel, pegs her date of birth as July 1, 1908. The last child in a family that included one full sister and five half-brothers and half-sisters, she was originally named Josephine Esther Mentzer but went by her middle name, which she altered to Estelle as a teenager. Her parents were Jewish Hungarian immigrants who had settled on Hillside Avenue in Corona, a somewhat rural but unfashionable part of Queens that served as a garbage and ash dump for other New York City boroughs during the early years of the twentieth century.
4 9 1
E s t e e
L a u d e r
to work for the family firm, and later their daughters-inlaw and grandchildren also became involved. By the late 1960s the Lauders were living in a Manhattan mansion, with homes in the south of France and Palm Beach, Florida, as well. Estee led an active life and was a well-known figure on the international social circuit. Aside from attending and giving lavish parties, she reportedly liked to watch the evening newscasts as well as the sitcom All in the Family. She doted on her grandchildren and her husband, who died in 1983 at the age of 80. Ever since breaking her hip in 1994, the cosmetics tycoon has very rarely been seen in public.
Career Details
Estee Lauder.
(The Library of Congress.)
Lauder’s father was a tailor by profession, but in Corona he opened a grain and feed store above which he and his family lived. Esther was a good student who attended P.S. 14 and Newtown High School in Queens. Among her early role models were her sister-in-law, Fanny Leppel Rosenthal, who ran a successful department store in the neighborhood, and an uncle, Dr. John Schotz, a chemist who had his own small laboratory and made face creams such as “Dr. Schotz’s Viennese Cream.” Lauder not only watched him concoct his products, she also used them herself; even as a teenager she was known for her beautiful complexion. According to some accounts, Esther quit school around the age of sixteen and headed to Wisconsin to live for a while with her aunt; she may also have worked briefly in a beauty salon in Milwaukee. Before long, however, she was back in New York, where she married Joseph Lauter (who later changed the spelling of his surname) on January 15, 1930. Their first child, Leonard, was born in 1933. An ambitious young woman, Lauder dreamed of a career in the cosmetics industry. Meanwhile, her husband failed at a series of business ventures of his own, and in 1939 the couple divorced. They remarried in 1942, however, and in 1944 they had a second son, Ronald. Around 1946 they founded the company that bears the Estee Lauder name. While Estee looked after product development, sales, and marketing, Joseph spent much of his career overseeing their manufacturing facility in Melville, Long Island. Both of their sons eventually went
4 9 2
B u s i n e s s
Lauder’s motto has always been, “Not by dreaming or hoping for it, but by working for it.” As early as her teenage years, she was intensely interested in skin care. She swore by the use of her uncle’s products, which she herself had learned to make at home on her kitchen stove. Lauder began her career selling them to beauty salons, where she also gave facials and built up a loyal customer base by passing out free samples of the Schotz Creme Pack and All-Purpose Creme. During her estrangement from her husband, she split her time between Miami and New York City, working the beauty salon circuit in both cities. She also had a stand inside the Roney Plaza Hotel in Miami and sold her wares at Jewish resorts on Long Island and in the Catskills. Lauder was a tenacious salesperson who was known to approach strangers and bestow skin-care advice and a free sample. After her remarriage, she began working behind department store cosmetic counters. Her goal was to obtain her own space at Saks Fifth Avenue, the premier retailer in the United States. Despite advice from her accountant that launching a cosmetics company was foolhardy, Lauder officially formed Estee Lauder, Inc., around 1946 or 1947. Her instincts and experience told her that there was a great demand for beauty products, especially well-made and well-packaged ones. She also knew firsthand that women were not at all hesitant to spend money on themselves. Lauder fulfilled at least one dream early in her venture when Saks Fifth Avenue became the first retailer to place a big order. Securing their business in turn helped her obtain counter space in other prestigious department stores around the country. But the tremendous growth of Estee Lauder, Inc., during its first few years of operation kept its founder extremely busy. She traveled incessantly, personally launching her line in an ever-expanding number of cities and training her sales staff. The Estee Lauder line was profitable almost from the start, partly as a result of its founder’s penchant for building loyalty through free samples and her equally innovative “gift with purchase” idea. Advertising campaigns
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
E s t e e
lured women to cosmetics counters by offering an attractive makeup bag or tote filled with a pair of lipsticks, a comb, miniature moisturizers, or other combinations of items, all free with the purchase of any Estee Lauder product over a certain amount. This promotional strategy proved to be so lucrative that many other companies with expensive cosmetics lines were soon imitating it. In 1953, Estee Lauder achieved dramatic success with the debut of its first fragrance product, Youth-Dew. Initially available only as a bath oil, it was a megaseller from the start. “Youth-Dew was like the Giorgio of today,” a former Estee Lauder employee told Israel in Behind the Magic. “It just had that cachet. Middle America went bananas for it.” The company distributed free samples and conducted an aggressive promotional campaign; Estee herself wore it and sprayed it around department stores. Priced at $8.50 a bottle, Youth-Dew boosted Estee Lauder sales at certain stores from $300 a week to figures in the thousands. It eventually became an entire fragrance line that was still bringing in $30 million a year by the mid-1980s, some three decades after its launch. Lauder’s other ventures were equally successful. A savvy interpreter of the beauty business, she continually introduced new products to fit with the times. In the early 1960s, for instance, she adopted a quasi-scientific approach to skin care in response to similar marketing strategies of various European cosmetics companies. Her first such product, Re-Nutriv, sold for $115 a pound and was a huge seller despite its high price. The year 1968 marked the introduction of the Clinique skin-care and makeup line, which was aimed squarely at a younger generation of women. Its marketing strategy was to promote the fragrance-free formulas as part of a fresh, health-conscious lifestyle. There was no mention of the line’s connection with the Estee Lauder company (in fact, only cosmetics industry insiders were aware of it), and at Clinique counters the saleswomen wore lab coats. By the late 1990s, Clinique products were available in 81 countries, and sales of the line’s lipsticks alone numbered more than $17 million. In 1979, Estee Lauder launched the Prescriptives makeup line. The 1980s saw the emergence of skin-care products that promised to reverse the signs of aging, including the company’s Night Repair, which first appeared in 1983 and has proven to be a big success in its segment of the market. In 1990, Estee Lauder introduced yet another new makeup line, the botanicals-based Origins. Through the years, the Estee Lauder company has also attracted attention for its long-running advertising campaigns featuring well-known models. During the 1970s, Karen Graham was the first to be signed to an exclusive contract. She was succeeded by Willow Bay, Paulina Porizkova, and, in 1995, Elizabeth Hurley.
L a u d e r
Chronology: Estee Lauder 1908: Born. 1930: Married Joseph Lauter. 1946: Incorporated Estee Lauder, Inc. 1953: Launched Youth-Dew and saw revenues skyrocket. 1968: Introduced Clinique line. 1979: Introduced Prescriptives line. 1990: Introduced Origins line. 1992: Went into semi-retirement. 1995: Estee Lauder, Inc. became a publicly-held company.
cosmetics company in private hands in the world. Under Leonard Lauder’s leadership, it has continued to grow and prosper, and now a third generation of the family is involved in the business. Aerin, Leonard’s niece, assumed the role of director of creative product development after graduating from the University of Pennsylvania in 1992. Her sister, Jane, focuses on sales and marketing strategies, including the “gift-with-purchase” promotions. Leonard’s son William, meanwhile, heads the Origins division and is apparently being groomed to take over his father’s job some day.
Social and Economic Impact Estee Lauder is an undisputed giant in the fragrance and cosmetics industry. Her predecessors and erstwhile competitors long ago disappeared, victims of failure or mergers with other companies. Her innovative product ideas and business strategies helped turn the beauty business into an international industry with sales that are measured in the billions of dollars.
Estee Lauder retired from the day-to-day running of her company in 1972, at which time she handed over the reins to her son Leonard. Before Estee Lauder, Inc., opted to go public in 1995 by selling stock, it was the largest
In recognition of her business and social standing, Lauder was offered the post of ambassador to Luxembourg by President Richard M. Nixon, which she declined. But her son Ronald has been active in Republican politics; during the administration of President Ronald Reagan, he was appointed ambassador to Austria. He later made an unsuccessful run for mayor of New York City.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
4 9 3
E s t e e
L a u d e r
Lauder’s tremendous personal wealth has enabled her to be generous with her donations to various projects and causes. In 1962, she established the Estee and Joseph Lauder Foundation, which has helped fund children’s parks in New York City. She has also donated to both the Whitney Museum of Art and the Museum of Modern Art. In 1978 she received France’s Legion of Honor award for her efforts to raise funds to restore the Palace of Versailles outside Paris. At the University of Pennsylvania, where both Lauder sons received degrees from the esteemed Wharton School of Business, the Lauder family donated several million dollars toward the creation of a graduate program known as the Joseph H. Lauder Institute of Management and International Studies. In addition, Leonard Lauder’s wife, Evelyn, is active in the breast cancer awareness and research campaigns spearheaded by the beauty and fashion industry in the mid-1990s.
Bibliography Byers, Paula K. and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1998. Current Biography Yearbook 1986. New York: H. W. Wilson, 1987. Israel, Lee. Estee Lauder: Behind the Magic. New York: Macmillan, 1985. “Leonard Lauder Adds $10 Million to International Management Program Founded by Lauder Family at Penn.” Wharton Journal Online, 16 September 1996. Available from http://journal.wharton.upenn.edu/journal/v40n17/Lauder.html (1998). “Life After Leonard.” Fortune, 25 May 1998. Available from http://www.pathfinder.com/fortune/1998/980525/est1.html (1998). Menkes, Suzy. “Soft Soap.” International Herald Tribune, 9 January 1996. Available from http://www.iht.com/IHT/FASH/96/ sz0109.html (1998). Mooney, Louise, ed. Newsmakers: 1992 Cumulation. Detroit: Gale Research, 1992.
Sources of Information Contact at: The Estee Lauder Companies, Inc. 767 Fifth Ave. New York, NY 10153 Business Phone: (212)572-4200
4 9 4
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Ralph Lauren Overview Over his 30-year career, Ralph Lauren has created one of the premier fashion designer labels. His operations encompass not only clothing but also furniture, linens, rugs, paints, and dinnerware in his traditional, classic style.
(1939-) Polo Ralph Lauren Corporation
Personal Life Ralph Lauren was born Ralph Lifschitz on October 14, 1939, in New York City. Raised in a middle class area of the Bronx, he became known early on as a dreamer, and often expressed his desire to become a successful entrepreneur. While working in New York City clothing stores as a buyer and salesman in the late 1950s, he studied business science at the City College of New York. During the early 1960s, Lauren worked as a fashion designer. In 1964, he married Ricky Low-Beer with whom he had three children: Andrew, David and Dylan. He formed his own company in 1968. Ralph Lauren is an intensely private man who shuns the public spotlight. Although his life revolves around work and family, one of his favorite hobbies is restoring and collecting classic automobiles. Married now for over 30 years, he and his wife, Ricky, enjoy weekends and vacations at their homes in Colorado, New York, and Jamaica.
Career Details At the age of 17, Lauren was working as a part-time sales assistant for Alexander’s Stores in New York City.
4 9 5
R a l p h
L a u r e n
Ralph Lauren and his wife, Ricky.
(Archive Photos, Inc.)
Beginning in 1958, he worked for three years as an assistant menswear buyer at Allied Stores. In the following years he held salesman positions for Bloomingdale’s, Brooks Brothers, and the A. Rivetz neckwear company. From 1962 to 1964, he served in the United States Army. Having the advantage of a strong retailing background, Lauren joined the neckwear division of Beau Brummel as a designer in 1964. Although now known for a more conservative style, his early designs were wide, flamboyant ties. In 1968, Lauren founded Polo Fashions, introducing a men’s clothing line that established his distinctive mix of classic English and traditional American styles. The Polo logo—a mounted polo player—suggested aristocratic outdoorsiness. He introduced his first women’s collection
4 9 6
B u s i n e s s
three years later. The women’s line developed into four lifestyle groups: collection, classics, country, and active. He came out with Polo Eyeware in 1974, and boyswear in 1978. That same year, he offered fragrances, Polo for men and Lauren for women. In the early 1980s, he introduced a girls clothing line, footwear, and home collection. Since then the Ralph Lauren label has been extended to accesories, hosiery, sleepwear, leather goods, and luggage. Ralph Lauren opened his first retail store in 1971 on Rodeo Drive in Beverly Hills, California. By 1997, the company maintained 116 freestanding Polo Ralph Lauren stores and 62 outlet stores in the United States. This was in addition to 1,300 boutiques that were housed in department stores. The firm also operates stores in London,
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
R a l p h
L a u r e n
Paris, and Shanghai. By the late 1990s, Lauren was the best-selling designer in the world. His Polo Ralph Lauren Company had annual sales of over $5 billion a year. Attention to detail is the cornerstone of Lauren’s managerial success. He painstakingly checks product quality and maintains tight control over marketing the brand image. This is evident through the establishment of over 25 lucrative licensing contracts, as well as the creation of new brands such as Polo Sport, a more moderately priced collection targeted to a younger audience. Two major new ventures in 1995 resulted in the company’s entry into the competitive mass market of blue jeans and a women’s bridge line. Lauren’s Home Collection is also an important revenue producer with about $535 million in worldwide sales during 1996. This is greater than similar operations of any other retailer. The collection was expanded in 1996 with paints, tools, and instruction videos to create four living environments: Thoroughbred, Country, Santa Fe, and Safari. The fragrance line has also been extended into over 100 skin color and treatment products. The once privately-held Lauren company had long been eyed by Wall Street for its continuing success and unrivaled sales volume until 1997 when it made its first Initial Public Offering. The stock had held its value and fared far better than other fashion companies in the past. Lauren’s work, in both the fashion and the film industry has generated critical acclaim. He created the distinctive costumes in Annie Hall and the The Great Gatsby, and has been regularly lauded by his fellow designers. Lauren has received the industry’s COTY award seven times and was inducted into the COTY Hall of Fame in 1986. In 1992, he was awarded the Lifetime Achievement Award from the Council of American Fashion Designers. The same organization elected him Designer of the Year in 1996. The Woolmark Tribute Award for influence on American style was presented to Lauren for his 25-years of impact on American style. Furthermore, Lauren was the first designer to appear in his own advertisements, his own silvered good looks lending to the upscale image. His early focus on creating brand image rather than paying overriding attention to individual garments is common practice in the industry today.
Social and Economic Impact Woody Hochswender, editor of Esquire magazine, describes Lauren as “a great interpreter of American traditions,” and says that he “shapes these traditions in an ongoing way.” The Polo logo is synonymous around the world with a luxurious lifestyle. To this end, some note the company sells a dream rather than innovative designs. In fact, Ralph Lauren himself has said “I style like I am telling a story.”
Chronology: Ralph Lauren 1939: Born. 1967: Founded Polo Fashions. 1971: Established Ralph Lauren Womenswear. 1971: Opened first Polo/Ralph Lauren store in Beverly Hills. 1981: Received Coty Hall of Fame Award. 1983: Introduced extensive home collection. 1986: Opened New York City flagship store in former Rhinelander mansion. 1992: Received Council of Fashion Designers of America Lifetime Achievement Award. 1997: Reached worldwide sales of $5 billion.
sign with the point of view that what I’m doing is for a person with a strong sense of style, I don’t want anything I do to be this year’s ‘hot look. “I like things that will age — that will look better next year. I believe that fashion is a function of lifestyle. I believe in clothes that are as easy and nonchalant as a pair of jeans, that mix well, and that don’t go out of style tomorrow.” Lauren’s success is also a result of his management style. Pamela Fiori commented, “What struck me is how respectful Lauren is of those who work for him. He doesn’t condescend. He doesn’t lose his cool. Even when he doesn’t like something, he says it gently. And when he fails to understand, he will ask ‘why?’ or ‘why now?’ or ‘what is that I’m not getting?” Lauren also admits that he enjoys his role as a leader: “I feel it is my responsibility to get the best out of people, to give them chances to do what they never imagined they could do in their careers. It gives me tremendous pleasure to watch them grow. It is also important for me to work with good, talented, nice people whom I truly like.”
Sources of Information
Ralph Lauren describes the enduring appeal of his clothing by stating: “My clothing is anti-fashion. I de-
Contact at: Polo Ralph Lauren Corporation 650 Madison Ave. New York, NY 10022 Business Phone: (212)318-7000 URL: http://www.ralphlaurenfragrance.com
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
4 9 7
R a l p h
L a u r e n
Bibliography Bondi, Victor, ed. American Decades 1970-1979. Detroit: Gale Research, 1995. Byers, Paula K., and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography. 2nd ed. Detroit: Gale Research, 1998
4 9 8
B u s i n e s s
Fiori, Pamela. “Life Is But A Dream.” Town & Country Monthly, December 1996. Martin, Richard, ed. Contemporary Fashion. Detroit: Gale Research, 1995. Pendergast, Sara, ed. Contemporary Designers. Detroit: St. James Press, 1997.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Geraldine Laybourne Overview Geraldine Laybourne is one of the most prominent women in cable television. She took the Nickelodeon television network from last place to first in the 1980s, and she did it through an unconventional leadership style. As a result of her success, she became vice chairman of Nickelodeon’s parent company, MTV Networks. Then in early 1996, this dynamic chief executive moved to an even bigger playing field when she was named president of Disney/ABC Cable Networks. In May of 1998, Laybourne unexpectedly left her position with Disney/ABC to form her own media company with ABC, Inc.
(1947-) Media Executive
Personal Life Geraldine Bond Laybourne was born May 19, 1947 in Plainfield, New Jersey. She grew up in Martinsville, New Jersey where her father was a businessman and her mother was a radio soap opera actress. Laybourne studied art history at Vassar College in New York, where she earned her BA degree in 1969. In 1970, she married Kit Laybourne, with whom she had two children, Emily and Sam. At the time Laybourne met Kit, he was teaching kids electronic media by letting them make their own television shows, movies, and videos. She was fascinated by his work and shared his interest in children, an interest that is reflected throughout her career. Laybourne enrolled at the University of Pennsylvania, where she earned her M.S. in elementary education in 1971. While earning her master’s degree, she worked as an administrator at an architectural firm, but after grad-
4 9 9
G e r a l d i n e
L a y b o u r n e
azine pointed out in a profile of her, “It may seem obvious that children’s programming should be both fun and educational, but when she took over at Nickelodeon, this was by no means a self-evident principle.” Most children’s programming in the 1970s was either strictly “educational” or purely entertainment. It was Laybourne’s gift to be able to steer between the two.
Geraldine Laybourne poses in front of a chalkboard. (AP/Wide World Photos, Inc.)
uation she became a high school teacher at Concord Academy, a prep school in Concord, Massachusetts. In 1973, after teaching at Concord for a year, she became festival coordinator for the American Film Festival from 1974 to 1976. Also in 1974, she helped found the Media Center for Children in New York City, where she worked until 1977. From 1978 to 1980, she was a partner in the Early Bird Specials Company, and from there she moved to the newly formed Nickelodeon network, which had a target audience of children and young adults.
Career Details Initially hired as a program manager at Nickelodeon in 1980, Laybourne quickly worked through the ranks in a variety of scheduling and programming jobs. By 1986, she was senior vice president and general manager for Nick at Nite, a subsidiary network specializing in old, babyboom era television shows. She was promoted to executive vice president and general manager position in 1987, and then promoted to president of Nickelodeon in 1989. Laybourne made Nickelodeon one of the most loved and most watched cable television channels. When she started working for Nickelodeon, there were only 12 employees and when she left the company, there were over 1,000 employees. Laybourne’s management style can be summed up in three words: make it fun! As Time mag-
5 0 0
B u s i n e s s
When asked by Sales & Marketing Management magazine to describe Nickelodeon, Laybourne called it the “naughty aunt or uncle who’s the most fun to have in a family, or the substitute teacher who turned the school on its ear.” These words also describe Laybourne, who is anything but conventional in her business style. Her character as a manager is reflected by the physical environment she created at Nickelodeon’s corporate headquarters in New York City, where she turned four stories of the building into a fun house. Decorated in bright colors with walls that leaned in odd directions, Nickelodeon had a conference room with rounded corners and oddly shaped windows. At strategy sessions, Laybourne would hand out Gak, a substance similar to Play-Doh—hardly what one would expect to find in the headquarters of a business that had $330 million in revenues the year before. In a world where egos battle it out everyday, Laybourne rejects the idea of a hierarchical corporate structure. The chief executive abandoned her huge office and instead of having the largest desk, she had the smallest one at Nickelodeon. By using individualized instruction and focusing on her employees’ strengths rather than their weaknesses, Laybourne was able to assemble a remarkably creative staff. Laybourne has expressed that she feels it is important to “see what’s good in people and make sure that 80 percent of their time is spent doing (those) things.” At the same time, she has described herself as having extremely high expectations for Nickelodeon and its employees. Her combination of management characteristics earned her the nickname of “the Velvet Hammer” at Nickelodeon. “There is no sloppiness at Nickelodeon,” she said. “It’s playful . . . but the people here are very driven, and they really want to do well.” Laybourne’s own success and drive was rewarded in 1992, when Nickelodeon’s parent company, MTV Networks, made her its vice chair. However, she was never given a voting spot on the company’s board, and she soon felt that her career had become limited. Late in 1995, Disney chief Michael Eisner made headlines for what Fortune magazine called a “coup” in hiring Laybourne away from Nickelodeon. In January of 1996, she assumed the job of vice president of Disney/ABC for cable operations, and by late 1997, she was named president. At Disney/ABC Cable Network, Laybourne was to oversee, the Disney Channel and the ABC interests in Lifetime, History Channel, A&E Network, and E! Entertainment. She also planned an all-news channel. Laybourne’s success at Disney/ABC included revamping
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
G e r a l d i n e
ABC’s Saturday morning children’s shows, and improving the Disney and Lifetime channels, but she had many plans that were never executed. Laybourne did not have as much freedom as she did at Nickelodeon to make decisions and get things done. The corporate structure was very different; any change was a very slow process, and Laybourne was perhaps a bit too distant from the creative process. Overseeing all those channels meant going to many meetings and not actually accomplishing anything. While Laybourne waited to see some of her plans materialize, other networks produced new programs, leaving Disney behind. Disney decided to abandon her early ideas for a cable news channel and an educational channel, claiming that they were too costly. Disney had not been evolving along with the changes taking place in the expanding broadcasting scene. Laybourne, perhaps, was brought in to fix the network. She improved some things, but overall, she was not content and decided to move on. In May of 1998, Laybourne left her position with Disney to start her own company. Her new company will provide programming for the cable, network television, and the Internet. She is interested in creating interactive programs for both the television and the Internet. The new company will also focus on Laybourne’s specialty, women’s and children’s programming.
Geraldine Laybourne has made tremendous changes in programming for children. From the beginning, her success has been grounded in the fact that she is genuinely interested in children. In a 1997 speech she commented, “I didn’t go into TV to have a career or build a business, I went into TV because I thought it was a disgrace for kids.” Laybourne has also said that she can learn all she needs to learn about a person by asking them what they were like as kids. It is likely that in any arena, she will apply the idea of appealing to the child in every person. After all, no child has ever been an adult; but all adults were once children. Geraldine Laybourne’s brand of corporate power was a shining example of how a corporation can change in order to create win-win situations. In a world that is often dominated by male executives, Laybourne is a dominant figure. “Gerry makes people think in a different way,” said one female Disney executive. One way Laybourne has made people think differently is to surround them with the unconventional. Her focus on fun included everything from brightly colored walls to staff meetings that resembled a glorified show-and-tell. Obviously, whatever Laybourne has done, worked. She has worked for mega-corporations, made many changes in
L e a d e r
P r o f i l e s
Chronology: Geraldine Laybourne 1947: Born. 1974: Founded Media Center for Children. 1980: Hired as program manager for Nickelodeon. 1985: Became director of acquisitions and programming executive, Nickelodeon. 1989: Named president of Nickelodeon. 1992: Became vice-chair of MTV Networks. 1995: Accepted presidency at Disney/ABC Network Cable. 1998: Left Disney/ABC to form own media company.
children’s television, and instituted progressive management techniques, thus setting a new standard for the corporate “think-tanks” of the United States.
Social and Economic Impact
B u s i n e s s
L a y b o u r n e
f o r
Sources of Information Contact at: Media Executive
Bibliography Auletta, Ken. “Up Life’s Ladder.” The New Yorker, 8 June 1998. Bing, Stanley. “More Magic From Mickey’s and Michael’s Kingdom.” Fortune, 15 January 1996. Carey, Robert. “Firing Line: Geraldine Laybourne.” Incentive, December 1995. Fierman, Jaclyn. “Winning Ideas From Maverick Managers.” Fortune, 6 February 1995. “The Fountain of Youth.” Chief Executive, July/August 1995. “Geraldine Laybourne.” Time, 17 June 1996. Newcomb, Horace, ed. Museum of Broadcast Communications Encyclopedia of Television. Chicago: Fitzroy Dearborn, 1997. Orwall, Bruce. “Laybourne Quits Walt Disney pectedly.”The Wall Street Journal 29 May 1998.
Unex-
Who’s Who of American Women 1997-1998. New Providence, NJ: Marquis, 1996.
S t u d e n t s
5 0 1
Andrew Lloyd Webber (1948-) Really Useful Group
Overview Andrew Lloyd Webber is one of the most popular and successful composers of modern theatre. He has been the one at the forefront of the creation of the super-show, complete with big budgets, large casts, and elaborate productions. In the theatre worlds of London, New York, and around the world, Lloyd Webber has been associated with some of the most popular, longest-running shows ever. While his critics complain that he often depends too heavily on overdone glitz and glamour, his fans love his fusion of various music styles, including rock and roll, jazz, and classical. No one, however, can deny his impact on theatre ever since Jesus Christ Superstar hit the stage in 1971.
Personal Life Andrew Lloyd Webber was born on March 22, 1948, in London, England, to William Southcombe Lloyd Webber, a composer and director of the London College of Music, and Jean (Johnstone) Hermione Southcombe Lloyd Webber, a piano teacher. As a child, Lloyd Webber took lessons in violin, piano, and French horn. Lloyd Webber’s brother, Julian, actually became a worldrenowned cellist. At a very early age, Lloyd Webber became fascinated by musical theatre and made stage models with puppets. At the age of nine, he wrote his first musical based on Oscar Wilde’s play The Importance of Being Earnest. At age 12, Lloyd Webber wrote a fan letter to famed musical composer Richard Rodgers and was invited to meet him. Around the same time, he won a scholarship to Westminster School in London, where he
5 0 2
A n d r e w
L l o y d
W e b b e r
continued writing musicals. Lloyd Webber was also extremely interested in architecture, and so in 1965 he entered Oxford as a history major. Lloyd Webber married Sarah Jane Tudor Hugill, a singer and musician, in 1971. They had one daughter, Imogen, before divorcing in 1983. A year later, Lloyd Webber married Sarah Brightman, a cast member in his musical Cats. They divorced in 1990. Lloyd Webber married for a third time in 1991, this time to Madeleine Gurdon. They have two sons and a daughter. Lloyd Webber was knighted by Queen Elizabeth II in 1992 for his service to the arts, and in 1997 became Lord Lloyd Webber of Sydmonton when he was elevated to Britain’s House of Lords.
Career Details After only one term at Oxford, Lloyd Webber withdrew from school and returned to London. He composed, with lyricist Tim Rice, The Likes of Us, a never-to-beproduced musical based on the life of British orphanage founder Dr. Thomas Barnardo. Lloyd Webber and Rice ultimately staged their first production after a local schoolmaster commissioned them to create a musical play for his students to produce. The result was Joseph and the Amazing Technicolor Dreamcoat, based on the biblical story of Joseph, a boy sold into slavery by his jealous brothers, who uses his ability to interpret dreams to overcome the bonds of his captivity. The musical, with its fusion of numerous musical styles, including rock, country, and jazz, proved to be so popular that it was also produced at the Central Hall in Westminster where it received rave reviews. Riding on their success, Lloyd Webber and Rice teamed up again to create another musical based on a biblical story, Jesus Christ Superstar. When they could not obtain funding to produce the musical, they released an album of songs they had written for it. The album was a success in both Great Britain and the United States, selling more than 3 million copies. The theatrical production, which finally came to the stage in 1971, was a huge success, running in London for a total of 3,357 performances. Along with success, the musical also brought controversy. Some Christian groups, who often protested outside the theater, were upset both with the portrayal of Jesus as a sometimes troubled human being and with the fact that Lloyd Webber and Rice left out the resurrection, choosing to end the story with Jesus’ death on the cross. Despite the controversy, Jesus Christ Superstar won the 1971 Drama Desk Award.
Andrew Lloyd Webber.
(Archive Photos/Popperfoto.)
Lloyd Webber teamed with Rice again in 1978 to produce Evita, the story of Argentine dictator Juan Peron’s first wife, Eva. The musical follows Eva Peron from her life as a child in a small town to her marriage and overwhelming popularity with the Argentine people, and ends with her death from cancer while she was still in her 30s. Once again, Lloyd Webber received mixed reviews, but Evita was a popular success and won two Antoinette Perry (Tony) Awards in 1980. As with Jesus Christ Superstar, Lloyd Webber and Rice released a soundtrack album that became popular before the show opened. Evita ran for 3,176 performances in London and for 1,567 performances in New York on Broadway. Around the same time, Lloyd Webber formed The Really Useful Theatre Company, which later became The Really Useful Group (RUG). Through RUG he was able to produce other authors’ plays. Lloyd Webber also purchased the Palace Theatre in London.
After Rice backed out of their next project, Lloyd Webber teamed up with British playwright Alan Ayckbourn to finish the musical Jeeves. It was Lloyd Webber’s first real failure. During this time, Lloyd Webber also composed the film scores for Gumshoe (1971) and The Odessa File (1973).
In 1981, Lloyd Webber took the theatre by storm with his extravagant musical production Cats. Based on poet T.S. Eliot’s collection Old Possum’s Book of Practical Cats, the production was the longest-running musical in both London and New York. Cats premiered in London, then found its place in New York, and has also been produced on tour in many different countries. Initially, Lloyd Webber had difficulty obtaining funding for the project. Backers were skeptical about a dance musical based on poems about cats. When Warner Brothers dropped its support, Backstage quotes Lloyd Webber as telling the company, “Just remember, 50 percent of the
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
5 0 3
A n d r e w
L l o y d
W e b b e r
Chronology: Andrew Lloyd Webber 1948: Born. 1968: Staged Joseph and the Amazing Technicolor Dreamcoat. 1971: Created Jesus Christ Superstar. 1976: Created Evita. 1981: Created Cats. 1986: Created Phantom of the Opera. 1992: Knighted by Queen Elizabeth II. 1993: Created Sunset Boulevard (London). 1994: Created Sunset Boulevard (United States). 1996: Created Whistle Down the Wind.
world hates cats and 50 percent loves them. I’ll go happily with the 50 percent who loves them.” The musical earned two Tony awards, and proved to be so popular that Lloyd Webber wrote a companion book, Cats: The Book of the Musical. In 1984, Lloyd Webber teamed with Richard Stilgoe to bring Starlight Express to stage. In 1986, Lloyd Webber found even more success with Stilgoe, along with Charles Hart, when they created The Phantom of the Opera. Set in 1910, the story revolves around a severely disfigured man who, while hiding out beneath the Paris Opera House, falls in love with a beautiful singer. A popular success, the spectacularly staged Phantom also received critical acclaim, winning a total of seven Tony awards. In 1989 Lloyd Webber departed from his usual big production musicals to bring Aspects of Love to stage. It is a love story based on the interwoven relationships among five people. Called Lloyd Webber’s most personal work, its success was marginal at best. In a question-andanswer session recounted in Backstage, Lloyd Webber admitted the musical was his personal favorite, “But I don’t think we quite got it right. Christopher Hampton [a writer] told me that if I ever do a movie of Aspects, it should be a bit sharper, sexier, and funnier. That’s probably it.” While the musical failed to attract large audiences, a less elaborate production was quite successful in Australia. Lloyd Webber used Billy Wilder’s 1950 film Sunset Boulevard for his next musical. It opened first in Lon-
5 0 4
B u s i n e s s
don in 1993, then in Los Angeles and New York during 1994. Sunset Boulevard tells the story of Norma Desmond, a fictional former silent screen star displaced by the introduction of sound to the movie business. Once again, some critics praised it and others panned it. Sunset Boulevard won a Tony award for Best Score and Best Musical in 1995. Sunset Boulevard received most of its publicity from the controversy that arose when Lloyd Webber fired actress Faye Dunaway and replaced her with Glenn Close. The production was nearing opening day when Lloyd Webber removed Dunaway from the leading role. According to New York, Lloyd Webber discovered that Dunaway could not sing and could not be taught to sing. Lloyd Webber wrote a letter to Dunaway explaining that he released her to avoid “extreme embarrassment.” Dunaway sued Lloyd Webber and reportedly received $1.5 million from Lloyd Webber to settle the wrongful termination suit. Lloyd Webber’s next project was Whistle Down the Wind, which was unveiled in Washington, D.C., at the end of 1996. The musical is based on a 1961 film by the same name. Set in Louisiana in the 1950s, the story is about a young girl who finds a man in her barn and thinks he is Jesus Christ. Like Aspects of Love, Whistle was a departure from Lloyd Webber’s typical “megamusical.” It was the first musical to premiere in the United States without the preliminary release of an accompanying album, and the production featured no established stars in its cast. Finally, over half the cast was under the age of 18, and Lloyd Webber’s intended audience was a younger crowd than typical for his efforts. However, Lloyd Webber’s attempted departure from his previous musicals was not successful, and the show closed quickly.
Social and Economic Impact Lloyd Webber helped change the face of theatre in both London and New York, the two centers of most major theatrical productions. Starting with Jesus Christ Superstar in 1971 and culminating with Phantom of the Opera in 1986, Lloyd Webber perfected the megamusical so that the show itself, separate from the story it told, was worth the price of a ticket. Lloyd Webber was also innovative in his choice of material. According to Entertainment Weekly magazine, “Webber . . . reflected onto the stage the political cynicism of the ‘70s ( Superstar, Evita) and the excess of the ‘80s (Cats, Phantom, and the roller-skating Starlight Express) . . . . With musical theater taking the next step forward with shows like Rent, Webber may be pressed to prove he can evolve. In the end, the audiences will decide.” Whether or not Lloyd Webber can produce another mega-hit is yet to be seen. He has not had a money-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
A n d r e w
making production since 1986’s Phantom of the Opera. Aspects of Love lost over $8 million, Whistle Down the Wind lost an estimated $15 million, and although Sunset Boulevard has been more financially solvent, it has not covered its production costs. RUG, which reported profits of over $100 million between 1994 and 1996, showed a loss of over $10 million for 1997. Lloyd Webber has responded to these losses. He has turned to reinventing his successes in various formats. Several of his hits have reentered the theatre to find new and renewed fans. His 1975 flop Jeeves opened with new songs as By Jeeves in regional theaters. “We got it wrong 20 years ago,” Lloyd Webber told Entertainment Weekly, “Now I think we’ve got it right.” Using the same idea, Lloyd Webber released Whistle Down the Wind, in a smaller, less expensive theatere production where he hopes it will recoup some of its losses. Jesus Christ Superstar has also been revived. He is working to turn out video productions of Cats and Joseph and the Amazing Technicolor Dreamcoat and movie versions of several of his stage productions. He has also been working with the idea of creating a sequel to Phantom of the Opera. Lloyd Webber, who previously turned over much of his control of RUG to others, has recently become more active in the everyday running of the company. “I don’t want to be an entrepreneur, but it’s unrealistic to say I shouldn’t be,” he told Matt Wolf of Variety magazine in 1997. “I hate being a producer, because music is really what I’m about; but it’s also unrealistic to think I can’t do it.” Lloyd Webber, whose estimated worth is over $500 million, is a major art collector, having a particular interest in pre-Raphaelite works. He is also a major sup-
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
L l o y d
W e b b e r
porter of the arts and other causes. Using an opening preview of Sunset Boulevard in 1993 as the forum, he raised $1.7 million for the Children’s Diabetes Foundation.
Sources of Information Contact at: Really Useful Group 22 Tower St. London, WC2H 9NS England
Bibliography Baker’s Biographical Dictionary of Musicians. New York: Macmillan, 1992. Bordman, Gerald. The Oxford Companion to American Theatre. New York: Oxford University Press, 1984. Cheng, Kipp, and Jason Cochran. “Knight Moves: Sir Andrew Lloyd Webber Tries a New Tune.” Entertainment Weekly, 15 November 1996. Contemporary Authors. Detroit: Gale Research, 1986. Current Biography Yearbook. New York: H.W. Wilson Co., 1982. Davies, Hunter. “Andrew and His Amazing Catchy Tunes.” Independent, 18 May 1993. Encyclopedia of World Biography. Detroit: Gale Research, 1998. Mermelstein, David. “The Music of the Knight Continues to Slay Fans.” Variety, 26 January 1998. Nassour, Ellis. “Two Roads Meet on the ‘Boulevard’: Lloyd Webber Looks Back.” Back Stage, 11 November 1994. Wolf, Matt. “Curtain Up on Act Two; Legit Composer Comes Through Like a Trouper.” Variety, 15 December 1997.
S t u d e n t s
5 0 5
George Lucas (1944-) LucasFilm, Ltd.
Overview George Lucas revolutionized the film industry when his 1977 film Star Wars was released. Through the use of computer technology, he was able to create an entire universe, which took the movie-going world by storm. While his legacy might be the Star Wars trilogy, it is his revolutionary film making process which is likely to have an impact for years to come.
Personal Life Lucas was born on May 14, 1944 in Modesto, California, the son of George, a retail merchant and parttime farmer, and Dorothy Lucas. As a boy, George was artistic, and he thought that he might become a photographer or an artist. While he took art classes in school, his spare time was spent rebuilding cars and working as part of the pit crew at the local racetrack. Lucas hoped to become a professional racecar driver, but those hopes were shattered when he was involved in a serious automobile accident just before his high school graduation. Lucas was 18 at the time. Once he had recovered from the accident, he entered Modesto Junior College, where he studied sociology and anthropology. He then transferred to The University of Southern California Film School, where he graduated in 1966 with a BFA.
Career Details While he was a student, Lucas made eight short films, including a bleak futuristic drama about a man on
5 0 6
G e o r g e
L u c a s
the run. In 1968, that film, titled Electronic Labyrinth: THX 1138: 4EB won the Best Film Award at the 3rd Annual Student Film Festival. TXH 1138 was later expanded and filmed by Zoetrope, an independent film company which had received backing from Warner Bros. Lucas was the director, and filming took place mostly in the San Francisco Bay area. He edited the movie at his home in Mill Valley. The film garnered good critical reviews but was a flop at the box office. Undaunted, Lucas began to film his second project, American Graffiti, which was a nostalgic look at adolescence. With the help of friends Francis Ford Coppola and Gary Kurtz, Lucas made the movie on a budget of just $780,000. Though studio heads were somewhat bewildered by the film’s seeming lack of plot, they finally agreed to produce it; American Graffiti was released to theatres in 1973. This time, Lucas scored with both critical acclaim and box office success. Within two years, it had grossed $50 million at the box office, a Golden Globe Award for best comedy, New York Film Critics and National Society of Film Critics awards for best screenplay, as well as five Oscar nominations. The success of American Graffiti gave Lucas credibility in the film industry and he began to approach studio heads with his idea for a science fiction movie he had titled, Star Wars. The idea of an intergalactic war between good and evil was a tough sell, but Lucas refused to be daunted, passionately convinced that his idea would not only make a good movie but would bring a muchneeded sense of mythology to the culture. Finally, Lucas received an $8.5 million backing from 20th Century-Fox, and filming began. Studio marketing analysis said women would not go to see a movie with “war” in its title. Members of the studio’s board of directors dozed during its initial screening. It surprised everyone when lines began forming at the theatres at 8 a.m. on May 25, 1977, the day Star Wars opened. Crowds flocked to theatres around the country to witness Lucas’ intergalactic civil war. Ultimately, Star Wars grossed $322 million. It also won seven Oscars. Lucas had been right; the film seemed to touch a chord in an audience hungry for storytelling and mythology. Lucas went on to make two more Star Wars movies, The Empire Strikes Back and Return of the Jedi. While both were well-received and ultimately grossed as much as the original, many critics complained they were not up to the standard of the original. For the movie-going public, however, Star Wars had become a permanent part of the culture. The phrase “May the force be with you,” became a slogan in the late 1970s. After completing the Star Wars trilogy, Lucas turned away from directing and produced the popular Indiana Jones movies. Lucas himself conceived these adventure films, again, hoping to bring the public a renewed sense of fantasy and storytelling. Though not the critical success of Star Wars, these movies were big hits at the box office. The same thing cannot be said of Lucas’ next few
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
George Lucas.
(AP/Wide World Photos, Inc.)
projects, which included Howard the Duck, Labyrinth, and Willow. After those movies, Lucas retreated to his 4,700-acre Skywalker Ranch. There, he attempted to understand computer technology and figure out how it could be used in moviemaking. That period of exploration would ultimately change the way movies were made in Hollywood. Lucas had created a digital studio at Skywalker, which opened filmmaking to the very limits of imagination. Prior to this, moviemakers were constrained by the physical limitations of reality. Digital technologies have factored about half of the movies subsequently produced, including 1996’s dinosaur epic, Jurassic Park, and Forrest Gump. For years, Lucas was away from filmmaking, but even with competitors clamoring for their piece of the digital effects market, Lucas has become incredibly rich. He owns 100 percent of LucasFilm, which includes Skywalker Sound (a video game company), all the franchise rights to both the Star Wars and Indiana Jones movies, and Industrial Light and Magic. In 1996 Forbes magazine estimated that LucasFilm alone was worth approximately $5 billion and that was prior to the 1997 rerelease of the Star Wars trilogy in the theatres, which enabled a new generation to discover the myth and magic which had made Lucas famous. Lucas is now working on another Star Wars trilogy, this time, a prequel to the original. Lucas, who wrote this new chapter, will also be both producer and director. The
S t u d e n t s
5 0 7
G e o r g e
L u c a s
ticated; fantasy and even historical events seeming to effortlessly intertwine with reality. This may even affect education, with children learning through simulation, rather than through theory.
Chronology: George Lucas 1944: Born. 1966: Graduated from USC Film School. 1973: Received Golden Globe for American Graffiti. 1977: Star Wars released in theatres. 1981: Produced Indiana Jones and the Temple of Doom. 1997: Theatrical re-release of the Star Wars trilogy.
first film is one of the most closely-guarded productions in movie history; release for the first of the three is tentatively set for May, 1999, with the others set to follow in 2001 and 2003.
In addition to Lucas’ contributions to the film industry, his Star Wars trilogy has had a profound effect on an entire generation of Americans. When the trilogy was re-released in 1997, the theatres were sold-out for days. The box office sales and the hundreds of thousands of dollars in movie-merchandise that was sold is evidence that Lucas’ films continue to have a lasting impact.
Sources of Information Contact at: LucasFilm, Ltd. PO Box 2009 San Rafael, California 94912 Business Phone: (415)662-1800 URL: http://www.lucasfilm.com
Social and Economic Impact Thanks to Lucas’ vision, the film industry has begun to literally reinvent itself, with the presence of computer technology felt in the majority of movies made today—especially those which have large-scale productions, like the 1997 blockbuster Titanic, or 1998’s Godzilla. Although the technology has been used for little more than a decade, the result is surprisingly sophis-
5 0 8
In a 1995 interview in Inc. magazine, Lucas said, “I’m really a storyteller. The technological adventure I’ve gotten myself involved in surely came about because I found myself out in the middle of the wilderness with no fire. I had no choice but to try to build a fire so that I could sit by it and tell stories. I’ve wanted to finish the Star Wars story for a long time so that the first three weren’t left hanging out there. But it’s a lot of work; you’ve got to take a deep breath and prepare yourself for four years of hard labor. But, you know, I look forward to the whole process.”
B u s i n e s s
Bibliography “The Force Is Back. Time, 10 February 1997 “Luke Skywalker Goes Home.” Playboy, July 1977. “The Magician.” Forbes, 11 March 1996. “Star Struck.” Entertainment Weekly, 21 May 1993.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Henry Luce Overview In 1923 Henry Robinson Luce and his partner Briton Hadden cofounded Time magazine, the most influential newsmagazine of the twentieth century. Time quickly became popular among college-educated Americans because of its open political bias, its broad coverage, and its distinctive writing style. After Briton Hadden died in 1929, Luce took Time and turned it into the center of a media empire. His other projects included the development of the magazines Sports Illustrated, Fortune, Architectural Forum, House and Home, and Life magazine, which became the most popular magazine in American history.
(1898-1967) Time Inc.
Personal Life Henry R. Luce was the son of Henry Winters Luce and Elizabeth (Middleton) Luce, two Presbyterian missionaries who served in China during the late nineteenth century. In 1898 their son was born in the town of Tengchow (modern P’englai), where the couple ran a college for Chinese Christians. He remained in China for the first 15 years of his life and then came to the United States to complete his education. He toured Europe alone for four months in 1913 “before returning to the United States for prep school,” says Alan Brinkley in Time. “He was, he said, ‘a fanatical sight-seer,’ and he visited cities, museums and other sites with a relentless and methodical efficiency.” Luce first met his future partner Briton Hadden at Hotchkiss Academy, the prep school he attended in or-
5 0 9
H e n r y
L u c e
The two businessmen used their magazine as the springboard for a media empire that aspired to bring news to a variety of American readers. In the late 1920s Luce and Hadden began planning what would become Fortune magazine. However, as New Leader contributor August Heckscher stated, “Hadden died tragically in 1929, a year before Fortune was unveiled,” and Luce took over all the operations of Time and its sister publications. Despite the onset of the Great Depression, “Fortune celebrated American business in a format more lush than had ever been offered by an American publication,” Heckscher continues. Fortune was joined six years later by Life, which quickly became the most successful magazine in American history. By the time Luce died in 1967, it had a circulation of around 750 million copies.
Henry R. Luce.
“As the ‘30s advanced,” explained Heckscher, “Luce alone would ride his three chargers, harnessed in a perfected team.” “And in the years that followed,” declared Lance Morrow in Time, “there unfolded all the high, dark world history for which the magazine’s epic rhetoric became a perfectly appropriate libretto: the Great Depression, World War II and the Holocaust, Hiroshima, the cold war and all the rest.” (The Library of Congress.)
der to prepare for Yale. The two entered Yale as classmates in 1916 and both worked on the Yale school paper, the Daily News. They also served together in the U.S. Army during World War I. Luce emerged from the conflict as a second lieutenant in 1918. He worked briefly as a cub reporter for the Chicago Daily News from 1921 to 1922 and with Hadden as a reporter for the Baltimore News before the two of them pooled their resources to found Time magazine in 1923. In 1923, Luce married Lila Ross Hotz and they had two children, Henry Luce III and Peter Paul Luce. The marriage ended in divorce in 1935 and Luce went on to marry Clare Boothe. Boothe was a playwright and editor who later became a United States Congresswoman and ambassador. In 1998, 31 years after his death, the United States Postal Service issued commemorative stamps honoring Luce’s role in shaping American journalism and American popular culture.
Career Details Luce and Hadden cofounded Time on the belief that most educated Americans had no time to keep up with current events. They collected $86,000 from a variety of friends, relatives, and associates, and on March 3, 1923, the first issue of Time appeared. The magazine ran at a loss in its first four years, but by 1927 it was making a profit and, at the age of 30, Luce was a self-made millionaire.
5 1 0
B u s i n e s s
As time went on the Luce media empire, and especially its flagship newsmagazine Time, began to reflect Luce’s own personal and professional biases. “His journalistic judgment could be clouded at times by his own commitments,” stated Alan Brinkley in Time magazine. “On the issues and people he cared most about— China, American foreign policy, the Republican Party, Chiang Kai-shek, Winston Churchill, Wendell Willkie—he personally directed coverage at critical times with a feverish and occasionally suffocating intensity.” Luce was also partly responsible for some of Time’s most epic gaffes. For instance, his support for Republican Willkie against Democrat Franklin D. Roosevelt in the 1940 election, said Heckscher, “seriously damaged Time’s reputation for truth and objectivity in reporting.” Luce’s second wife, Congresswoman Clare Boothe Luce, also “tested Luce’s editors—who were not always as enthusiastically partisan as her admiring husband, not as ready to accommodate themselves to her often idiosyncratic views.” Luce continued as editor-in-chief of Time, Inc. up until his retirement in 1964. He remained principal owner of the company until his death in 1967.
Social and Economic Impact One of the major factors in the success of Time was the voice given it by its founders. “Luce and Hadden, classmates out of Hotchkiss and Yale,” explained Lance Morrow in Time magazine, “succeeded because they understood this truth: history may be complicated, as life is complicated, but the business of storytelling is sim-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
H e n r y
ple.” Based in part on classical poetry, such as the Iliad, the voice of the newsmagazine was “squally, bratty, brash,” according to Morrow. “The new smart aleck— its voice distinctive, sophomoric, self-assured—thrived . . . . The magazine’s voice, Luce said, had three modes: ‘Everything in Time should be either titillating or epic or supercurtly factual.’” At times the magazine’s style could be overdone, as Wolcott Gibbs proved in a parody of Time published in the New Yorker in 1936. “Backward ran sentences until reeled the mind,’ Gibbs wrote. Luce also boosted circulation with thought provoking topics such as the Man of the Year, a competition that began in 1927 with the selection of Charles Lindbergh. However, Luce and Hadden had different concepts of what Time was supposed to be. Hadden, “a true product of middle-class America,” explained Brinkley, “wanted Time to be the witty, sophisticated, even cynical voice of his generation—something like a newsman’s version of H. L. Mencken’s popular magazine The Smart Set.” Time, declared Heckscher, “was far more concerned about being provocative and breezy than tackling deep policy issues. It presented the news in a style that Hadden invented and burnished, and had almost no regard for the eminence of its targets.” Because he was raised in the rarified atmosphere of an American mission and “encountered America first as an abstraction,” said Brinkley, Luce retained a view of the United States that was less worldly. “To Luce, Time had a different purpose. It was to be a vehicle of moral and political instruction, a point of connection between the world of elite ideas and opinion and middle-class people in the ‘true’ America hungry for knowledge.” With Hadden’s death in 1929, Luce’s view of Time’s mission came to dominate the magazine. Time became a widely respected news source,” declared Heckscher, “its freewheeling correspondents reined in by powerful editors who brought their dispatches within the scope of Henry Luce’s generally humanitarian, Protestant, Republican, and capitalistic faith.” Luce’s greatest impact on business history may have been forming the concept of the newsmagazine. With Life and Sports Illustrated, he created a showcase for photojournalism and a periodical devoted to America’s favorite physical activities. Time, however, established a whole new category of journal. “The Weekly Newsmagazine,” explained Morrow, “matured into an American institution, mentor to the questing middle class, keeper of a certain American self-image and expectation—America’s superego, the child of Henry Luce, a presence infuriating to many but undeniably a force.”
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
L u c e
Chronology: Henry Luce 1898: Born. 1914: Entered Hotchkiss Academy, Connecticut, and met future partner Briton Hadden. 1920: Graduated from Yale summa cum laude and a member of Phi Beta Kappa. 1923: Cofounded Time magazine with Hadden. 1929: Hadden died suddenly and Luce took control of Time. 1930: Created Fortune magazine. 1936: Bought Life and changed its subject from humor to photojournalism. 1954: Launched Sports Illustrated. 1967: Died. 1998: Honored with a portrait on a U.S. postal stamp.
Sources of Information Contact at: Time Inc. 1271 Avenue of Americas New York, NY 10020 URL: http://www.pathfinders.com
Bibliography Brinkley, Alan. “To See and Know Everything: Henry R. Luce Had an Insatiable Curiosity, with the Drive and Ambition to Match.” Time, 9 March 1998. Contemporary Authors. Detroit, MI: Gale Research, Inc., 1982. Dictionary of Literary Biography. Detroit: Gale Research, Inc., 1990. Heckscher, August. “Henry R. Luce: A Political Portrait of the Man Who Created the American Century.” New Leader, 6 June 1993. “Henry R. Luce Honored on Cover of U.S. Stamp.” M2 Presswire, 6 April 1998. Morrow, Lance. “The Time of Our Lives.” Time, 9 March 1998.
S t u d e n t s
5 1 1
C h a p t e r
5 1 2
N a m e
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Stanley Marcus (1905-) Neiman Marcus
Overview Stanley Marcus was president of the Neiman Marcus retail department store chain from 1950 to 1975. Involved in the company since 1926, he continued the family tradition of providing high-quality products at reasonable prices. Marcus turned a local Dallas store into an internationally respected retailer with 30 stores nationwide.
Personal Life Harold Stanley Marcus was born in Dallas, Texas, on April 20, 1905. He was the eldest son of Herbert Marcus, one of the founders of the Neiman Marcus department store, and Minnie Lichenstein Marcus. Stanley had three younger brothers: Edward, Herbert Jr., and Lawrence. Stanley was raised in Dallas and attended Forrest Avenue High School. From there he went East to prestigious Harvard University. He graduated in 1925 and received his Master’s degree in business administration from Harvard’s Business School in 1926. Retailing was a Marcus family affair. In 1907, when Stanley Marcus was only two years old, Herbert Marcus, Sr., along with Stanley’s aunt and uncle, Carrie Marcus Neiman and Al Neiman, founded Neiman Marcus. Young Stanley spent his childhood playing among the clothing and display cases of his family’s Dallas store. Upon returning from Harvard in 1926, Stanley went to work at the store. Al Neiman had just retired and the elder Marcus needed his son’s help. Stanley started as a floor man in Neiman Marcus’ apparel departments. It was
5 1 2
S t a n l e y
M a r c u s
not the career he had envisioned for himself; he had wanted to be a book publisher. His father and aunt insisted that he join the family business, but promised that his creative energies would not be stifled. In November 1932, Stanley Marcus married Mary Cantrell. The two met when Mary worked as a buyer in the Neiman Marcus sports shop. They had three children: Jerry and twins Richard and Wendy. After Mary Marcus’ death, Stanley Marcus married his second wife, Linda, in 1979. Stanley Marcus was extremely active in the social scenes of New York and Dallas. He was a member of the Grolier, Harvard, and Harmonie clubs in New York and the Columbian, Lakewood Country, and Variety Clubs of Dallas.
Career Details During Stanley’s first year at Neiman Marcus, his creativity was certainly put to use. He pioneered Neiman Marcus’ weekly fashion shows, the first by an American department store. The store became famous for these shows and it was their first step into the world of high fashion. Stanley Marcus also introduced the Neiman Marcus Fashion Exposition. Under his guidance, Neiman Marcus became the first specialty store to advertise in national magazines. These were the first of many promotional visions that Stanley Marcus brought to life. Over time, his marketing genius became legendary. By 1928, Stanley Marcus was an executive. He became director, secretary, and treasurer of Neiman Marcus, as well as the sportswear merchandise manager. At this time, the United States was beginning its plunge into the Great Depression. Most of the country saw poverty on previously unknown levels and countless businesses closed. Retail establishments like Neiman Marcus were particularly hard-hit, as Americans struggled to put food on their tables and eschewed fashion and decor. Amazingly, Neiman Marcus only had two years of small losses during the Depression, the only losses in the company’s history. In September 1930, oil was discovered in several large oil fields in east Texas. This created wealth for many Dallas families and increased business for Neiman Marcus. In the article, “Fashion is My Business,” in the December 1948 issue of Atlantic Monthly, Stanley Marcus described how he guided these newly wealthy families in their fashion and décor choices. As a result of his direction, the Depression’s nouveau riche could not be distinguished from the Southwest’s older wealthy families. Still, during the Depression, Marcus noticed that many of the Southwest’s wealthiest continued to travel to New York or Paris to purchase their clothes. So, Stanley Marcus arranged a lunch with the famed publisher Condé Nast. At this meeting, Marcus announced that he
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Stanley Marcus at the 6th annual UomoModa Menswear Awards celebrating Italian menswear at the Lincoln Center in New York City on July 18, 1994. (AP Photo/Chrystyna Czajkowsky.)
wanted to advertise Neiman Marcus in Nast’s fashion magazines. He easily convinced Nast, who until then had only accepted advertising from New York stores, and soon Neiman Marcus advertisements were found in Vogue and other couture magazines. In 1938, Stanley developed the Neiman Marcus awards, “the Oscars of Fashion.” The awards were presented annually for distinguished service in the field of fashion. Early honorees included Christian Dior in 1947
S t u d e n t s
5 1 3
S t a n l e y
M a r c u s
Patriarch Herbert Marcus Sr. died in 1950. At this time, Carrie Neiman was named chairman of the board, Stanley Marcus became president and chief executive officer and Edward Marcus became executive vice president.
Chronology: Stanley Marcus 1905: Born. 1907: Neiman Marcus department store in Dallas is founded by his father, aunt, and uncle. 1926: Graduated from Harvard Business School. 1928: Became director, secretary, and treasurer of Neiman Marcus. 1935: Began national advertising campaign in Condè Nast fashion publications. 1938: Originated Neiman Marcus Awards, the Oscars of Fashion. 1950: Became president of Neiman Marcus. 1960: Created Neiman Marcus His and Hers gifts. 1974: Retired from Neiman Marcus and started a consulting business. 1995: Celebrated his 90th birthday.
for “The Look.” The same year saw designer Norman Hartnell of London honored for designing Princess Elizabeth’s wedding gown. World War II involved the entire Marcus family. Stanley Marcus served as director on a three-state regional board of the Smaller War Plants Corporation. He was also chief of the clothing section of the textile, clothing, and leather branch of the War Production Board in early 1942. Brothers Edward, Herbert, and Lawrence joined the armed services. All of the Marcus brothers returned to work for Neiman Marcus at the conclusion of the war. After the war, Stanley’s marketing savvy, combined with Neiman Marcus’ legendary quality merchandise and customer service, continued the store’s growth. His national advertising campaign continued as he worked to present Neiman Marcus merchandise as irresistible. By 1949, the specialty store’s charge accounts numbered about 100,000. Neiman Marcus could claim customers throughout the United States and many parts of the world. That same year, French ambassador Henri Bonnet presented Stanley with the Chevalier Award of the Order of the Legion of Honor for his contributions to French industry and commerce by influencing the sale of French fashions.
5 1 4
B u s i n e s s
Stanley Marcus is among the most visible of those family members associated with Neiman Marcus. His imprint is all over the operation—so much so that when a new chief executive officer came on board, one pundit told WWD that the man would no doubt attempt to emulate Marcus. Marcus made the Neiman Marcus catalogues famous. Designed to promote the company’s mail order business, the first catalogue appeared in 1915. The company’s sophistication was exemplified in the amazing offerings of its catalogues. Stanley Marcus’ most famous marketing strategy was his 1960 creation: his and hers gifts in the Neiman Marcus Christmas catalogue. The response was tremendous, stimulating sales and strengthening Neiman Marcus’ place as an internationally known retailer. In “His and Hers, the Fantasy World of the Neiman Marcus Catalogue,” Marcus said, “did more to establish our catalogue than any other idea. We had His and Hers submarines for $18,700 each. Hot air balloons at $6,850 each. We had His and Hers camels. His and Her airplanes. Matching Chinese junks that we headlined, ‘Junk for Christmas, $11,500.’ We sold eight.” This was quite a difference from Neiman Marcus’ first Christmas catalogue in 1915, a six-page, 5 by 6 inch list of Christmas gift ideas! Marcus’ philosophy was that a successful retailer stays ahead by fighting standardization, “by selling what he believes in, not just what he thinks can make him money.” From that point, success becomes a question of high-quality salesmanship. “One thing I learned very early is that a valuable salesperson is easily worth three times what you pay the average schnook,” he told Inc. “Because you never know what that schnook is costing you in lost sales. Why do you think that you have to have so many department stores in a mall these days? It’s not because their merchandise is so different. It’s because each of them does such a poor selling job that they survive just taking up each other’s unsatisfied customers. A store with good sales people wouldn’t let that happen.” Despite the store’s purchase by Carter Hawley Hale Stores, Inc. in 1969, Stanley Marcus stayed involved with the day-to-day-operations of Neiman Marcus and remained visible as a business leader in the Dallas community. Marcus was named as executive vice president of the company’s specialty store division. He retired in 1974 with the title chairman emeritus. He continues to be active, and acts as a consultant in the retail industry. His company takes on everything from redesigning corporate logos to schooling executives in art history so they can make appropriate purchases for their corporate offices. He has written three books, Minding the Store (1974), Quest for the Best (1979) and His
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S t a n l e y
M a r c u s
and Hers (1983). He also writes a weekly editorial column for the Dallas Morning News. He has written numerous articles on fashion and retailing for well-known publications, including Atlantic Monthly and Fortune.
American Heritage Foundation, the National Commission of Public Schools, and the American Trade Association for British Woollen, Inc. He also served as an alumni advisor to Harvard University.
Even in the mid-1990s, the nonagenarian business consultant continued to give public lectures around the country. Narrowcasting, the business he co-founded, is a marketing service which gathers information on the shopping habits of America’s wealthy. During this time critics still continued to view his analysis of the current market as cutting edge.
Through his membership in the American Retail Federation, Marcus worked to correct the “economic illiteracy” of American retailers. He was elected chairman of the board of trustees of the federation in 1949. He urged the federation to become a “powerful force to protect consumer interests” and declared that businessmen should have a better understanding of national interests. As American Retail Federation chairman, he developed policies for an organization representing over 500,000 U.S. retail stores.
“In the 21st century, I think the department store will have to be redefined and reinvented,” Marcus told WWD. “It serves a very important place in the American distribution economy, but it’s out of date. Across the country, with few exceptions like Macy’s and Bloomingdale’s, department stores are dismal places to be in. They’re overcrowded with fixtures and merchandise, offer no service to speak of, no ambience or anything exciting. They don’t even have the charm of a warehouse.”
Stanley Marcus is a retailing legend; he lived by the credo “the customer is always right.” Customer service and quality were his passion and through that passion, he turned a local Dallas specialty store into an international giant whose name is synonymous with distinction.
Sources of Information
Social and Economic Impact Marcus managed to give his local Dallas store a reputation for quality that spanned the globe. In a move that was unprecedented for fashion retailers outside of New York City, Marcus started placing ads in national magazines in the 1930s. Since his primary customers were oil-rich Dallas residents who traveled extensively, Marcus realized that his competition included retailers in the Big Apple. Moreover, he deduced that extensive advertising would give these travelling Texans a sense of security, knowing that their provincial shopping outlet was recognized as a source of quality. “The fact that we dared to advertise in a national magazine made news itself, and as a result Time and Life magazine came to see me to find out what kind of store it was,” Marcus recalled.
Contact at: Neiman Marcus 300 Crescent Cir., Ste. 375 Dallas, TX 75201 Business Phone: (617)232-0760 URL: http://www.neimanmarcus.com
Bibliography Haber, Holly. “Stanley Marcus at 90: The Great Gadfly.” WWD, 12 April 1995. Raphel, Murray. “An Interview With Stanley Marcus.” Direct Marketing, October 1995. Rothe, Anna, ed. Current Biography Who’s News and Why 1949. New York: H.W. Wilson Co., 1949. Standard & Poor’s Register of Corporations, Directors and Executives. New York: Standard & Poor’s Corp., 1997.
Despite his work responsibilities, Stanley Marcus stayed busy in Dallas’ civic and cultural communities. He was a member of the Salvation Army Advisory Board, the American Council for Judaism, the Civic Federation of Dallas, the Greater Dallas Planning Council, the Dallas Health Museum, and the Dallas Historical Society. National organizations to which he belonged included the
Tapert, Annette. “Arbiter of Elegance: Stanley Marcus, at 92, has Observed and Critiqued...” Town & Country Monthly, September 1997.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Witchel, Alex. “So, What Does a Retailing Legend Buy?” The New York Times Biographical Service, Ann Arbor: UMI, Co., 1995. The Writers Directory, Detroit: St. James Press, 1996.
5 1 5
J. Willard Marriott (1900-1985) Marriott International, Inc.
Overview During the course of a career that spanned nearly 50 years, J. Willard Marriott parlayed a nine-stool root beer stand into a $3 billion food and lodging empire.
Personal Life J. Willard Marriott was born on September 17, 1900, in Marriott, Utah. The town was established in 1847 by Marriott’s Mormon great-grandfather, John Marriott. The second of eight children, J. Willard, known as Bill, grew up on a sheep and cattle ranch owned by his father and mother, Hyrum and Ellen Marriott. By the time he was 20 years old, Bill had fulfilled a two-year Mormon missionary obligation. In 1922, Marriott graduated from Weber State College in Ogden, Utah, and then transferred to the University of Utah, where he received a BA degree in 1926. After graduation, he taught English at Weber State College, and also worked as the school’s treasurer and theater manager. In 1927, after Bill married Alice Sheets, the newlyweds headed east and bought an A&W root beer franchise for $6000. During Marriott’s last year of college, an A&W root beer stand had opened in Salt Lake City near the University of Utah campus, and he had been impressed with how rapidly it had drawn in customers. He decided to try one in Washington, D.C., a hot and humid place where he thought people would enjoy a cold root beer. Together, the young couple built a base of happy customers, then added additional outlets. The Marriotts’ first son, J. Willard, Jr., was born in 1932; their second
5 1 6
J .
W i l l a r d
M a r r i o t t
son, Richard Edwin, was born in 1939. Both sons entered the family business. An active Mormon for all of his life, Marriott contributed 10 percent of his income to the church and made generous donations to Brigham Young University and the University of Utah. He served as president of the Washington Stake of the Church of the Latter Day Saints from 1948 until 1957. Marriott was also a loyal supporter of Republican political causes and candidates, among them former presidents Dwight D. Eisenhower and Gerald R. Ford. Marriott served as chairman of both of President Richard Nixon’s inaugural committees. At the time of his death in 1985 at the age of 84, Marriott’s original $6000 investment had grown into a conglomerate whose 140,000 employees operated 143 hotels and resorts, 1,400 restaurants, and 90 flight kitchens serving more than 150 airlines worldwide. President Ronald Reagan eulogized Marriott as “a living example of the American dream.” Total sales that year were $3.5 billion.
Willard J. Marriott.
Career Details J. Willard and Alice Marriott were newlyweds, recently transplanted from Utah, when they opened an A&W root beer stand in Washington, D.C., in 1927. They quickly noticed that soft drinks sold well during Washington’s long, hot summer, but that business needed a boost during the cooler months. For this reason, they added barbecued beef sandwiches, tacos, and tamales to the menu and renamed the restaurant “Hot Shoppe.” Alice did the cooking, using recipes she had acquired from the nearby Mexican Embassy, and Bill waited on tables. They boosted business by such marketing techniques as giving out free root beer coupons on street corners. In 1929, the restaurant was incorporated as Hot Shoppes, Inc., with three outlets. By 1932, Marriott had seven Hot Shoppes in the Washington area, including one with curbside service.
(UPI/Corbis-Bettmann.)
at a Washington airport carrying food on board from a nearby Hot Shoppe. In-Flite, as it was called, would eventually become the world’s largest airline catering business. The restriction on automobile travel during World War II was a setback for the Marriotts, but the postwar economic boom brought renewed prosperity to their food and catering businesses. In 1939, Marriott began serving food at the U.S. Treasury building, and the next year five new Hot Shoppe restaurants opened.
As Hot Shoppes evolved into a chain of restaurants along the highways from New York to Florida, the Marriotts maintained close family supervision of all facets of the business. For many years Alice served as company bookkeeper while Bill ran the business. In 1933, Marriott, who worked more than 15 hours every day, became gravely ill with a disease of the lymphatic system, but returned to work after a six-month period of recuperation. At this point, he realized that his company would thrive only if he could establish a strong management team. Calling upon his wife, his three brothers, and his two sons, he taught his new managers to run the business using his management strategy.
In 1953, Marriott’s first offering of stock sold out in less than two hours in an impressive round of confidence in the company. In 1957, another business segment made its debut when Marriott’s first hotel, the Twin Bridges Marriott Motor Hotel, opened in Arlington, Virginia, on U.S. Route 1, near the Pentagon and Washington National Airport. Bill Sr. had actually purchased the property for a new corporate office. When his executive vice president suggested it would be a perfect site for a hotel, Bill Sr. and Bill Jr. immediately agreed. At that time 125,000 cars were passing by the location on a daily basis, the Pentagon was nearby, and downtown Washington was only about five miles away. Plans for a 365room hotel were drawn up and on opening day, which coincided with President Eisenhower’s second inauguration, the entire family—Alice and Bill, Bill Jr., and Dick—stayed up all night hanging pictures and making sure everything was in perfect order.
During this time, Marriott launched a new service that catered boxed lunches to airlines. The idea for this service was prompted by his observation of passengers
As with the first Hot Shoppe, business at the first hotel was great during the spring and summer, but lagged during the rest of the year. To develop a year-round
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
5 1 7
J .
W i l l a r d
M a r r i o t t
porate name change to Marriott Corporation. In 1968 the company started the Roy Rogers, fast-food chain. Convention hotels were built in Boston, New York, and Anaheim, California. As airline travel grew, Marriott began to locate new hotels near airports.
Chronology: J. Willard Marriott 1900: Born in Marriott, Utah. 1926: Graduated from University of Utah. 1927: Married Alice Sheets; bought an A&W root beer franchise. 1929: Incorporated as Hot Shoppes, Inc. 1937: Began In-Flite catering service to airlines. 1953: Sold out first offering of stock to investors in less than two hours. 1957: Opened first hotel in Arlington, Virginia. 1964: Named son, J. Willard Marriott, Jr., company president.
The Marriotts always resisted unionization because they believed that their company would be much more flexible without union rules. They also believed they could offer better benefits to their employees. The company provided health insurance, retirement plans, generous profit sharing, a system of incentive bonuses, and training programs that supported the promote-fromwithin philosophy. Labor unions’ attempts to organize Marriott workers were unsuccessful during Bill Sr.’s lifetime. In 1972, Marriott transferred the post of chief executive officer to his son, J. Willard Marriott, Jr. Under the leadership of Bill Jr., Marriott entered the middle-priced hotel market, time-sharing in resort areas, and the luxury all-suite market, targeting extended-stay travelers. In the crowded, competitive lodging market, Marriott’s occupancy rates continued to be about 12 percent over the industry average.
1972: Retired. 1985: Died.
Social and Economic Impact stream of business, the Marriotts developed a marketing plan that targeted commercial businessmen and conventioneers. Until this time lodging options were limited to large inner-city hotels and hundreds of small mom-andpop motels. The Marriotts were able to fill a growing need for large hotels where professionals could congregate for meetings and banquets. The second Marriott hotel opened in 1959 at Key Bridge, also in Arlington, Virginia. The Marriotts always liked to be located next to bridges, figuring that highways may relocate but bridges never move. Every year, new hotels and new restaurants opened. In 1964, Marriott turned over the presidency of his growing corporation to his son, J. Willard Marriott, Jr. (“Bill”), but he remained actively involved as chief executive officer. Sales and profits had been steadily doubling every five years. Motivated by a desire to accelerate the pace of growth, Bill Jr. concentrated on the lodging segment of the business. Over the next six years, Marriott almost quadrupled in size, surpassing Howard Johnson and Hilton Hotels in both revenues and profits. Marriott’s hotels generally catered to upscale travelers and businessmen willing to pay extra for quality. Marriott became an international company in 1966, when it acquired an airline-catering kitchen in Caracas, Venezuela. In 1967, the 22-unit Big Boy restaurant chain was acquired. Also in 1967, shareholders approved a cor-
5 1 8
B u s i n e s s
Besides leaving a $3 billion business to his son, J. Willard Marriott passed on a rock-solid management system. His perfectionism led him to create detailed procedural manuals for all tasks within his empire. Bill Jr. described his father’s methods in his book The Spirit to Serve: “Almost from the start, my parents especially my father, launched the process of figuring out how to do something right and then writing it down. From washing windows to burnishing silverware, to arranging buffet tables and processing customers’ checks, no aspect of the workplace went untouched by my dad’s penchant for systemization.” Although the systems developed for the restaurants did not transfer to the hotel business, the method of systemization did. Bill Sr.’s 66 separate steps for cleaning a hotel room in less than half an hour is a sterling example of his attention to detail. Clear instructions like this helped Marriott employees deliver consistently superior service. This, in turn, gave customers confidence in the brand name. Another key to Marriott’s success was the ability to change. After a few unsuccessful attempts to expand through diversification, the Marriotts realized that their enthusiasm for innovation was far ahead of their ability to analyze possibilities and manage change. Bill Jr. describes this phase in Marriott’s development as very common among successful businesses: “acquiring for the sake of acquiring, launching new enterprises simply because they’ve got the money to give them a whirl.” When they realized they had fallen into this trap, they set up a strategic-planning department to analyze the possibilities.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J .
The result was two new businesses that were logical outgrowths of what Marriott’s did extremely well: distribution services and facilities management services. The next logical step was diversification within the lodging industry. The company introduced moderate-priced lodging with the Courtyard by Marriott, and economy-priced lodging with the Fairfield Inn. Senior living services and time-shared vacation lodging were also logical extensions of businesses in which Marriott already excelled. Bill Jr. is fond of recalling how one Marriott director was able to summarize the basic truth learned through the years of diversification: “‘No tree grows to the sky,’ he used to say, a warning that even the healthiest growth cannot go on forever. Nor can it continue at the fast pace that marks a sapling’s first few years. But by splitting the company into pieces — pruning and transplanting, if you will — we had given ourselves new room to grow.” In 1997, when Bill Jr.’s book was published, Marriott’s was the thirteenth largest employer in the United States, with 225,000 employees.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
W i l l a r d
M a r r i o t t
Sources of Information Contact at: Marriott International, Inc. 10400 Fernwood Rd. Bethesda, MD 20817 Business Phone: (301)380-3000 URL: http://www.marriott.com
Bibliography “J. Willard Marriott.” Contemporary Newsmakers. Detroit: Gale Research, 1986. “J(ohn) Willard Marriott.” Current Biography Yearbook. New York: H. W. Wilson Co., 1972. Kepos, Paula, ed. “Marriott Corporation.” International Directory of Company Histories. Detroit: St. James Press, 1991. Marriott, John Willard Jr., and Kathi Ann Brown. The Spirit to Serve: Marriott’s Way. New York: HarperBusiness, 1997. O’Brien, Robert. The J. Willard Marriott Story. Salt Lake City, UT: Deseret, 1977.
S t u d e n t s
5 1 9
Oscar Mayer (1859-1955) Oscar Mayer Foods
Overview Oscar Mayer Foods, now part of the Kraft General Foods empire, was founded in 1883 by a German immigrant named Oscar Ferdinand Mayer. His company grew rapidly because of the high quality of its meat products, and it was eventually able to expand far beyond its headquarters in Chicago, Illinois, thanks to innovative marketing strategies and packaging techniques. In the beginning, Oscar Mayer Foods had about 12 employees. But by 1955, the year its founder died, it employed more than 8,000 people and enjoyed annual sales of $225 million.
Personal Life Oscar F. Mayer was born in Württemberg, Germany, on March 29, 1859, the son of Ferdinand and Wilhelmina (Wagner) Mayer. His father, a master forester, died when Oscar was only 11 years old. As a result, he quit school and went to work for his cousin, John Schroll, a grocer in Munich, Germany. Three years later, in 1873, Mayer immigrated to the United States with the Schroll family, settling first in Detroit and then moving to Chicago. In both cities, the teenager continued working in small retail butcher shops before obtaining a job in 1877 with Armour & Co., the large meat-packing firm. The six years he spent there taught him much about the business, and in 1883 he left to open up his own meat market in a Chicago neighborhood that was home to many German immigrants. After his butcher shop was well established, Mayer returned to Munich in 1887 to marry Louise Greiner.
5 2 0
O s c a r
M a y e r
They made their home in Chicago (Mayer eventually became a naturalized U.S. citizen) and had five children: one son and four daughters. In addition to his business interests, Oscar Mayer served for many years as treasurer of the Forest Preserve District of Cook County, which was responsible for acquiring and maintaining natural wooded areas for recreational uses. Hunting and fishing were, in fact, among his favorite pastimes. In 1928 Mayer retired as president of Oscar Mayer Foods. However, he remained active in the company as chairman of the board until just a few weeks before his death in 1955 at the age of 95. Although he became a millionaire early in his career, Mayer could never quite distance himself completely from his humble roots as a friendly neighborhood merchant. This became obvious during the Depression of the 1930s, when he ordered his factory to make a certain number of sausages that he distributed free to people who lined up every day outside his office.
Career Details
Oscar F. Mayer.
Almost from the time he first set foot in the United States, Mayer dreamed of starting his own business. As a young man in his early twenties, he wrote home suggesting that his brother Gottfried learn the art of sausage making. Gottfried followed his advice and in 1883 arrived in Chicago, ready to help Oscar fulfill his dream. The two brothers then bought the failing Kolling Meat Market on the north side of the city and leased the building from the former owner. The Mayers’ first challenge was to overcome Kolling’s bad reputation in the neighborhood. This they did by turning out high- quality sausages, including house specialties such as liverwurst, bockwurst, and weiswurst, that quickly became favorites among their German-born customers. Within a year, the shop was turning a profit. Five years later, its continuing success prompted the envious former owner of Kolling’s to refuse to renew the Mayers’ lease on the building. Instead, he announced that he would resume control of the firm himself. What he had not counted on, however, was Oscar Mayer’s determination. Having worked very hard to establish his business, the young entrepreneur was not about to let anyone take it away without a fight. Mayer borrowed $10,000 and purchased a piece of property only two blocks away, close enough to continue serving his faithful clientele. He then built his own building and set up shop again in 1888.
(AP/Wide World Photos, Inc.)
had expanded well beyond the immediate neighborhood. By the early 1890s, Mayer was able to buy a glasspaneled, horse-drawn wagon to deliver sausages to grocery stores and other retail outlets throughout the city, primarily in areas with large German populations. Ever mindful of how his former landlord had tried to capitalize on his reputation, Mayer tried to thwart imitators by developing recognizable brand names (such as “Edelweiss”) for his sausages, bacon, and hams. This was virtually unheard of at the time, but it allowed shoppers to ask for Oscar Mayer products by name and thus enabled the company to expand into new markets. By 1904, Mayer employed eight salesmen who serviced more than 280 grocery stores in northern Illinois and parts of southern Wisconsin. He built up goodwill for his products by running advertisements in community newspapers and sponsoring German “oompah-pah bands” that played at picnics and holiday parades.
With Gottfried in charge of production and another Mayerbrother, Max (a recent arrival from Germany), serving as bookkeeper, the business—by then known as Oscar F. Mayer & Brother—proceeded to grow even more. Soon it became apparent that their customer base
The company experienced significant changes after Mayer’s son, Oscar Gottfried Mayer, joined the firm on a full-time basis following his graduation from Harvard University in 1909. Over the next few years, every phase of the operation was subjected to intense scrutiny as Oscar Gottfried applied the latest industrial engineering techniques to improve efficiency. He invented a lard-tub washer and a casing flusher, introduced cardboard cartons for packaging sausages, and instituted many improvements in handling and shipping methods. In addition, production was decentralized into different departments, and by 1912 a Ford Model T automobile
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
5 2 1
O s c a r
M a y e r
Chronology: Oscar Mayer 1873: Emigrated to United States from Germany. 1883: Bought a small butcher shop and sausagemaking business in Chicago. 1888: Built his own facility and proceeded to expand sales throughout the city. 1909: Joined in business by son, Oscar Gottfried Mayer. 1913: Posted $2.7 million in sales. 1915: Began to advertise. 1919: Purchased a second plant in Madison, Wisconsin. 1924: Introduced sliced bacon in a see-through plastic package. 1936: Little Oscar in his Weinermobile became the company’s goodwill ambassador. 1955: Died.
had replaced the horse-drawn wagon on one of the company’s 20 sales routes. By 1918 sales at Oscar Mayer had grown to $11 million. About a third of that total represented government purchases for troops fighting in World War I. That same year the Edelweiss brand name was discontinued and replaced by “Oscar Mayer Approved Meat, Products.” The company underwent a major expansion in 1919 when it acquired a farmer’s co-op meat-packing plant in Madison, Wisconsin. This gave Mayer a reliable source of beef and pork for his Chicago plant. Sales soon tripled, and before long production at the Madison facility (which subsequently became corporate headquarters for the newly renamed Oscar Mayer & Co.) surpassed the home plant in Chicago. Over the next few decades, Oscar Mayer continued its reign as an innovator both in terms of product and marketing. In 1924, for example, it introduced sliced bacon in a see-through plastic package. To create a national preference for their products, the Mayers also began devoting a greater percentage of the company budget to advertising. They dropped the old-fashioned oompah-pah bands in favor of a more sophisticated approach, including putting a bright yellow band bearing the Oscar Mayer
5 2 2
B u s i n e s s
brand name on every fourth hot dog produced. And in 1936 they introduced a chef character named Little Oscar who acted as a goodwill ambassador for the company at store openings, children’s hospitals, and other venues. Little Oscar and his Wienermobile, a vehicle shaped like a hot dog, appeared in many of the company’s advertisements and played a major role in making the Oscar Mayer name a household word. Despite such efforts, however, sales went into a slump during the Depression of the 1930s. One of the few bright spots occurred in 1936, when a member of the third generation of Mayers entered the family business. Oscar Gustave Mayer, the son of Oscar Gottfried, joined the firm after graduating from Cornell Universityand attending Harvard Graduate School of Business Administration. The market for meat products began to expand once again when the United States became involved in World War II. Oscar Mayer provided the armed forces with much-needed supplies using new processing methods that allowed for the canning of meats. Throughout the rest of the 1940s and into the early 1950s, the company launched a series of technological improvements in the areas of packaging and distribution. The first of these debuted in 1944. Known as the Kartridg-Pak, it automatically banded hot dogs together in bunches. Five years later a tube machine was invented that encased liverwurst in “chub-sized” plastic tubes. The year 1950 marked the development of the Slice-Pak, which vacuum-packed sliced meat in plastic packages. A stripping machine created in 1953 removed the cooking cases from sausages and made possible the sale of skinless links. Oscar Mayer leased the rights to all of these innovations to competing meat packers, which is one reason the company has consistently been among the most profitable firms in the meat-packing industry. The 1950s and 1960s were boom years for Oscar Mayer in other ways as well. In 1951 the company purchased a meat-packing plant in Los Angeles, giving it a coast-to-coast presence for the first time in its history. During the early 1960s, it entered the international market when it acquired a Venezuelan meat processor. And in 1963 the famous “Wiener Jingle” made its debut. The catchy tune, which began with the words, “Oh, I wish I were an Oscar Mayer wiener, that is what I’d truly like to be,” became one of the longest-running and most popular jingles in advertising history. It helped sales top the $1 billion mark by 1975. In 1981 Oscar Mayer was bought by General Foods Corporation, and its name was changed to Oscar Mayer Foods Corporation. As an increasingly health-conscious public began to shun fatty meat products containing preservatives, the company countered by introducing a variety of low-fat and low-sodium products. Thus, a large share of the meat that finds its way into America’s lunchboxes still carries the name of Oscar Mayer.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
O s c a r
Social and Economic Impact
M a y e r
Sources of Information
Oscar F. Mayer was an innovator in a segment of the food market that was largely untouched by modern marketing and packaging techniques until he came along. He developed brand identification for meat products as well as distinctive packaging that enabled the consumer to identify Oscar Mayer sausages, cold cuts, and hot dogs at a glance. In addition, the technological improvements he encouraged resulted in greater efficiency and increased profits. Not only did they boost sales, they also led to lucrative deals with competitors who were eager to lease rights to the company’s new inventions.
Contact at: Oscar Mayer Foods 910 Mayer Ave. Madison, WI 53704 Business Phone: (608)241-3311 URL: http://www.kraftfoods.com/oscarmayer/home/index.html
Bibliography Fucini, Joseph, and Suzy Fucini. Entrepreneurs. Boston: G.K. Hall & Co., 1985. Grant, Tina, ed. International Directory of Company Histories. Detroit: St. James Press, 1996.
While advertising and promotion were key to making Oscar Mayer products successful nationally and then internationally, they were not the only reasons. Under the leadership of Oscar Ferdinand Mayer as well as his son and grandson, quality was also a deciding factor. It is what has prompted consumers to keep looking for the Oscar Mayer brand by name.
Ingham, John N. Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood Press, 1983.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
“Oscar Ferdinand Mayer.” The National Cyclopaedia of American Biography. New York: James T. White & Co., 1962. Oscar Mayer Foods. “An Interactive History of the Wienermobile.” Madison, WI: Oscar Mayer Foods, 1998. Available from http:// www.oscar-mayer.com/wienermobile/history.html (June 2, 1998).
5 2 3
Cyrus McCormick (1809-1884) International Harvester Company
Overview Despite having had little formal education, Cyrus McCormick was the inventor of the first successful reaper, which ultimately revolutionized farming not only in America but throughout the world. He started American Harvester, which became an international company, and in his later years, he was known as a philanthropist and a generous contributor to the Presbyterian Church.
Personal Life McCormick was born on February 15, 1809 at “Walnut Grove,” a 1,200-acre family farm located in rural Virginia. He was the son of Robert McCormick, a farmer, an inventor of farm machinery, and a whiskey distiller, and Mary Ann Hall. Robert McCormick’s inventions included hydraulic machinery and reapers, but he was never successful at selling any of his inventions commercially. Although McCormick received very little formal education, he began working on the farm alongside his father and tinkering with the farm tools and machinery. As a young man, McCormick became interested in politics. He was a loyal Democrat and avid defender of slavery. He viewed Abraham Lincoln’s election to the Presidency as a disaster, and traveled North in the late 1840s where he would ultimately purchase the Chicago Times. The paper would serve as a forum for his proSouthern ideas. In 1858, McCormick married Nancy Maria Fowler, whom he met when he first moved to Chicago. He was 49 years old at the time and 26 years her senior. She
5 2 4
C y r u s
M c C o r m i c k
served as McCormick’s secretary, helping him formulate his business plans and offering encouragement to her husband throughout his career. She shared her husband’s politics and became a significant benefactor to the Democratic Party. In all, the couple had seven children, including Cyrus Jr., Harold Fowler, and Robert. McCormick devoted the last quarter of his life to religion—specifically the Presbyterian Church—and to building his large industrial empire. In 1859, he endowed four professorships at the Presbyterian Theological Seminary of the Northwest; 27 years later, the school was renamed McCormick Theological Seminary. He also kept his hand in publishing, purchasing another newspaper, the Interior,in 1872. That paper, renamed the Continent, would later become a leading Presbyterian paper in the country. McCormick’s political passions, which had stirred in him since he was young, continued to be an important factor in his life. In 1860 and 1861, he tried to get the North to make a number of concessions to the South, often using his Chicago paper to promote his ideas. Residents disliked McCormick’s views and his biased paper and he became very unpopular in his adopted city. For the next two years, the McCormicks traveled abroad, spending very little time in Chicago. In 1864, McCormick ran for a Democratic seat in Congress, on a platform to stop the war, but he was soundly defeated. Up until the very end of the Civil War, in fact, McCormick continued to believe the South was undefeatable. Ironically, his reaper contributed, in part, to the triumph of the North. Beginning in 1872, McCormick served a four-year term on the Central Committee of the Democratic party in Illinois. After the war ended, he was one of the founding organizers of the Mississippi Valley Society, which promoted the use of New Orleans and Mississippi ports for European trade. In addition, he tried to secure support to annex Santa Domingo into the United States. McCormick died in 1884.
Career Details In 1831, McCormick invented a hillside plow and was able to secure a patent for his invention. That same year, he invented the reaper for which he would become famous. While he was satisfied with the essential design of the reaper, McCormick continued to modify his invention for the next two years, even as he worked on other projects.
Cyrus H. McCormick, Jr.
(The Library of Congress.)
McCormick, however, still was not entirely satisfied with his reaper and continued to make improvements on it over the next few years. He was living on a 500-acre tract of farmland his father had given him in 1835 and was producing a small number of reapers in his father’s workshop. McCormick would display his reapers on nearby Virginia farms. This managed to get the attention of several area newspapers, including the Farmer’s Register and the Lexington Union. In 1836, McCormick and his father purchased an ironworks factory which ultimately bankrupted them both. It took them each almost seven years to turn around this financial setback. By this time, McCormick had decided to have his reapers manufactured near the larger, more productive and lucrative farms in the Northeast and Midwest. He authorized licensees in several towns, including Brockport, New York and Cincinnati, Ohio, to manufacture his invention. Unfortunately, though, it was impossible for McCormick to oversee these operations. His licensees began producing inferior reapers, which threatened the reputation of the McCormick reaper.
It was competition which spurred McCormick to seek a patent for his reaper. In 1833, Obed Hussey announced his invention of a reaper similar to McCormick’s. McCormick informed Hussey of his machine, which predated Hussey’s, and he sought and received a patent on June 21, 1834.
McCormick took control, revoking his contracts and deciding to manufacture all of his reapers at a central facility. He picked Chicago, which was then a relatively insignificant lake town. The factory was built in 1847, but by the next year, McCormick was unable to get the reaper’s patent renewed. He continued to improve his invention through innovations and spread word of the reaper through marketing. By 1950, the business was a success; McCormick had essentially secured the reaper
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
5 2 5
C y r u s
M c C o r m i c k
offices across the country, six offices in Canada and a small office abroad.
Chronology: Cyrus McCormick 1809: Born. 1831: Invented hillside plow and reaper. 1834: Secured patent for reaper. 1847: Built reaper factory in Chicago. 1884: Died.
market, despite the competition of more than 30 others, including his first rival, Hussey. Hussey and McCormick would put their rival reapers against each other in a well-publicized contest in 1851 at the London Crystal Palace Exhibition. The Virginia McCormick Reaper handily beat its competitor, prompting the London Times to write that, “the reaping machine from the United States is the most valuable contribution from abroad, to the stock of our previous knowledge, that we have yet discovered.” While the contest was a boost for the reaper, it was McCormick’s business savvy which finally secured his success. Not unlike other manufacturers, McCormick hired distributors, who in turn hired salespeople, for the actual transactions. McCormick kept a close eye on his distributors, through correspondence and by using what he called “traveling agents.” McCormick also continued to refine and reorganize his manufacturing operations. He instituted a system of mass production in the factory and also incorporated as much automation as he could. This all increased production. For example, from 1879 to 1886, the number of machines produced each year almost doubled, from about 13,000 in 1879 to over 25,000 in 1886. Within the next five years, production tripled. As production increased, McCormick continuously refined his business organization to meet the demand. By 1885, McCormick was buying sawmills in the South, so the company would have enough wood. The office itself was centralized, purchasing was systematized, and a shipping department was formed to oversee all purchases. In addition, McCormick began hiring canvassers in the 1890s which would provide back-up to and reinforcement for the dealers. The dealers themselves were paid on a commission basis to increase their productivity incentives. By the early 1900s, McCormick had 65 regional
5 2 6
B u s i n e s s
Despite the reaper’s success at the London Exhibition, European farmers were not quick to embrace this new invention. The machine, though, did garner a lot of awards, which subsequently boosted the reaper’s sale in the United States. After the financial depression of 1893, as sales in the United States began to dry up, McCormick and others began to focus more of their attention on foreign markets unaffected by the financial upheaval. McCormick also continued to improve his reaper. In the early 1860s, however, the actual modification work was done by firm mechanics, rather than McCormick himself. In fact, the inventor spent much of his time in court, successfully battling competitors. He also turned his attention to the much-neglected South. As McCormick had anticipated, his reaper was used primarily in the Midwest; the South and the Northeast remained unmechanized for years, even after the Civil War. In fact, in the New England states, innovative farming techniques were not widely adopted until early in the 20th Century. While McCormick was the principle motivator and inspiration behind the company’s expansion and innovation, he did receive invaluable assistance from his family members. For one thing, his wife, Nettie Fowler, proved to be an astute businesswoman, as well as a morale booster. It was she who encouraged McCormick to persist with the business in 1871, after the Chicago plant was destroyed by fire. She also suggested many of the corporate and administrative innovations McCormick put into practice, and she traveled with her husband on his marketing trips to Europe. McCormick’s brother, Leander McCormick, headed the factory operations; brother William McCormick handled business operations. Initially, the brothers worked on salary, but in 1859, both of them became partners. Twenty years later, the business was incorporated as McCormick Harvesting Machine Company; Cyrus McCormick retained his position as corporate president until his death in 1884. After McCormick’s death, his wife took over the business, before finally devoting herself solely to philanthropic interests—the Democratic party, and the church—which she and her late husband had shared. It was her efforts which ultimately brought about the formation of the International Harvester Company.
Social and Economic Impact In the 1800s, farming in the United States was largely done by hand, with animals assisting in plowing, breaking up the soil, and transporting crops. Farming was a seasonal occupation; it was also labor-intensive. A number of people sought ways to revolutionize the process, bringing machine-age developments into the farming industry. Cyrus McCormick’s father, Robert, fo-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
C y r u s
cused a lot of his inventive energy on this, but it would be Cyrus himself who would ultimately create a reaper so revolutionary and efficient that its central components continue to be used in modern-day equipment. The McCormick reaper would have a profound impact on the American economy, and it would go a long way toward shaping the history of the time. The reaper enabled the crops to be cut and harvested in much less time and by using fewer workers. Farmers’ costs were reduced, and their yields increased significantly. In addition, workers were free to leave their jobs as farmhands, and many went West, to help build in that flourishing region. One event changed by the invention of the reaper was the duration and ultimate outcome of the Civil War. Ironically, the thing which became McCormick’s legacy contributed, in part, to the defeat of his beloved and, as he thought, unconquerable Southern homeland. The reaper helped the North maintain a larger military front while still being able to export grains to Europe and feed the military. The South, without this machinery, saw their farms suffer, which impacted the regional economy while the war was going on.
M c C o r m i c k
for the dealers and also for credit and collection. In addition to managers, these offices also had mechanics, trained to work on McCormick products. They could not only repair the machines, but they could also assemble them when they first arrived from the factory, and they could provide product demonstrations for interested customers. The entire regional staff provided back-up to the sales force. This decentralization increased sales, which McCormick further augmented through his manufacturing innovations. These included factory mass production and continuing automation. Finally, McCormick left a significant corporate legacy, which ultimately resulted in the creation of the International Harvester Company.
Sources of Information Bibliography Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood Press, 1983. Dictionary of American Biography. New York: Greenwood Press, 1986.
McCormick’s business acumen distinguished him almost as significantly as did his inventions. As his business grew, he realized he needed a stronger sales force, with a clear organizational plan. As part of his reorganization, McCormick created a number of regional offices. Each was supervised by a manager who was responsible
Duffy, Bruce. “Harvest of Stubbornness.” D&B Reports, MayJune 1993.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Byers, Paula K., and Suzanne Bourgoin, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1997.
5 2 7
Mac McDonald Dick McDonald (1902-1971) (1909-1998) McDonald’s Corporation
Overview Richard and Maurice McDonald, pioneers in the fast-food industry, were the first to use assembly-line efficiency in a restaurant kitchen. Their self-serve menu, under the golden McDonald arches, has transformed the eating habits of people all over the world.
Personal Life In 1929, shortly after they graduated from high school, Maurice “Mac” and Richard “Dick” McDonald left their native New Hampshire for California. Attracted by the motion picture industry, their first jobs were as stage hands. Their first business was a small movie theater in a rented building in Glendora, California, on the east side of Los Angeles. Four years later, they still had not turned a profit, so they began to look around for a business that might be more lucrative. In 1940 the brothers opened a drive-in hotdog stand in Pasadena, but shut it down to open a larger carhop drive-in with a barbecue pit on the corner of 14th and E streets in San Bernardino (50 miles east of Los Angeles). Within five years, with sales of $200,000 per year, they were among the richest families in town. Dick and his wife, with the single Mac, lived in a 25-room mansion with a view. Every year, they bought three brand new Cadillacs. With an annual income of more than $100,000 between them, they were content. In 1954 the McDonald brothers turned over the franchising rights of McDonald’s to Ray Kroc. In return, they received onehalf percent of the gross income until they were totally
5 2 8
M a c
M c D o n a l d
D i c k
M c D o n a l d
bought out by Kroc in 1961. In 1970 they sold their mansion and the lot at 14th and E, and moved back to New Hampshire.
Career Details After World War II, drive-in restaurants with carhops were a growing phenomenon, especially in southern California. The McDonald’s carhop drive-in could easily serve 125 cars at a time, offering a menu that included barbecued pork and beef sandwiches, barbecued ribs, and hamburgers. Despite their prosperity, the McDonald brothers were not happy. According to John F. Love, “The brothers longed for a less complicated operation without the annoyances of unreliable carhops and the leather-jacketed customers they attracted.” In 1948 the McDonalds closed their drive-in for three months in order to streamline the operation. The new menu was very simple: hamburgers and cheeseburgers (which had been 80 percent of their business), french fries, shakes, soft drinks, and apple pies. The remodeled building, shaped like an octagon, had only 600 square feet. There were no tables to sit at, no jukebox, no cigarette vending machines, no payphones, no newsstands, and no carhops. As a result, the McDonalds succeeded in discouraging teenagers from patronizing their business. Perhaps the most impressive aspect of the restaurant was the efficiency with which the food was prepared. Specially designed equipment included two 6-foot grills, stainless steel lazy susans, spatulas suited for volume flipping, and a stainless steel pump dispenser for squeezing a premeasured portion of ketchup and mustard evenly onto each bun. The tasks of the kitchen crew were broken down into clearly defined steps which untrained cooks could follow. The savings in preparation time allowed the McDonalds to lower the price of a hamburger from $.30 to $.15. A bag of french fries was $.10, a cup of coffee was $.05. Since all hamburgers were prepared with the same condiments, they could be prepared before they were ordered and kept warm along with the fries under infrared lamps. Orders could now be filled in 15 seconds. Children pressed their noses up against the glass windows to see the commercial kitchen while their parents were reassured that although the food was inexpensive, the kitchen was spotless, and the hamburger was fresh. For the first time, working class families could afford to eat out. Three years after their conversion to fast food outlet, the McDonald brothers were grossing $277,000 per year.
Chronology: Mac McDonald Dick McDonald 1929: Brothers left New Hampshire for California. 1940: Opened drive-in hotdog stand in Pasadena, California. 1943: Opened drive-in carhop in San Bernardino, California. 1945: Lived in a mansion and had three Cadillacs. 1948: Closed the carhop and reopened it as a fast-food restaurant without tables. 1951: Enjoyed a 40 percent rise in profits. 1954: Licensed the McDonald’s name, architecture, and efficient kitchen system to entrepreneur Ray Kroc. 1961: Bought out by Kroc for $2.7 million. 1970: Returned to New Hampshire. 1971: Mac McDonald died. 1984: The 50 billionth McDonald’s hamburger was served to Dick McDonald. 1998: Dick McDonald died at age 89.
outlets. Dick and Mac sold a few franchises, and for the first licensee, they designed a rectangular building with a red-and-white tiled front, a roof that slanted downward from front to back, and solid glass from counter to roof. The architect, Stanley Meston, refused to add what the McDonald brothers really wanted: two enormous arches, one on each side of the building. George Dexter, a sign maker, was hired to add the bright yellow arches with neon lighting.
The unique automation of McDonald’s and its high level of profitability received some press coverage which in turn brought numerous visitors. Many who toured the San Bernardino operation opened imitations in various parts of southern California. Glen Bell, a telephone repairman, was a regular customer whose Taco Bell restaurant grew into an international chain of more than 10,000
In 1954 Ray Kroc, a seller of milkshake machines, learned that the McDonald brothers were using eight of his Multimixers in their San Bernardino restaurant. When the brothers ordered two more Multimixers, Kroc decided the time had come to see the operation in person. By this time, the McDonald brothers were grossing $350,000 per year and had sold 15 franchises. Two days of observation, along with a formal tour and long conversations with the proprietors, were enough to convince Kroc that the McDonald formula was a ticket to success. When Kroc suggested that they increase their effort to franchise their efficiency system, he envisioned each new McDonald’s restaurant with eight Multimixers. Upon further reflec-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
5 2 9
M a c
M c D o n a l d
D i c k
M c D o n a l d
tion, though, he began to see the real potential behind the franchises. Selling hundreds of $.15 hamburgers every day was a lot better than selling one $150 milk shake mixer every 10 years.
Kroc the asking price was $2.7 million. Although he was already deeply in debt, Kroc successfully negotiated a loan; the interest he ultimately paid brought the cost up to $14 million.
Kroc continued to pester the McDonald brothers regarding expansion. When they said they liked it fine in San Bernardino and had no desire to scout out new locations or hire managers for these outlets, Kroc said he would do it. He would do everything and just send them a check every month. Kroc’s persistence paid off: the brothers started to talk numbers. Kroc suggested the parent company take two percent of gross sales of any franchised outlet. Until this time, the brothers had merely sold their name and their “speedy service system” for a one-time fee of $1,000. The McDonalds said this was too high, and insisted on 1.9 percent, of which Kroc would get 1.4 percent and the brothers would get 0.5 percent. Kroc successfully negotiated a 10-year contract which gave him the right to set up McDonald’s restaurants throughout the country, except in a handful of territories in California and Arizona already licensed by the McDonald brothers.
Kroc’s takeover set the stage for the rapid expansion of the chain throughout the United States and the world. Unfortunately, when the history of McDonald’s began to be recorded, Ray Kroc’s version took precedence. His outlet in Des Plaines, described as the “original” McDonald’s, was turned into a museum. If the brothers were mentioned at all, it was only as someone who contributed the name. John F. Love quotes a letter written in 1983 by Dick McDonald to corporate headquarters: “Over the years, I have received letters and phone calls from television stations, radio stations, authors, reporters, et cetera, and they all told me the same story. It seems that if they contact your company in Oak Brook regarding my present address, they have been told that the company has no idea where I live or if I am even alive. On several occasions they have been told that there really was never a McDonald. They were told that McDonald’s was only a fictitious name that was chosen because it was easy to remember.”
Kroc’s first McDonald’s restaurant opened in Des Plaines, Illinois, near Chicago, on April 15, 1955. Adapting the McDonald’s building design to a cold climate was easy enough, but according to their contract Kroc was not supposed to make any changes without written permission from the brothers. The brothers gave verbal approval for the addition of a furnace, basement, and winter enclosure around the ordering area so customers would be sheltered from the winter winds. Since the contract required written approval and the brothers refused to put anything in writing, Kroc’s apprehensiveness grew.
5 3 0
In an effort to set the record straight, the company welcomed Dick McDonald back into the fold (Mac had died in 1971). In a widely covered 1984 media event, Ed Rensi, then president of McDonald’s USA, cooked the company’s 50 billionth hamburger at the Grand Hyatt in New York City and served it to Dick McDonald. Ray Kroc had died earlier that year.
Social and Economic Impact
Kroc’s Des Plaines restaurant grossed $158,000 the first year, plus now he had a showplace to use in his effort to sell franchises for his McDonald’s chain. All sales were made on the condition that owners manage their restaurants and strictly follow the automated system of food preparation spelled out by the McDonald brothers. Kroc’s chain grew slowly at first, but within four years he had a hundred outlets. As he passed the six-year mark of his 10-year contract with the McDonald brothers, Kroc began to fear that his growing chain would be taken away when the contract expired. He had also come to realize that his profit, after the expense of managing the chain, netted him a lot less money than the McDonald brothers’ one-half percent.
As the world’s largest quick-service restaurant organization, McDonald’s contributed to a dramatic change in Americans’ eating habits. Mac and Dick McDonald refined their kitchen production techniques so they could sell prepared food quickly, through a counter window, without using plates: quick service, self service, and paper service. This had never been done before and totally revolutionized the food service industry. In addition to speed, their efficient restaurant was a model of cleanliness that is still followed by McDonald’s stores today. The McDonald brothers also brought families and children to fast-food restaurants. Today, special kids’ meals with prizes and intense movie promotions suggest that the market that they introduced continues to be an important one.
With 228 outlets and gross sales of $37.8 million since signing the contract, Kroc’s share amounted to $718,200. Of this, $189,000 had gone to the McDonalds. In 1960 Kroc’s net profit after expenses was $77,000, $23,000 less than the McDonald brothers’ profit at its San Bernardino outlet alone. Kroc was bothered by the financial inequity of the agreement, but he also wanted complete control of the operation. In 1961 Kroc offered to buy out the McDonald’s for half a million dollars. Dick and Mac considered the offer for a long time, then told
The rapid growth of the McDonald’s chain shows how quickly a brand can become popular. A mere 20 years after the McDonald brothers perfected their fast food system, the name “McDonald’s” was known throughout the world. The success of McDonald’s also shows that the less tangible entrepreneurship can be more influential than a product. Hamburgers weren’t new; rather, the way hamburgers were made and sold was new. Though Ray Kroc built McDonald’s national and international presence, it was the McDonald brothers who
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
M a c
started it; and because they insisted that their restaurant be surrounded by the golden arches, a symbol that is recognized worldwide was created.
M c D o n a l d
D i c k
M c D o n a l d
Bibliography Boas, Max, and Steve Chain. Big Mac: The Unauthorized Story of McDonald’s. New York: New American Library, 1976. Kepos, Paula, ed. International Directory of Company Histories. Detroit: St. James Press, 1993.
Sources of Information
Kroc, Ray. Grinding It Out: The Making of McDonald’s. Chicago: Henry Regnery, 1977.
Contact at: McDonald’s Corporation McDonald’s Plz. Oak Brook, IL 60523 Business Phone: (630)623-3000 URL: http://www.mcdonalds.com
Mattera, Philip. World Class Business: A Guide to the 100 Most Powerful Global Corporations. New York: Henry Holt, 1992.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
5 3 1
Scott McNealy (1954-) Sun Microsystems, Inc.
Overview Scott McNealy is the energetic chief executive officer (CEO) of Sun Microsystems and a champion of alternative computer technology. He specializes in network computers (NCs) as opposed to personal computers (PCs) and hopes that his own Java software will succeed in breaking the near-monopoly of the Windows operating system.
Personal Life Scott McNealy was born on November 13, 1954, to Marmalee Doris (Noffke) and Raymond McNealy. He grew up in the Detroit suburb of Bloomfield Hills with his two brothers and a sister, while his father worked as an executive for American Motors Corporation (AMC) and then the Chrysler Corporation. His father, who rose to become the vice-chairman of AMC, often engaged his teenage son in discussions about business. He even took him golfing with Chrysler chairman Lee Iacocca. Although McNealy has an impressive educational background, he was not a model student. After attending Cranbrook Kingswood, a private preparatory school where he served as captain of the tennis team, he earned a degree in economics from Harvard University in 1976. But his initial applications to the graduate business schools at both Harvard and Stanford were met with rejection. Finally, McNealy was admitted to Stanford on his third try. A manufacturing major, he received his Master’s in Business Administration (MBA) in 1980 and helped found Sun Microsystems a mere two years later.
5 3 2
S c o t t
M c N e a l y
Scott McNealy jokes with the audience prior to speaking at the Java Internet Business Expo in New York, on August 26, 1997, about the coordination of “Java”, a universal language for developing software that works on any computer system. (AP Photo/Doug Kanter.)
Known as brash, fun-loving, and extremely energetic, McNealy enjoys creating catch phrases to explain his business philosophy (“have lunch or be lunch”) and strategies (“the network is the computer”). His motto, “kick butt and have fun,” sums up his general approach to work. In fact, humor is an important part of Sun’s corporate culture; for example, elaborate April Fool’s day pranks have become a tradition, with company engineers targeting McNealy and other executives. McNealy and his wife, Susan, married in 1994 and have a son named Maverick who was born in 1995. Even though he could easily afford more expensive fare (his personal income was estimated at around $1.2 million in 1994), he says that his favorite meal is a double cheese pizza with Bud Light beer. His hobbies include playing golf and hockey.
Career Details While awaiting acceptance to graduate school, McNealy took a job as a foreman and plant scheduler for Rockwell International at a plastics facility in Ashtabula, Ohio, that produced truck hoods for the company’s automotive operations. Anticipating a labor strike, Rockwell officials ordered its employees to work double shifts in order to maintain production. McNealy contracted he-
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
patitis two months into the accelerated schedule and was hospitalized for six weeks. In the meantime, he was admitted to Stanford, prompting him to quit his job and head for California. McNealy’s first job after receiving his MBA was at a tank manufacturing facility owned by FMC Corp of Chicago, Illinois. However, he resigned from his position 10 months later. As he later told a reporter for Fortune magazine, “FMC put me on a strategy team, and I wanted to be a plant manager. I wanted to make something.” In 1981, McNealy was hired as the director of manufacturing for Onyx Systems, a minicomputer company based in San Jose, California. Assigned to improve quality control, he achieved this goal by meeting with employees, talking over the problems they faced, and encouraging them to solve them on their own. Yet he was not quite satisfied with the way his career was unfolding. While his passion for manufacturing had not waned, his commitment to the demands of corporate life was not as strong. In fact, as he once revealed in Industry Week, McNealy dreamed of owning a small machine shop. “If it all worked out,” he went on to explain, “I figured my kids would run it someday and I’d get out when I was 45 or 50 years old and play golf.” McNealy’s plans underwent a sudden and dramatic change, however, when a former Stanford classmate and
S t u d e n t s
5 3 3
S c o t t
M c N e a l y
Chronology: Scott McNealy 1954: Born. 1976: Received degree in economics from Harvard. 1980: Received MBA from Stanford. 1982: Cofounded Sun Microsystems, Inc. 1984: Became president of Sun Microsystems, Inc. 1984: Became CEO of Sun Microsystems, Inc. 1995: Unveiled Java computer language.
engineer named Vinod Khosla invited him to become involved in a new computer company he planned to establish. (The other two partners in the endeavor were product designer Andreas V. Bechtolsheim, also a Stanford graduate, and programmer William N. Joy, a former student at the University of California in Berkeley.) The creation of Sun Microsystems, Inc., in 1982 would soon catapult McNealy into the ranks of an elite group Forbes magazine later dubbed “high tech’s new royalty.” Although he knew very little about computers, McNealy accepted his friend’s offer and went to work as Sun Microsystem’s head of manufacturing. He proved to be highly skilled at his new job, enabling the company to meet the explosive demand for its products that caused sales to grow from $9 million in 1983 to $39 million in 1984. Soon McNealy was also running the sales department and actively seeking funds to help the operation expand. In 1984, Eastman Kodak Co. agreed to invest $20 million in the company if McNealy were made president. Around the same time, Khosla left Sun and McNealy was named president on a temporary basis. Within a few months, the company’s fortunes took off and McNealy, at the age of 30, was named Sun’s CEO. Although he had often vowed never to fall victim to the expectations that had claimed so much of his father’s time, McNealy quickly found himself working 80-hour weeks. “I’ll never know my kids as well as most people...,” he remarked to a Business Week reporter. “But I’ve also got 15,000 people and $7 billion worth of market value counting on me.” As if to underscore his love for his job, he added, “I just wish I didn’t have to sleep.” Under McNealy’s leadership, Sun has made its name manufacturing computer workstations of the type tradi-
5 3 4
B u s i n e s s
tionally favored by sophisticated users such as engineers and scientists. When such computers are linked by a network, their resources are multiplied geometrically, making them more powerful than individual PCs or terminals served by a mainframe computer. McNealy’s commitment to network computing really paid off during the 1990s as major business clients turned to the format in increasing numbers. Among the firms Sun supplied with networks for their internal operations were Federal Express, the Gap, AT&T, Universal Card Services, and Charles Schwab. Network computing has proven to be an important Internet tool as well; in 1996, for example, some 35 percent of World Wide Web servers were Sun machines. (Servers are the machines on which companies tend to install all of the software that run their business.) They have proven to be more reliable, versatile, and powerful than those run by software developed by Sun’s competitors, chiefly Microsoft. In addition, Sun has created two other important products that cater to the needs of Internet users and large businesses. The first and most revolutionary one was Java, a computer language that enables all networked computers to communicate with each other and share applications, regardless of which operating systems they may be using. Unveiled in 1995, Java created quite a stir in the computer industry as enthusiastic programmers contemplated being able to write software that can flow from machine to machine along a network. Furthermore, Sun engineers demonstrated that Java miniprograms (or “applets,” as they are called) could jazz up web pages by making it possible to add motion to words and images. Java thus has the potential to generate revenues for Sun in several ways—as a licensed language, as the language used in Sun-authored programs, and as its own operating system. Sun was also one of the first computer companies to offer a network computer (NC), a disk-less machine especially made for working on the Internet. With an NC, the user’s files and applications are stored at a remote location that is accessible via the Internet. However, some critics were less than impressed when NC’s were introduced in late 1996. They speculated that such machines were not likely to appeal to the average consumer. McNealy is understandably among those who are excited about Sun’s future prospects. Others express a hint of caution, noting that even though Bill Gates and Microsoft lag behind Sun in the world of networked computers, it would be dangerous to downplay the threat they pose. “We’re not going to make any money on Java, but that’s all right,” McNealy admitted in OEM Magazine. “We’ll make money selling servers and desktops and network-management software. We just want the world to be free from having to write to Windows.” Indeed, Sun’s sales rose to over $762 million by the end of 1997, apparently disproving the naysayers—at least for the moment.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S c o t t
Social and Economic Impact With both Java and the NC, McNealy is making a concerted effort to challenge the near-monopoly of the Windows operating system and its maker, Microsoft. He is determined not to become one of Window’s many vendors; instead, Sun computers run a customized version of the Unix operating system. As McNealy commented in Forbes, “What we’ve decided not to do is become a general purpose car dealer, selling Fords, Chevys and Toyotas.... We like the fact that we own our intellectual property; we own our microprocessors and our operating system.” The overwhelming popularity of Windows makes this a risky proposition, but McNealy said in Business Week that he wants his company to be “controversial.” “If everybody believes in your strategy,” he declared, “you have zero chance of profit.” A bona fide workaholic, McNealy has little time or inclination to pursue anything but business. “[He] makes no pretense of being an intellectual or a visionary,” Brent Schlender observed in Fortune. “He can’t remember the last time he read a book, much less a novel, and he loves to ridicule highfalutin notions about what computers can do for humanity.” Nevertheless, Schlender concluded, “He has forced Microsoft to rethink basic aspects of its business and play a little catch-up.” For that alone, he stands out in an industry that has seen its share of big
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
M c N e a l y
names (among them IBM, Apple, and Netscape) take on Bill Gates and Microsoft and lose, sometimes in a very big way. It is a fate that McNealy has no intention of sharing.
Sources of Information Contact at: Sun Microsystems, Inc. 2550 Garcia Ave. Mountain View, CA 94043-1100 Business Phone: (415)960-1300 URL: http://www.sun.com
Bibliography “The Adventures of Scott McNealy: Javaman.” Fortune, 13 October 1997. “An Attention to Detail.” New York Times, 8 September 1996. “Next: Nothing But Net?” Newsweek, 11 November 1996. “Now, Sun Has to Keep Java Perking.” Business Week, 22 January 1996. “Rich Man, Poor Man.” Forbes, 9 October 1995. “Scott McNealy’s Rising Sun.” Business Week, 22 January 1996. “Windows NT—Never!” Forbes, 23 September 1996.
S t u d e n t s
5 3 5
Andrew Mellon (1855-1937) Gulf Oil Company
Overview Andrew William Mellon built an enormous fortune as an industrial financier in the late 1800s and early 1900s. He was instrumental in backing many companies that went on to become giants, including the Aluminum Company of America (ALCOA) and the Gulf Oil Corporation. When President Warren G. Harding named Mellon his Secretary of the Treasury in 1921, it seemed the culmination of a brilliant career. However, Mellon would later be one of the men blamed for the Wall Street Crash of 1929. He later served as the U.S. ambassador to the United Kingdom and helped establish the National Gallery of Art in Washington, D.C.
Personal Life Mellon was born on March 24, 1855, one of eight children, to Judge Thomas and Jane (Negley) Mellon in Pittsburgh, Pennsylvania. His father was born into a poor family of Irish immigrants, but established a fortune as a pioneer in the banking and steel industries of early Pittsburgh. Young Mellon was educated at home by a private tutor, and later attended public schools in Pittsburgh. He was given a grounding in business at an early age and apparently received the skills of sound judgment and remarkable executive talents from his father. Though he would become highly influential, Mellon was far from a charismatic figure. He was short and small, with deep-set, cold blue eyes. He spoke softly and with a stammer, so that people had difficulty hearing what he said. Mellon was said to have no real friends,
5 3 6
A n d r e w
M e l l o n
not even his longtime associate Henry Clay Frick, whom he invariably addressed as “Mr. Frick.” In spite of his being shy and withdrawn, Mellon—who let his brother Richard act as his “front man” in business—married and fathered two children, Paul and Ailsa. He died in Southampton, New York, on a visit to his daughter, on August 26, 1937.
Career Details Mellon had an education centered almost exclusively on business. In 1873, he left Western University (now the University of Pittsburgh) in Pittsburgh shortly before graduation. He soon established a successful lumber company and became widely known throughout the Pittsburgh community for his abilities in business. Through the efforts of his father, Mellon got a job in the real estate business established by his father, T. Mellon and Sons. The family’s fortune had become even greater after they gained large amounts of property due to other people’s foreclosures in the financial panic of 1873. In 1886, Mellon’s father retired from the business world. After Mellon returned from a trip to Europe—the traditional “Grand Tour” taken by wealthy young men at that time—with an associate named Henry Clay Frick, his father put him and his younger brother, Richard Beatty Mellon, in charge of the family’s business interests. These ranged from real estate and coal mines to banking. Mellon was not a passive caretaker—he actively sought out to expand business opportunities. In October of 1889, he and his brother organized the Union Trust Company of Pittsburgh as an affiliate of their banking firm (later known as the Mellon National Bank). Union Trust Company soon had the business of most of the leading Pittsburgh companies. After the Mellons established Union Savings Bank, and these three banking institutions, all under Mellon control, became the largest and most influential financial institutions in the nation. Mellon helped fund the Pittsburgh Reduction Company known as Aluminum Company of America (ALCOA), after its owners came to him for a loan in 1889. He later gained total control of AlCOA, and through it held a virtual monopoly on aluminum. This was the beginning of a fortune that would ultimately eclipse that of his father by a large factor. In 1899, Mellon and his associate Frick started Union Steel, an enormous company which competed with the industry leader at that time, United States Steel. Union Steel later merged with United States Steel and became the largest producer of steel in the world. Two years after founding Union Steel, Mellon financed a Texas oil company which came to him for help. Its drilling rigs had struck so much oil that they could not retrieve it fast enough with the equipment they had.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Andrew Mellon.
(The Library of Congress.)
As in the case of ALCOA, Mellon gained control of the company, which soon took the name of Gulf Oil. He bought up 40 percent of its stock. By 1906, its founder had been edged out, and Mellon appointed his nephew to direct Gulf Oil. Gulf Oil later diversifed into the Gulf Refining Company, also controlled by Mellon, in order to process the oil that Gulf Oil extracted. In 1914 Mellon acquired the last of the crown jewels of his portfolio with the acquisition of Koppers Gas and Coke Company. This purchase gave him dozens of utility companies all along the east coast of the United States. In addition to these very high profile companies, Mellon also established many other companies. He was also involved with The Workingmen’s Savings and Trust Company, the Bessemer Trust Company, the Duquesne Trust Company, the Braddock National Bank, the Monongahela Trust Company, the Wilkinsburg Bank, the East Pennsylvania Savings and Trust Company, the Pennsylvania Railroad, the Ligonier Valley Railroad, and Union Fidelity Title Insurance Company, as well as several other banks in and around Pittsburgh. He also came to own the Pittsburgh Coal Company, which was the largest company of its kind in the world. Mellon also established the town of Donora, Pennsylvania, which became the site of several major steel mills. Mellon was involved in behind-the-scenes politics since his early days as a businessman. He moved into mainstream politics in 1920, when he paid off a $1.5 mil-
S t u d e n t s
5 3 7
A n d r e w
M e l l o n
ment of loans made to the nation’s European allies during World War I.
Chronology: Andrew Mellon 1855: Born. 1886: Took control of T. Mellon and Sons. 1889: Established the Union Trust Company of Pittsburgh. 1906: Gained full control of Gulf Oil Company. 1914: Purchased Koppers Gas and Coke Company. 1921: Appointed as U.S. Secretary of the Treasury. 1923: Introduced the Mellon Plan. 1932: Became U.S. ambassador to the United Kingdom. 1933: Founded Mellon Institute of Industrial Research. 1937: Donated art collection to the federal government. 1937: Died.
lion deficit incurred by the Republican National Committee. In a move that would surely have ended the career of a politician in the post-Watergate era, Presidentelect Warren G. Harding rewarded Mellon by appointing him to his cabinet as secretary of the treasury. Mellon was hardly known outside of Pittsburgh and financial circles, even though he owned and operated businesses in every state of the country and almost every country in the world. Only after this appointment did he become a leading national figure. He resigned his myriad directorships in his many companies and moved to Washington D.C., intent on occupying himself with only the nation’s business. Mellon was a political conservative, and his policies while in office reflected his beliefs. He opposed progressive taxation—a policy of taxing wealthier individuals at a higher rate than others of lesser financial means. He was also against high taxes on business and industry. Mellon urged Congress to stop its practice of burdening wealthier individuals and corporations with high taxes. His programs followed the view that the nation’s greatest interest was in the success of its businesses and that government should allow corporations to retain a maximum of profit for reinvestment and expansion. Under Mellon, the nation’s debt fell from $24 billion in 1920 to $16 billion in 1931. Mellon also oversaw the repay-
5 3 8
B u s i n e s s
Mellon felt that wealth created and retained at the top of the capitalist system would filter down to the lower levels. This early version of the “trickle down” theory of economics made popular by Ronald Reagan in the 1980s was widely popular in Mellon’s time. While Mellon was in office, the burden of taxation paid by those earning above-average incomes fell drastically. Taxation on those earning less than average fell as well, though not to the same degree. During the 1920s, the United States saw the greatest rise in business it had ever seen up to that time. Mellon’s critics felt that his policies were specifically designed to help himself and his companies, and detractors claimed that his tax policy unequally distributed income and provided relief for millionaires. While serving as the secretary of the treasury, Mellon also served as the chairman of the Federal Reserve Board, the Farm Loan Board, and the U.S. section of the Inter-American High Commission. He also served as the general director of the United States Railroad Administration and was a member of the board of Reconstruction Finance Corporation. After years of great success, first in the Harding administration and then in those of Presidents Calvin Coolidge and Herbert Hoover, Mellon suddenly fell from grace after the stock market crash of 1929. He interpreted the world economy’s crash as a natural phenomenon and favored a deflation in the nations currency to thwart the economy’s fall. Mellon did not favor public works projects, even though many called for them as a way to keep Americans working after the crash. From his office, Mellon promoted a policy of savings, and stressed frugality in the nation’s spending habits. In early 1930, Mellon stated that: “I see nothing in the present situation that is either menacing or warrants pessimism.” Mellon’s political career never recovered from the tailspin it went into after 1929. In the face of mounting criticism, he stepped down as secretary on February 5, 1932 and was persuaded by the president to take a post as the U.S. ambassador to Great Britain. Mellon fulfilled his duties in London excellently, but when Hoover lost the election to the Democrat Franklin D. Roosevelt and finished his presidency in March of 1933, Mellon resigned his post as ambassador and returned to the United States. Mellon returned to private life and set about, along with his brother, Richard, to establish the Mellon Institute of Industrial Research. This non-profit institute is devoted to research in physical science and technology as an aid to business. It is currently operated by the University of Pittsburgh and has contributed many developments to U.S. industry. In 1937, Mellon donated his large and distinguished art collection to the federal government. He endowed the National Gallery of Art in Washington, D.C. with funds to construct a gallery for these works. But even with these
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
A n d r e w
philanthropic deeds, for the last years of his life, Mellon was under attack as a leading capitalist by the liberals of Roosevelt’s new administration.
Social and Economic Impact Mellon built his success largely by being able to play both sides against the middle. Thus between 1898 and 1902, he financed and brokered a number of corporate mergers, and when many of these mergers failed in the financial panic of 1903, he was able to foreclose on them and gain control of the companies. Mellon’s shrewd investment strategies made him an extremely wealthy man. Aside from the many companies he owned, he had interests in other giant corporations of his time, such as Bethlehem Steel, Westinghouse, and Pullman. In 1920, his family’s wealth was valued at $1.69 billion. This would be a large sum of money at any time, but especially then, when a man making $10,000 a year was considered a high earner. In 1923, Secretary of the Treasury Mellon introduced the Mellon Plan, which reduced taxes on the wealthiest citizens. It was not necessarily a bad idea, since these were the people who owned the businesses that gave others jobs. A new tax plan in February 1926 (not Mellon’s creation) set taxes for the wealthy even lower. He was called “the greatest Secretary of the Treasury since Alexander Hamilton.” (Hamilton was a powerful figure in the administrations of Presidents John Adams and Thomas Jefferson.) By 1927, people even considered Mellon a viable candidate for the presidency.
M e l l o n
were blamed. Whether this was justified is debatable, but it is certain that Mellon’s public image went into a downturn. He was exposed to even more negative publicity when it was revealed that the secretary of the treasury himself had taken questionable actions in filing his tax returns. With his cut-throat business dealings and retiring personality, Mellon gained few close friends. As secretary of the treasury, his tax policy won him first esteem and then revulsion. But his charitable activities, including the National Gallery of Art in Washington, D.C. and the Mellon Institute of Industrial Research in Pittsburgh, are still seen today as important contributions to America’s cultural and business life.
Sources of Information Contact at: Gulf Oil Company
Bibliography Garraty, John A., ed. Encyclopedia of American Biography. New York: Harper and Row, 1974. Ingham, John N. Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood, 1971. Koskoff, David E. The Mellons: The Chronicle of America’s Richest Family. New York: Thomas Y. Crowell, 1978. Love, Philip H. Andrew Mellon: The Man and His Work. Baltimore: F. Heath Coggins, 1929. Mellon, Andrew W. Taxation: The People’s Business. New York: Macmillan Publishing, 1924.
But when the stock market crashed in October of 1929, Mellon and his boss, President Herbert Hoover,
O’Connor, Harvey. Mellon’s Millions, The Biography of a Fortune. New York: John Day, 1933.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
5 3 9
Charles Merrill (1885-1956) Merrill Lynch & Co., Inc.
Overview As cofounder of Merrill, Lynch & Co. in 1914, Charles E. Merrill launched a Wall Street dynasty that would long outlive him. Building on the slogan “Bring Wall Street to Main Street,” he designed his business around middle-class investors, not stock exchange insiders. By the time of his death in 1956, his firm had offices in 106 cities across North America, and it has continued to grow ever since, through good times and bad.
Personal Life Charles E. Merrill was born on October 19, 1885 in Green Cove Springs, Florida, the son of Dr. Charles and Octavia Wilson Merrill. His father, a local physician, also owned a drug store. As a boy, Merrill worked in his father’s drug store and had a paper route. Merrill attended a preparatory school affiliated with Stetson University, and later was sent on a partial athletic scholarship to Worcester Academy in Massachusetts. He attended Amherst College in Massachusetts from 1904 to 1906. He left Amherst without graduating and returned to Florida, where he dabbled in newspaper journalism at West Palm Beach’s Tropical Sun. Later in life, he commented that that job provided him with “the best training I ever had; I learned human nature.” After one year of law school at the University of Michigan, Merrill abandoned plans for a legal career and went to Mississippi to play baseball during the summer of 1907 for a minor league team. When the season ended, he moved to New York City to look for work. His first
5 4 0
C h a r l e s
M e r r i l l
job was in the office of the Patchogue Plymouth Mills in Patchogue, New York. Here, Merrill acquired what “turned out to be the equivalent of a university course in general, and credit, finance, cost accounting, and administration, in particular.” This training would be invaluable to his future success. Charles Merrill married three times: to Eliza Church, with whom he had a son and a daughter, in 1912; to Helen Ingram, with whom he had a son, in 1925 (they divorced in 1937); and to Kenta Des More, a marriage that lasted from 1939 to their divorce in 1952. Merrill spent his last years at his home on Merrill’s Landing in Palm Beach, Florida, and died on October 6, 1956.
Career Details The skills Merrill learned at his early jobs enabled him to become one of the most innovative leaders in the field of financial services. With a sound understanding of business practices that he obtained during his two years with Patchogue Mills, he went on to a job on Wall Street. Merrill joined George H. Burr & Company in 1909. The company’s owner had heard of Merrill’s abilities and wanted the young man to take charge of Burr’s newly created bond department. Merrill promptly hired Edmund Lynch, a Johns Hopkins University graduate whom he had met at the 23rd Street YMCA, to handle sales. Merrill’s strategy for attracting new customers was to use direct mail solicitations. He concentrated on informative and accurate information, rather than the exaggerated claims and misleading statements that were the norm at the time. This emphasis on honesty was to remain one of Merrill’s chief concerns throughout his career. Clear, honest information would appeal to a broad customer base, he reasoned, and “having thousands of customers scattered throughout the United States is infinitely preferable to being dependent upon the fluctuating buying power of a smaller and perhaps on the whole wealthier group of investors in any one section.” Under Merrill’s leadership, Burr’s bond department quickly became a success. Soon the company expanded into underwriting (guaranteeing) equities. In 1912, the company sponsored a $2 million stock offering in the Kresge chain stores. Chain stores were a new concept at the time, and this project began Merrill’s career-long involvement with this retail innovation.
Charles Merrill.
(Corbis-Bettmann.)
ing business, Merrill soon made his first fortune. He accepted stock warrants as part of his fee and sold these when they increased in value. World War I had broken out by this time, and Merrill joined the U.S. Army as a first lieutenant in the air corps. After the war, Merrill returned to his firm to oversee its period of greatest expansion. The American economy was booming in the 1920s. Many Americans had bought war bonds, and liked the investing habit; they were now ready to expand to corporate ventures. Merrill’s emphasis on straight advice for a broad range of middle-class customers was well-suited to this new business climate. Merrill, Lynch grew rapidly. In 1919, Merrill hired the first bond saleswoman on Wall Street, Annie Grimes, and in 1924 he expanded the company’s office hours, opening early and closing late, to better serve customers.
In 1913, Merrill left Burr to become sales manager at Eastman, Dillon & Company and a year later founded his own small securities firm, Charles E. Merrill & Company. Within six months, he had taken on Edmund Lynch as a partner, and Merrill, Lynch was born. The partners began by underwriting two chain stores, McCrory Stores and Kresge, an account Merrill lured away from Burr. With the public receptive to buying stock in this emerg-
Merrill, Lynch continued to focus on the expanding chain store industry. About half of the company’s underwritings in the 1920s were retailers such as J.C. Penney, National Tea, Kresge, and McCrory. In 1921, the company entered the movie business when it took over the studio Pathé Exchange. Merrill, Lynch later sold the studio to Cecil B. deMille and Joseph Kennedy (father of the future president). With the profit from the sale of Pathé Exchange, the company acquired the southern California food chain Safeway Stores. Merrill subsequently built up and expanded Safeway, merging it with another western chain. Merrill next founded Family Circle magazine, the first magazine distributed through supermarkets.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
5 4 1
C h a r l e s
M e r r i l l
Chronology: Charles Merrill 1885: Born. 1914: Established Merrill, Lynch and Company. 1922: Assumed management of bond department at George H. Burr and Company. 1926: Organized Safeway Stores. 1930: Left brokerage business to focus on underwriting chain stores. 1932: Founded Family Circle magazine. 1940: Merged with E. A. Pierce and Company. 1941: Merged with Fenner and Beane. 1946: Published booklet “How to Read a Financial Report.” 1954: Supported New York Stock Exchange Monthly Investment Plan. 1956: Died at Southampton, NY home.
As the American economy continued to boom through the 1920s, Merrill grew increasingly concerned. In 1928, over a year before the infamous stock market crash that sent the country into the Great Depression, he sent a letter to customers recommending they get out of debt. He persuaded his partner to reduce the company’s vulnerability in the event of a sharp decline. When the stock market crashed in October 1929, Merrill, Lynch survived. Merrill became highly respected for his ability to foresee market trends. In January 1930, Merrill, Lynch left the brokerage business and turned over its accounts to E.A. Pierce and Company. The firm then focused on underwriting and individual banking, specializing in chain stores. By 1931, Merrill had built Safeway to the third largest food chain in the country. He was also its largest stockholder. Growth continued through the decade, but then, on a vacation trip in 1938, Edmund Lynch died unexpectedly. Without his partner, Merrill had to reexamine his business focus. In 1940, he went back into the brokerage business and merged Merrill, Lynch with E. A. Pierce and Company. The next year, another merger created Merrill Lynch, Pierce, Fenner, and Beane, the world’s largest brokerage house.
5 4 2
B u s i n e s s
During the 1940s, Merrill was at the forefront of change in the investment industry. He coined the phrase “Bring Wall Street to Main Street” in 1941 to attract small investors to the stock market. He printed ads and pamphlets with his characteristic honest information, and insisted on professionalism among his own employees. He provided business education for his employees and paid them a straight salary rather than commissions. These strategies boosted public confidence in the company, and enabled Merrill Lynch to continue its astronomical growth. After suffering a heart attack in 1944, Merrill withdrew from active management of the firm. But he continued to direct strategy and long-term planning for the company. With partner Win Smith, Merrill instituted additional changes. He recruited younger, better-educated brokers and provided them with training in accounting and commercial banking. He published the booklets “Hedging: Insurance Policy or Lottery Ticket” and “How to Read a Financial Report,” and ran informative ads in the country’s leading newspapers. In 1954, the New York Stock Exchange launched a new plan for moderate-income individuals who wished to make small, regular investments in the stock market. Merrill Lynch became the largest institutional supporter of this Monthly Investment Plan (MIP). After one year, Merrill Lynch had almost half of all MIP accounts, and within a few years the firm maintained the vast majority of MIP accounts. By the time he died in 1956, Merrill’s firm had 107 partners in 106 cities, employed over 4,600 people, and handled almost 300,000 active customer accounts. The firm then became Merrill, Lynch, Pierce, Fenner and Smith and continues to be the world’s biggest brokerage.
Social and Economic Impact Merrill’s innovations in the field of financial services led to far-reaching changes both in the way Americans invested and in the way they spent money. Before Merrill established his brokerage firm, stock market investments were only for the elite or the unscrupulous. Average Americans had no idea of how the stock market worked, and they distrusted Wall Street—with good reason. Many brokerage houses kept the “best” information only for their wealthiest customers, and tried to lure others with exaggerated claims and deceptive promises of profits. Merrill, however, provided accurate figures and honest information tailored to the needs of average Americans. One of his first acts when he reentered the brokerage field in the 1940s was to issue a pamphlet that stated “The interests of our customers MUST come first.” Merrill Lynch became a leader in the dissemination of investment information. The company published a biweekly magazine, Investor’s Reader, and was the first to make full public disclosures of its operations and hold-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
C h a r l e s
ings, as well as the investments of its partners. As Martin Mayer wrote in Wall Street: Men and Money, “Merrill brought in the public [to Wall Street] not as lambs to be fleeced but as partners in the benefits.” New Deal legislation also affected the public perception of Wall Street. During the 1930s, the federal government created the Securities and Exchange Commission to monitor the stock brokerage industry. New laws imposed fines and jail terms on those convicted of financial fraud. Merrill wholeheartedly supported these reforms and was instrumental in influencing other brokerage houses to adopt his firm’s direct practices. The rapid growth of chain stores, in which Merrill was instrumental, also profoundly affected the American economy. Before the introduction of these giant chains, most Americans shopped at small, mom-and-pop style stores that operated with a small volume and charged higher prices. Since chains could operate on an economy of scale, though, they could offer a greater selection of goods at lower prices. The growth of chains became such a threat to smaller retailers that the California legislature passed a tax on chain stores which would have absorbed about 20 percent of Safeway’s net income. Safeway management, confident that consumers wanted the better prices and selection that chains could offer, urged that the issue be put to a popular vote. In a 1936 statewide referendum, voters in California repealed the tax. The message was clear: consumers wanted chain stores. Merrill later remarked, “If ever I get to heaven, it will be because I helped lower the price of milk by a penny a quart in Los Angeles.” Merrill used a substantial part of his wealth to further the principles by which he had made his fortune. In 1945 he created the Merrill Foundation for the Advancement of Investment Knowledge, which awarded grants to institutions such as Massachusetts Institute of Technology, Brookings Institute, and the Wharton School of Finance. He donated 95 percent of his $25 million estate to churches, hospitals, and colleges. A large portion of this estate supported colleges and universities in the South that served African American populations. In 1951, he donated his 16-acre estate in Southampton,
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
M e r r i l l
Long Island to Amherst College. The estate became the Merrill Center of Economics. In 1953, Merrill endowed a chair of medicine at Harvard university in honor of heart specialist Dr. Samuel A. Levine, who had treated Merrill for his heart condition. In 1947, Merrill was named as the only representative from the securities industry in a poll of 50 outstanding business leaders. He received an honorary M.A. degree from Amherst College in 1933, honorary degrees from the University of Michigan in 1945, John B. Stetson University in 1946, Amherst College in 1948, Kenyon College in 1949, and a degree from New York University in 1950.
Sources of Information Contact at: Merrill Lynch & Co., Inc. World Financial Center, North Tower 250 Vesey St. New York, NY 10281-1332 Business Phone: (212)449-1000 URL: http://www.ml.com
Bibliography Current Biography Yearbook, 1956. New York: H.W. Wilson Co., 1956. Encyclopedia of World Biography: 20th Century Supplement. IL: Jack Heraty & Assoc., 1987. Ingham, John. Biographical Dictionary of American Business Leaders. Westpor, CT: Greenwood,1983. Merrill, Charles E., Jr. The Checkbook: The Politics and Ethics of Foundation Philanthropy. Boston: Oelgeschlager, Gunn & Hain, 1986. Regan, Donald. The Merrill Lynch Story. NewYork: Newcomer Society, 1981. Schweikart, Larry, ed. “Banking and Finance, 1913-1989.” In Encyclopedia of American Business History and Biography. New York: Facts on File, 1990. Who Was Who In America. Chicago: Marquis, 1960.
S t u d e n t s
5 4 3
Jane Metcalfe (1961-) Wired Ventures Limited
Overview As president of Wired Ventures, Jane Metcalfe has been a pioneer in both print and on-line publishing. Wired magazine and its on-line companion, Hot Wired, have offered readers a new technical viewpoint, that ponders the cultural impact of digital technology.
Personal Life Jane Metcalfe was born on November 15 1961. She attended the University of Colorado in Boulder where she graduated with honors and earned a degree in International Affairs. In 1983 she met her partner, Louis Rosetto, in Paris. Metcalfe and Rosetto have a son Orson, who was born in 1997. In 1994, Metcalfe was elected to the board of directors of the Electronic Frontier Foundation, an organization that was created to protect and promote civil liberties of on-line technology users.
Career Details Even though Metcalfe’s degree was not technical, some of her first jobs after college were computer oriented. She worked for the International Herald Tribune in Paris where she co-developed a multicurrency accounting system for a Wang mini computer. In 1984, Metcalfe helped set up an asynchronous telecommunications link between Paris, Geneva, and Washington, D.C. She returned to Paris in 1987, to become the Di-
5 4 4
J a n e
rector of Export Sales for the Paris-based fashion house Valentine Palomba, where she introduced the use of computers for catalogue production and accounting. Later she worked, along with Rosetto, for Electric Word magazine, an Amsterdam-based journal which dealt with the topics of optical character recognition, machine translation, and speech recognition. While with Electric Word, she served as director of advertising sales and as an associate publisher. Metcalfe and Rosetto began planning a new type of magazine in 1991 while they were living in Amsterdam. The pair moved to San Francisco and cofounded Wired, a monthly print magazine that explores how digital technology is impacting our culture. Metcalfe is president of Wired Ventures, while Rosetto serves as editor and publisher. The pair used their own money to create the magazine, with the support of a few investors. The premier issue of Wired was published in 1993. There were 150,000 copies of that first issue, and in just a few years monthly circulation had grown to 400,000. By 1994, Wired won a National Magazine Award. Metcalf and Rosetto created a magazine that examined computers’ potential to benefit society as well as individuals, a concept that makes Wired radically different from the many other technical magazines. It represented the change in society “led by technology, absorbed by business, and spread by artists.” Wired magazine became known as “the” leading edge of digital culture worldwide. Although Metcalfe knew she had developed something very powerful and influential, she never anticipated the overwhelming response to her magazine. Metcalfe recognized that the “digital subculture” was a rapidly growing group of people and she was one of the first to create and provide a media form specifically for that group. Wired Ventures also developed a free on-line version of the magazine, called Hot Wired, which provide the stories seen in the print version as well as other services. Metcalfe described Hot Wired in The New York Times as “a complementary but also a parallel medium. The magazine is a beautiful format for our material, like the 15,000-word stories. Hot Wired has shorter, crunchier bits of information.” Metcalfe used Wired to promote her belief that interactive communication can benefit everyone, not just computer junkies and wealthy businesses. She told the New York Times that “there’s a fundamental shift going on in society right now . . . the digital revolution is whipping through our lives like a Bengali typhoon . . . . We’re profoundly optimistic about how we can use technology to change things.” Metcalfe also predicted in Self magazine that computer interactivity will “bring out the artist and the communicator and the intellectual in everybody.” Wired examined the growing computer culture with stories that ranged from a piece about “Microserfs”—employees at Microsoft, by Generation X author Douglas Coupland, to a discussion of whether computers will give
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
M e t c a l f e
Chronology: Jane Metcalfe 1961: Born. 1984: Worked at International Herald Tribune in Paris. 1987: Worked at Valentine Palomba. 1991: First plan for a digital magazine. 1993: Published first issue of Wired magazine. 1994: Elected to board of Electronic Frontier Foundation. 1995: Wired went international.
government agencies the means to invade an individual’s privacy. Jon Gluck described Metcalfe as a passionate and tireless Wired promoter. He further characterized her as “confident and always in overdrive.” Metcalfe addressed the issue of being a woman in the male-dominated computer world in Self magazine and noted that when she and Rosetto were approaching investors regarding the magazine, men would avoid making eye contact with her. She chose not to dwell on this kind of experience and stressed her opportunities to make an impact. “The business needs artists, designers, and writers to make it more intuitive, more human. I think that’s a more feminine approach to a problem,” she said. During its first two years, Wired took off at rocket speed. The magazine quickly found an enthusiastic audience and financial support from the likes of publisher Condé Nast. Five years after the magazine’s debut, though, its future looked troubled. The Economist speculated that the magazine had taken a turn for the worse in terms of content and finances: “[it] has evolved from the hip bible of the Internet generation to an advertisement-packed lifestyle magazine for the pretentious technophile.” However, the magazine’s real concern was not a loss of popularity but rather its inability to find the financial backing to expand. In 1996 Wired Ventures attempted to raise money with a stock market offering, but was rejected as being too highly priced at $293 million. One casualty was the British edition of Wired, which had been operating at a loss. At the same time, on-line publishers such as Microsoft and C/NET were creating stiff com-
S t u d e n t s
5 4 5
J a n e
M e t c a l f e
petition. Although Wired Ventures maintained a creative edge, it had to prove that it could survive financially.
Social and Economic Impact Metcalfe has played a major part in the digital revolution. She has said that relying on digital communication is inevitable and that those who resist will find fewer opportunities. She also strongly suggested that digital communicators should be “courageous and innovative proponents of technology.” Wired has impressed the publishing industry as a breakthrough product. Gluck opined, “What Jann Wenner’s Rolling Stone did for hippies, what Gloria Steinem’s Ms. did for feminists, Metcalfe’s Wired is doing for [the] emerging group of media-savvy urban professionals,” a group that has become known as the “Digerati.” Wired is also notable for its graphic style as well as content. With neon colors, unconventional typefaces and layout, its appearance has been likened to MTV.
5 4 6
B u s i n e s s
Sources of Information Contact at: Wired Ventures Limited 660 Third St. San Francisco, CA 94107 Business Phone: (415)276-8400 URL: http://www.wired.com
Bibliography “Crosswired.” The Economist, 8 February 1997. Donahue, Deirdre. “Tuned Into Technology.” USA Today, 28 April 1994. Flynn, Laurie. “Sound Bytes: Tracking High-Tech Culture.” New York Times, 10 July 1994. Gluck, John. “Technology Jane.” Self, August 1994. “Jane Metcalfe.” Wired Ventures Limited, 1998. Available from http:digerati.edge.org/digeratie/metcalfe/index.html. Simons, John. “Tired: Hyped Firms Wired: Real Profits.” U.S. News & World Report, 21 October 1996.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Thomas Monaghan Overview Domino’s Pizza, Inc., known world-wide as a leader in the world of fast-food, was imagined and built by Thomas Stephen Monaghan, who rose from a world of poverty in his youth, to become one of America’s business giants. With tremendous faith in his religion and himself, he built a fortune by offering a popular, tasty, reliable and relatively inexpensive food that was delivered quickly to where the customers wanted it. He has become one of the true success stories of the pizzeria business and, for a time, even parlayed his success into professional sports.
(1937-) Domino’s Pizza, Inc.
Personal Life Thomas Stephen Monaghan was the elder of two sons born to Francis and Anna (Geddes) Monaghan in the college town of Ann Arbor, Michigan on March 25, 1937. Younger brother Jim was born two years later. On Christmas Eve, 1941, Monaghan’s father, a truck driver, died suddenly from peritonitis, an infection of the muscle tissue covering the abdomen, devastating the families financial situation. Monaghan’s mother was left with only her job, earning $27.50 per week, to provide for the family. His mother found circumstances unmanageable and placed both her sons into the first of a series of foster homes, while she trained as a nurse. She assured her sons that she would return to take them back after she had found a job. At the age of six, Monaghan entered the St. Joseph’s Home for Boys, an orphanage operated by the Roman
5 4 7
T h o m a s
M o n a g h a n
Tom began high school at St. Francis High School, in Traverse City and decided during his freshman year that he wanted to become a priest. He soon entered the St. Joseph’s Seminary in Grand Rapids, Michigan. Monaghan was too active, however, broke too many rules, and was kicked out of the seminary in less than a year. It was a bitter disappointment to the young Monaghan and he later said; “Never before had I felt so crushed. I am no stranger to failure, but no other setback devastated me as this one did, because it was so final.” Following this setback, Monaghan soon returned to his mother’s home and St. Francis High School. The problems with his mother continued, however, and at 16 he was arrested for using his mother’s car without her permission. At 17, his mother had him placed in a detention home where he spent six months before being released into the care of an aunt and uncle who took him to live with them in Ann Arbor. Monaghan enrolled at St. Thomas High School but was a poor student and graduated last in his high school class. Monaghan met his future wife while making a pizza delivery. He and Marjorie Zybachon were married on August 25 1962, and they have four daughters: Mary, Susan, Margaret, and Barbara.
Career Details
Tom Monaghan proves that he knows how to handle a pizza. (AP Photo/Ypsilanti Press.)
Catholic church and the Felician order of nuns in Jackson, Michigan. He developed a close bond with one of the nuns, Sister Berarda, and would later write that, “She became my surrogate mother, and I flourished under her care.” When he was 12 years old, his mother, who had become a nurse, was finally able to take him home. Home life in the Monaghan house was not perfect and the young sixth grader soon began to argue with his mother. Although he was industrious in his new setting, selling vegetables and fish door-to-door, and newspapers on street corners, his mother was very unhappy with his behavior, and two years later placed him in a foster home; this time on a farm just outside of Traverse City.
5 4 8
B u s i n e s s
An early admiration for architect Frank Lloyd Wright peaked Monaghan’s interest in architecture. But poor grades and his inability to afford tuition caused his initial rejection from the University of Michigan in Ann Arbor. Instead, Monaghan enrolled at the architectural trade school at Ferris State College in Michigan and earned tuition by working several odd jobs. Monaghan’s first year at Ferris State College was very successful and he hoped his grades would allow him to transfer to the University of Michigan. After forwarding his grades to the University of Michigan, however, he was denied admittance once again. Monaghan was determined to turn his life around and decided to join the U.S. Army in order to take advantage of their educational benefits. After filling out his application, he soon discovered that he had joined the U.S. Marine Corps, instead. After basic training, Monaghan was stationed on the island of Okinawa. There, he read every book he could and was especially fond of selfhelp inspirational writings by Dale Carnegie and Norman Vincent Peale, where being ‘positive’ about life was stressed and where self-esteem was encouraged. Later, stationed in Japan, he used his leave to travel to Tokyo to study the Wright-designed Imperial Hotel. Monaghan finished his service in the Marine Corps on July 2, 1959, and was finally accepted to the University of Michigan for the fall 1959 term. He worked as a delivery manager for the Washington News Agency to help pay for his tuition.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
T h o m a s
M o n a g h a n
Monaghan was not successful as a student and dropped out after only three weeks. In 1960, he re-enrolled in the University of Michigan for their spring 1960 term, but again, left after only three weeks. It seemed as if his dream of becoming an architect was dead and he was at a loss with what to do with his life. In September of 1960, Monaghan’s brother James heard that a small pizzeria in Ypsilanti, Michigan named DomiNick’s was for sale by Dominick DiVarti for only $500 and debts the owner had accumulated. The two brothers agreed to go into business together. Monaghan planned to work in the pizzeria at night while attending classes at the University of Michigan, which he had again enrolled in for the fall term. The two brothers gave DiVarti a $75 deposit and took out a loan for the rest from the post office credit union. Monaghan did not feel that Monaghan’s Italian Pizza sounded right, so the name DomiNick’s Pizza stayed. Before leaving, DiVarti gave the brothers a few lessons in the art of making pizzas. “I was captivated by (DiVarti’s) description of the recipe for the sauce,” Monaghan said. “His statement ‘The secret of good pizza is in the sauce’ made a lasting impression on me. I vowed right then that I would have the best pizza sauce in the world.” Monaghan soon discovered that he liked the physical side of pizza-making. “I found that the manual work of rolling out the dough and slapping it into shape appealed to me.” Monaghan soon hired two unemployed factory workers as delivery men and visited other pizzerias in the area to sample their products. Meanwhile, the Monaghan’s partnership was falling apart because Jim’s job as a mailman kept him from having time enough to devote to the business. After about eight months, Monaghan bought out his brother’s share of the business in exchange for a 1959 Volkswagen Beetle they had purchased as a delivery car. Monaghan soon gave up his dream of becoming an architect and devoted his life to his business. By 1961 DomiNick’s had become successful enough to allow him to employ his first hourly employees. He took on a new partner, Jim Gilmore, and bought a pizzeria in Ypsilanti. In May of 1962, Monaghan and Gilmore opened their third store, Pizza King, on the campus of the University of Michigan. In May of 1963 Monaghan opened a second Ypsilanti pizzeria and in July of 1964 he and Gilmore bought Ann Arbor’s leading pizzeria, Pizza From The Prop. In March of 1965, Monaghan and Gilmore dissolved their partnership and Gilmore received $20,000 and control of the Pizza King in Ann Arbor. Monaghan retained control of his two Ypsilanti pizzerias and the Pizza From The Prop pizzeria. Monaghan soon began to search for a new name for his pizzerias and settled on the name Domino’s Pizza. He also contacted a local advertising executive, Sam Fine, to design a new logo for the company. Fine’s resulting design featured a domino with
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Chronology: Thomas Monaghan 1937: Born. 1960: Purchased DomiNick’s pizzeria. 1961: Purchased bother’s share of DomiNick’s pizzeria. 1961: Opened second DomiNick’s. 1965: Became sole owner of DomiNick’s. 1965: Renamed pizzeria chain to Domino’s Pizza, Inc. 1966: Developed corrugated cardboard pizza box. 1967: Began franchising Domino’s Pizza. 1983: Purchased Detroit Tigers. 1989: Opened 5,000th pizzeria. 1989: Resigned as president of Domino’s Pizza, Inc.
three white dots representing Monaghan’s three pizzerias and is still used today. Monaghan believed that he would be most successful by offering the best-tasting pizza in the Ann ArborYpsilanti area. To accomplish this he set strict guidelines for the ingredients that went into his pizzas. He would use only the freshest toppings and only cheese made with whole milk. He insisted on using only the most expensive flour for his pizza dough which would be made daily. At the same time, Monaghan eliminated all other food from the menu besides pizza, and made his pizzerias takeout or delivery only. He guaranteed a hot pizza at the door within 30 minutes or the pizza would be free. To further motivate his employees, Monaghan began giving bonuses to delivery drivers who collected the most cash. Monaghan soon contacted the Triad Container Company of Detroit to develop the stiff corrugated cardboard box that has become synonymous with home-delivered pizza ever since. In April of 1967, he began franchising Domino’s Pizza when he sold his second Ypsilanti store to businessman Chuck Gray. Monaghan had a recipe that worked, a good brand name, and a good logo, and in 1968 he opened his first out-of-state store in Vermont. By January of 1969 he had 12 stores and 12 more in development. He aimed to open one new store a week and in the first 10 months of 1969 came close to achieving this goal with 32 new stores, bringing the total to 44.
S t u d e n t s
5 4 9
T h o m a s
M o n a g h a n
But, Monaghan’s expansion proved to be too much for his bottom line. Because most of his new stores had opened in residential areas, many of them were failing and closed. By the early spring of 1970, he was $1.5 million in debt and faced lawsuits from 150 creditors. He was forced to relinquish 49 percent of the business to Ypsilanti businessman Ken Heavlin. By May 1, 1970, Monaghan had regained control over his many business misfortunes and by 1972, had 54 stores in operation. In 1973, he continued expanding and had 76 stores, in 13 states. By 1978, he had expanded to 200 stores. In 1997 Domino’s operated 4,431 stores in the United States and its main subsidiary, Domino’s Pizza International, had 1521 units. Sales totaled $3.2 billion. Like one of his heroes, McDonald’s founder Ray Kroc, Monaghan turned his business success into the ownership of a professional sports team. A faithful fan of the Detroit Tigers baseball team, Monaghan realized a childhood dream in 1983 when he purchased the team from John E. Fetzer for $53 million. A year later, Monaghan’s Tigers defeated Kroc’s San Diego Padres to win the 1984 World Series. Monaghan sold the team in 1992 but remains a devoted fan. In 1989, Monaghan shocked the business world by handing over the presidency of Domino’s to a former operations vice-president, P. David Block. Although he persists in a behind-the-scenes role as the chief executive officer (CEO) of Domino’s Pizza, Inc., he devotes most of his time primarily to activities involving children’s related charities and the Catholic church.
people every day, the sheer numbers of his operations have created jobs for thousands of people, from teenagers delivering the pizzas, to professional business executives managing all levels of this world-wide operation. Since 1989, Monaghan has given back to the community far more than pizza and quick home-delivery service. In the service of his church, he has given large sums of money to Legatus, an organization of Catholic executives. He heavily financed the computer system at the Vatican, in Rome, Italy. He funds a Catholic mission in Honduras and has given millions to relief aid, particularly in Latin America. The Monaghan style has been one of sticking to the work and playing by the rules, despite the many problems of the business world. Ellen Stern wrote of Monaghan’s style: “Tom Monaghan lives by the rules, not by breaking them.”
Sources of Information Contact at: Domino’s Pizza, Inc. 30 Frank Lloyd Wright Dr. PO Box 997 Ann Arbor, MI 48106-0997 Business Phone: (212)930-3030 URL: http://www.dominos.com
Bibliography Current Biography Yearbook, 1990. New York: H.W. Wilson Co., “Thomas Monaghan.” Gentleman’s Quarterly, June 1989. Monaghan, Tom. Pizza Tiger. New York: Random House, 1986.
Social and Economic Impact Domino’s pizzerias have been at the front of the fastfood industry in America for more than a decade. Aside from providing inexpensive and tasty food for millions of
5 5 0
B u s i n e s s
People Magazine, 25 September 1989. Saturday Evening Post, April, 1985. “Thomas Monaghan.” Who’s Who in America,
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J.P. Morgan Overview J.P. Morgan was a potent force in American business during its era of greatest growth, and a tycoon who almost single-handedly established the practice of investment banking. The son of a banker with international connections, Morgan, through his successful investments and cunning acquisitions, amassed a fortune that was almost unimaginable at the time. “Essentially an organizer and an integrating force, he continually fought the financial buccaneers of his day with their own weapons, and triumphed over them, becoming a powerful force for stabilization in the economic system,” declared John N. Ingham in the Biographical Dictionary of American Business Leaders.
(1837-1913) J.P. Morgan & Company
Personal Life The Morgan family’s roots in the United States stretched back to 1636 with the arrival of one Miles Morgan from Wales. They were affluent farmers by the time Joseph Morgan, J.P.’s grandfather, entered adulthood, but Joseph became quite prosperous by acquiring a number of holdings, including stagecoach manufacturing concerns and fire insurance providers. His son, Junius Morgan, was involved in the dry-goods wholesale business, first in Hartford, Connecticut and later in Boston. In 1836 Junius wed Juliet Pierpont of Boston. Their first son, John Pierpont, was born in April of 1837 when the family was still in Hartford. J.P. was tagged with the unwieldy “Pierpont” name as a youth, and earned good grades in school. He was es-
5 5 1
J . P .
M o r g a n
Company, a firm that handled financial transactions for transatlantic trade and would play a vital role in the growth of J.P. Morgan’s career. Before he joined his family in London, J.P. Morgan adjourned to the Azore Islands for health reasons; it was thought that the tropical sea air would cure a host of his health problems, including skin and stomach ailments. Later that year, he enrolled in a boarding school in Vevey, Switzerland, where he stayed two years. From there, he traveled and studied in Europe, spending two years at the University of Goettingen in Germany. He worked for his father for a time, in a lowly clerk’s position at the London office, and then returned to New York City in August of 1857. He rented rooms at West 17th Street, and took on George Peabody’s son as a roommate. In early 1860 Morgan married Amelia Sturges against his father’s advice; Junius thought the couple should wait a bit longer. For their honeymoon the pair sailed to North Africa to cure what was thought to be a lingering cold in Amelia. Instead she died in Algiers of tuberculosis a few months later. In 1865 Morgan wed Frances Tracy, whom he had come to know though his affiliation with St. George’s Episcopal Church in New York City. Together they had four children—one son, J.P. Morgan Jr., and daughters Louisa, Juliet, and Anne. When Junius Morgan died in 1890, J.P. inherited a great deal of money, which he used to buy European art and rare manuscripts. Known as a tireless executive, Morgan’s few activities outside of the business world involved St. George’s. He owned a series of ocean-going yachts he named Corsair, and traveled to Europe at least once a year.
Career Details
J.P. Morgan.
(The Library of Congress.)
pecially gifted in math. Four other siblings followed him—all girls, a fact that historians would later note made it easy for him to gain such mastery over the family’s businesses and assets; he would have been expected to share some power with a brother. When he was 14, the Morgans moved to Boston and J.P. unofficially began his collection of rare documents: he sent a card to U.S. president Millard Fillmore that he asked him to sign, which the Chief Executive did and returned to the youngster. Morgan graduated from English High school at the age of 17. His family moved once more at that point when Junius Morgan entered into a partnership with an American who possessed a thriving London brokerage. The senior Morgan became a partner in George Peabody &
5 5 2
B u s i n e s s
When Morgan returned to New York City after some training at his father’s firm in England (which was involved in financing the import of British-made iron rails for the American railroad system), he was hired at Duncan, Sherman & Company. Here too, he spent much of his first months as a copyist: there were no typewriters, and every business document had to be written in longhand and then copied in the same manner. Soon Morgan advanced to a position of more responsibility; the fact that his father was a prominent London banker certainly helped. He was sent on research missions for the firm. He traveled throughout the South, and gleaned information on the cotton trade, then a major part of southern economy. On the side, Morgan engineered deals, once buying a shipload of coffee in New Orleans and selling it to local merchants at a profit. In 1861 the 24-year-old founded his own firm, J.P. Morgan & Company, to act as the American agent for his father’s London firm, now called J.S. Morgan. That same year the American Civil War broke out, and Morgan, like 70,000 other men who could afford to do so,
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J . P .
M o r g a n
hired someone to take his place in the Union Army. He came under worse criticism, however, for his role in financing what came to be known as the Hall Carbine Affair, in which Morgan loaned money to a profiteer who used it to buy armaments from the U.S. government, and then sold them back to the government at a profit. Morgan’s first office was at 53 Exchange Place near Wall Street, and at first he did not even have a permanent clerk to copy papers at the office. But soon he was making a name for himself in increasingly brazen deals: he bought gold in small transactions, then sold half of it overseas, which drove up the price; he then sold the other half at a profit. His father, Junius Morgan, disapproved of such dealings, and forced J.P. to hire the older, more cautious Charles Dabney as senior partner. Thus the firm became Dabney & Morgan from 1864 to 1871, then Drexel, Morgan in 1871 when his father arranged a merger with the New York branch of a successful Philadelphia family-run bank. During this era the younger Morgan made a fortune in financing the growing railroad industry as it spread across the continent. By 1869, he had gained control of the Albany and Susquehanna Railroad, and in 1879 Morgan was part of a secret syndicate that sold $25 million worth of William Vanderbilt’s holdings in the New York Railroad. He had colluded with his father in London to do this, and the deal both enriched him and made him famous for the return on the investment. For the success of his plan he was granted a seat on New York Central Railroad’s board of directors. Between 1885 and 1890 Morgan held private meetings at his home with other railroad tycoons, a group that called itself the Interstate Commerce Railway Association, to squash potential competition on lucrative routes. During this era, competing railroad lines would build parallel tracks, and one carrier inevitably went under. The magnates also set rates amongst themselves. This practice was declared illegal with the Interstate Commerce Act of 1887. Morgan’s ties with the federal government began in the early 1870s when he became involved in treasury bonds and government loans. With the financial crisis that was known as the Panic of 1893, Morgan was tapped to act as a central banker by President Grover Cleveland. The United States had no Federal Reserve system at the time, and Morgan and the other bankers knew the nation’s monetary system was in danger of collapse. Morgan led the effort that created a syndicate with European lenders to provide $65 million in gold. He profited enormously from the deal, and came under great fire in the press. Cleveland too was criticized, and Congress launched an inquiry. Morgan refused to reveal how much profit he had actually made in the transaction, which did not endear him to the press or the public, and was tagged as a “Robber Baron.” Still, latter-day historians credit Morgan with saving the United States’ commercial banking system from collapse on this and a few other occasions.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Chronology: J.P. Morgan 1837: Born. 1854: Studied in Germany at University of Goettingen for two years. 1861: Opened offices at 53 Exchange Place. 1869: Gained control of his first railroad, the Albany and Susquehanna. 1873: Opened famous headquarters at 23 Wall Street. 1887: Presided over the Interstate Commerce Railway Association. 1890: Inherited $12 million upon death of his father. 1895: Engineered major international gold transaction on behalf of U.S. Treasury. 1901: Founded U.S. Steel. 1907: Reorganized American banks during confidence crisis.
In the late 1870s Morgan became involved in funding the Edison Electric Company. Drexel and Company in Philadelphia became one of the first offices in the world to operate by electric light. In the early 1890s Morgan arranged a merger of Edison with its competitor to form General Electric. Morgan’s firm also worked with the Boston brokerage of Kidder, Peabody to underwrite bonds for the capitalization of American Telephone & Telegraph’s telephone infrastructure. By 1895 Morgan was head of his own firm, J.P. Morgan & Company, and was considered a powerful force in American finance. He became involved in merging a number of small steel producers until Andrew Carnegie’s giant Carnegie Steel was threatened. Morgan then arranged a merger that created United States Steel in 1901, the first billion-dollar manufacturing corporation in the world. He engineered another profitable merger with the creation of International Harvester around the turn of the century. In 1907, Morgan was again tapped by the government to help out in a potentially disastrous American financial crisis when many banks were about to fail. Morgan and a group of other prominent financiers evaluated which institutions were solvent. In the midst of the crisis, Morgan’s U.S. Steel traded some stock for one bank’s share in the Tennessee Coal, Iron, & Railroad Company, and Morgan was later indicted by President William H.
S t u d e n t s
5 5 3
J . P .
M o r g a n
Taft for this. Morgan’s son, J.P. Morgan, Jr., took over the company upon his death in 1913, and quickly achieved success when he became the American purchasing agent for France and England during the early years of World War I.
Social and Economic Impact Before Morgan’s era, large costly enterprises such as transportation systems and massive manufacturing enterprises, were usually created by a monarch and funded from the royal coffers. Morgan and a few others realized early on an opportunity to fill such a role in the United States with the creation, underwriting, and sale of bonds. New railroads and public utilities are examples of the infrastructure created with Morgan’s influence. Despite the fact that Morgan was willing to step in and help the federal government if he foresaw a benefit for himself—he even financed the entire army payroll in 1871 when a deadlocked Congress would not appropriate the funds for it—much of America’s legislative involvement in business dates from this era and Morgan’s infamy. During this time, private banks became involved in financing the development of industrial nations, and politicians saw great wealth being created. At the time, there were neither personal nor corporate taxes. Furthermore, the nation was becoming more cohesive after the resolution of the Civil War, with less regional differences that had caused political friction between the states’ powers and federal powers. In other words, any federal regulation regarding business was viewed as anti-business and heavy-handed. This changed in the Morgan era with the introduction of several important legislative acts, such as the aforementioned Interstate Commerce Act of 1887 and the Sherman Anti-Trust Act of 1890. Naturally, Morgan decried the increasing hand played by government in the affairs of business. “The time is coming when all business will have to be done in glass pockets,” he said, after the Supreme Court found his Northern Securities concern an illegal enterprise in 1909, according to Encyclopedia of American Business History and Biography. Morgan’s role in creating U.S. Steel made a significant difference in helping that particular economy thrive in the following decades. Demand for steel greatly increased; steel wire was needed to enclose grazing lands out West, and other variations of the strong metal were needed for a growing urban America, such as nails, skyscraper skeletons, and tubes for steam boilers. Still, the popular image of Morgan at the time, fanned by tabloid-
5 5 4
B u s i n e s s
style newspapers, was as an enormous, greedy tycoon. Such images had political repercussions. Because of the Panic of 1907 and Morgan’s role in it, he again came under Congressional suspicion and faced the Pujo Committee in 1912. The Pujo Committee was part of the House Banking and Currency Committee and investigated insurance practices. It found that among the country’s public utilities and banking, insurance, and transportation giants, transactions and profits seemed to be controlled by a very small number of men, Morgan among them. To avoid the periodic economic panics and the reliance upon Morgan and others to help out, Congress finally voted to create a Federal Reserve System in 1913 within the department of the Treasury. Such an institution had been attempted on other previous occasions in American history, but had until then been viewed with suspicion as perhaps too powerful an economic force. It was only the influence wielded and profits reaped by men like Morgan that helped sway public and legislative opinion. Morgan died during the Pujo Committee aftermath while staying at the Grand Hotel in Rome. He left a fortune estimated at $68 million, which was separate from his extensive collection of fine art. He had built up a superb rare book and manuscript collection that included several historically significant pieces, such as the first Bible ever printed in North America. He served as president of Metropolitan Museum of Art, to which he bequeathed his extensive art collection. His rare books and manuscripts, at first housed at his mansion at Madison Avenue and 36th Street in New York, were moved to the Pierpont Morgan Library.
Sources of Information Contact at: J.P. Morgan & Company 60 Wall St. New York, NY 10260-0060 Business Phone: (212)648-5213 URL: http://www.jpmorgan.com
Bibliography Byers, Paula K. and Suzanne M. Bourgion, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1998. Frey, Robert L., ed. Encyclopedia of American Business History and Biography. New York: Facts on File, 1988. Ingham, John N. Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood Press, 1983. Rosenblum, Joseph, ed. Dictionary of Literary Biography. Detroit: Gale, 1994.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Akio Morita Overview As cofounder and chairman of the Sony Corporation, Akio Morita became one of the most influential businessmen in the world. He introduced consumers to innovative products including the hand-held transistor radio, the video cassette recorder (VCR), the Walkman portable audio cassette player, and the Diskman portable compact disk player. At the same time, he helped establish Japan’s reputation as a source of high quality products.
(1921-) Sony Corporation
Personal Life Akio Morita was born on January 26, 1921, the first son of Kyusaemon and Shuko Morita, in the small village of Kosugaya near Nagoya, Japan. If he had followed the traditional family occupation, he would have been the fifteenth-generation heir to his family’s sake brewing business. Influenced by his mother’s love for classical music, he became interested in electronics and sound reproduction while listening to her RCA Victrola record player. Morita became so interested in electronics that he built his own ham radio and almost flunked out of school due to his disinterest in anything but electronics. After returning diligently to his studies for a year, he entered the very prestigious Eighth Higher School as a physics major. Rather than be drafted at the beginning of World War II, Morita entered Osaka Imperial University, agreeing to serve in the navy following his graduation. At the university, he assisted his professors in research for the Japanese Imperial Navy. In 1944, Morita earned a de-
5 5 5
A k i o
M o r i t a
cessor, Noria Ohga, took over leadership of the company. Morita was now physically impaired and confined to a wheelchair. He was subsequently named honorary chairman, replacing co-founder Ibuka, who took the title of chief advisor to Sony Corporation unitl his death in 1997.
Career Details Following World War II, Morita worked as a physics professor until, in 1946, he borrowed money from his father to start a new business with Ibuka. With $500, they created Tokyo Tsushin Kogyo (Tokyo Telecommunication Engineering Corporation), with 20 employees sharing a rented office in a burned-out Tokyo department store.
Akio Morita.
(The Library of Congress.)
gree in physics and was immediately commissioned as a lieutenant in the engineering corps for the Japanese Imperial Navy. While in the navy, he conducted research at the Aviation Technology Center into thermal guided weapons and night-vision gunsights. There he met Masura Ibuka, an electronics engineer that was 13 years his senior. They became good friends and would eventually co-found Sony Corporation. Morita married Yoshiko Kamei on May 13, 1950; they had three children: Hideo, Masao, and Naoko. In 1987, Morita wrote Made In Japan, a historical biography that was considered to be one of the greatest resources for students considering a career in business. Two years later, he co-authored The Japan That Can Say “NO,” a book that drew a great deal of criticism in the United States. In addition to commenting on the quality of American products, Morita also criticized the U.S. education system and what he saw as the short-term focus of U.S. business practices. Right-wing politician and coauthor Shintaro Ishihara contributed more extreme, nationalistic chapters to the book, which suggested that Japan should not make any concessions to American demands for a balanced trade relationship. Morita distanced himself from this position in magazine articles written for publications such as The Atlantic Monthly. He asserted that he did not support Ishihara’s position; rather, he sought the deregulation of the Japanese economy. In November 1994, a year after Morita had surgery for a cerebral hemorrhage, he retired as CEO of Sony. His retirement had been anticipated, and his hand-picked suc-
5 5 6
B u s i n e s s
The company’s first products included manufacturing amplifiers, vacuum-tube voltmeters, and communications devices for the Japan Post Office and the Japan Broadcasting Company. Their first product aimed at the consumer market was a bulky $500 tape recorder that failed to attract much interest and was sold to schools instead. In 1947, the company had grown marginally and moved its 50 employees into some former army barracks on the outskirts of Tokyo. In 1953, Morita bought the rights to the transistor, a miniaturized electronic circuit which had been developed by an American company, Bell Laboratories, and whose patent was owned by another American company, Western Electric. Transistors were initially thought to be impractical for most consumer products with the exception of hearing aids. But, Morita’s purchase of the patent would prove to be a watershed for his company. His company would go on to produce many firsts: the AM transistor radio (1955); the pocket-sized transistor radio (1957); the two-band transistor radio (1957); the FM transistor radio (1958); the all-transistorized television set (1959); the alltransistorized video tape recorder (1960); and the smallscreen transistorized television set (1961). In 1958, the Tokyo Telecommunication Engineering Corporation changed its name to the Sony Corporation, and Morita moved to New York City to set up an office for operations in the United States. Five years later, Sony became the first foreign-owned business to offer stock for sale in the United States and, in 1970, it became the first Japanese company to be listed on the New York Stock Exchange. Sony Corporation continued to introduce new inventions: the first home video tape recorder priced within reach of most consumers (1965); a color video tape recorder (1966); the first integrated circuit radio (1966); its own tape for color video recording (1967); the first seven-inch color television set (1967); and a portable, battery-operated video tape recorder and camera (1967). Morita went on to become executive vice-president, president, chairman, and, finally, Chief Executive Officer (CEO) of Sony. His last major decision on behalf of
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
A k i o
M o r i t a
Sony was the purchase of CBS Records and Columbia Pictures Entertainment (which became Sony Pictures Entertainment) in the late 1980s.
Social and Economic Impact While Morita credited his partner Masura Ibuka as being Sony’s technical genius, Morita served as the company’s more visible spokesperson and promoter. He created the name “Sony” (easy to remember and say), and later replaced model numbers with the equally catchy product names Walkman, Handycam, and Watchman. It was Morita who learned English and traveled the world unveiling Sony prototypes, and it is he who has become most closely identified with the company. In his starring role, Morita introduced an astounding number of innovative products. Speaking in Fortune, Morita explained, “Our basic concept has always been...to give new convenience, or new methods, or new benefits, to the general public with our technology.” Following this guideline, Sony engineers developed electronic devices that were revolutionary at the time of their inception and are accepted as must-have products today: the hand-held transistor radio, the battery-powered television, the VCR, the camcorder, the compact disk player, and the Walkman portable cassette player. The Walkman and the Trinitron television set have been Sony’s greatest successes; the Trinitron’s exceptional picture quality garnered it an Emmy Award in 1972. Morita not only shared responsibility for creating perhaps the most inventive electronics company in the world, but he also led the way in establishing Japan’s reputation as a source of high quality products. He recalled an earlier time in New Scientist: “When I made my first trip to Europe in 1953 I couldn’t see any Japanese industrial products being exported to Europe. ‘Made in Japan’ was regarded as meaning very cheap, poor quality. When we started up our exports...we had to put, ‘Made in Japan’ on them. We were ashamed so we made the label as small as possible.” Ironically, Morita later found that when his company began building factories outside of Japan that customers expressed a preference for Sony products with the Japanese label.
Chronology: Akio Morita 1921: Born. 1944: Earned degree in physics at Osaka Imperial University. 1946: Cofounded Tokyo Telecommunication Engineering Corporation. 1953: Bought rights to the transistor. 1958: Changed company’s name to Sony Corporation. 1960: Set up American office for Sony. 1972: Sony awarded an Emmy for Trinitron television set. 1982: Awarded Medal of Honor with Blue Ribbon, Royal Society of Arts Albert Medal. 1984: Awarded Legion d’Honneur, Government of France. 1987: Wrote Made In Japan. 1989: Co-authored The Japan That Can Say “NO.” 1991: Awarded First Class Order of Sacred Treasure, His Majesty the Emperor of Japan. 1992: Awarded Honorary Knight Commander of Most Excellent Order of the British Empire. 1994: Resigned as CEO of Sony.
Described in New Scientist as having an “un-Japanese frankness,” Morita was outspoken at home and abroad regarding trade issues. Unlike most other Japanese business leaders, he admitted that Japan’s economy was essentially closed and expressed the opinion that his country’s policies should be changed. At the same time, however, he criticized the quality of some American products and charged that this was also an important factor in the Japanese trade surplus in the United States.
The Sony reputation for excellence and Morita’s active participation in the debate over economic policy combined to make him one of the most notable businessmen of his time. Writing for the New York Times, James Sterngold noted, “[Morita’s retirement] is a milestone in the business history of Japan and the West . . . [marking] the end of a career that symbolized Japan’s transformation from a low-cost industrial imitator into a highly competitive global innovator. Along the way, Mr. Morita became Japan’s most influential business diplomat.” But for his illness, Morita would have become the chairman of Keidanren, the most powerful business lobby in Japan.
Contact at: Sony Corporation Sony Corporation 7-35 Kitashinagawa 6-chome Tokyo, 141 Japan Business Phone: URL: http://www.world.sony.com
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Sources of Information
5 5 7
A k i o
M o r i t a
Bibliography Fox, Barry. “A Godhead of Japanese Electronics.” New Scientist, 11 July 1992. “IEEE Founders Medal to Sony Chairman.” Electronics Now, 1 October 1994. Jensen, Holger, and Kevin Sullivan. “Superiority Complex.” Maclean’s, 11 December 1989.
Schlender, Brenton R. “How Sony Keeps the Magic Going.” Fortune, 24 February 1992. Sterngold, James. “Sony’s Pioneering Chairman Gives Up the Reins.” New York Times, 26 November 1994. Sykes, Trevor. “The Century’s Top 10 Tycoons.” World Press Review, February 1996.
McClure, Steve. “Ohga Now Stands Alone Atop Sony Corp.?” Billboard, 17 December 1994.
5 5 8
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Samuel Morse Overview Samuel F.B. Morse is best known as the inventor of the telegraph and the code used to transmit messages on it. He sent the very first telegraph message—“What hath God wrought?”—on May 24, 1844. His invention revolutionized communications, making it possible to transmit messages across long distances with almost no delay. The telegraph facilitated westward expansion and the development of industry across the continent and helped to forge a sense of unity in a nation that was still very new.
(1791-1872) Magnetic Telegraph Company
Personal Life Samuel Finley Breese Morse was born in Charlestown, Massachusetts, on April 27, 1791, to Jedidiah Morse, a clergyman and his wife, Elizabeth Breese Morse. The oldest of three boys, he grew up being called “Finley.” Morse’s grandfather had been president of Princeton College, and his father was known throughout New England as a fervent Calvinist preacher. At the age of seven, Morse was enrolled at Phillips Academy in Andover, Massachusetts. Like his father before him, he went on to attend Yale College. While there, he began painting miniatures on ivory and enjoyed it so much that he considered pursuing a career in art. But his very religious parents did not approve. Thus, after graduating from Yale in 1810, Morse found a job in a bookstore in his native Charlestown. Morse continued to paint, however, and eventually his work came to the attention of two of the country’s most respected artists, Gilbert Stuart and Washington
5 5 9
S a m u e l
M o r s e
He worked as a portrait painter from 1815 until 1832 and enjoyed a fair amount of success. Of all his works, two in particular stand out. Both are portraits of France’s Marquis de Lafayette that were painted in 1825 in Washington, D.C. In 1826, Morse helped establish the National Academy of the Arts of Design, an organization aimed at helping artists obtain commissions and improving the public’s taste in art. He served as its first president from its founding until 1842. The deaths of Morse’s wife and parents left him in a profound state of grief. To aid in his recovery, he sailed to England in 1829 for an extended stay in Europe. During his return voyage to the United States in 1832, he became acquainted with an eccentric inventor named Charles Thomas Jackson. The two men passed the time aboard ship discussing Jackson’s ideas regarding electromagnetism, a subject Morse had first heard about while a student at Yale.
Samuel Morse.
(The Library of Congress.)
Allston. Impressed by their admiration of his son’s work, Jedidiah Morse finally allowed the young man to accompany Allston on a trip to England to study painting at the Royal Academy in London. He returned to the United States in 1815 with dreams of painting grand murals of heroic scenes. But there was no market for that kind of art at the time, so Morse had to settle for a career as a portrait painter. Having garnered a fair share of praise and recognition by the early 1820s, Morse settled in New York City and married a young woman named Lucretia Walker. But tragedy struck in quick succession as he lost his wife in 1825, followed by his father in 1826 and his mother in 1828. Grief over their deaths ultimately propelled him in a new direction. Morse married for a second time in 1848 and had several children. He ran for Congress in 1854 but was not elected. Morse spent the last years of his life on his estate in Poughkeepsie, New York, surrounded by his large family. Many European nations honored him for his invention, and in 1871 American telegraph operators erected a bronze statue of him in New York’s Central Park. Morse was elected to the Hall of Fame in 1900, 28 years after his death.
Career Details The first half of Morse’s life was dominated by his love of art and his efforts to establish himself in that field.
5 6 0
B u s i n e s s
According to Jackson, electrical impulses could be carried great distances along wires. Morse reasoned that if this were true, “and the presence of electricity can be made visible in any desired part of the circuit, I see no reason why intelligence might not be instantaneously transmitted by electricity to any distance.” He soon began sketching plans for a device that might be able to perform such a task. Although he resumed his painting career upon his return to America and began teaching painting and sculpture at the University of the City of New York, Morse continued to mull over the question of how to send and receive electromagnetic signals by wire. He envisioned a system in which the long and short impulses could stand for letters and numbers. Thus, not only did he need to come up with an appropriate transmitter and receiver, he also had to devise the code that would enable users to create and then decipher messages. Morse worked on his invention for a number of years without making much progress. Part of his problem stemmed from the fact that he was not a scientist and did not have the skill to implement his ideas. But then he met two men at the University of the City of New York who helped him tremendously. Leonard Gale, a chemistry professor, showed Morse how he could improve the electromagnet and battery for the working model of his telegraph. Gale’s friend Joseph Henry offered additional assistance in the area of electromagnetism. Morse also received valuable help from Alfred Vail, whom he took on as a partner in 1837. Vail suggested several practical refinements to the telegraph device itself as well as to the code it used to transmit and receive messages. In order to minimize the number of transmission lines per message, Morse had invented a code consisting of combinations of dots and dashes, each representing a single letter, number, or punctuation mark. A visit to a typesetting shop had helped him determine which letters were used most often, and to these he assigned the sim-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S a m u e l
M o r s e
plest code symbols. Complex codes were reserved for little-used characters. Thus marked the development of what would come to be known as Morse Code, the universal standard for communicating by telegraph. Meanwhile, aware that European inventors were also working on a telegraph device, Morse (who had abandoned his art career at this point) was anxious to establish himself at the head of the line. By 1837 he was ready to conduct a public demonstration. Appearing before a select audience at New York University on September 2 of that year, Morse successfully presented his telegraph device. He then contacted federal government officials and suggested that further development work be supervised by the Post Office. But nothing came of his recommendation. That same year, Morse and Vail applied for a patent for the telegraph in both the United States and England. Morse also approached Congress for a grant to fund the construction of an experimental line from Washington, D.C., to Baltimore. The American patent was approved in 1840 (the English one was rejected because a similar device had been introduced there earlier), but Morse could not convince Congress to appropriate any money for a telegraph line. After a few years of frustration, Morse finally obtained a federal grant of $30,000 to lay a telegraph line from Washington to Baltimore. On May 24, 1844, he tapped out the first message, “What hath God wrought?” and launched a new era in communications. Morse then tried to interest the government in buying the rights to the telegraph for $100,000, but Congress opted to leave it up to the private sector to finance and develop a system. So Morse and several partners formed the Magnetic Telegraph Company to lay telegraph lines themselves. Making money on the new technology proved difficult, however. According to an article in Canadian Geographic, the company made only one cent in revenue during its first four days of operation and only $193.56 during the first three months. Operating expenses for this same period were $1.859.05. Additional problems soon surfaced. Morse faced prolonged litigation over his patent rights as Charles Jackson and other scientists who had given the inventor advice demanded the recognition they felt they deserved. Neither side came out looking very good in court. While Morse stubbornly refused to give credit to the many people who had indeed contributed in some way to the development of the telegraph, a few scientists were strictly out to profit from his years of hard work. In 1854, the U.S. Supreme Court upheld Morse’s patent rights. Competitors were also quick to exploit the potential of the new invention. They soon began to establish rival telegraph companies throughout the country. Eventually, several small companies merged into the Western Union Corporation, which finally was able to make a profit on the telegraph. Morse’s own company did not stand much of a chance in the face of such a rival, so in 1866 the
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Chronology: Samuel Morse 1791: Born. 1832: Met Charles T. Jackson and began formulating the idea of the telegraph. 1837: Applied for telegraph patent. 1840: Received telegraph patent. 1843: Awarded federal grant to construct BaltimoreWashington telegraph line. 1844: First telegraph message transmitted. 1857: Teamed with Cyrus Field in transatlantic telegraph cable project. 1866: Merged his telegraph company with Western Union. 1872: Died.
Magnetic Telegraph Company also merged with Western Union. In his later years, Morse left the business world behind and turned his attention instead to politics and philanthropy. He even ran unsuccessfully for the United States Congress in 1854. His interest in scientific matters never waned, however, and in 1857 he teamed with Cyrus Field in a project to lay a transatlantic telegraph cable.
Social and Economic Impact It is nearly impossible to determine the full extent to which the telegraph changed the way people lived. It was not so much because ordinary citizens made use of it on a regular basis; in fact, it was a rather expensive means of communication that appealed mostly to big business and government. But telegraph lines followed the westward expansion of the railroad across North America, making it possible to communicate quickly over vast distances and linking far-flung settlements with population centers back east. This helped foster a stronger sense of national identity and underscored the need for more standardization and uniformity. One significant consequence of this new attitude was the creation of time zones in the United States and Canada. Before the invention of the telegraph, most cities
S t u d e n t s
5 6 1
S a m u e l
M o r s e
kept their own time based on the position of the sun at noon. A standardized time schedule, presented less confusion and less accidents. Surveying and cartography also underwent some changes as a result of the telegraph. Before its invention, surveyors calculated longitude by chronometers that were shipped to key geographic points. Though chronometers were fairly accurate instruments at the time, the jostling involved in moving them could affect their precision by as much as 20 seconds a day. But in 1849, astronomer William Bond of Boston invented a machine that attached chronometers to the telegraph. With this device, astronomers could hit a telegraph key when they saw a star cross the meridian, passing the data along to other astronomers and improving longitude precision. As a result, maps showing boundaries and borders became more accurate. By making distant communities feel less isolated from each other and the rest of the country, the telegraph also prompted greater political and social cohesion. People were better informed about what was happening at a national level and consequently became more involved in influencing policy, mostly because they heard about events in a more timely fashion. While the telegraph represented the first major breakthrough in mass communications technology, it was rapidly followed by the telephone (patented in 1876), television (first demonstrated in 1927), and eventually computers. Telecommunications is now a multi-billiondollar global industry that connects people not only by telephone and television but also by cable, satellite, and the Internet.
5 6 2
B u s i n e s s
Sources of Information Bibliography Byers, Paula K. and Suzanne M. Burgoin, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1998. Coe, Lewis. The Telegraph: A History of Morse’s Invention and Its Predecessors in the United States. Jefferson, NC: McFarland, 1993. Downs, Robert, John T. Flanagan, and Harold W. Scott, eds. Memorable Americans, 1750-1950. Little, CO: Libraries Unlimited, 1983 Harris-Adler, Rosa. “Creation of the e-nation.” Canadian Geographic, November- December 1995. Kloss, William. Samuel F.B. Morse. New York: H.N. Abrams, 1988. Lossing, Benson John. Harper’s Encyclopaedia of United States History. New edition. New York: Harper & Brothers Publishers, 1915; reprint, Detroit: Gale Research, 1974. Mabee, Carleton. The American Leonardo: A Life of Samuel F.B. Morse. New York: Knopf, 1944. Morse, Samuel F.B. Samuel F.B. Morse: His Letters and Journals, Edited By Edward Lind Morse. New York: Da Capo, 1973. Staiti, Paul J. Samuel F.B. Morse. New York: Cambridge University Press, 1989. Van Doren, Charles, ed. Webster’s American Biographies. Springfield, MA: G. & C. Merriam Co., 1979.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Peter Morton Overview Peter Morton along with partner Isaac Tigrett founded the Hard Rock Cafe in London, England in 1971, launching what evolved into one of the world’s bestknown; highest-grossing; and most influential restaurant creations. Years later Morton sold his share of the business for several millions but he continues to work as a Hollywood restaurateur and hotelier.
(1948-) Restaurateur
Personal Life Becoming a restaurateur must have been in the genes for Peter Morton. He was born in 1948 into a family well known for the Morton’s of Chicago restaurant. After earning a business degree at the University of Denver, he left Colorado and headed to London for a little rest and relaxation before starting a job with a Wall Street conglomerate. It was while in London that he met Isaac Tigrett. A product of the 1970s, a time when society became more environmentally conscious, Morton’s social interests are largely an extension of his business philosophy and, as such, require corporate involvement with charity and conservation issues. He is very committed to environmental causes and has had a membership on the board of the National Resources Defense Council, a New Yorkbased group made up of scientists, lawyers, economic planners, and others who promote management of natural resources through research, public education, and development of public policies.
5 6 3
P e t e r
M o r t o n
Peter Morton.
(AP Photo/R. Carscon.)
Career Details For Morton, the beginning of his ascent in the restaurant business started in 1970. After spending time in London, Morton came to the conclusion that there was a void in burger joints in the British capital and attempted to change that by opening the Great American Disaster restaurant. He later boasted, according to Nation’s Restaurant News in February of 1996, that he “beat even McDonald’s to Europe.” Eventually, Morton met Tigrett, a native of Tennessee who was working odd jobs in British factories controlled by his father, an exporter of vintage Rolls-Royces and Bentleys. Morton and Tigrett decided to join forces and pool resources, totaling $5,000.
5 6 4
B u s i n e s s
Of course, more was needed so they borrowed enough money to launch the first Hard Rock Cafe in 1971. The very ‘American’ restaurant opened in London’s fashionable and upscale Mayfair district. It was Europe’s first introduction to the American experience. Oddly enough, this very unconventional restaurant in a most traditional location quickly became one of the most sought after places to dine. Moreover, it was a place that attracted people from a variety of ages and social backgrounds. The Beatles and the Rolling Stones frequented the restaurant, as well as hippie-types, high society, and ordinary folks — all desiring to eat and be seen at the hottest place in London. And they came to the newest sensation to hit London streets just to eat a burger. As the restaurant’s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
P e t e r
M o r t o n
popularity grew, so too did demand for its logo-emblazoned souvenirs. “I brought a real understanding of the restaurant business, and Isaac brought a lot of creative attributes and together we made the Hard Rock Cafe,” Morton once said. The appeal of this restaurant was high but few could explain why. Ken Western of the Arizona Republic newspaper tried to get Morton to offer tips for success, but Morton, a private person who avoids public attention, merely credited the success to good food at an affordable price offered in an environment with great memorabilia. The primary audience tends to be age 18 to 40, a varied and diverse group. In 1979 Morton left England and returned to his hometown of Los Angeles. Shortly after, he launched the trendy Morton’s restaurant, one of Hollywood’s exclusive locations for power dining. It was tough overseeing the original Hard Rock Cafe from abroad, and Morton’s interests were gradually shifting elsewhere. However, Tigrett seemed interested in continuing the business in London. So in 1982 Morton “sold his stake in the London cafe for $800,000,” according to Richard Martin of Restaurant News and, “with a host of celebrity investors, launched the first U.S. branch of Hard Rock Cafe a short distance from Mortons.” In the mid-1980s, Morton and partner Tigrett decided to part ways and argued over Morton’s rights to Hard Rock. Morton eventually won the legal dispute, and the two ex-partners split the globe for future expansion, and divided the United States along the Mississippi River. Morton ended up with the Western part of the United States to develop and Tigrett developed the name in the East. Morton opened a slew of Hard Rock Americas from Los Angeles, the headquarters for his operations, to Chicago, New Orleans, and Aspen, Colorado. It was not long before Morton was branching out across continents again, and he opened cafes in Sydney, Australia and Tel Aviv, Israel. In 1983 Tigrett took his Hard Rock faction in England public, launched a New York Hard Rock Cafe in 1984, and then, in 1988, sold his controlling interest for $108 million. Morton, however, held on much longer. Finally, in 1996 he sold 13 restaurants and four franchised cafes, mostly in the West, for $410 million. He sold to Rank Organization PLC of Great Britain. Rank had already acquired Tigrett’s former shares in 1990 from the company Tigrett had sold his shares to in 1988. Thus Rank completely owned the Hard Rock Cafe franchise, with the exception of Morton’s West Hollywood restaurant. Even still, Morton realized a substantial profit. According to James Bates of the Los Angeles Times, “Morton’s share of the proceeds is about $300 million, with the remaining amount going to his numerous partners who were passive investors, including TV mogul Barry Diller and actor Tom Cruise.” Bates continued on to say that “sources said that the investors came away with a staggering return, having invested only about $18 million total over the years.”
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Chronology: Peter Morton 1948: Born. 1971: Cofounded first Hard Rock Cafe. 1979: Opened Morton’s Restaurant. 1982: Sold stake in London Hard Rock Cafe. 1985: Morton and founding partner split Hard Rock name. 1992: Filed third suit against Planet Hollywood in Chicago. 1995: Hard Rock Hotel-Casino opened in Las Vegas. 1995: Morton’s company made $26 million profit. 1996: Opened 16th Hard Rock America restaurant. 1996: Sold stake in original Hard Rock Cafe restaurants and rights to the chain for $410 million.
Social and Economic Impact It was quite a run for Morton and Tigrett, who had no idea of what they were starting in London. Hard Rock grew to inspire a whole slew of entertainment-theme restaurants, all trying to copy the burger and rock-n-roll aura of the Hard Rock Cafes. Without Hard Rock Cafe, restaurants such as Planet Hollywood, which Morton sued claiming the restaurant stole his entertainmenttheme concept, and Fashion Cafe might not have opened. Morton, however, is very modest about his success with the American icon restaurant. “I just got lucky,” he told Restaurant News in 1996. “If you would have told me that it would lead to a $100 million hotel-casino, I would have told you were crazy.” Yet, a hotel-casino is exactly what Morton gained when he finally parted with the Hard Rock Cafe restaurants. In the deal divesting Morton of the restaurants, he still retained rights to the name and the Hard Rock Hotel & Casino. In 1996 his partner, Harveys Casino Resorts, owned 40 percent of the casino/hotel. After selling the restaurants, Morton said that he was ready to “refocus my energies in different areas.” This time he had his eye on the potentially lucrative but risky hotel and gaming business. In 1996 Morton estimated that the casinohotel was worth $300 million. A year later, however, Morton found himself, once again, breaking with his part-
S t u d e n t s
5 6 5
P e t e r
M o r t o n
ner. The Hard Rock joint ventures partnership, of which Morton was a part, bought Harvey’s interest for $45 million. Philosophical differences were cited as the reason for the split. “Opening a spectacular hotel and casino is a dream come true”, said Morton with no delusions about what it will take to make the operation a success. More important, he is not looking to cash in on the Hard Rock name. “I don’t look at this hotel as a field of dreams, where just because we opened people are going to come,” he says. “Vegas is a city that’s dominated by great showmen like Steve Wynn and Kirk Kerkorian. To succeed, we’re going to have to deliver.” An article in the Arizona Republic newspaper said of the hotel: “Its casino will probably seem like a foreign country to the average Las Vegas visitor. It will feature slot machine handles shaped like guitars and roulette tables in the shape of pianos. An electronic tote board above a bank of Save the Rainforests slot machines that contribute their winnings to environmental organizations counts down the acres of rainforests remaining on the planet.” Indeed, not a typical casino but one that may appeal to the 40 years old and under crowd, the group that Morton hopes to win over. “The place will probably have a unique tendency to attract a younger gambler,” Morton explained. “I think it will help to attract a new customer to Las Vegas, because we’re offering an alternative.” But it is not typical of Morton to follow conventional standards or norms. This very private, low-key man is very much a trend-setter and continues to influence the entertainment industry, challenging owners in this business to go beyond the obvious and the conventional. His advice for young entrepreneurs is simple: dedicate, focus and commit. When it comes to predicting what works and what does not, Morton leaves that up to the con-
5 6 6
B u s i n e s s
sumer. “I wouldn’t assume anything is a success until the customer proves it to you,’ he said.
Sources of Information Bibliography Bates, James. “Hard Rock Cafe chain, a Yankee Original, Sold to British.” Los Angeles Times, 8 June 1996. Bates, James. “Morton, Partners Sell Hard Rock Interest to Tune of $410 million.” Los Angeles Times, 8 June 1996. “Harvey’s Casino Resorts and Hard Rock Hotel Complete Negotiations.” Two-Ten Communications Online. Available from http:// www.twoten.press.net/97/07/02/headlines/Business_Harveys_ Hotel. “The History of The Hard Rock Cafe.” Baltimore Hard Rock Cafe. Available from http://www.baltimorehardrockcafe.com/history.htm. Martin, Richard. “Peter Morton & Isaac.” Nation’s Restaurant News February 1996. Mattox, Jake. “Peter Morton: I Don’t Take Success For Granted.” Las Vegas Business Press 24 June 1996. McKee, Jamie. “Hard Rock Hotel: Can it Roll Without Players?” Las Vegas Business Press 20 February 1995. “Rock ‘n’ Roll Magic Spins Into Shanghai Centre.” Shanghai Centre Online, Available from http://www.shanghai-centre.com/ arc896.html. Shruers, Fred. “Tumblin’Dice: Vegas’s Hard Rock Hotel & Casino is the Newest Game in Town, Luring Music Fans Both Young and Graying.” Los Angeles Magazine, October 1995. Weithas, Jeremy. “Morton, Hard Rock Cafe Partners File Third Suit Against Planet Hollywood.” PR Newswire, 17 June 1992. Western, Ken. “Cafe Founder A Hard Rock to Crack.” Arizona Republic, 20 October 1995.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
William Mow Overview William Mow rose through amazing adversity, including being forced to resign from a company he owned because he was falsely accused of hiding financial information, to found the highly successful Bugle Boy Industries. Though Mow knew nothing about the clothing business when he began the company, effective advertising and networking, along with a good understanding of his target market, helped make Bugle Boy clothing a high demand item in the United States and around the world.
(1936-) Bugle Boy Industries
Personal Life William Mow, or Mow Chao Wei, was born in Hangchow, China in 1936. His father worked at the United Nations in New York as an official of the Nationalist Chinese regime. When William was 13, his parents fled the Communist takeover of their country on “the last Pan Am flight out of Shanghai.” Once they moved to the United States, the family adopted Western names, and Mow Chao Wei became William Mow. He grew up in Great Neck, New York, where his parents owned a restaurant. William Mow’s family valued education. Of his parents’ four sons, three earned a Ph.D. After attending a boarding school, Mow worked his way through an extremely challenging course of study in electrical engineering at the highly respected Rensselaer Polytechnic Institute of New York. From 1963 to1965, he also worked for Honeywell, Inc. He earned his Ph.D. in electrical engineering from Purdue University in Indiana in 1967.
5 6 7
W i l l i a m
M o w
Chronology: William Mow 1936: Born. 1949: Fled China with family and settled in New York. 1967: Earned Ph.D. in electrical engineering from Purdue University. 1969: Founded Macrodata. 1976: Forced to resign from Macrodata based on accusations of concealing sales losses. 1977: Founded Buckaroo International, Inc. 1980: Reorganized Buckaroo International into Bugle Boy Industries. 1988: Legally cleared of accusations of concealing Macrodata financial data. 1990: Expanded clothing line to include men, women, and children. 1996: Moved Hong Kong offices into China.
Mow married twice and fathered two children, one from each marriage. By 1997 several members of his family held high positions at Bugle Boy, including his wife Rosa (who supervised operations), two daughters (heading up marketing and creative arts), and two nephews. But Mow insisted that any relatives working for him either earn their pay or find other work.
Career Details Mow’s first experience with entrepreneurship came from the Yangtse River Cafe, his family’s restaurant in Great Neck, New York. Every Sunday when he returned to boarding school as a teen, he would bring with him 20 egg rolls, which he sold for a quarter apiece at the school snack bar. “There was always a line of boys waiting to buy them,” he recalled. After earning his Ph.D., Mow spent the years from 1967 to 1969 working for Litton Industries as a program manager before forming his first business in 1969, a computer-controlled instrumentation firm called Macrodata. Macrodata designed new ways to test large scale integrated computer chips. By 1974, Macrodata had annual
5 6 8
B u s i n e s s
sales of $12 million. In the mid–1970s, Mow sold Macrodata to Cutler-Hammer, a conglomerate located in Milwaukee. He remained on as chairman and CEO but had to resign after the new owners accused him of concealing $2 million worth of losses. He would later remember the years 1976 until 1981 as a “nightmare.” Mow had gone into the relationship with Cutler-Hammer thinking they would provide him with management backing while he focused on technology; instead, due to accusations that he had manipulated the financial records, he found himself forced to leave the company he had founded. Later, in 1988, a California court cleared Mow of any accusations and found that Culter-Hammer had actually been responsible for concealing the sales loss. The entire incident took a toll on Mow’s personal life — his first marriage ended during that period. After Mow resigned from Macrodata, he felt the need to take immediate action to clear his name and to pay for the legal fees he had incurred. In 1976 he acted on the advice of some golfing friends and began exploring wholesale and retail clothing sales. He also met his future partner, Vincent Nesi, who worked in a boutique jeans store. Mow started Buckaroo International Inc., a boutique store, in 1977 and hired Nesi as merchandise manager. Success was far from immediate, as Mow had a lot to learn about the apparel business. In Notable Asian Americans he said, “I got myself a ‘school-of-hardknocks’ Ph.D. in understanding every step in composing a garment.” In September 1980, Mow redirected his clothing company. He renamed the company Bugle Boy Industries (chosen because of his interest in the Civil War and the men who played bugles alongside battles) and asked his merchandise manager, Vincent Nesi, to step up to the position of president of sales and merchandise. Mow and Nesi narrowed their focus to jeans and casual pants. The two men operated as partners; Mow worked out of his Simi Valley, California company headquarters (headquarters for administration, operations, advertising, and distribution) and Nesi worked in the garment district of New York (the location of merchandising, product design, and sales). Because the company was private — and Mow had declared it would remain so because the Macrodata fiasco showed him what could happen if he lost control of his business — Mow and Nesi in 1994 remained the only Bugle Boy shareholders. The company opened stores in Canada in 1988, and spread to various locations in the Pacific Rim, Latin America, and Europe. William Mow’s company was built on the “parachute pants” fad of the early 1980s, and appealed mainly to young males. When that fad died out, Bugle Boy began the practice of constantly introducing changes in style and color. The company responded rapidly to changes in the market with a quick manufacturing turnaround process and the use of overseas manufacturers. By 1991, Bugle Boy had broadened its strategy to appeal to young women, adults, and children.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
W i l l i a m
After facing numerous challenges, Bugle Boy’s sales skyrocketed in 1980. From less than $10 million in sales during the early part of the decade, receipts jumped to almost $190 million in 1987, and by 1990 they had passed $500 million. Because of the company’s private status, Mow was under no obligation to provide financial specifics, but Bugle Boy clearly was continuing to grow throughout the late 1990s. According to Mow, “We’ll be doing $1 billion by 2001.” In 1996 Mow made an aggressive move and relocated the company’s Hong Kong office into a special economic zone in China. Mow made it clear that he wanted to capture the Chinese market and set a goal of establishing 1,000 retail outlets in China. His rationale was, “If one can get China, you can forget everything else.” Regardless, capitalist entrepreneurs in China faced a variety of government obstacles and red tape. Mow’s move was successful in terms of moving production to China —he claimed that it saved the company $7 million a year because production and operating costs were cheaper there. However, in 1997 he still had not made the leap to selling Bugle Boy clothing in China, citing too great a risk until China operated by the same rules as the rest of the countries in the World Trade Organization.
Social and Economic Impact
Part of Bugle Boy’s success was due to Mow’s ability to react quickly to changes in the market and still come forward for customers and retailers. When the recession hit the clothing industry in 1990, Mow acted quickly and expanded the clothing line to include customers other than teenage boys. Using his engineering expertise, Mow installed high power computer systems to track slow as well as popular inventory, and to speed communications with those all along the production process in foreign countries. Bugle Boy also opened up discount mall outlet stores to better reach potential customers. These stores provided 50 percent of company revenue in 1997. In 1997 Bugle Boy had annual sales of $500 million and had a one year sales growth of 5.2 percent. The company employed 2,200 people in all, including 400 people
L e a d e r
P r o f i l e s
in California, which—according to Mow—represented a increase in Bugle Boy employment (in California) of 75 percent between 1994-1997. The expanded employment represented sales, management, and design positions; functions that Bugle Boy continued to carry out in America. By 1997 Bugle Boy products were sold in more than 7,000 retail stores, as well as in Bugle Boy’s own discount outlets. Bugle Boy continued to make use of foreign production resources. In 1997, the company sent out 15 million units of clothing per year to Mexico for manufacturing. Bugle Boy garments produced in Mexico increased by five times between 1994-1997, which Mow claimed was due to new business. Bugle Boy retail markets continued to expand in the late 1990s. By 1998, Bugle Boy was expanding into new markets in China and opening stores there. Though Bugle Boy nearly went bankrupt several times when the fickle demand for teenage fads collapsed, Mow gained a reputation as a business leader to bank on. He credited his ability to deal with risk to his childhood in a family where they all had to work hard for their achievements. His flexibility also allowed him to weather the ups and downs of the apparel industry. At the right price, he once said, you can sell anything.
Sources of Information
Due in part to targeted and effective advertising, the Bugle Boy name came to be widely recognized. Mow and Nesi achieved success by focusing their strategy in a simple way—by consistently delivering products to stores every month. Bugle Boy’s initial timing was particularly good, since the designer jean fad was phasing out and teenagers were looking for alternatives in jeans design. Bugle Boy provided that alternative with its popular cargo pants and parachute pants.
B u s i n e s s
M o w
f o r
Contact at: Bugle Boy Industries 2900 N Madera Rd. Simi Valley, CA 93065-6236 Business Phone: (805)582-1010
Bibliography Barrier, Michael. “From Riches to ‘Rags’—And Riches.” Nation’s Business, January 1991. “Bugle Boy Industries.” Hoover’s Online 2 June 1998. Bugle Boy Industries. Available from http://www.bugleboy.com. Gall, Susan, ed. The Asian American Almanac. Detroit: Gale, 1995 Iritani, Evelyn. “Back to His Future: Bugle Boy’s William Mow is Returning to China.” Los Angeles Times, 28 September 1997. Lee, Don. “Fashion Forward.” Los Angeles Times, 26 April 1998. Stavro, Barry. “Bugle Boy to Battle on New Fronts.” Los Angeles Times, 8 August 1989. Who’s Who In America 1997. Chicago: Marquis Who’s Who, 1996 Who’s Who in America. New Providence, NJ: Marquis Who’s Who, 1996. Zia, Helen, and Susan B. Gall, eds. Notable Asian Americans. Detroit: Gale, 1995.
S t u d e n t s
5 6 9
Rupert Murdoch The News Corporation (1931-)
Overview Rupert Murdoch has been credited with singlehandedly creating the concept of a modern media empire. With his chain of newspapers, a television network, holdings in book and magazine publishing, part-ownership of 20th Century-Fox, and expansion into satellite television services around the world, Murdoch has mastery over an enormous array of information providers. Murdoch created his News Corporation out of a few small newspapers inherited from his father, and in the late 1990s his 30 percent share of the company was estimated at $3.9 billion, making him one of the world’s richest private citizens. Politically conservative, Murdoch has been accused of wielding his power unfairly. He has been compared to the lead character in the famous 1930s Orson Welles film Citizen Kane, which, in turn, was loosely based on the career of William Randolph Hearst, who is considered the founder of tabloidstyle journalism.
Personal Life Murdoch was born Keith Rupert Murdoch in 1931 in Melbourne, Australia. He was named for his father, Sir Keith Murdoch, an Australian newspaper magnate who had been a well-known war reporter during the World War I. His mother, Elisabeth, would later be honored with the title Dame of the British Empire for her welfare activism. Murdoch and his three sisters were raised in a suburb of Melbourne in a prosperous home, and also spent time on the family’s sheep ranch in the country. At the age of ten he was sent away to boarding
5 7 0
R u p e r t
Rupert Murdoch.
(AP Photo/Richard Drew.)
school, and as a young adult traveled to England to earn his college degree. At Worcester College of Oxford University, Murdoch studied economics and political science, and earned an M.A. in 1953, the year after his father died. He married and had a daughter, Prudence, but by 1967 the marriage had ended and he wed Sydney newspaper reporter Anna Torv, with whom he would have three children. The two separated in 1998. Two of Murdoch’s three adult children work for him; his second son is involved in the record industry. For recreation the mogul swims, plays tennis, and skis, but he also travels incessantly to keep tabs on his global empire. Though he is considered one of the world’s wealthiest private citizens, Murdoch shuns
B u s i n e s s
M u r d o c h
L e a d e r
P r o f i l e s
f o r
a lavish lifestyle and is known to prefer taxicabs to limousines. Although he travels extensively, he did not purchase a Gulfstream jet for his private use until the late 1980s. When not traveling, he lives in New York City and Beverly Hills, and is a generous contributor to the Republican Party.
Career Details Murdoch’s first job in journalism came while still in England when he was hired as a reporter for a paper in Birmingham. He then spent time at London’s famed
S t u d e n t s
5 7 1
R u p e r t
M u r d o c h
Chronology: Rupert Murdoch 1931: Born. 1953: Earned Oxford degree. 1960: Bought major Australian newspaper. 1967: Married Anna Torv. 1969: Became publisher of two major English tabloids. 1974: Became publisher of London Times. 1976: Bought New York Post. 1985: Became a naturalized U.S. citizen. 1986: Launched Fox Television network. 1997: Bought Los Angeles Dodgers baseball team.
Daily Express, where he served under the tutelage of its equally newsworthy owner, Lord Beaverbrook, a friend of Sir Keith Murdoch. After his father’s death, Murdoch had inherited his holdings, including the Adelaide News. But when he returned to Australia in 1954, he realized that his father’s empire was far less than the family had assumed, and inheritance taxes had taken a large share. Murdoch set out to revive the Adelaide News, and as its owner and publisher implemented circulation-boosting tactics he had learned at the Daily Express. He is credited with bringing London’s Fleet Street style to Australia, and was known in the early days for writing some of the attention-getting headlines himself. In 1956 Murdoch purchased a Perth paper, and four years later entered Australia’s largest market when he acquired two lackluster Sydney papers, the Daily Mirror and Sunday Mirror. Critics of Murdoch, mostly his more conservative competitors in the field of journalism, expected him to fail. Instead, circulation of both the daily and Sunday paper rose dramatically after being revamped with his News Corporation’s particularly racy style. His critics remained, but it became evident that crime and sex stories did indeed sell papers, as did headlines like “Queen Eats a Rat.” In 1964, Murdoch lured some of the country’s top editors and reporters to launch The Australian, a serious paper with an esteemed reputation. Murdoch set his sights on England as his next conquest. In 1969, he bought the weekly News of the World, the best-selling newspaper in the English language, and
5 7 2
B u s i n e s s
later that year acquired another Fleet Street staple, the daily Sun. In the case of the Sun, Murdoch more than doubled circulation in the first year by featuring a photograph of a topless woman every day on page three. Elsewhere in its pages, a melodramatic style and excerpts from tell-all books made it a must-read. The Sun soon became the best-selling paper in Murdoch’s empire, and over the next decade, the politically conservative Murdoch would use his editorial power to make this and his other papers platforms of support for Tory Party (conservative) politics in England. Murdoch entered the American market in 1973 when he purchased the San Antonio Express in Texas. The next year, he launched the supermarket tabloid Star to compete with the National Enquirer. His most famous acquisition, however, came in November of 1976 when he bought the New York Post, a bastion of liberal politics and the city’s oldest newspaper, founded in 1801 by Alexander Hamilton. It shocked journalism circles, and Murdoch introduced into the paper many of the same tabloid-esque tactics that had been so successful overseas; perhaps most infamously, the Post once used the headline “Headless Body in Topless Bar” in a 1983 crime story. He also tried to introduce the concept of the page three pin-up to American readers, but his wife Anna was adamantly against it; she feared their three children, who were living in New York City by then, would see the paper on their way to school. For a time, Murdoch was somewhat of an outcast in New York, and the children were even refused admission when the Murdochs attempted to enroll them in one elite private school. Murdoch’s empire gained further notoriety in 1977 when he bought the New York Magazine Corporation, publisher of the Village Voice and the well-regarded weekly New York from a onetime friend in a somewhat underhanded manner. A court case ensued, and New York magazine writers went on strike in protest of the possibility of having Murdoch as their boss; 20 of them later quit when that occurred. By now, Murdoch was a millionaire and his News Corporation controlled an empire that brought in enough revenue to enable him to become owner of one of Britain’s most venerable papers, London Times and its weekly edition, the Sunday Times, perhaps the most prestigious name in British print journalism. Although he shifted its focus to a more conservative slant, he allowed editors there to run stories unfavorable to the conservative government of prime minister Margaret Thatcher. On one occasion, the owner of the Harrod’s department store, Mohamed al Fayed, objected to a story the Times had run about one of his homes, the former Paris abode of the Duke and Duchess of Windsor. As former editor Andrew Neil recounted in his book about the Murdoch empire, Full Disclosure, Al Fayed threatened to cancel his advertising with the paper unless a retraction was printed. Instead, Neil banned all Harrod’s advertisements, the paper’s biggest account, with the blessing of Murdoch,
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
R u p e r t
who rejected the idea that Al Fayed would assume that, “We can be bought for 3 million pounds.” Murdoch was interested in electronic media, and his 1983 investment into a European satellite television market represented his first foray. His goal, however, was to launch a fourth network in the United States, and to meet one of the legal requirements to do so, he became a naturalized U.S. citizen in 1985. After purchasing a large share of the movie and television behemoth 20th Century-Fox and several local affiliate television stations, Murdoch launched the Fox Network in 1986, the first competitor to the broadcast giants ABC, NBC, and CBS since the 1950s. A decade later, Fox TV was a serious presence in broadcast television, with a string of highlyrated shows that catered to young viewers. A major coup was its successful bid to the broadcast rights for National Football League games, including the ratings plum of Superbowl Sunday. In 1988 Murdoch cut a $3 billion deal with media mogul Walter Annenberg to acquire several publications, including TV Guide, a periodical with one of the largest number of readers in the United States. By this point the News Corporation had already acquired several other dailies in major markets, including the Boston Herald and Chicago Sun-Times. In the late 1980s Murdoch also added the title of book publisher to his list when he became chair of HarperCollins publishing empire. Acquisitions of satellite broadcast services around the globe continued, and a decade later his empire included Star TV in Asia and ZeeTV, which broadcasts to the Indian subcontinent. In 1995 Murdoch financed the launch of the conservative American magazine, The Weekly Standard.
Social and Economic Impact Murdoch’s wealth has enabled him to exert influence in politics around the world. He once commented about a liberal administration in power in Australia: “I elected them. And incidentally I’m not too happy with them. I may remove them.” Over the years Murdoch has faced much criticism for his competitive business practices and political conservatism, and has been accused of “dumbing down” of print and broadcast journalism in general, as competitors have adopted some hallmarks of the tabloid style in order to compete with his empire. America writer Terry Golway described Murdoch as a “media baron who is destined one day to employ a third of the world’s journalists, actors, authors, editors and scriptwriters.” Some have asserted that such control in the hands of one private citizen is unfair, and in the end stifles the spirit of the printed word. During the 1980s, Murdoch was an enthusiastic supporter of British prime minister Margaret Thatcher and her Tory government, an 11-year regime that dismantled much of the country’s socialist policies. One aspect of this was to weaken Britain’s powerful trade unions. The
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
M u r d o c h
Murdoch chain became embroiled in this union squabble in a contentious 1986-87 strike at the Times’ printing presses. A decade later the high-tech printing plant was non-union, which saved Murdoch’s company greatly in labor costs. In 1997, with the scheduled handover of the British colony of Hong Kong to the Chinese government, Murdoch faced criticism for giving in to the Communist leaders in Beijing. The British Broadcasting Corporation newscasts, which reflected unfavorably on the Chinese government, were taken off Murdoch’s Star TV satellite network. The following year, the News Corporation entered a deal with the People’s Daily, China’s national, party-controlled newspaper, to create an informationtechnology partnership that would include on-line services. Murdoch, believed the long-term effect was obvious. “Advances in the technology of telecommunications have proved an unambiguous threat to totalitarian regimes everywhere,” a BBC report quoted him as saying. After the 1997 hand over of Hong Kong, Murdoch’s HarperCollins was set to publish former Hong Kong colonial governor Christopher Patten’s memoirs, but the manuscript was dropped in a well-publicized fracas. Critics of the News Corporation asserted that Murdoch nixed the book when it proved too critical of mainland China in Patten’s accounts of his dealings with Communist leaders over the years. In the end, it reflected unfavorably on China for resisting Patten in his goal to gain some assurance of democracy in the post-British Hong Kong. The book was later published by a competitor, and the incident was considered by some to have damaged HarperCollins’s credibility in the book publishing world. One of Murdoch’s biggest foes is fellow media mogul Ted Turner, owner of the Cable News Network and several other massive media properties. The two have a longstanding rivalry that includes legal volleys. Murdoch successfully triumphed over Turner in 1997 when he purchased the Los Angeles Dodgers professional baseball team. Murdoch has also bought a partial interest in the New York Knicks, the New York Rangers, and Madison Square Garden, and in Australia owns an entire rugby league.
Sources of Information Contact at: The News Corporation 2 Holt St. Surry Hills, Sydney, New South Wales 2010 Australia
Bibliography Alterman, Eric. “Prizing Murdoch: Full-Court Press.” Nation, 23 June 1997. America, 18 January 1997. Bondi, Victor, ed. American Decades. Detroit: Gale Research, 1996.
S t u d e n t s
5 7 3
R u p e r t
M u r d o c h
Byers, Paula K. and Suzanne M. Bourgoin, eds. Encyclopedia of World Biographies. Detroit: Gale Research, 1998.
James, Steve. “Murdoch’s Dodgers Start Era of Rupert Ball in L.A.” Detroit News, 8 April 1998.
British Broadcasting Corporation. “BBC News.” London: British Broadcasting Corporation, 1998. Available from http://www. news.bbc.co.uk.
Neil, Andrew. “Murdoch and Me.” Vanity Fair, December 1996.
Contemporary Theatre, Film and Television. Detroit: Gale Research, 1988.
“Rupert Murdoch Picks Sides Between Money and Honesty.” Herald 3 March 1998. Shah, Diane K. “Will Rupert Buy L.A.?” Los Angeles Magazine, December 1997.
Current Biography Yearbook. New York: H. W. Wilson, 1977.
5 7 4
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Condé Nast Overview Legendary magazine publisher Condé Nast became the preeminent chronicler of society from 1909 until 1942 through such major publications as Vogue, Vanity Fair, and House and Garden. Out of his belief that advertisers would pay premium rates for the most affluent readership, he pioneered the concept of the limited-circulation magazine targeted to an affluent audience. This concept revolutionized magazine publishing. As the New York Timesobserved in his obituary, “for a generation he was the man from whom millions of American women got most of their ideas, directly or indirectly, about the desirable standard of living.”
(1873-1942) Condé Nast Publications Inc.
Personal Life Condé Montrose Nast was born on March 26, 1873 in New York City. His father, William Frederick Nast, was an unsuccessful speculator-inventor. His mother was Esther Ariadne Benoist Nast of St. Louis. With his father often absent, Nast, his brother, and two sisters were raised by his mother in St. Louis. Nast’s paternal grandfather, Wilhelm Nast, was a leading founder of German Methodism in America and edited the leading German Methodist newspaper. It was likely from him that Nast inherited his love of publishing, as well as his systematic way of doing things. Descriptions of Nast as a child have included such traits as thoroughness and neatness. As his mother recalled, “When they were boys, he and [his brother] Louis used to cut the lawn in front of our house in St. Louis. . . . There was a path down the middle of the plot and Condé’s side was always very neat, each blade of
5 7 5
C o n d é
N a s t
Nast’s third child, Leslie, was born. In 1932, suffering from serious financial reversals and uneasy about the age difference, Nast insisted that Leslie divorce him, and she reluctantly complied. During his heyday as a magazine publisher in the 1920s, Nast established a spectacular life-style in his thirty-room penthouse on New York’s Park Avenue. Although he often lunched cafeteria style restaurants, he lived a life of luxury. He was notorious for his lavish parties that brought together the era’s rich and famous. As biographer Caroline Seebohm relates, “Going up in the private elevator . . . jammed together with Astors, Vanderbilts, and other persons of consequence, Groucho Marx was overheard . . . to remark to his brother Harpo: ‘This is a classy joint.’” After 1941, struggling to make his various publishing ventures successful, Nast became irascible and refused to listen to the advice of those around him. He refused to slow down, despite a serious heart condition. In September 1942, while visiting his daughter at camp in Vermont, he suffered a severe heart attack while climbing a hill with her. Two weeks later he died at the age of sixty-nine, having provided his own epitaph shortly before his death: “Think of it. Here I was, just a boy from St. Louis, and Edna Chase (the long-time editor of Vogue) a Quaker from New Jersey. Between us, we set the standards of the time. We showed America the meaning of style.”
Career Details
Condé Nast.
(AP/Wide World Photos, Inc.)
grass in scrupulous order, but Louis’s was more laissez faire, uneven in spots and artistic outcroppings.” Nast convinced a wealthy aunt to finance his education at Georgetown University where he became the first student president of the athletic association in his freshman year. He met fellow student Robert Collier, whose father owned a successful publishing business in New York, an important future contact in Nast’s eventual career in publishing. Nast met his first wife, Clarisse Coudert, while riding in New Jersey with Collier and they were married in 1902. They had two children, Charles Coudert and Natica. The couple divorced in 1925. In 1928 Nast remarried to Leslie Forrest who was the same age as both his daughter and his son’s fiancée. In 1930,
5 7 6
B u s i n e s s
After graduating from Georgetown, Nast returned home to St. Louis to earn his law degree from Washington University in 1898, but was not eager to work in law. Instead he began to work in a small printing plant in which his family had invested. Nast used the St. Louis Exposition as a way of attracting new business to the plant. When Robert Collier visited his friend he was impressed with Nast’s success. He offered Nast a job as advertising manager for Collier’s Weekly at twelve dollars a week. Nast built the magazine’s advertising revenue to first place and was promoted to business manager in 1905. Nast’s strategy was to divide the public into marketing areas and to aim promotions at a select, affluent audience rather than aiming at the mass market. In a famous analogy to explain his concept, Nast observed, “If you had a tray with two million needles on it and only one hundred and fifty thousand of these were had gold tips, which you wanted, it would be an endless and costly process to weed them out. Moreover, the one million, eight hundred and fifty thousand which were not goldtipped would be of no use to you, they couldn’t help you; but if you could get a magnet that would draw only the gold ones, what a saving!” Nast focused on specialty publishing, feeling that advertisers would pay high rates to reach the wealthy market that he was targeting with his publications.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
C o n d é
Nast left Collier’s in 1907 to devote his attention to the Home Pattern Company, which had a franchise for the manufacture and sale of Ladies’ Home Journal patterns. Nast convinced advertisers to place ads in the pattern sheets, and their success convinced him that there was a market for fashion news. In 1909 Nast acquired the weekly magazine Vogue as a vehicle to reach a high society audience through its attention to women’s fashion. By 1913, Nast had acquired House and Garden and Vanity Fair. He established a British edition of Vogue in 1916 and a French Vogue in 1921. Nast’s publications were trend setting and defined high society interests during the era. Nast excelled at the business of his publications but he helped himself by hiring talented editors who gave his publications their unique character and style. Frank Crowningshield was hired to edit Vanity Fair; Richardson Wright managed House and Garden, and Edna Woolman Chase, who had joined Vogue as a clerk in the circulation department, became its editor in 1914, a position she would hold for fifty years. Nast was hit hard by the stock market crash and the Depression. Despite great financial losses, Nast refused to abandon his plans to enlarge and modernize his printing plants and introduced color photography into Vogue, Vanity Fair, and House and Garden in 1931. But by 1930, control of the Condé Nast empire had passed into the hands of his bankers. Vanity Fair ceased publication in 1936. After a lifetime in publishing, Nast introduced the first magazine he ever created, Glamour, which appeared in 1939. Aimed at working women, it was a success from the beginning. Nast died burdened by crushing personal and business debt, and the contents of his magnificent penthouse were sold at depressed wartime prices. Nast’s publishing empire continued after his death until S.I. Newhouse purchased controlling interest in 1959.
N a s t
Chronology: Condé Nast 1873: Born. 1900: Hired as advertising manager of Collier’s Weekly. 1905: Promoted to business manager of Collier’s Weekly. 1909: Named publisher of Vogue. 1911: Named publisher of House and Gardens. 1914: Named publisher of Vanity Fair. 1916: Published British edition of Vogue. 1920: Published French edition of Vogue. 1939: Named publisher of Glamour. 1942: Died.
DeWitt Wallace, helped define modern publishing, for good and ill, and his legacy remains strong.
Sources of Information Social and Economic Impact Condé Nast was one of publishing’s titans through the first half of the twentieth century, and his innovations transformed magazine publishing. Recasting his magazines from mass circulation to more specialized audiences, Nast showed how a fortune could be made by focusing on narrower interests aimed at the kinds of readers advertisers were after. The incredible variety in subject matter of today’s publications can be traced directly to Nast’s conception. He also revealed how dominant periodicals could be in shaping contemporary standards and values. How we dress, how we decorate our homes, and who we admire all are shaped by the media, as Nast demonstrated with the remarkable success and impact of such trendsetting publications as Vanity Fair, Vogue, and House and Garden. Nast, like other publishing giants such as Joseph Pulitzer, William Randolph Hearst, and
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Contact at: Conde Nast Publications Inc. 350 Madison Ave. New York, NY 10017 Business Phone: (212)880-8800 URL: http://www.condenet.com
Bibliography Chase, Edna Woolman.Always in Vogue. Garden City, New York: Doubleday, 1954. Chase, Edna Woolman. “Fifty Years of Vogue. “ Vogue, 15 November 1943. Dictionary of Literary Biography. Detroit: Gale Research, 1992. Kazanjian, Dodie, and Calvin Tomkins. “Becoming a Legend.” Vanity Fair, October 1993. Robinson, Walter G. “With the Makers of Vogue.” Vogue, 1 January 1923. Seebohm, Caroline. The Man Who Was Vogue: The Life and Times of Condé Nast. New York: Viking, 1982.
S t u d e n t s
5 7 7
James Near (1938-1996) Wendy’s International, Inc.
Overview Dave Thomas may have been the founder of Wendy’s International, Inc., a fast-food chain named after his daughter, but when the company ran into trouble in the late 1980s, Thomas turned to James Near. Near, a successful Wendy’s franchisee who had known Thomas since their early days as competing restaurateurs in Columbus, Ohio, set about to return the company to its formerly high standards, and enlisted Thomas himself in a highly successful advertising campaign.
Personal Life James W. Near was born in 1938 in Columbus, Ohio. His father owned and operated a White Castle hamburger franchise which gave his young son early exposure to the restaurant business. Near worked as a short-order cook in his father’s restaurants starting at the age of 15 and continued in the restaurant business for the next 42 years. Near married his wife Nancy in 1972, and they had two sons, David and Jason. In 1992, Near received the Operator of the Year award from Nation’s Restaurant News, and was voted Executive of the Year by Restaurants & Institutions. He cherished these awards and considered winning them the pinnacle of his career. He retired from the restaurant business in January 1995 and then spent most of his time at his home in Bonita Springs, Florida,where he enjoyed playing golf. While attending the Summer Olympics in Atlanta, Georgia, Near suffered a heart attack and died on July 22, 1996 at the age of 58.
5 7 8
J a m e s
N e a r
Career Details After graduating from Hanover College in 1961, Near went to work in the restaurant business while also serving in the United States National Guard. He bought a Burger Boy Food-A-Rama store in Columbus, Ohio, at the young age of 23, and became acquainted with a Kentucky Fried Chicken franchise owner named Dave Thomas. The two men began years of friendly competition. In 1965, Near became vice president of Burger Boy and by the end of the 1960s, he had 50 Burger Boy Food-A-Rama stores under his ownership throughout the central Ohio area. Around this time, Thomas founded Wendy’s, a new fastfood restaurant chain named after his daughter. In 1969, Near left Burger Boy and took a position as executive vice-president of retail sales for Borden Inc. He soon become president of retail sales for Borden, but left in 1974. That same year he bought a franchise in his old friend’s growing restaurant chain. Between 1974 and 1978, Near opened 39 successful Wendy’s franchises in West Virginia and Florida. In 1978 he sold his stores to the mother company, Wendy’s International, Inc., and started the successful Sisters Chicken and Biscuits restaurant chain. Near sold his shares in Sisters Chicken and Biscuits to Wendy’s International, Inc. in 1981, and left the executive ranks. From the time of its founding in 1969 until 1985, Wendy’s experienced explosive growth. The company had ridden the crest of a wave so strong it seemed it would never break, and along the way it shattered numerous fast-food industry records. This period of growth peaked in 1984, with one of the best-known advertising campaigns of all time, “Where’s the Beef?”, in which senior citizen Clara Peller addressed that rhetorical question to Wendy’s competitors. But after record sales of $76.2 million in 1985, Wendy’s fortunes began to sag. In 1984 and 1985, Wendy’s quarterly sales charts resembled a roller-coaster, and investors in the New York Stock Exchange were nervous about investing in the company. Wendy’s highly paid executive had lost sight of the successful management styles that had previously made Wendy’s a leader in the fast-food market. First there was the introduction of breakfasts in 1986, an elaborate program which did not go with the fast-food concept. “Breakfast was failing and there were big shifts in the marketing department,” stated franchise owner Bob Goodrich. “We were floundering and didn’t know where to go.” In addition, the quality in some of restaurants had declined, because the original owners had sold them to people who did not operate them personally or care about the company’s standards. By the end of the year, company morale was sinking and one in every five Wendy’s franchises was in danger of bankruptcy. This was the situation that Near inherited when Thomas asked him to become chief operating officer (COO) in1986. Near had not been a part of the executive ranks of a large corporation since 1981, when he had sold his shares of
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Chronology: James Near 1938: Born. 1961: Graduated from Hanover College. 1961: Bought first Burger Boy Food-A-Rama store. 1965: Became vice-president of Burger Boy. 1969: Left Burger Boy. 1974: Purchased first Wendy’s franchise. 1986: Hired as president and COO of Wendy’s International, Inc. 1989: Named CEO of Wendy’s International, Inc. 1992: Received Operator of the Year award. 1995: Stepped down as head of Wendy’s International, Inc. 1996: Died.
Sisters Chicken and Biscuits, but Thomas felt that Near was the right man for the job. “I wasn’t happy with what was happening,” Thomas stated. “We were losing sales and profits, and it was just a very obvious thing — that you just don’t keep on the same track. (Near is) very difficult if you don’t do your job and very supportive if you do.” So, in 1986 Near was hired as president and COO of Wendy’s International, Inc. and immediately set about to get the company back on solid ground. Near was a passionate believer in the benefits of capitalism, and concluded that the best way to return the company to its top position in the industry was to give Wendy’s customers exactly what they wanted. Near started reorganizing Wendy’s by changing the things that customers saw. He imposed new high standards for cleanliness for all franchisees, and redesigned the menu in line with several trends in the market. First, in response to the desire for discount pricing in the wake of the early 1990’s economic recession, he introduced a daily feature of seven items priced at 99 cents. At the same time, though, he also introduced premium items, such as the Big Classic and Dave’s Deluxe burgers, to appeal to big eaters who did not mind paying a few extra cents for a special burger. Finally, Near made Wendy’s more responsive to growing health concerns by improving the salad bar and introducing a skinless chicken breast sandwich.
S t u d e n t s
5 7 9
J a m e s
N e a r
Near’s next act was to bring the company’s founder out of semi-retirement. While Near paid attention to the nuts and bolts of the company, he needed Thomas as a front man. Thomas became a traveling ambassador for Wendy’s throughout the country. In 1989, Thomas began going in front of the cameras to promote his company in a series of advertising spots. Initially these met with an unenthusiastic response but eventually the Thomas advertisements proved highly successful because they allowed customers to identify with Thomas as a jolly father figure. In 1989, Near became the chief executive officer (CEO) for Wendy’s International, Inc. and started the last phase of what would become a very successful corporate turnaround. He reorganized and cut expenses at the corporate level, but raised pay for employees and increased their benefits. He also introduced a highly successful stock option plan called “We Share.” As a result of Near’s hard work and wisdom in utilizing the talents of his boss and the company’s employees, Wendy’s recovered from its slide into the red. Earnings rose, even in a recession, and the chain’s profit margin was higher than that of leading competitors. By 1992, Wendy’s had 4,000 stores worldwide, and had plans to open another 1,000 within the next few years. Though Thomas became the public face for the company, business leaders recognized Near as the man who had engineered Wendy’s successful turnaround. In January of 1995, Near stepped down as CEO. His father had died at a young age, and Near realized that he did not want to spend the rest of his life inside the executive ranks living a corporate lifestyle. Near had started the search for his successor almost immediately after taking his post at Wendy’s International, Inc. in 1986. “My first challenge as president was to find someone else to take the reins,” Near said. “My dad died at an early age and I realized earlier that this was not where I wanted to be. I get too intense. So I started looking around for bench strength.” Near turned over his title and most of the responsibilities that went with it to Gordon F. Teeter, who had been hired by Near in 1987 and had been groomed ever since as his successor.
work in the kitchen making hamburgers for a few minutes. He was also a frank and outspoken figure within Wendy’s International, Inc. By 1994, Wendy’s International, Inc. revenues amounted to $359 million with net income of $29.8 million and a profit margin up 16.2 percent. The company provides numerous jobs, not only for those who work at all levels within the company but also for outside suppliers. Wendy’s has reclaimed its position as a leader the in the fast-food industry. The company provides millions of fast and hot meals to customers every day. A mark of Near’s ability was the respect given to him by one of the most successful entrepreneurs in America, Dave Thomas. When he hired Near as COO, Thomas had business cards printed which said, “Founder and Jim’s Right Hand Man.” On Near’s passing, Thomas said, “He knew more about restaurants than anyone else I know. His passion for customers and employees was evident to everyone who met him.” Though Near died relatively young, his legacy continues at Wendy’s. The company embraced the theme he gave it: “Do It Right! Performance Pays!”
Sources of Information Contact at: Wendy’s International, Inc. 4288 West Dublin-Granville Rd. Dublin, OH 43017-0256 Business Phone: (614)764-3100 URL: http://www.wendys.com
Bibliography “He Always Found the Beef.” Business Week, 5 August 1996. “James Near 1938-1996.” Restaurant Hospitality, September 1996. Kepos, Paula, ed. International Directory of Company Histories, Detroit: St. James, 1994. “Near, McLamore Mourned.” Restaurants & Institutions. 15 September 1996. Thomas, R. David. Dave’s Way: A New Approach To Old- Fashioned Success. New York: G.P. Putnam’s Sons, 1991. “Who’s News: Wendy’s Chairman Who Led Turnaround Dies of Heart Attack.” The Wall Street Journal, 24 July, 1996.
Social and Economic Impact Near was a hands-on leader who was known occasionally to stop in at a Wendy’s franchise and actually
5 8 0
B u s i n e s s
Who’s Who In America 1997. New Providence, NJ: Marquis, 1996.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Jean Nidetch Overview Jean Nidetch was a five-foot-seven, 214-pound overweight housewife and mother who had tried every diet and appetite suppressant pill she could find. Then she realized that she could not stick to a diet without being able to talk to someone about it, so she invited six overweight friends to her apartment in Queens, New York. This was the informal beginning of Weight Watchers International, which became a billion-dollar business with franchises in more than 24 countries. After selling the company to H.J. Heinz Co. in 1978, Nidetch continued on as a Weight Watchers spokesperson and later as a consultant.
(1923-) Weight Watchers International
Personal Life Jean Nidetch was born Jean Slutsky in Brooklyn, New York on October 12, 1923. Her father, David Slutsky, was a taxicab driver, and her mother Mae was a manicurist. Although Jean only weighed seven pounds, three ounces at birth, she soon became an overweight child. “I don’t really remember, but I’m positive that whenever I cried, my mother gave me something to eat,” she recalled in her autobiography, The Story of Weight Watchers. Jean was outgoing and talkative and had many friends in school, although all of them were overweight, too. She graduated from the Girls High School in Brooklyn, but her plans to finish college were cancelled when her father died in 1942. From then until 1947 she was employed by the Internal Revenue Service (IRS). In 1947 she married Martin Nidetch, a young man from the neighborhood who had served in World War II.
5 8 1
J e a n
N i d e t c h
Jean Nidetch, center, participates in a job fair at the University of Nevada with workers from the Jean Nidetch Women’s Center. (AP Photo/Lennox McLendon.)
Married life meant relocating to wherever her husband was employed, first to Tulsa, Oklahoma, then Warren, Pennsylvania, and finally back to Queens, New York, in 1952. During that time Nidetch first worked as a salesperson in a department store and later in the personnel department of Sylvania Electric. In 1949 the couple’s first child died shortly after birth; they had two other sons, David, born in 1952, and Richard, born in 1956. While raising her children, Nidetch was unable to work, but she managed to join several organizations. “And whatever organization I got into, I usually ended up heading it,” she wrote in her autobiography.
gan to help others to achieve their own weight-loss goals, starting with her husband, her son David, and other family members. The group meetings became too large for the family apartment and were moved to the basement of the apartment building. Nidetch also traveled around the city visiting overweight people, many of whom were reclusive. One couple she had helped, Felice and Albert Lippert of Baldwin, New York, convinced Nidetch to give up her exhausting routine and go into business. Together, the Lipperts and Nidetch formed Weight Watchers in May 1963, and the company set up shop in a loft over a movie theater in nearby Little Neck.
Nidetch continued to eat compulsively. While she tried every diet and appetite-suppressant pill she could find, by 1961 she weighed 214 pounds. Finally she went to the New York City Department of Health’s obesity clinic for treatment, where she was told to lose two pounds a week until she reached her weight goal of 142 pounds. Although she followed the diet for 10 weeks, she was unable to stop bingeing. That was when she realized she needed to talk to someone about her weight problems, and she invited six overweight friends to her apartment in Queens.
The Weight Watchers program featured weekly meetings where dieters gave each other support and the group calculated how many pounds it had lost collectively. The recommended diet was essentially the same as the one Nidetch had received from the New York Department of Health. Once a person reached a weight goal, he or she was given a maintenance program to follow.
Career Details With the help of her friends, Nidetch reached her goal of weighing 142 pounds in October 1962. She be-
5 8 2
B u s i n e s s
When Weight Watchers became a publicly owned corporation in 1968, it had grown to 81 franchises operating in 43 states. It also had 10 overseas franchises. By 1973, when the company celebrated its tenth anniversary, there were more than 100 franchises and more than five million people had enrolled in the weight-loss program. Nidetch organized a tenth anniversary celebration at New York’s Madison Square Garden, where some 20,000 people were entertained by Bob Hope, Pearl Bailey, and others.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J e a n
While Albert Lippert handled the business aspects of Weight Watchers International, Nidetch remained the company’s spokesperson and chief public relations officer. It was her image that drew people into the Weight Watchers program. She traveled extensively and spoke in front of large audiences to deliver the Weight Watchers message. Her performances were described as loud, funny, and long. She appeared frequently on television as a guest of Merv Griffin and Johnny Carson. Nidetch wrote a regular column in Weight Watchers Magazine, as well as books that she thought would help people to stay on a diet. In 1966 her Weight Watchers Cookbook was published. She wrote another cookbook in 1984, Weight Watchers Party and Holiday Cookbook, which was aimed at helping people maintain their diets when entertaining or celebrating the holidays. Her autobiography, The Story of Weight Watchers, appeared in 1970. In 1978 the H.J. Heinz Co. acquired Weight Watchers International for $71.2 million. By then Weight Watchers had estimated revenues of $1 billion. One condition of the sale was that Nidetch would not go into the weight loss business on her own. Instead of being an owner, Nidetch became an employee of the company, and then a consultant. During the 1980s she traveled some 60 days a year on behalf of Weight Watchers International. In the mid-1980s Nidetch lent her name to a line of largesize clothing through a licensing agreement with David Warren Enterprises. The first “Jean Nidetch for Claudia Cooper” line of clothing premiered in October 1984 and was in stores at the beginning of 1985. Nidetch hoped that the clothing would give larger women more of a choice when it came to their wardrobes. As she got older, Nidetch spent less time representing Weight Watchers, which called on other celebrities to present its program to the overweight public. Throughout her career, Nidetch gave support to overweight men and women and never gained back the weight she had lost in the early 1960s.
Social and Economic Impact Before Weight Watchers, there was very little, if any, organized help for people with weight problems. While it is hard to measure Weight Watchers’ effect on people, it is clear that the company’s weight-loss program has helped millions of people to reach their weightloss goal and thereby improve their self-esteem. Weight Watchers is also one of the oldest and most visible selfhelp programs operating throughout the United States. The Weight Watchers program not only has been accepted by millions of people seeking to lose weight, but it also gained the endorsement of the medical community. The program is reasonably priced, widely available, and nutritionally sound. It offers people group support and makes them accountable for their eating habits. As people’s understanding of nutrition has changed over
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
N i d e t c h
Chronology: Jean Nidetch 1923: Born. 1947: Married Martin Nidetch. 1963: Cofounded Weight Watchers. 1968: Weight Watchers International became a publicly owned company. 1970: Wrote The Story of Weight Watchers. 1973: Weight Watchers International celebrated its 10th anniversary. 1974: Weight Watchers camps began operating. 1978: Weight Watchers International was sold to H.J. Heinz Co. for $71.2 million. 1984: Introduced “Jean Nidetch for Claudia Cooper” line of large-size clothing.
time, the Weight Watchers diet has also changed. But its core program remains the encouragement of balanced, nutritious eating habits that last a lifetime, as opposed to crash dieting.
Sources of Information Contact at: Weight Watchers International 203 E. 72nd St., Apt. 11B New York, NY 10021-4568 Business Phone:
Bibliography Contemporary Authors. Detroit: Gale Research, 1980. Current Biography Yearbook, 1973. New York: H.W. Wilson, 1973. Lebow, Jean. “Jean Nidetch Weighs In With Line of Dresses.” WWD, 8 January 1985. Miller, Holly G. “Hips, Hips Away!” Saturday Evening Post, November 1988. Moreau, Dan, and Jennifer Cliff. “Change Agents: Jean Nidetch Knew that Weight Watchers’ Success Hinged on More than a Diet.” Changing Times, August 1989. Nidetch, Jean. The Story of Weight Watchers. New York: New American Library, 1970 (revised edition, 1979). Who’s Who in America. 1996. New Providence, N.J.: Marquis Who’s Who, 1995.
S t u d e n t s
5 8 3
John W. Nordstrom Nordstrom Department Stores (1871-1964)
Overview In 1901 John Nordstrom and his partner Carl Wallin founded a modest shoe store in the Pacific Northwest boom town of Seattle, Washington. From this tiny seed would come the Nordstrom department store empire, which by the 1990s encompassed a chain of upscale stores stretching all the way to Boca Raton, Florida. Successive generations of John Nordstrom’s descendants have run the family enterprise, which has grown to become a more than $4 billion-a-year company with a reputation for excellence.
Personal Life Johan W. Nordstrom was born on February 15, 1871, in the Swedish town of Alvik Neder Lulea, just 60 miles south of the Arctic Circle. His early life was harsh. Nordstrom’s father, a blacksmith, died when the boy was just eight years old, and three years later, his mother took him out of school to work on the family’s farm. His mother, he would recall later in a privately published memoir called The Immigrant in 1887, “seemed to think I was a man.” She expected him to perform at the same level as a brother who was 10 years older. “I often cried when I had trouble doing things she expected me to do and couldn’t, and felt very helpless.” In 1900, Nordstrom married Hilda Carlson, another Swedish immigrant living in Seattle. They had five children, and their three sons, Everett, Lloyd, and Elmer, grew up to run the family business. Later the three would turn the enterprise over to their sons. By the 1990s a fourth generation of Nordstroms had emerged.
5 8 4
J o h n
W .
N o r d s t r o m
John Nordstrom was just 16 when, with two companions, he left his hometown for the first and last time. He had with him the equivalent of $112, which he had inherited, and he wore his first suit, the only item of clothing he had ever owned that was not homemade. He set off for the Pacific Northwest of the United States, a mecca for Swedish immigrants. The young man had a long trek ahead of him: a two-day boat trip to Stockholm, the Swedish capital; another three days to a Baltic Sea port where he set sail for Hull, England. From Hull he traveled by train to Liverpool, from whence he took a 10-day voyage to New York’s Ellis Island. Barely able to speak English, Nordstrom and his two companions bought a train ticket to Stumbaugh, Michigan. By now he only had $5 left, and a relative in Stumbaugh helped him get work hauling iron ore. It was backbreaking work, and he was nearly killed in an iron ore slide. For a grueling 10-hour day, he earned $1.60. Over the next five years, Nordstrom worked his way westward in a series of tough jobs. He worked as a logger in Michigan, a coal miner in Iowa, a gold and silver miner in Colorado, a railroad worker in northern California, and a logger in Washington. In the summer of 1896 he used his savings to buy a 20-acre potato farm in Arlington, Washington, some 50 miles north of Seattle. One Sunday morning a year later, Nordstrom read in his morning paper about the discovery of gold in Alaska. He became excited and asked a friend to go with him. The friend chose not to go, so Nordstrom set off that afternoon for Seattle with nothing but the money he had in his pocket. He sailed from Seattle to Port Valdez, Alaska, then went overland to the gold fields at Klondike. During the trip he nearly froze to death and had to kill his horse for food. Finally he arrived in the Yukon Territory boom town of Dawson, near Klondike, and he spent the next two years digging for gold. Finally he found it, but immediately became embroiled in a claims dispute with another miner who happened to be the brother of the local gold commissioner. Instead of allowing himself to get into a protracted battle he could not win, Nordstrom sold his share for $13,000 and went home.
Career Details In May of 1900, Nordstrom, back in Seattle and married, decided to go into business with a shoemaker he had met in Klondike. The shoemaker’s name was Carl Wallin, and he owned a shoe repair shop that the two converted into a store using $5,000 of Nordstrom’s money and $1,000 of Wallin’s. They invested another $3,000 in inventory, and in 1901, Wallin & Nordstrom opened its doors.
John W. Nordstrom.
(AP/Wide World Photos, Inc.)
and what would become their trademark strategy, the use of a varied stock and a large inventory, the business grew. In 1905 it had sales of $47,000. They bought out another store and moved to a new location, using a loan of $10,000 from the Scandinavian-American Bank. Nordstrom had secured the loan by putting up his two houses and some property he owned. As the business grew, so did Nordstrom’s sons, and his two older boys began working at the shoe store in 1915. Eight years later, in 1923, Wallin and Nordstrom opened another store in Seattle, and Nordstrom put his 20-year-old son Everett in charge of it. But Nordstrom and Wallin had a falling-out of some kind, and in 1928, Nordstrom sold his share in the company to his two oldest sons for about $120,000. He continued to run the business for some time, since he had loaned his sons the money to buy it, and had co-signed on a bank loan to help them obtain the necessary capital. Nonetheless, he gradually let his sons take the front seat in the store, which became known as Nordstrom on August 19, 1930.
The two did not seem particularly well-suited for the business, since neither spoke English very well, nor did they look like fashion trendsetters. But through hard work
Nordstrom would grow under the stewardship of John Nordstrom’s sons, even during the Great Depression. World War II brought additional challenges. The military demand required all the country’s leather supplies, so shoe manufacturers had to use rubber soles. Nordstrom’s inventories were seriously depleted. The company was forced to use ration stamps to purchase the limited number of shoes available for retailers and the civilian public. Nordstrom’s nationwide pursuit of shoes during the war years earned his company its long-standing
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
5 8 5
J o h n
W .
N o r d s t r o m
he had learned. “In all honesty,” Everett replied, “I did not bring back a lot of good ideas about what I should be doing in the retail business. But I certainly learned several things I should not do.” To this his father answered, “In that case, you learned quite a bit.”
Chronology: John W. Nordstrom 1871: Born. 1887: Left Sweden for the United States. 1896: Settled in Seattle, Washington. 1897: Headed to Alaska during the Klondike Gold Rush. 1899: Struck gold and returned to Seattle with $13,000. 1901: Opened Wallin & Nordstrom shoe store. 1930: Opened first Nordstrom department store. 1961: Honored as “Shoe Man of the Century.” 1964: Died.
reputation for a large and assorted inventory. As a result of these efforts, John Nordstrom was honored by his industry as “Shoe Man of the Century” in 1961. After the war, Nordstrom was the largest independent shoe chain in the country. Not content with this, the Nordstrom family sought out expansion opportunities. In 1963 the company purchased Best’s Apparel stores. Best’s was a specialty chain that carried women’s designer clothing. The growth continued and soon Nordstrom stores carried men’s apparel, children’s wear, accessories, and cosmetics. Nordstrom started out, however, selling shoes, and shoes remained a mainstay. In the shoe department, and in the store as a whole, one of Nordstrom’s hallmarks was the breadth and depth of its inventory. According to legend, this was due to the fact that Wallin’s and Nordstrom’s neighbors and friends were Swedes, who had larger feet than less robust people. Whatever the cause, even in the 1990s, Nordstrom had 20 to 30 percent more inventory per square foot than its competitors, thus giving customers more choices. One way that John Nordstrom provided for the future was to make sure that his sons got an education by working in other’s shoe stores. He sent his oldest son, Everett, east to work at Marshall Field & Company in Chicago. Everett later reported that although Marshall Field inspired awe in this young Seattle boy, he was disgusted at the way the store’s management treated merchandise roughly and lost track of inventory. When Everett returned from Chicago, his father asked him what
5 8 6
B u s i n e s s
Later Everett’s son Bruce would have a similar experience when he went to work at Macy’s in New York City. Bruce realized that the giant department store’s management simply assumed that a certain percentage of its shoes would be stolen, and he vowed that at Nordstrom, the theft or “shrinkage” rate would be very low. In fact, it is currently about half the national average for department stores. This may be because, as Bruce Nordstrom has said, employees feel a sense of ownership. If they see someone stealing, they think, “That’s my merchandise. Don’t you steal from me!” Since John Nordstrom’s death in 1964, the store has continued to grow under the guardianship of his family. In 1970 the third generation of Nordstroms officially took the helm. Today, many members of the fourth generation are employed by the company. In the 1990s it had become one of the United States’ largest family-owned businesses. The retail legacy John Nordstrom created employs more than 40,000 people in 18 states.
Social and Economic Impact John W. Nordstrom only established the store that would become Nordstrom; his sons built the department store chain. By 1995, when a fourth generation of Nordstroms began to take the helm, the chain consisted of 90 outlets in 18 states, generating $4.11 billion in annual sales. Nordstrom Inc. became the largest independent fashion specialty retailer in the United States, and along the way, it gained an outstanding reputation for excellence in customer service. Nordstrom’s legendary customer service and liberal return policy are a benchmark to which all retail concerns can aspire. In many companies, the board of directors tops the pyramid-shaped chain of command, but not at Nordstrom. Its decentralized structure is best described as an inverted pyramid, with the customers at the top, followed immediately by sales and support staff members. Further down the pyramid is Nordstrom management, with the board of directors at the bottom. Without a doubt, the most important people at Nordstrom are the customers.
Sources of Information Contact at: Nordstrom Department Stores 1501 5th Ave. Seattle, WA 98101 Business Phone: (206)628-2111 URL: http://www.nordstrom-pta.com
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J o h n
Bibliography “Business Brief: Nordstrom Inc.: First Florida Store to Mark Expansion in the Southeast.” The Wall Street Journal, 21 May 1997.
W .
N o r d s t r o m
Reda, Susan. “Department Stores Debate Sales Commission System.” Stores, November 1996.
Johnson, Kaylene. “Nordstrom: From Klondike Gold to a National Retail Legend.” Alaska Business Monthly, April 1993.
Spector, Robert and Patrick D. McCarthy. The Nordstrom Way: The Inside Story of America’s #1 Customer Service Company. New York: John Wiley, 1995.
Pederson, Jay, ed. International Directory of Company HistoriesDetroit: St. James Press, 1997.
Weinstein, Steve. “The Nichemakers.” Progressive Grocer, February 1997.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
5 8 7
Mo Ostin (1927-) DreamWorks SKG Records
Overview Legendary record company executive, Mo Ostin as the longtime head of Warner Bros. Records, has established a revered status in an industry known for its cutthroat competition and concern for the bottom line. Ostin has approached music making from the principle that the artist is primary, and he has created a supportive environment that has caused a host of the most influential artists in the pop and rock world to flourish, from Sinatra to Jimi Hendrix. All have been extremely loyal clients of Ostin who is admired for his honesty and creativity.
Personal Life Born March 27, 1927 in New York City, Mo Ostin was originally named Morris Meyer Ostrovsky. He adopted the name Mo Ostin after entering the music business because he thought it was easier for people to remember. Ostin’s parents were Russian immigrants who had fled Russia during the revolution. When he was 13, his family, including a younger brother, moved to Los Angeles where his father opened a tiny produce market near L.A.’s Fairfax Theatre. Ostin attended Fairfax High School, while living next door to Irving Granz, the brother of jazz entrepreneur Norman Granz, owner of Clef Records and a leading jazz concert promoter in the 1940s and 1950s. Granz started Ostin’s career in the music business at Clef Records. Ostin attended UCLA where he was an honors student in economics and graduated in 1950. The same year he married his wife Evelyn. They had one child, Michael, who followed his father into the recording business. After college, Ostin attended law
5 8 8
M o
school at UCLA but dropped out in 1954 to support his wife and son, and took a job as a controller for $100 a week at Clef Records. At the time artists at Clef included jazz greats Charlie Parker, Count Basie, and Duke Ellington. Ostin was excited to be exposed to the music world, but as he recalls, “I still didn’t have any real goals at that point. It wasn’t like I was dying to be in the record business. I was just trying to support my family.” As the head of Warner Bros. Records, Ostin was instrumental in shifting the company’s emphasis from pop and comedy records to rock and creating a family atmosphere at Warner Bros. that helped nurture a wide spectrum of recording artists from the 1960s to the 1990s. The unassuming and self-effacing Ostin often resisted publicity and instead, was usually at his office from 10 in the morning to around 7, spending much of his time on the telephone. As he has said, “It’s discourteous and bad business not to return phone calls.” As Island Records founder Chris Blackwell has observed, “The reason he’s the best record executive there has ever been is that he’s not off running all over the place like his competitors. This is a guy who’s at his desk every day working hard.” Ostin’s hard work and dependability, as well as his honesty, have been important factors in gaining the respect of his artist clients. As Flea, of the Red Hot Chili Peppers, wrote in a song he recorded when Ostin left Warner Bros.: “Mo, Mo, why do you have to go? You’re the first record company guy That looked me in the eye.”
Career Details Ostin began his career in the recording business at Clef Records, which later became Verve Records, where he worked for six years making a number of important policy decisions in sales, marketing, and finance. Frank Sinatra, who had left Capitol Records in 1960 to start his own record company, Reprise, first tried to buy Verve, but later settled for hiring Ostin as the administrative vice president of Reprise. Ostin credits Sinatra with helping to form his artist-oriented philosophy. As he recalls, “Frank’s whole idea was to create an environment which both artistically and economically would be more attractive for the artist than anybody else had to offer. That was not how it was anywhere else. You had financial guys, lawyers, marketing guys. Their priorities may not have been the music. One of the great things about Warners, I always felt was our emphasis and priority was always about the music.” Sinatra sold the company to Warner Bros. in 1963, who took the company as part of a package to secure his service as an actor in Warner Bros. films. Ostin became the president of Warner Bros./Reprise Records in 1967 and chairman and CEO in 1969, a position that he would hold until 1994.
O s t i n
Chronology: Mo Ostin 1927: Born. 1950: Graduated from UCLA. 1954: Hired as controller of Clef Records. 1960: Named as head of Reprise Records. 1963: Reprise Records acquired by Warner Bros. 1964: Promoted to vice president of Warner Bros. Records. 1967: Named president of Warner Bros./Reprise Records. 1969: Appointed chairman and CEO of Warner Bros./Reprise Records. 1994: Left Warner Bros. Records. 1995: Named to head DreamWorks SKG Records.
bums with emerging rock artists. Ostin personally hired Jimi Hendrix; as Ostin recalls, “I signed him in the spring of 1967 based on all the excitement he was causing in the English press and after hearing his first single, ‘Hey, Joe.’ I thought the record sounded great. I also loved the way he looked, the whole image.” Over the years, Ostin added many pop, rock, country, dance, punk and heavy metal artists to the label, forming a who’s who of musical talent. Artists included Madonna, Prince, James Taylor, Talking Heads, Miles Davis, Fleetwood Mac, Black Sabbath, the Grateful Dead, Van Morrison, Paul Simon, the Sex Pistols, Elvis Costello, U2, Neil Young, R.E.M., and many others.
Under Sinatra, rock music was banned at Reprise, but with Warner Bros. Ostin began to augment the al-
The end of Ostin’s long and extremely productive reign at Warner Bros. began in 1993 over disagreements with Time Warner management and complaints that sales had slipped because he was too loyal to older, unproductive artists, and Ostin stepped down as the head of Warner Bros. Records in 1994. As Ostin explained, “It was the toughest thing I’ve ever been through in the business and it shook me to the core. It made me doubt myself. It made me wonder whether I was just living on my laurels like my critics were saying or what? I even went to a shrink. But it just wasn’t true. The company was doing terrific. The idea of leaving Warners really troubled me, but I decided I just could not continue working here under those conditions.” Ostin agreed to head DreamWorks SKG Records in 1995, along with Lenny
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
5 8 9
M o
O s t i n
Waronker, an equally influential record producer, and Ostin’s son Michael. The trio is expected to build the music division of the entertainment conglomerate, DreamWorks founded by Steven Spielberg, David Geffen, and Jeffrey Katzenberg.
and uncanny sense of talent and the marketplace were important factors in shaping the musical tastes of listeners around the world for over forty years.
Sources of Information Social and Economic Impact There are few other business executives who have exerted such an influential role in helping to shape American music as Mo Ostin. As head of Warner Bros. Records Ostin turned his company into the world’s largest recording company, while cultivating the artistic careers of a legion of the era’s top performers in virtually every musical genre from pop to rock, country, punk, heavy medal, and rap. In the history of modern music Ostin has an important place for discovering new talent and creating a business environment to help artists develop and flourish. With his artist-first oriented philosophy, Ostin proved that allowing individual performers the time and conditions to mature and evolve made both artistic and business sense. Ostin’s own diverse musical tastes
5 9 0
B u s i n e s s
Contact at: DreamWorks SKG Records 100 Universal Plz. Universal City, CA 91608 Business Phone: (818)733-7000
Bibliography Hilburn, Robert, and Chuck Philips. “Quotations From Chairman Mo.” Los Angeles Times, 11 December 1994. Philips, Chuck. “Company Town; At Warner Bros. Records, Mo Ostin Loyal to the End.” Los Angeles Times, 16 August 1994. Rosen, Craig. “Dreamworks gets Warner Alumni.” Billboard, 14 October 1995. Sterngold, James. “Ex-Head of Warner Joins DreamWorks.” New York Times, 6 October 1994. White, Timothy. “Lenny & Mo: How 2 Execs Taught Bugs Bunny to Rock.” Billboard, 12 November 1994.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Elisha Graves Otis Overview Elisha Graves Otis designed and built the first hoisting device that proved safe enough to carry people. A self-trained mechanic and constant tinker, he founded the company that still bears his name in 1853. His invention of the elevator has been called one of the most important breakthroughs of the nineteenth century, for it made possible the development of the skyscraper.
(1811-1861) Otis Elevator Co.
Personal Life The family of Elisha Graves Otis had roots in New England that stretched back to the seventeenth century. Elisha, the son of Stephen and Phoebe Otis was born on the prosperous family farm near Halifax, Vermont, on August 3, 1811. In addition to being a farmer, the senior Otis was a local justice of the peace and a member of the Vermont state assembly. Young Elisha attended public schools in Halifax, and at the age of 19 he moved to Troy, New York and took up carpentry as a profession. However, he was forced to abandon this line of work after just a few years due to bouts of poor health that weakened his stamina for heavy physical labor. Other setbacks would trouble Otis during his adult life. His first wife, Susan A. Houghton, died eight years after their 1834 marriage, leaving him with two young sons. In 1845 he married Elizabeth Boyd. A lifetime of chronic health problems ended Otis’ own life at the age of only 50, when he passed away from diphtheria and nervous depression during the spring of 1861.
5 9 1
E l i s h a
G r a v e s
O t i s
Yonkers, New York. By this time, Otis’ oldest son, Charles, was in his teens and already a skilled machinist; at the age of 15, he was employed full-time at the same company as his father. One of Elisha Otis’ major challenges at the Yonkers construction site was to find a way to hoist machinery safely to the new building’s upper floors. Hoisting devices were by no means unheard of (the concept was, in fact, thousands of years old), but they had always been troubled by one fatal flaw—if the rope or cable snapped, the load came crashing down, destroying the goods and sometimes even killing workers.
Elisha Graves Otis.
(Archive Photos, Inc.)
Career Details After Otis was forced to give up carpentry, he established a freight hauling business between Troy and Brattleboro, Vermont. It was successful enough that he was able to set aside a little money, which he then used to buy some land on the Green River near Brattleboro. There Otis set up a gristmill powered by the river and built a home for his family nearby. But the grain-grinding operation was unprofitable, so he converted it into a sawmill. In 1845, illness once again forced Otis to find a different line of work. Later that same year, he relocated his family to Albany, New York. In Albany, Otis found work as a master mechanic in a bedstead factory, where heavy wooden frames for mattresses were made. But he still loved to tinker with and build things, so he opened a small machine shop of his own powered by water from nearby Patroon’s Creek. It was there that he perfected the first of his many inventions, a turbine water-wheel. He also created an automatic lathe, a device that spun an object on a horizontal axis so that it could be cut or shaped uniformly. In 1851 government officials in Albany opted to exercise their rights over Patroon’s Creek for the city’s water supply. Otis had no choice but to close his shop. But someone he had known at the bedstead factory established a similar facility in Bergen, New Jersey and invited Otis to take the master mechanic position there. He accepted the offer, then relocated again a year later to oversee construction of his employer’s new factory in
5 9 2
B u s i n e s s
Otis experimented with a few ideas and devised a new hoist with a safety catch that kept the platform from plummeting in the event of a cable break. “A model of engineering simplicity, the safety device consisted of a used wagon spring that was attached to both the top of the hoist platform and the overhead lifting cable,” wrote Joseph J. Fucini and Suzy Fucini in Entrepreneurs: The Men and Women Behind Famous Brand Names and How They Made It. “Under ordinary circumstances, the spring was kept in place by the pull of the platform’s weight on the lifting cable. If the cable broke, however, this pressure was suddenly released, causing the big spring to snap open in a jawlike motion. When this occurred, both ends of the spring would engage the saw-toothed ratchet-bar beams that Otis had installed on either side of the elevator shaft, thereby bringing the falling hoist platform to a complete stop.” Otis used his new hoist only at the Yonkers plant, not realizing its potential. At the time, though, his mind was on other matters, because he was making plans to head for California to mine for gold. His plans were postponed when he met a man named Benjamin Newhouse, a partner in the Yonkers Bedstead Company and the owner of a furniture company. Newhouse persuaded Otis to design and build an elevator for his factory, which had recently experienced a distressing hoist accident. Otis did so, and soon he began receiving inquiries from other people who were interested in his newfangled invention. Before long, he had abandoned his plans to become a gold miner. In September of 1853, he established the E.G. Otis Company in Yonkers for the purpose of building and selling lifting devices for use in factories. Otis’ new venture got off to a slow start. As orders trickled in he envisioned another use for his hoist that carried far greater potential—carrying people. Common wisdom at the time held that this was an extremely dangerous proposition; not too many people were willing to leave their personal safety in the hands of technology. To convince would-be buyers that his elevator was safe for passengers, Otis arranged a demonstration at the 1854 American Institute Fair held in New York City’s Crystal Palace. In full view of the assembled crowd, he stood on the hoisting platform and rode upward several feet, then had an assistant cut the cable with an ax. Onlookers gasped as the platform upon which he was standing
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
E l i s h a
shifted a bit before miraculously pausing in midair. Wearing a top hat that gave him an air of “unassailable dignity,” according to Donald Dale Jackson in the Smithsonian, Otis made “what was probably his first and last excursion into showmanship” on that momentous day. Bowing to the crowd and doffing his hat, he said, “All safe, gentlemen, all safe.” The exciting demonstration captured a great deal of attention in the press and immediately prompted several orders. Even then, Otis sold only 15 elevators in 1855 and 27 in 1856. Finally, in 1857 his company made history when it installed the world’s first passenger elevator in the E.V. Haughwout store at the intersection of Broadway and Broome in New York City. (It was still in use as late as 1984.) In 1861, the company logged another “first” when it sought a patent for an elevator Otis had developed that was powered by a small steam engine. This invention was especially significant because at the time, only factories and warehouses had their own power sources, usually water or steam. By creating an elevator that included its own little steam engine, Otis opened up the market for his product to a much larger group of customers, including stores, hotels, and office buildings that were not necessarily located near a natural power source. Other patents he held were for a braking device for railroad cars (1852) and a baking oven (1858). Despite these accomplishments, sluggish sales of his invention left Otis discouraged. By the late 1850s, however, his sons were in partnership with him, and they had a fairly good idea why the company was not doing well— their father had a knack for engineering but no head for business. Charles Otis kept a journal, and in one entry dated 1858 he noted that earnings were on the rise but that “Father will manage in such a way to lose it all.” Indeed, when Elisha Otis died in 1861 at the age of only 50, he left behind debts of $8,200 and an estate worth only $5,000.
Social and Economic Impact It is not an exaggeration to say that without the elevator, the skyscraper would not exist. During Otis’ lifetime, buildings usually were no higher than four stories, since people did not like to climb more than four flights of stairs. “Combined with the development of metal building skeletons, the elevator made possible the soaring, dramatic skylines that have come to exemplify the twentieth century,” observed Jackson. The elevator was also a boon to the flourishing retail industry in the United States that catered to a growing urban population. In increasingly crowded cities, the elevator meant that department stores could build “up” and increase floor space without taking on additional land costs or higher rent payments.
G r a v e s
O t i s
Chronology: Elisha Graves Otis 1811: Born. 1830: Began working as carpenter. 1845: Employed as master mechanic for bedstead firm. 1852: Invented hoisting device with safety catch. 1853: Founded E.G. Otis Company. 1854: Demonstrated safe passenger elevator in public. 1857: First passenger elevator installed by Otis Company. 1861: Granted patent for steam-powered elevator. 1861: Died.
launched a long and extremely successful era. Both men were tinkers like their father, and they kept improving on his invention. For instance, the first buildings to be designed with elevators were no higher than 10 floors because the winding drum for the lifting cable could only hold a certain amount of cable. To solve this, the brothers devised a hydraulic (water-powered) elevator in the 1870s that tapped into a city’s water supply to obtain the proper pressure. The cables and motion of the elevator were driven by a piston that replaced the drum, thus allowing the shaft to reach far greater heights. Excessive speed eventually became a concern, too, as some cities enacted “vertical speed limits” into their building codes. The boom in skyscraper construction that occurred as the 1800s drew to a close meant that the Otis brothers soon had a thriving business. They installed an elevator in Paris’s Eiffel Tower in 1889 and one in the Washington Monument the following year. They also worked on smaller projects, including passenger lifts in apartment houses and department stores. Some of these were quite plush, with seats, lavish wood fixtures and, occasionally, chandeliers. By 1913 the Otis Company had gained international renown for installing an elevator inside what was then the tallest structure in the world, the 60-story Woolworth Building in New York City. The company eventually expanded into the escalator business after the Otis brothers bought the patent and plans for a moving staircase mechanism.
After Otis’ death, his sons Charles and Norton ran the elevator company and implemented practices that
As of 1997 the Otis name could be found on some 1.2 million elevators around the world. The firm, now part of the United Technologies Corporation, is head-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
5 9 3
E l i s h a
G r a v e s
O t i s
quartered in Farmington, Connecticut and employs 68,000 people. Its 1996 revenues checked in at $5.6 billion, mostly from elevator sales of about 40,000 per year (representing a 23 percent share of the global elevator installation market). The company also manufactures escalators and moving walkways of the type used at airports. A round-the-clock hotline staffed by Otis employees responds to worldwide requests for maintenance and repairs, and some 22,000 mechanics are available to take care of any problems.
Ingham, John N. Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood Press, 1983. Jackson, Donald Dale. “Elevating Thoughts from Elisha Otis and Fellow Uplifters.” Smithsonian, November 1989. Malone, Dumas, ed. Dictionary of American Biography. New York: Charles Scribner’s Sons, 1928-1936. Otis Elevator Co. “The World of Otis.” Farmington, CT: Otis Elevator Company, 1998. Available from http://www.otis.com (May 8, 1998). Useem, Jerry. “Giving Business a Lift.” Inc., November 1997. World of Invention. Detroit: Gale Research, 1994.
Sources of Information Bibliography Fucini, Joseph J. and Suzy Fucini. Entrepreneurs: The Men and Women Behind Famous Brand Names and How They Made It. Boston: G.K. Hall, 1985.
5 9 4
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Michael Ovitz Overview Michael Ovitz became one of the most powerful persons in Hollywood during the 1980s and early 1990s. As founder and president of the Creative Artists Agency (CAA), he made important deals with talent agencies, entertainment conglomerates, actors, writers, and directors. He became known as a “super agent” for his use and promotion of the talent “package”—a combination of screenplay, actors, and director—for big studios. So successful was this concept that it established a new standard for the industry.
(1946-) Livent Inc.
Personal Life Ovitz was born on December 14, 1946, in Encino, California. His father sold wholesale liquor which afforded Ovitz a middle-class lifestyle as a child. He went to Birmingham High School where he was elected student body president. He attended University of California, Los Angeles (UCLA), where he joined the Zeta Beta Tau fraternity. Ovitz was later elected president of his fraternity. While attending UCLA, Ovitz worked his way through school as a tour guide for Universal Studios. He explained to L.J. Davis of the New York Times that, “I came in contact with a lot of people from the agency business. I realized that there were a lot of areas in the entertainment business that I was interested in, and the career that would offer me the widest exposure to the entertainment business was the agency business. Agents can allow creative people to achieve their visions, and that’s why I did it.”
5 9 5
M i c h a e l
O v i t z
best friend at the agency, Ron Meyer, along with three other agents, also shared his disenchantment. The five of them started to make plans to start their own agency. When news of their plans got back to the management at William Morris, however, the five were fired in January, 1975. Ovitz, Meyer, and the others responded by setting up shop in a small office on Wilshire Boulevard in Los Angeles. They had obtained a $100,000 line of credit and a bank loan of $21,000. With only two cars between them and their wives serving as secretaries, the group began to build the client base for their newly established Creative Artists Agency (CAA.) Ovitz used his clout and contacts from William Morris to help generate revenue at CAA. Some of his early clients included comedian Rich Little and the singing group The Jackson 5.
Michael Ovitz.
(AP/Wide World Photos, Inc.)
After graduating from UCLA in 1968, Ovitz considered going to medical school, but soon went to work as a trainee in the William Morris Agency in Beverly Hills. After a year there, he briefly attended law school but was soon back at William Morris. He married Judy Reich in 1969 and the couple has three children. In his free time, Ovitz enjoys aikido (a form of martial arts) and team sports.
Career Details The William Morris Agency is a talent agency that seeks contracts and jobs for a variety of actors and actresses. Ovitz, hired right out of college, was put through a comprehensive and detailed training program before he was allowed to assume any of the duties of a talent agent/scout. He started off in the mail room and endured months of performing menial tasks and grunt work before he was “upgraded” to agent status. Though the dropout rate in the training program was over 50 percent, Ovitz managed not only to stay on but to rise steadily through the ranks. In time, he was representing such clients as Bob Barker, Chuck Barris, and Merv Griffin. Ovitz also developed game shows and collared contracts from two networks. By 1974, though, Ovitz was growing disenchanted with the low pay and lack of advancement opportunities at William Morris. He was not alone in his feelings. His
5 9 6
B u s i n e s s
CAA started out wanting to be better than William Morris. To achieve this goal, CAA established lower rates than other agencies charged for their television package deals. These package deals were assemblages of the agency’s writers, directors, and actors into unified packages that television networks could “purchase” as identifiable and trusted commodities. This saved the networks the extra work of having to put together the cast and crew themselves. William Morris was unable to match the low rates set by CAA and, as a result, CAA grew by leaps and bounds. By 1980, CAA was the number three agency in Hollywood with bookings of approximately $100 million. Around this time, Ovitz sought to branch out and diversify his client base and actively sought to represent screenwriters. This enabled him to bill CAA as a literary talent agency. With a wide range of talent at his disposal, Ovitz brought the television package concept to the motion picture industry. The concept, which offered steady work to actors, was extremely popular among performers. Ovitz had a keen ability to put different talents together. He teamed up Debra Winger and Robert Redford for Legal Eagles, and brought together Ivan Reitman, Harold Ramis, Bill Murray, and Dan Aykroyd for the hit comedy Ghostbusters. He also paired up Tom Cruise and Dustin Hoffman for the respected and popular Rain Man. By the late 1980s, CAA was handling 146 directors, 134 performers, and almost 300 screenwriters.
Social and Economic Impact The film package deals were Ovitz’s biggest contribution to the entertainment industry. As in television, the studios liked the notion that they were receiving a pre-assembled bankable commodity. As Tony Ludwig explained to Davis in The New York Times, “look at the letterhead of the CAA stationary. There you’ll find a major reason so many attorneys moved their clients into the agency. It
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
M i c h a e l
says literary and talent agency. The key is the fact that the material comes first. CAA represents an incredible number of screenwriters. They’re the foundation the agency is built on. At CAA, you get the scripts you wanted. The stars followed the scripts.” Fees were derived from a 10 percent cut of the salaries of the clients assembled in the package. This led to the hyper-inflated “going rates” for many actors, actresses, and screenwriters. Though Ovitz enjoyed the power and influence he had through his client base at CAA, he eventually wanted a new challenge. After 20 years as chairman of CAA, he stepped down in 1995 to become president of Disney Studios. This was a dream come true for Ovitz—but it was not to last. At Disney, Ovitz was second-in-command to his good friend and Disney chair, Michael Eisner. This was a role to which Ovitz was unaccustomed. Used to being in charge of his own organization, he did not adapt well to his new position and was responsible for many poor business decisions and ventures during his short appointment with the studio. Still thinking like a talent agent, Ovitz tried to lure a top executive from the National Broadcast Company (NBC) over to the Disneyowned American Broadcast Company (ABC). He also tried to lure David Letterman’s former producer as well. These actions did not earn Ovitz many friends at either Disney or ABC. Ovitz had been cautioned by a number of entertainment industry insiders to keep quiet, not to ruffle any feathers, and to lay low. But when he repeatedly ignored this advice, the stage was set for his termination. After only 14 months at Disney, Ovitz was fired in late 1996. Disney paid Ovitz a severance package worth over $110 million, including numerous stock options. Ovitz was back in the news in early 1998, when he paid $20 million to help shore up the faltering Toronto-based theatre group, Livent Inc. Livent was responsible for the wildly successful Broadway musicals Phantom of the Opera, Show Boat, and Ragtime. Ovitz’s contributions earned him a 36 percent share in the company and the title of the chair of the executive committee. His chief duties are to help the cash-strapped group increase its income, and to institute cost-cutting measures to stabilize the company. Some analysts predict that Ovitz will eventually add film to the theater company’s business interests. Since Ovitz gave up his role as talent agent, some believe that the art of making deals has declined. But Ovitz’s influence in Hollywood is still felt. His emphasis on the casting package helped boost star salaries to $20 million. As Frank Rose of Fortune states, “Ovitz’s singular contribution to Hollywood has been this obsession with the deal. As an agent, of course, deals were what he did—and whether they worked was somebody else’s problem. But the media attention he got led to such a glorification of the deal that even young studio executives have developed an agent mentality; measuring success by how much they paid for that spec script or how
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
O v i t z
Chronology: Michael Ovitz 1946: Born. 1968: Graduated from University of California, Los Angeles. 1968: Started working at William Morris Agency. 1975: Fired from William Morris Agency. 1975: Established Creative Artists Agency (CAA). 1979: CAA Becomes third largest talent agency. 1995: Left CAA presidency. 1995: Became president of Disney. 1996: Fired from Disney. 1998: Became chair of Livent, Inc.
many development deals they have going, as opposed to whether their movies work. The deal is king.”
Sources of Information Contact at: Livent Inc. 355 S. Grand, Ste. 4150 Los Angeles, CA 90071
Bibliography Davis, L. J. “Hollywood’s Most Secret Agent.” The New York Times, 9 July 1989. Kennedy, Dana. “Alone Again Naturally.” Entertainment Weekly, 31 October 1997. Master, Kim. “Job Hunting With Mike.” Time, 24 February 1997. “Michael Ovitz.” Contemporary Newsmakers 90. Detroit: Gale, 1990. “Michael Ovitz.” Entertainment Weekly, 24 April 1998. Peers, Martin. “Ovitz Makes Broadway Bow.” Variety, 20 April 1998. Rose, Frank. “What Ever Happened to Michael Ovitz.” Fortune, 7 July 1997. Turner, Richard, and Corie Brown. “Power Failure.” Newsweek, 23 December 1996. Who’s Who in America. New Providence, NJ: Marquis Who’s Who, 1996.
S t u d e n t s
5 9 7
David Packard (1912-1996) Hewlett-Packard Company
Overview David Packard’s name lent itself to one-half of the oldest and largest employer in California’s high-tech region known as Silicon Valley. He cofounded the HewlettPackard Company with college pal Bill Hewlett, and together they built it into the second-largest computer company in world. Hewlett-Packard first prospered by making electronic measuring equipment such as radar-jamming devices, and later branched out to space aeronautics and medical monitoring equipment before entering the burgeoning personal-computer field. Yet Packard and Hewlett became industry pioneers for a simple vision: the company was guided by a code of ethics that came to be known as “The HP Way.” Packard and his partner created a relaxed, supportive management style that fostered innovation and, some note, the very culture that allowed the high-tech industry in the United States to achieve global domination by the time of Packard’s death in 1996.
Personal Life “As a child, Mr. Packard wished he had been born in an earlier day,” wrote the Economist in its obituary, “when America’s west was still a frontier and its people pioneers. He proved that the same spirit, channeled into technology and business rather than land and conquest, could create and cross new frontiers.” Packard was born in Pueblo, Colorado in 1912. His father was an attorney, and his mother taught school. As a child, he loved to read science books, and visited his local library often. Exhibiting an early knack for electronic tinkering, Packard built a radio while still an elementary school student.
5 9 8
D a v i d
After graduating from Pueblo’s Centennial High School in 1930, Packard went on to California’s Stanford University to study electrical engineering. He was unusually tall and athletically gifted. At Stanford he became a track star, and also continued to play football and basketball as he had done in high school. Endowed with an exuberant personality, Packard was elected president of his fraternity, Alpha Delta Phi. Packard earned his B.A. from Stanford in 1934 at the height of the Great Depression. He took some graduate courses at the University of Colorado, and in 1935 relocated to Schenectady, New York, when General Electric hired him as a trainee. One of his early supervisors expressed disapproval of Packard’s desire to enter the field of electronics, and predicted there was little future in it. Undaunted, Packard made a successful effort to transfer into the company’s vacuum-tube department, which made the types of parts that would soon constitute one of the world’s first computers. Deciding to pursue a graduate degree in earnest, he returned to California and again enrolled at Stanford. In the graduate program he renewed an acquaintance with William Hewlett, also an electrical engineering student. Around this same time, in 1938, Packard married Lucile Salter of San Francisco, whom he had met at Stanford. The couple would raise one son and three daughters. Packard died of pneumonia in Stanford University Hospital on March 26, 1996. His memorial service was attended by over 1,000 people, many of them leading executives in the computer industry.
Career Details Packard’s friend Hewlett had written his master’s thesis at the Massachusetts Institute of Technology on a new type of oscillator that could measure the intensity of recorded sound. Hewlett’s invention was cheaper than similar devices on the market, and when he and Packard, who were considering going into business together, demonstrated the oscillator at a 1938 convention of radio engineers, it received a favorable response. It was also at the same gathering that they met Walt Disney, who the next year purchased eight of the oscillators and used them for sound effects for his 1940 animated classic, Fantasia. Packard and Hewlett officially went into business in 1939 by pooling their combined savings of $538 to buy equipment. They tossed a coin to decide whose name would come first; Hewlett won. That same year, Packard received his electrical engineering graduate degree from Stanford. The company’s original purpose was the design and manufacture of instruments for electronic measurement. Hewlett oversaw the technical side, while Packard handled the business end. Their first headquarters was located in Packard’s garage on Palo Alto’s Addison Avenue, but soon they were able to move to a site
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
P a c k a r d
Chronology: David Packard 1912: Born. 1934: Graduated from Stanford University. 1935: Employed in vacuum-tube division at General Electric. 1939: Founded Hewlett-Packard with William Hewlett. 1947: Became president of Hewlett-Packard. 1957: Took company public. 1969: Served as U.S. Deputy Secretary of Defense. 1972: Introduced Hewlett-Packard hand-held calculator. 1984: Entered printer market for personal computers. 1989: Created the David and Lucile Packard Foundation. 1996: Died.
near their alma mater. This initiated a decades-long connection with Stanford, and one that they considered vital to their company. Later they would become one of the first private enterprises in the country to be given university land for business use, a tie that would later cause problems during the Vietnam War. Some of Hewlett-Packard’s first sales were for products such as a weight-reducing device, an electronic harmonica tuner, and a foul-line alarm for bowling alleys. In the first year in business, they sold over $5,300 worth of devices, some delivered by borrowing a friend’s fruitbusiness truck, and made a profit of $1,653. With the onset of World War II, however, the company began a quite profitable era with sales of its radar-jamming oscilloscopes, among other devices, to the U.S. military. With the American entry into the conflict in 1941, Hewlett served in the Army, while Packard ran the company. After the war’s end, however, they were forced to lay off nearly half their workforce, which greatly troubled them. By 1950 the company was thriving again, and in 1957 it went public in a Wall Street stock offering. The firm continued to make a name for itself in the growing field of electronics as a producer of parts for computers; in 1966 Hewlett-Packard introduced its own computer. They also made the atomic clocks used by the National
S t u d e n t s
5 9 9
D a v i d
P a c k a r d
Aeronautics and Space Administration’s Apollo flights in the late 1960s. It was during this era that they first branched out into the consumer electronics industry with an innovative hand-held calculator. Yet it was Packard’s management style that would bring him lasting fame. Early on, he and Hewlett ran their company based on some rather benevolent principles. “The HP Way,” as it became known, meant a corporate environment with no doors; neither Hewlett nor Packard had his own office. It also meant decentralized decisionmaking, and a structure that kept their thousands of employees organized into self-sufficient divisions, each with its own research and development, financial, and marketing systems. Profits were always reinvested, and when economics necessitated layoffs at other companies, Hewlett-Packard instead reduced the workweek or some worked a full week at lesser pay. If they had to trim costs, every level of employee, including Packard and Hewlett themselves, took a cut. Indeed, employee loyalty was Hewlett-Packard’s greatest asset. Firings were rare, the benefits package generous, morale high, and turnover low. As a result, Packard and Hewlett created an environment where creativity could flourish. Employees were encouraged to tinker with any product on anyone’s desk, and equipment rooms were left unlocked. Sales personnel were forbidden from saying anything negative about competitors to customers. Packard was awarded an honorary degree in jest by his staff: “M.B.W.A”—Master by Wandering Around. Packard’s successes with his own company and ties to the Republican Party led to a Pentagon appointment. When California Republican Richard M. Nixon was elected president in 1968, he chose Packard for his Deputy Secretary of Defense under Defense Secretary Melvin Laird. It was thought that the Pentagon needed a business mind to manage its $80 billion budget, but Packard’s appointment was not without controversy. At the time, Hewlett-Packard was selling $100 million a year in equipment to the government; his nomination was seen as a conflict of interest and received much publicity. Packard’s only term in public office to date had been on the Palo Alto School Board. Critics also pointed out that he was a generous contributor to the Republican Party. To avoid charges that he might set policy that would in the end benefit his own company, Packard placed all of his Hewlett-Packard stock into a charitable trust that would return to him once he was out of office at the Pentagon. Congress voted on his nomination, and only one Senator, Albert Gore, Sr., cast a dissenting vote. Though Packard and Hewlett were known for their far-from-lavish lifestyles, Packard earned about $1 million a year at his company and a federal salary of $30,000 a year at the Pentagon. He spent two years on the job, but grew disillusioned. “Working with the Washington bureaucracy was like pushing one end of a 40-foot rope and trying to get the other end to do what you want,” he wrote in his autobiography, The HP Way.
6 0 0
B u s i n e s s
Packard returned to his company in 1972 as board chair and chief executive officer. With the following decade came the genesis of the northern Californian hightech region known as Silicon Valley, and HewlettPackard stood at the forefront. Though they never achieved success in the personal computer or software market, they did revolutionize printing technology by entering the field in 1984, first with the ink-jet and later the laser printer. Both Packard and Hewlett retired from daily operations in 1977, but each came back in 1990 when the company was in trouble. They restructured certain aspects, and were proud to maintain their cherished no-layoff policy, a rarity in the computer industry. Packard formally retired as chair in September of 1993, and was designated chairman emeritus. The company he and Hewlett had begun in a garage had sales of $30 billion in the mid-1990s and was second only to IBM in its field. The Addison Avenue garage became a state historic landmark, its plaque designating it “the birthplace of Silicon Valley.” Packard belonged to the Business Council beginning in 1966, a group of prominent CEOs who met with government officials. He also served on the boards of Chevron, Boeing, General Dynamics, and U.S. Steel.
Social and Economic Impact Silicon Valley virtually grew up around HewlettPackard. Many famous names in the computer industry once worked for Packard’s company, including Steve Wozniak, co-founder of Apple Computer. Others went on to launch such industry leaders as Silicon Graphics and Tandem Computers. The company’s ties to Stanford sometimes provoked controversy. During the Vietnam War years, students protested that their school was affiliated with a firm that profited from war by selling instrumentation used in bomber planes. Packard was often vilified by student protesters and even confronted them at times; on the other hand, he once served as a liaison between students and Stanford’s board of trustees. Though he was a staunch Republican, Packard supported social welfare programs to help the underprivileged, and funded ventures to employ minorities in urban areas. His support of California Republican Ronald Reagan gained him another publicservice appointment in 1985. Then-President Reagan asked him to serve as vice-chair of the Packard Commission, which was charged with suggesting reform of the process by which defense contractors like HewlettPackard were awarded Pentagon contracts. Packard’s tenure there coincided with much public debate concerning federal spending. Packard later served as trustee of the Ronald Reagan Presidential Foundation until 1991, and sat on the U.S.-U.S.S.R. Trade & Economic Council. His real passion, however, lay not in politics but in the outdoors. He
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
D a v i d
was a major contributor and fundraiser for the Monterey Bay Aquarium, and his marine-biologist daughter would go on to serve as is its administrator. For it, Packard designed a machine to recreate ocean tides. He and Hewlett co-owned cattle ranches, and Packard was fond of riding around them on his bulldozer. He was also active in the California Nature Conservancy. Packard was the recipient of numerous honorary degrees, as well as the Gandhi Humanitarian Award and Presidential Medal of Freedom, both bestowed in 1988. He lived in Los Altos Hills, and after the death of his wife in 1987 created the David and Lucile Packard Foundation and the Packard Center for the Future of Children. After his own passing in 1996, the Foundation received the entirety of Packard’s $6.6 billion fortune, with the Center instructed to use some of that endowment to fund projects to improve the health of minority children in the United States. Packard and Hewlett also gave a great deal of money to Stanford, estimated at a combined $300 million over the years. That figure includes a $77 million bequest in 1994 to build new science and engineering facilities. Packard also donated $10 million to historic American black colleges.
P a c k a r d
Bibliography Bicknell, David. “A Pioneer Who Built His Success on Teamwork.” Computer Weekly, 4 April 1996. Byers, Paula K., and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1998. Current Biography Yearbook 1969. New York: H. W. Wilson, 1969. “David Packard.” Economist, 13 April 1996. Erkanat, Judy. “Hewlett-Packard CoFounder Dies.” Electronic News, 1 April 1996. Geier, Thom. “The Visionary in a Palo Alto Garage.” U.S. News & World Report, 8 April 1996. Howe, Harlan. “In Memoriam: David Packard (1912-1996).” Telecommunications, May 1996. Notable Twentieth-Century Scientists. Detroit: Gale Research, 1995. Postrel, Virginia I. “Legacies.” Reason, June 1996. Rostky, George. “Hewlett-Packard Pioneer David Packard Dies at 83.” Electronic Engineering Times, 1 April 1996.
Sources of Information Contact at: Hewlett-Packard Company 3000 Hanover St. Palo Alto, CA 94304 Business Phone: (650)857-1501 URL: http://www.hp.com
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
6 0 1
Roger Penske (1939-) Penske Corporation
Overview Roger Penske created a unique niche for himself, in the highly competitive automotive industry through his almost fanatical attention to the details of his products and services. He also found success by paying close attention to the vastly overlapping and interlocking aspects of his privately held transportation empire which included: Detroit Diesel, Penske Truck Leasing, Penske Racing, Team Penske, and a retail automotive group among others. The former NASCAR grand national championship driver and cofounder of Championship Auto Racing Teams (CART) also owned the Outboard Marine Corporation.
Personal Life Penske was born in Cleveland, Ohio, on February 20, 1939. His acute attention to detail was apparent at a very early age. While a preteen news carrier for the Cleveland News, Penske prided himself on being able to throw the papers on to his customers’ porches without getting them wet. His delivery style earned him not only numerous satisfied customers but also garnered the praise of the paper’s publisher, who gave him a cash reward for his efforts. The money from the award and the route enabled Penske to buy his first car, which he repaired and sold. After this, he bought another car to repair. Racing has been in Penske’s blood for a long time. He raced both dragsters and motorcycles while in high school, and when he went to college. He attended Lehigh University, in Pennsylvania, where he continued to in-
6 0 2
R o g e r
P e n s k e
dulge in his passion for racing along with playing football and participating in student government. In 1958, upon graduating from Lehigh with a degree in business administration, Penske went to work for the Aluminum Company of America (Alcoa), as a sales engineer. Around this time, he began to embark on a career as a professional race car driver.
Career Details Penske continued to work at Alcoa until 1964, when he left to become the general manager of a Philadelphia Chevrolet dealership. He eventually bought the dealership in 1965. Throughout the early 1960s, Penske enjoyed the acclaim of being named one of America’s premiere race car drivers. In 1960 and 1961, Penske was named the Sports Car Club of America’s national champion. In 1961, Sports Illustrated named him the Driver of the Year. The following year both the Los Angeles Times and the New York Times named Penske Driver of the Year. In 1964 Penske won three Nassau Trophy races and the following year he took home his first NASCAR grand national title. In 1965, Penske decided to retire from racing as a driver in order to concentrate on his growing business empire. Not willing to get out of racing entirely, Penske formed Penske Racing and Team Penske in 1966. The creation of Penske Racing was made possible by his purchase of the Chevrolet dealership the previous year. Penske continued to build his racing team with driver Mark Donahue. In 1969, Donahue finished seventh at the Indianapolis 500. Also that same year, Penske founded the Penske Corporation which would serve as an umbrella organization to all of his future business ventures, including a truck leasing organization and a racing tire distribution network. Team Penske won its first Indianapolis 500 race in 1972. The following year, Penske purchased the Michigan International Speedway for nearly three million dollars. Later, he purchased the Pennsylvania National Raceway. For much of the next three decades, Team Penske became synonymous with winning the Indianapolis 500. The team took home the trophy in 1979, 1981, 1984, 1985, 1987, 1988, 1991, and 1993. Besides Donahue, Team Penske drivers included: Rick Mears, Tom Sneva, Bobby Unser, Al Unser Sr., and Emerson Fittapaldi.
Roger Penske.
(Courtesy of Penske Motorsports, Inc.)
Social and Economic Impact Penske’s devotion and commitment to the automobile industry ran deeper than his CART affiliations and racing team. In 1987, he entered into a joint venture with General Motors (GM) for the operation of the Detroit Diesel Corporation. The venture, worth about a billion dollars, put GM’s 49-year-old heavy truck engine plant up for sale. GM needed the cash and Penske, as a longtime distributor of Detroit Diesel, wanted to diversify his place in the automotive market. Detroit Diesel’s market share had plummeted from 25 percent in 1979 to three percent a decade later. Penske sought to rejuvenate the company by having his truck leasing company promote the benefits of Detroit Diesel’s engines. Penske’s marketing approach, combined with the introduction of new engine models, helped Detroit Diesel’s market share climb to 26 percent by 1991. Despite strong competition from others in the industry, Penske has managed to keep Detroit Diesel’s market share at approximately 25 percent.
Penske united with U.E. Patrick in 1978, to form CART as an alternative to the Indy car organization. CART soon developed its own Indy car races at various tracks across America and has dominated Indy car racing since 1981.
When asked about why he took on the burden of Detroit Diesel, Penske told Ward’s Auto World, “It was a business opportunity. I typically have taken businesses, which were not highly fine tuned and been able to add our expertise in team management style to bring them to a solid and profitable market position....I realized here was a business I had been involved with for 15 years as a distributor. I knew the product, I knew the problem, I knew the people. So with that in hand, I took a look at
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
6 0 3
R o g e r
P e n s k e
of the Penske Corporation included: the transportation group, which included Detroit Diesel; the diesel technology corporation, which built commercial diesel injectors; the Penske Truck Leasing Corporation; a Southern California based retail sales venture; and the automotive performance group, which included Penske Racing.
Chronology: Roger Penske 1939: Born. 1961: Named Sports Illustrated Sports Car Driver of the Year. 1965: Retired from racing. 1966: Formed Penske Racing and Team Penske. 1969: Created the Penske Corporation.
In 1997, Penske purchased the Outboard Marine Corporation, the producer of Chris Craft boats along with Johnson and Evinrude outboard motors. Penske’s plan was to expand Detroit Diesel’s market share into the marine business. Explaining his drive to Ward’s Auto World Penske said, “I want to understand what’s going on in the organization. I’ll be walking through the plants, or looking at the suspension set up or looking at dyno sheets for my whole life. The day I stay out of the factories, I should get out of the business.”
1972: Team Penske won its first Indianapolis 500 race. 1978: Formed Championship Auto Racing Teams (CART) with U.E. Patrick. 1982: Formed Hertz Penske Truck Leasing. 1987: Bought Detroit Diesel. 1997: Bought Outboard Marine Corporation.
Sources of Information Contact at: Penske Corporation 176 Riverside Ave. Red Bank, NJ 07701
Bibliography “Detroit Diesel Gets Portable and Seamless.” Diesel Progress Engines and Drives, April, 1995.
what the structure of the deal could be. Typically, I have always wanted to have good partners.” Re-engineering Detroit Diesel kept Penske busy for much of the early 1990s, but it was only one facet of his expanding transportation empire. The different facets of the corporation worked together to build and support the trucking and racing industries. Some of the subdivisions
6 0 4
B u s i n e s s
“Driven.” Indiana Business Magazine, May, 1994. “High Gear.” Forbes, 12 September 1994. “Penske Talks About DDC.” Ward’s Auto World, November, 1994. “Roger Penske.” Newsmakers 88, Detroit:Gale, 1988. “Roger Penske Goes Boating.” Fortune, 4 August 1997.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Ronald Owen Perelman Overview Ronald Perelman is in the business of creating wealth. He buys undervalued companies, focuses on their core products, sells off unprofitable operations, and uses the remaining assets and improving cash flow to buy more ailing companies. In 1988 Perelman joined the ranks of the nation’s foremost takeover giants after securing control of Revlon, one of the world’s best-known cosmetic firms. The worth of Perelman’s financial empire is in constant flux, but at times has been as high as $7 billion. His personal worth is estimated by Business Week to be close to $5 billion. The cigar-smoking Perelman, who would prefer to remain unrecognized, inconspicuous, and generally forgotten about, has fought a losing battle in his efforts to remain out of the public spotlight. He has been ranked several times as among the top five richest men in the world.
(1943-) Revlon Group, MacAndrews & Forbes
Personal Life Ronald Perelman was born in Greensboro, North Carolina in 1943, the first of two sons of Raymond and Faith Perelman. His father, the son of a Lithuanian immigrant, owned and operated Belmont Industries, a metal-fabricating firm in Philadelphia, Pennsylvania, which served as a holding company for several other businesses based in Pennsylvania. Perelman attended the Haverford School outside of Philadelphia and upon graduation enrolled in the University of Pennsylvania, where he received a BA in economics (1964) and an MBA from the Wharton School of Finance (1966).
6 0 5
R o n a l d
O w e n
P e r e l m a n
Ronald Perleman poses with models Cindy Crawford, left, Salma Hayek, and Halle Berry, far right, at the eighth annual “Fire & Ice Ball”. The ball benefits the Revlon/UCLA Women’s Cancer Research Program that was co-established by Perleman. (AP Photo/Michael Caulfield.)
6 0 6
ute philanthropic donations amounting to nearly half a million dollars every year.
At the age of 21, Perelman married Faith Golding, a member of a wealthy New York City real estate family. They had four children and were married for nearly 20 years before divorcing. In 1985 Perelman married television entertainment reporter Claudia Cohen; they had one daughter, then divorced. Perelman’s first divorce cost him $8 million; his second divorce cost him $80 million. The third time he married, in 1994, bride Patricia Duff agreed to sign a prenuptial agreement. Duff was made president of Perelman’s philanthropic Revlon Foundation and redecorated all four of Perelman’s houses. According to Los Angeles Magazine, Perelman’s residential property at the time included a 57-acre estate in East Hampton, an 18-acre estate in Palm Beach, a house in Bel-Air, and three adjacent townhouses on East 63rd Street (one served as the office for his holding company, MacAndrews & Forbes). Perelman and Duff had one daughter and then divorced.
Beginning at a very young age, Ronald Perelman was a frequent visitor at his father’s holding firm, Belmont Industries. He was eleven when he attended his first board meetings, and often traveled with his father to inspect companies being considered for acquisition. When he was in high school, Perelman spent his vacations studying balance sheets and reading annual reports. He entered a full-time apprenticeship at Belmont Industries in 1966, but after 12 years of working for his father Perelman decided to move to New York and start his own business.
As a wealthy, somewhat paranoid billionaire, Perelman is never seen in public without his bodyguards. He is frequently photographed at social events, but rarely speaks to the press. An active member of the Orthodox Fifth Avenue Synagogue, Perelman keeps a kosher household and does not work on Saturday. He has made generous donations to Princeton University and to the University of Pennsylvania. The Revlon Group Foundation and the MacAndrews & Forbes Foundation distrib-
Taking the advice of a business broker, Perelman’s first deal on his own, using a bank loan, was the purchase for $1.9 million of 40 percent of a jewelry retailer and distributor, Cohen-Hatfield Industries. Most of the company’s assets were sold, but Perelman retained the profitable wholesale watch distribution business. Two years later, he purchased a controlling interest in MacAndrews & Forbes, a company that dealt in licorice extract and chocolate, for the price of $50 million. The com-
B u s i n e s s
Career Details
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
R o n a l d
pany’s chocolate operations were immediately sold for $45 million, putting Perelman in a position to repay the loans taken out to purchase the company. To boost profits, he sought out new sources of licorice in areas more stable than the company’s suppliers in Iran and Afghanistan, and added spices to the product line that were easily acquired in the same areas that produce licorice roots. By 1983 Perelman was able to buy all shares of MacAndrews & Forbes not under his control. Perelman turned the now-private MacAndrews & Forbes into his first holding company. In 1983 Perelman bought Technicolor, the company that gives vivid color to many Hollywood films. Five divisions of Technicolor were immediately sold for $68 million. Within five years, the remaining divisions had increased their yearly profit from $3.4 million to $100 million. In 1984 Perelman purchased Consolidated Cigar and a videocassette duplicator named Video Corporation of America. Perelman’s move to acquire Revlon began with the 1985 purchase of a controlling interest in Pantry Pride, a Florida-based chain of supermarkets that wanted to buy Revlon. The beauty company had faded in the face of stiff competition and waning enthusiasm from department stores, which were no longer stocking the product line. By selling off Pantry Pride’s assets, Perelman was able to finance the purchase of Revlon’s outstanding shares. In an effort to block the takeover, Revlon accepted a $900 million offer for the cosmetics business from a New York investment company, then allowed a management buyout corporation to purchase the total of Revlon’s non-cosmetic holdings for about $1.4 billion. A Delaware judge, who ruled that the deal was not in Revlon’s shareholders’ best interests, disallowed these sales. The Delaware Supreme Court upheld the ruling, and on November 5, 1985, at a price of $58 per share totaling $2.7 billion, Revlon was sold to Pantry Pride. Perelman then gave the name of Revlon Group to the former Pantry Pride. Perelman immediately sold Revlon’s non-cosmetic holdings and recovered $1.5 billion of his borrowed funds. He successfully persuaded most large department stores to give Revlon the exposure it once had. He purchased Max Factor and the cosmetics and fragrance lines of Yves Saint Laurent, and he directed that Revlon lipsticks and nail enamels be reformulated and that bottles and packages be redesigned. To gloss up the company’s image, Perelman hired famed beauty photographer Richard Avedon, whose portraits of seductive women ran in advertisements with the tag line, “The world’s most unforgettable women wear Revlon.” Within five years, Revlon was back in the number one spot in mass color cosmetics.
O w e n
P e r e l m a n
Chronology: Ronald Owen Perelman 1943: Born in Greensboro, North Carolina. 1964: Received BA from University of Pennsylvania. 1966: Received MBA from Wharton School of Finance. 1966: Entered apprenticeship at Belmont Industries. 1978: Moved to New York and started his own business. 1980: Purchased controlling interest in MacAndrews & Forbes. 1983: Purchased Technicolor. 1985: Purchased Revlon. 1986: Failed to secure ownership of Gillette. 1990: Purchased New World Productions. 1997: Lost control of Marvel Entertainment Group.
1988 from Ford Motor Co., turned into a profitable business, then ten years later folded into Glendale Federal, a $2.8 billion deal that created the nation’s third largest savings and loan, with $51 billion in assets. In 1990 Perelman bought New World Productions. To secure more airtime for New World’s productions, he acquired 54 percent of SCI Television. After accepting a $500 million investment from Rupert Murdoch’s News Corp., he announced that New World would switch all existing affiliations to Murdoch’s Fox Broadcasting Co. Broadcasting & Cable describes the resulting ramifications: “68 stations in 33 markets ended up swapping affiliations, while the Big Three networks [ABC, NBC, CBS] were forced to pony up an additional $250 million in annual compensation costs to prevent further defections.”
The Revlon story was repeated with Perelman’s purchase of Sunbeam (small appliances and Coleman camping gear) and National Health Laboratories. He also bought troubled savings and loans, attractive purchases that came with billions of dollars of government aid. The money-losing First Nationwide Bank was purchased in
Although his success rate is very high and his acquisitions have reached into many disparate industries, Perelman’s reputation as a corporate raider brought him some disappointments. In 1986 he was unable to secure majority ownership of Gillette, then sold the stock he was holding back to the company for a $39 million profit. Called “greenmail,” this kind of profit further tarnished Perelman’s reputation. In 1997 he lost control of Marvel Entertainment Group because, according to Hoover’s Online, “he financed the company with debt backed by the company’s stock.” More than a 1,000 bondholders accused Perelman of transferring money to his other en-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
6 0 7
R o n a l d
O w e n
P e r e l m a n
tities so Marvel could file for bankruptcy, a move that would allow him to wrestle control away from the bondholders. In a 1998 court ruling, Perelman lost control of the company. The structure of Perelman’s holding companies has allowed him to reap enormous tax benefits while limiting the legal liability of his holding companies. In fact, a net operating loss is attractive to Perelman in any new acquisition because it can be used to offset profit in the prosperous companies he owns. According to Business Week, Perelman “limits his holding-company debt to 20% of the equity value of all of his companies. Perelman figures his companies grow around 20% a year and his debt costs him only about 10%, so he’s sitting on a money machine.”
Sources of Information
Social and Economic Impact Corporate raiders with billion-dollar war chests and the desire for deal making have taken on an increasing presence in twentieth-century economics, but few have moved up the takeover ladder as quickly and as aggressively as Ronald Perelman. In 1995 Business Week assessed Perelman’s holdings: “He has considerable debt outstanding at two levels: Bonds issues by the holding companies that own the operating companies and bonds issued by the operating companies themselves. Changing economic conditions, such as recessions or high interest rates, could jeopardize Perelman’s ability to grow. Perelman says that his debt level is conservative: ‘We could sell any one of six assets and completely eliminate our holding-company debt overnight.’” Junk bonds from the investment-banking firm Drexel Burnham Lambert were used in Perelman’s buyout of MacAndrews & Forbes and his hostile takeover of Revlon. (Junk bonds offer interest rates to investors that are three to four percentage points higher than U.S. Treasury bonds, but they also come with increased probability of default.) Drexel employed the high-profile Michael Milken, whose specialty was corporate bonds. Drawing upon a huge network of federally insured savings and loans, he was able to turn over large sums of money while earning unusually high commissions and equity in the companies he was funding. Although more than 35 percent of the bonds were defaulting, Drexel was not putting money aside to cover the defaults. When Milken’s empire collapsed, more than 50 Drexel-controlled savings and loans also went bankrupt. American taxpayers had to make up the $50 billion in losses to depositors. The Securities and Exchange Commission eventually indicted Milken on 98 felony counts; he served less than two years of a ten-year sentence before being released from prison. According to Ronald Perelman, Drexel made capital available to a whole segment of the business com-
6 0 8
munity that had never had access to investment capital. He told Cigar Aficionado that Drexel had “...resources beyond anybody’s wildest imagination. And I think that this in and of itself concerned a lot of people. It concerned corporate America; I think it concerned some of the political structure... there was a lot of fear created about what was going on in the country, and in large part, the fears were focused on Michael and the product he created.... But America is not about legislating economic success. I mean, you might tax it, but don’t legislate against it. This country has been built in large measure by the entrepreneurs who came out with either a concept, or an idea, or a product, or a way of doing business.”
B u s i n e s s
Contact at: Revlon Group, MacAndrews & Forbes c/o MacAndrews & Forbes Holdings Inc. 35 E. 62nd St. New York, NY 10021 Business Phone: (212)688-9000
Bibliography “Bank Sues Perelman for Holders of Bonds Totaling $900 Million.” Wall Street Journal, 11 December 1997. Hast, Adele, ed. International Directory of Company Histories. Chicago: St. James Press, 1991. “MacAndrews & Forbes Holdings Inc.: Hoover’s Company Profiles.” Hoover’s Online, 9 June 1998. Available at www.hoovers. com/premium/profiles/40291.html. McClellan, Steve. “Perelman Didn’t Mean to Start a Revolution.” Broadcasting & Cable, 17 April 1995. Peers, Martin. “Perelman’s New Showbiz Vision Makes Street Wary.” Variety, January 1998. “Ronald Perelman.” 1991 Current Biography Yearbook. New York: H. W. Wilson Co., 1991. “Ronald Perelman.” Newsmakers: The People Behind Today’s Headlines, 1989, Issue 2. Detroit, MI: Gale Research, 1989. Shah, Diane K. “Beauty and the Billionaire.” Los Angeles Magazine, December 1996. Shanken, Marvin R. “Ron Perelman.” Cigar Aficionado, Spring 1995. Also available from http://www.cigaraficionado.com/cigar/ aficionado/librarie.html. Sosnoff, Martin. “Greed, Audacity and Timing: Perelman’s Sleight of Hand in the Consolidated Cigar Offering Is Pure Houdini.” Forbes, 23 September 1996. Spiro, Leah Nathans, and Ronald Grover. “The Operator: An Inside Look at Ron Perelman’s $5 Billion Empire.” Business Week, 21 August 1995. Stein, Benjamin J. A License to Steal: The Untold Story of Michael Milken and the Conspiracy to Bilk the Nation. New York: Simon & Schuster, 1992.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Steve Perlman Overview Steve Perlman designed revolutionary new computer products for several companies before forming his own, WebTV Networks Inc. In doing so, he realized his dream of creating a system for using the television to reach the World Wide Web and to operate e-mail. Now many others in the computer, television, and cable TV industries are trying to create similar services.
(1961-) WebTV Networks, Inc.
Personal Life Steve Perlman was born in West Hartford, Connecticut in 1961. Beginning at age 10, he attended Talcott Mountain Academy of Science and Mathematics in Avon, Connecticut. In 1997, Perlman donated $1 million to the school, which responded by naming its library and technology conference center after him. Perlman graduated from Hall High School in West Hartford in 1979. He went on to earn a liberal arts degree from Columbia University.
Career Details Perlman’s technical savvy enabled him to work during high school, when he stopped going to class in order to work on a minicomputer project for Northeast Utilities. In 1984 he was hired as a principal scientist at Apple. He helped design the first color monitor for the Macintosh computer and worked on QuickTime, an early system for showing video on a PC. During his stay at
6 0 9
S t e v e
P e r l m a n
hookup. This first WebTV model was offered just in time for 1996 Christmas sales and retailed at $300.
Chronology: Steve Perlman 1961: Born. 1971: Attended Talcott Mountain Academy of Science and Mathematics. 1984: Hired as principal scientist for Apple Computers. 1990: Hired as managing director of Advanced Products at General Magic, Inc. 1994: Cofounded Catapult Entertainment. 1995: Cofounded WebTV Networks Inc. as Artemis Research. 1996: Developed WebTV prototype. 1996: Offered WebTV in retail markets. 1997: Unveiled WebTV Plus. 1997: Sold WebTV to Microsoft for $425 million.
Apple, Perlman wanted to adapt the Macintosh for use as a television receiver, but the project was rejected. Perlman says that Apple destroyed some of his work, causing him to quit. In 1990 Perlman became managing director of Advanced Products at General Magic, Inc., developing software for handheld communicators. He quit this job when management sat on what he called “Magic TV.” He left the company but retained the rights to this new interactive software. Next, Perlman cofounded Catapult Entertainment, Inc. in 1994, where he was chief technical officer (CTO). He was fired from this position a year later. While at Catapult, Perlman developed the XBAND video game modem, which allowed players at different locations to play together. Finally, Perlman cofounded WebTV Networks Inc., where began designing and selling the technology he believed in so strongly and became the president, CEO, and CTO of the Palo Alto company. WebTV was founded in June 1995 with former Apple co-workers Bruce Leak and Phil Goldman. At first, the company operated in secret, under the name Artemis Research in an old automobile dealership’s garage. Perlman designed the WebTV prototype in 14 months using some $3000 in parts purchased at an electronics store. The product gave an individual access to the World Wide Web and e-mail, using a television, remote control, wireless keyboard, and telephone
6 1 0
B u s i n e s s
In 1997 Perlman unveiled an improved version of WebTV named WebTV Plus. The new version allows cable television customers to have simultaneous Web and television use, with a picture-in-picture display. For example, the viewer can access information on a product seen in a commercial or statistics related to a live sporting event. The new product cost $299 and the older WebTV “Classic” was reduced to $99 with a rebate. Later in 1997, Microsoft purchased the company for $425 million in stock and cash. As was noted in the Wall Street Journal, the purchase was a “vindication” for Perlman, who had finally proved the value of a TVcomputer combination. Perlman’s conflicts with his employers have left him with a reputation for being argumentative and uncompromising. He believes that his troubles were rooted in the mediocre minds of his bosses, a situation that he dubbed the “Salieri Syndrome.” He is referring to the film Amadeus and the character Salieri, who succeeded over Amadeus Mozart despite his inferior talents. “Apple was taken down by Salieris,” Perlman was quoted in the Wall Street Journal. What Perlman lacks in diplomatic skill, he makes up in technical imagination. Perlman made WebTV possible by making computer images look good on a television set. He found a way to fix color distortion and fuzziness, characteristics that made the television a poor format for displaying text. To do this, Perlman created a software filter called TVLens that corrects flicker, crosstalk (rainbowing), and resolution problems. Perlman hopes to sell WebTV to consumers who are interested in accessing the World Wide Web and e-mail but are intimidated by the PC or consider it too costly. Perlman saw an untapped market of World Wide Web users—everyone who watches television. For while only 20 million households have PCs with modems, 98 percent of U.S. households own at least one television and some 64 million have cable television. Perlman’s inexpensive box and keyboard are manufactured not by WebTV but by licensees Sony, Mitsubishi, Hitachi, and Philips. WebTV sells the customer the connection to its service, which costs $19.95 per month. Perhaps the most important issue at hand is whether “couch potatoes” want to interact with the television. Some critics insist that people will not give up the passive pleasures of zoning out in front of the television. If consumers do warm to a WebTV-type product, they will soon have several choices. Within the computer and television industries, upcoming products include RCA’s Network Computer, NextLevel’s DCT-1000, and the Curtis Mathes’ uniView 210. Computer manufacturers point out that WebTV’s proprietary system does not allow users to take advantage of “applets,” new mini-applications that are downloaded from a web page, limiting fullfledged Web use. And from the cable television indus-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S t e v e
try the leading Internet service is WorldGate, which is potentially faster and less expensive than WebTV. This product downloads software to a cable box over a cable system’s wiring, which is four times faster than telephone lines. WorldGate is projected to cost $5 to $12 per month—on top of regular cable fees. Steve Perlman, however, has a good head start on the competition. He has made a long-term commitment to uniting the television and the computer, and his passion for the project is clear. As Stephen J. Luczo of Seagate Technology Inc. noted in the Wall Street Journal, “When you meet with him, there isn’t a lot of chit chat . . . . He is definitely on a mission. And the mission is to change what it means to watch TV.” Now others are scrambling to join in the convergence of television and the Internet. Even after the first WebTV model was on store shelves for a year, no other competitor had launched a full-scale attack on Perlman’s product. This made WebTV virtually the only TV/Internet product available in late 1997.
P e r l m a n
Perlman also demonstrated perseverance and a belief in himself and his ideas that all can learn from. When employer after employer rejected Perlman’s ideas for interactive television, he developed it himself. He changed the way many Americans watch television and became a multi-millionaire in the process.
Sources of Information Contact at: WebTV Networks, Inc. 305 Lytton Ave. Palo Alto, CA 94301 Business Phone: (650)326-3240 URL: http://wwww.webtv.com
Bibliography Desomd, Edward W. “Set-top Boxing.” Fortune, 10 November 1997. Garner, Rochele. “The Salieri Syndrome,” Upside, February 1997. Gomes, Lee. “For WebTV’s Perlman, Microsoft Deal is Vindication After His Exile at Apple.” Wall Street Journal, 9 April 1997.
Social and Economic Impact
Hafner, Katie. “TV Meets the Web,” Newsweek, 29 September 1997.
Steve Perlman’s WebTV can bring the vast information of the Internet to every living room in the world through television. Nearly every American household has a television set, while a minority owns PCs, and even less go online via modem. Since the mid-1980s, Perlman has developed and promoted interactive television. With the booming popularity of the World Wide Web, Perlman saw the potential that his idea held for extraordinary expansion of the online consumer base.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Hof, Robert D. “Hello, Couch Potatoes.” Business Week, 24 March 1997. Lee, Jeanne C. “Web-ready Television Starts Making Sense.” Fortune, 13 October 1997. Lemos, Phil. “Web’s Wonder Boy Makes Return to Avon.” The Hartford Courant, 18 September 1997. Nix, Marilyn. “Former Apple Multimedia Pioneers Unveil WebTV.” PR Newswire, 12 June 1996.
S t u d e n t s
6 1 1
Ross Perot (1930-) Perot Systems Corporation
Overview Ross Perot has earned a reputation as a successful business executive, a fiercely patriotic citizen, and a formidable political candidate. He built a computer company from the ground up, turning it into a major enterprise that has made him a billionaire. He has used some of his vast wealth to improve the lives of war veterans and to stage two campaigns for President of the United States. In so doing, he has made his voice heard within American society.
Personal Life Perot was born Henry Ray Perot on June 27, 1930 in Texarkana, Texas. He was the last of three children born to Elias Perot, a cotton broker and horse dealer and Lulu May (Ray) Perot, a homemaker. Perot legally changed his name to Henry Ross Perot when he was 12 years old in honor of his brother, Gabriel Ross Perot, Jr., who died of a stomach disorder in 1927 at the age of three. Perot grew up in a modest home with his sister Bette in Texarkana, Texas attending the private Patty Hill Elementary School for four years before transferring to public school. Perot’s early life was greatly influenced by his parents. He admired his father’s business skills and his mother’s strong discipline and religious faith. By the age of seven, Perot had his first job. He began working for his father, breaking horses for a dollar each. He also sold Christmas cards and garden seeds door-to-door, but quit after he learned the profits were seasonal. Other endeavors included selling magazines,
6 1 2
R o s s
P e r o t
buying and selling horses and calves, and collecting for classified advertisements. At the age of 12 Perot created his own paper route for the Texarkana Gazette, offering to deliver papers in New Town, an impoverished area of Texarkana that had no paper delivery service. Because the Gazette did not think Perot could succeed in New Town, the newspaper offered him a higher-than-average commission. Working his new route first on horseback then later on a bicycle, Perot shocked his employers by quickly turning a profit. He was so successful that within two years the Gazette was trying to back out of its deal to pay Perot a higher commission. Only by appealing to the paper’s publisher was Perot able to hold his employers to their promise. At the age of 12, Perot joined the Boy Scouts. Just 16 months later, he reached the rank of Eagle Scout. By comparison, only one percent of all Boy Scouts ever reach Eagle Scout, and the normal amount of time to achieve that rank is three to five years. In 1947, Perot graduated from high school and enrolled at Texarkana Junior College where he spent two years, before entering the United States Naval Academy (USNA) in Annapolis, Maryland. He spent four years at the Naval Academy, graduating in 1953. Despite finishing in the middle of his class academically, Perot was elected by his classmates as best midshipman. He also served as class president, chairman of the honor committee, and battalion commander, among many other positions. Upon graduation, Perot served four years, first on the aircraft carrier U.S.S. Sigourney and then the U.S.S. Leyte. He had originally signed up for two years of service, but when the Korean War broke out in 1950, his commitment was extended to four years. In 1957, Perot’s ship was headed towards Korea, but the war ended and he was discharged. Perot married Margot Birmingham in 1956 and they had five children (Ross, Jr., Nancy, Suzanne, Carolyn, and Katharine.)
Career Details
Ross Perot.
While in the Navy, Perot served as an official greeter. In this capacity, he was introduced to a representative of International Business Machines (IBM) who was impressed with Perot and suggested Perot look him up after being discharged. Subsequently, in 1957, Perot moved to Dallas to take a job selling computers for IBM. He was soon drawing the largest commission checks in the company. By 1961, IBM executives decided to set quotas on how much commission a salesperson could earn each year. In 1962, Perot reached his quota by January 18, less than three weeks into the year. While at IBM, Perot had an idea not only to sell computers, but also to lease unused computer time along with software and technical support. IBM was not interested in pursuing this new concept. Growing frustrated, Perot left IBM in 1962 to start his own company, Electronic Data Systems, which would be based on his rejected idea.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
(AP/Wide World Photos, Inc.)
When Perot started EDS, he received 78 rejection letters before making his first sale to Collins Radio in Cedar Rapids, Iowa. However, EDS’s business did not skyrocket until 1965 when the federal government introduced Medicare and Medicaid. In 1965, Perot won contracts in 11 states to computerize the billing systems for these two programs. Finding his niche in the insurance business, Perot began gaining more clients. In 1968, EDS was worth $2.4 million. On September 12, 1968, Perot made EDS stock available to the public. One week later, he was a billionaire. By 1970, EDS had over 1,500 employees. Perot’s business ventures suffered substantial losses in the first half of the 1970s. In 1971, in an effort to save the failing American stock market, Perot purchased du
S t u d e n t s
6 1 3
R o s s
P e r o t
In 1989, Perot invested $20 million in NeXT, a new business being formed by Steve Jobs, the founder of Apple Computer. Also during the 1980s, Perot began to invest heavily in real estate in Texas. Accounting for all his business ventures, Perot’s net worth has been estimated at over $3.3 billion.
Chronology: Ross Perot 1930: Born. 1953: Graduated United States Naval Academy. 1957: Became salesperson for IBM. 1962: Founded Electronic Data Systems Corporation (EDS). 1979: Orchestrated rescue mission of EDS employees held hostage by Iranian government. 1984: Sold EDS to General Motors. 1988: Founded Perot Systems Corporation. 1992: Ran for United States President.
During the 1990s, Perot wrote six books: United We Stand: How We Can Take Back Our Country (1992); Not for Sale at Any Price: How We Can Save America for Our Children, (1993); Save Your Job, Save Our Country: Why NAFTA Must Be Stopped-Now! (1993); Intensive Care: We Must Save Medicare and Medicaid Now (1995); Preparing Our Country for the 21st Century (1995); and The Dollar Crisis (1996), co-written with retired Illinois senator Paul Simon. Perot is the recipient of numerous awards, including the Winston Churchill Award, presented to him in 1986 by Prince Charles, and the Raoul Wallenberg Award. In addition, he has been inducted into the National Business Hall of Fame. For public service, he has received the Jefferson Award, the Patrick Henry Award, and the Eisenhower Award.
1992: Published United We Stand: How We Can Take Back Our Country. 1996: Ran again for United States President.
Pont-Glore, Forgan, Inc., one of the largest brokerage firms on Wall Street. The company was in serious financial trouble, and many feared its failure could threaten the stability of the entire stock market. Over the next three years, Perot invested approximately $97 million. By 1974, Perot conceded to failure and dissolved the company, losing between $60 million and $70 million in the process. In 1984, Perot sold EDS to auto manufacturer General Motors (GM) for $2.5 billion. Perot remained chairperson of EDS and joined the GM board of directors. GM purchased EDS in order to consolidate its computer systems that were spread around the country in over 100 locations. Over the next two years, EDS grew from 15,000 to 40,000 employees and increased its value from $926 million to $5 billion. However, in 1986, with tensions between Perot and GM executives growing over management style and direction, Perot agreed to allow GM to buy EDS from him for a reported $700 million. Perot agreed to refrain from opening a for-profit data processing company that would compete with EDS for at least three years. The agreement also stipulated that Perot could not operate a competing business without profit for 18 months. Exactly 18 months later, Perot formed Perot Systems Corporation. Almost immediately, he won a contract to update the United States Postal System. However, Perot was forced to drop the contract after complaints of contract violation by EDS.
6 1 4
B u s i n e s s
Social and Economic Impact While Perot was building his business empire, he was also making his name known in the public arena. In 1969, he established the nonprofit Perot Foundation, contributing more than $2 million to the public schools in Dallas and $1 million to his beloved Boy Scouts of America. Perot added to his reputation as a good citizen and superpatriot in 1969 when he was called to the White House to help develop a plan to aid prisoner of war (POWs) in North Vietnam. Perot had already created United We Stand, an organization that called attention to the plight of POWs and those missing in action. In a grand effort, Perot rented two Braniff airplanes, stuffed them with 30 tons of medicine, Christmas gifts, and letters from home, and flew to Vietnam. Eventually, some of the gifts reached the POWs and the increased publicity helped improve conditions. Perot appeared on the national news again in 1979 when he staged a rescue effort to free two EDS employees who had been imprisoned without charge in Iran. EDS had sent employees to Iran to manage the government’s social security system. After two years, two employees were arrested and sent to a maximum-security prison in Tehran. Their captors demanded $12.5 million, the exact amount the government owed EDS for its services. Perot formed a rescue team, which managed to free the two men, along with 11,000 Iranian prisoners and mental patients, by staging a riot outside the prison. The rescue was documented by spy novelist Ken Follett in the book On Wings of Eagles, which was later adapted as a television mini-series.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
R o s s
Perot’s name became a household word in 1992 after he announced that he would enter the race for the U.S. Presidency on February 20, 1992, on the Larry King Live television show. He would run, he insisted, only if his name was placed on the ballot in all 50 states. This sparked a phenomenal grassroots movement that swept the nation. Perot unofficially entered the presidential race. At first spared the negative campaigning by the Clinton and Bush camps who did not want to alienate undecided voters, Perot’s campaign received significant support and approval from the many voters put off by politics-as-usual. Yet, by July 1992, after spending $10 million of his own money, Perot was on the ballot in only 25 states and his campaign was becoming increasingly burdened with internal conflict. On July 16, 1992, Perot dropped out of the race. However, his withdrawal was short-lived. Those working to get him elected did not stop their efforts, and on September 18, 1992, he was on the ballot in all 50 states. He officially re-entered the race as an independent candidate on October 1, 1992. On Election Day, Perot earned 19 percent of the vote, Bush earned 38 percent, and Clinton earned 43 percent. Although not able to win the election, Perot had stirred the pot for an election season and made a respectable showing at the polls.
P e r o t
chance of winning in November. On Election Day 1996, he received 8 percent of the popular vote. Perot is a noted philanthropist. According to Texas Monthly, in June 1996, he donated $23.5 million to the University of Texas Southwestern Medical Research at Dallas to support the Erik Jonsson Center for Research in Molecular Genetics and Human Disease. Other major gifts between 1995-1997 include a total of $20 million to University of Texas Southwestern, $15 million to the Texas Research Park, $14 million to the Dallas Symphony Orchestra, and $1 million to the Boy Scouts of America.
Sources of Information Contact at: Perot Systems Corporation 12377 Merit Dr., Ste. 1100 Dallas, TX 75251-3233 Business Phone: (972)383-5600
Bibliography Castle, Anne. “Thanks a Million.” Texas Monthly, December 1997.
Over the next four years, Perot organized his grassroots movement by creating United We Stand, America. He used this organization as a forum to keep his ideas before the public. In 1994 he founded the Reform Party, a new political party, and named himself a candidate for the party’s nomination to the upcoming 1996 presidential election. The mood of the country was different this time, and Perot did not prove to be as popular. He even had to struggle to gain his own party’s nomination over his opponent Richard D. Lamm. He was denied a place in the presidential debates because the Presidential Debate Commission ruled that he did not have a realistic
Contemporary Authors. Detroit: Gale Research, 1994.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Current Biography Yearbook. New York: H.W. Wilson Co., 1996. Encyclopedia of World Biography. Detroit: Gale Research, 1998. Gordon, Myles. “The Ross Perot Show.” Scholastic Update, 5 November 1993. Newsmakers. Detroit: Gale Research, 1992. Who’s Who in America. New Providence, NJ: Marquis Who’s Who, 1996. Who’s Who in American Politics. New Providence, NJ: R.R. Bowker, 1998.
6 1 5
Eckhard Pfeiffer (1941-) Compaq Computer Corp.
Overview As chief executive of Compaq, Eckhard Pfeiffer has established the computer company as the world leader in the hotly contested personal computer market. He hopes to take the company even further by expanding its product line and services to become the largest enterprise computing company.
Personal Life Eckhard Pfeiffer was born on August 20, 1941 just west of Dresden in the small town of Lauben, Germany (now part of Poland) during the first days of World War II. He earned his BA at the Kaufmaennissche Berufsschule in Nuremberg, Germany in 1963 and an MBA at Southern Methodist University in 1983. Pfeiffer is single and lives in a Houston high-rise. He dresses in elegantly custom tailored suits and speaks with a heavy German accent that reminds those who meet him of Henry Kissinger. He has often been seen socializing with Houston Rockets basketball star Hakeem Olajuwon and Texas governor George W. Bush and owns a collection of highpowered classic automobiles.
Career Details Pfeiffer started his career as a financial controller for Texas Instruments in Munich following his graduation from Kaufmaennissche Berufsschule in Nuremberg, Germany, in 1963. Pfeiffer later switched to the sales department of Texas Instruments and subsequently was head of
6 1 6
E c k h a r d
Eckhard Pfeiffer speaks about personal computers.
P f e i f f e r
(AP Photo/Lennox McLendon.)
the company’s European marketing division. In 1983, Compaq Computer Corp. invited him to head their European operations after he graduated from Southern Methodist University. He proved to be remarkably successful in this role and came to the United States to become chief operating officer in 1991. Before the end of the year, Pfeiffer replaced the man who promoted him, Compaq CEO and co-founder, Rod Canion. The board rejected Canion for his having allowed competitors to beat Compaq’s prices. In October of that year, the price of Compaq stock dropped by two-thirds in response to poor sales and profits reports. It was now Pfeiffer’s job to change the company’s reputation for high-quality but high-cost computers.
Pfeiffer proceeded to make dramatic changes and to set seemingly radical goals at Compaq. He reduced the company’s employee count from 12,000 to 10,000 and enlisted 3,000 new dealers. He also beefed up telephone ordering and customer service and he opened up marketing to include PC sales for homes, education and small business. Moreover, Pfeiffer announced that Compaq would be the top PC producer by 1997. This incredible and seemingly arrogant claim came true far ahead of schedule. In January 1995, Compaq had succeeded by shipping 4.8 million PCs in a year with the industry giant International Business Machines Corporation (IBM) lagging behind at 4 million.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
6 1 7
E c k h a r d
P f e i f f e r
Chronology: Eckhard Pfeiffer 1941: Born in Lauben, Germany. 1963: Graduated from Kaufmaennissche Berufsschule, a German professional school. 1963: Took first job at Texas Instruments. 1983: Graduated from Southern Methodist University. 1983: Became head of Compaq’s European operations. 1991: Promoted to chief executive officer at Compaq. 1995: Led Compaq to become the world’s largest PC producer.
Pfeiffer is a highly respected corporate leader. His value to Compaq is reflected by the size of his paycheck. In 1996, Pfeiffer’s cash compensation jumped 17 percent, from $3.6 million to $4.2 million. These figures account for Pfeiffer’s salary and annual bonus. Also in 1996, he exercised options on 370,000 shares of Compaq stock for another $23.5 million in revenue. Some of Pfeiffer’s critics complained that he made over Compaq in his own image. David Kirkpatrick commented in Fortune, “While it sounds peculiar to say that Pfeiffer is the personification of Compaq, it’s true. Pfeiffer is a highly competent, relentless, somewhat bland workaholic.” On the one hand, the CEO is known to work at lightning speed. But perhaps more importantly, he is careful and even meticulous about shaping corporate policy. Generally, Pfeiffer is serious, carefully spoken and reserved, even as Kirkpatrick noted, “a dull interview.” On occasion, however, he surprises observers. He has a love for dancing at corporate functions and even appeared at one corporate function in lederhosen and was hoisted off stage by a 70-foot cable. There isn’t much of a chance that Pfeiffer will become complacent with all of his achievements. He has remade Compaq’s corporate culture to make change ongoing and accepted by employees. Pfeiffer champions what he calls “creative destruction” as the means to continuously improving the business. He wrote in Euromoney magazine, “Nothing is harder than casting aside the thinking, strategies and biases that propelled a business to its current success. Companies need to learn how to unlearn, to slough off yesterday’s wisdom.”
6 1 8
B u s i n e s s
Pfeiffer has big plans for Compaq. He wants the company to be one of the top three computer companies by the year 2000. When he set this goal, four companies were larger than Compaq: IBM, Fujitsu, HewlettPackard, and NEC. In this attempt, Pfeiffer is remaking the company from a PC specialist into an all-purpose computer company. Compaq now encompasses four business divisions. Servers and high powered workstations, portable and desktop computers, PCs for home use and networking products including software all have their own divisions within Compaq. Compaq is even making computerized toys that are marketed with Fisher Price under the brand name Wonder Tools. Such major changes are necessarily risky, as Pfeiffer faces stiff competition on all sides. The New York Times warned that “If Mr. Pfeiffer has charted the wrong course, or even if he is right but the company cannot move nimbly enough, then Compaq could stumble as badly as it did under his predecessor.” Some analysts see another price war in the making as Pfeiffer seeks to cut costs again. To do this Pfeiffer has overhauled both production and personnel structures. He has instituted a new production system that will reduce dealer inventories by only building machines when they are ordered. Compaq hopes that this strategy will save the company $1 billion per year. The computer company must also hire possibly thousands of new support personnel to work with customers. This is something that corporate clients demand and is critical with products such as large servers that cost ten times more than a PC. Another new element that must prove its strength is a largely new management team. Pfeiffer summed up the significance of these developments in a New York Times article, saying “We’ve recognized a significant change very much in time and taken action . . . and not waited until something went sour and then tried to come out of a hole.”
Social and Economic Impact Under Pfeiffer’s guidance, Compaq went from being the fifth-largest PC maker in 1991 to the industry leader in 1995. He began this climb by sparking a price war that drove some smaller PC makers out of business. In 1992, Pfeiffer’s first full year as CEO saw Compaq beat up its competition by doubling its sales and quadrupling its profits.
Sources of Information Contact at: Compaq Computer Corp. 20555 State Hwy. 249 PO Box 692000 Houston, TX 77269-2000 Business Phone: (281)370-0670 URL: http://www.compaq.com
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
E c k h a r d
P f e i f f e r
Bibliography
“Fast Times at Compaq.” Fortune, 1 April 1996.
“Compaq at the ‘Crossroads.’” Business Week, 22 July 1996.
“Leadership Lost—And Regained.” Fortune, 17 April 1995.
“Computing’s Big Picture.” Popular Science, July 1997.
“Problem Child.” PC Week, 24 March 1997.
“The Endless Wave.” Financial World, 4 July 1995.
“They’re All Copying Compaq.” Fortune, 25 November 1996.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
6 1 9
Jane Cahill Pfeiffer (1932-) National Broadcasting Company, (NBC)
Overview Jane Cahill Pfeiffer made headlines between 1978 and 1980 as the first chairwoman of the National Broadcasting Company (NBC). Her NBC career ended suddenly after only 22 months when a rift developed between her and other management.
Personal Life Jane Cahill Pfeiffer was born in Washington, D.C., on September 29, 1932, to John Joseph and Helen Cahill. Jane’s father died suddenly when she was only seven, leaving her mother to raise Jane and her brother Jack alone. Helen Cahill started working hard on her own career and eventually became the highest-paid woman in the federal civil service as chief nutritionist for the Veteran’s Administration. Her mother’s efforts to advance her career impressed Jane deeply. After graduating from the University of Maryland with a BA in speech and drama and in mathematics in 1954, Jane Cahill took graduate courses in philosophy at Georgetown University and at Catholic University in Washington, D.C., from 1956 to 1957. She then entered a Roman Catholic novitiate to become a nun, but left after only six months and started her career as a trainee at IBM. On June 3, 1975, Cahill married Ralph A. Pfeiffer Jr., senior vice president of IBM’s World Trade Corporation. Nine months after her marriage, however, she gave up her IBM position. Jane Cahill Pfeiffer believed that two top managers being married and working for the
6 2 0
J a n e
C a h i l l
P f e i f f e r
same company could cause serious problems, and she had already planned to resign from IBM. Pfeiffer has received many awards. The University of Maryland presented her with its Distinguished Alumnus Award in 1975 and an honorary doctorate in 1979. In 1978, Pfeiffer was given the Outstanding Broadcast Executive Award at the first annual Mainstream Women Broadcasting Industry Awards. In 1980 she received the Eleanor Roosevelt Humanitarian Award from the League for the Hard of Hearing. Jane Cahill Pfeiffer was described as a religious and extremely private person. She and her husband live in Connecticut.
Career Details In 1955 Jane Cahill joined IBM as a systems-engineer trainee, where she first learned and later taught computer programming. Beginning in 1960, she worked for two years as the site manager of a missile tracking station in Bermuda. Once while in Bermuda, paychecks for her employees failed to arrive on time. Cahill paid her staff with money borrowed from a local bank, then wrote her bosses at IBM headquarters that the company had better “get with it” because the loan was going to fall due soon. Thomas J. Watson, then IBM’s chairman, was impressed by Cahill’s managerial know-how and assertiveness. In 1966, Jane Cahill was chosen as the first female White House Fellow. She left IBM for one year and, as part of the program, made the acquaintance of leading government officials in Washington, D.C. When Cahill returned to IBM, chairman Thomas J. Watson hired her as administrative assistant and then made her his executive assistant. In 1970, she became the secretary of the management review committee, whose purpose was to analyze and solve company-wide problems. One year later, she became director of communications and, in 1972, vice president of corporate communications and government relations. In 1975 Pfeiffer left IBM and started working as an independent management consultant. A good reputation and numerous strategic contacts helped her to get started. The Bank of America, Bethlehem Steel, Yale University, and the research firm Yankelovich, Skelly, and White were among her first clients.
Jane Cahill Pfeiffer.
One of her tasks was to improve the management of National Broadcasting Company (NBC), which was owned by RCA. After redirecting its programming toward youth in 1974, NBC’s television division had lost a large segment of its adult audience. As a result, NBC was losing affiliate stations to other media networks like CBS and ABC. RCA top managers put their hope in Fred Silverman, a very successful broadcasting executive, who had previously turned around declining operations at both the CBS and ABC networks. Pfeiffer helped recruit Silverman, whom she had met as vice president at IBM, while Silverman was program chief of CBS-TV. In June 1978, Silverman became NBC’s president and chief executive officer. He requested Pfeiffer’s assistance as a consultant and on October 4, 1978, suggested her to the board of directors as a candidate for NBC chairmanship. She was not only elected NBC chairwoman, but also, at the suggestion of Edgar H. Griffiths, RCA’s president and CEO, added to the RCA board of directors. Her assignment there was to help reorganize and manage the company.
In late 1976 the media reported that Pfeiffer was president-elect Jimmy Carter’s first choice as Commerce Secretary. On December 14, 1976, however, Pfeiffer released a statement that she was not interested in the Cabinet post because she did not want to live apart from her husband, who was working for IBM in Armonk, New York, and at the time she was recovering from surgery.
While Silverman worked on injecting some life into NBC’s programming, Pfeiffer took care of administration, employee relations, legal affairs, and government relations. In 1978 and 1979, Pfeiffer made substantial changes in areas she directly supervised. She took some unpopular measures while solving an internal criminal scandal, reduced the NBC board of directors from 18 to nine members, and reorganized the news division.
One of the firms for which Pfeiffer consulted was RCA, a major consumer electronics and media company.
In late 1978, it became known by the NBC hierarchy that certain unit managers were involved in fraudu-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
6 2 1
J a n e
C a h i l l
P f e i f f e r
sponsibility, were put off by her memos which they found arrogant, and objected to her wholesale replacements in the finance, personnel, and technical areas.
Chronology: Jane Cahill Pfeiffer 1932: Born. 1966: Named first female White House Fellow. 1971: Appointed secretary of IBM management revision committee. 1972: Became vice president at IBM. 1976: Started working as management consultant. 1978: Elected chairperson NBC, Inc. 1978: Became director of RCA. 1980: Discharged from NBC and takes a position with RCA.
lent practices and had embezzled some $1 million of NBC funds. To settle the affair, Pfeiffer investigated the charges swiftly. She spent more than $4 million replacing many of the managers and one vice president and bringing up approximately ten people on criminal charges. As a result, many NBC executives lost their director posts. By 1979, NBC was trailing the evening news programs on both CBS and ABC. To remedy the situation, Pfeiffer made a number of changes. She raised the news budget by 23 percent; she hired Paul Greenberg, a producer of the CBS Evening News, and Richard S. Salant, the retired president of the CBS news department, which had set the standard for television news since the fifties; and she arranged for the popular Phil Donahue to appear regularly on the Today show. The entire format of NBC news was altered by including more information, improving the editing, and emphasizing people in the news. In May 1979, Pfeiffer and Silverman stressed their goal of more mature programs with more news and information for the fall season. One year later, however, NBC was still trailing behind ABC and CBS in third place in the viewer numbers. As a result, NBC was earning approximately $120 million less in advertising revenues per year than its competitors. Adding to the problem was the United States boycott of the summer Olympic Games in Moscow. Silverman had been counting on attracting viewers, but instead lost another estimated $10 million in advertising revenues. Dissatisfaction among Pfeiffer’s staff led to open criticism. They claimed that she refused to delegate re-
6 2 2
B u s i n e s s
In the wake of these charges and under the added pressure of NBC’s deteriorating economic situation, on July 8, 1980, after serving only 22 months of her threeyear contract, Jane Cahill Pfeiffer was relieved of her duties by Fred Silverman, apparently on orders from Griffiths. The affair shocked the business community, in particular considering Silverman’s claims that Pfeiffer would remain as long as he was at the network. The firing was not handled correctly, however. Pfeiffer and Silverman exchanged charges and countercharges in the press. Pfeiffer was said to be extremely angry about how RCA had dealt with the matter. She maintained in statements to the media that Silverman had never formally asked her to resign. Furthermore, according to Pfeiffer, Silverman had confided to her that his primary concern was whether his own contract would be renewed. The warring parties traded official statements and bitter charges for days. But finally, on July 11, 1980, Jane Cahill Pfeiffer formally resigned. Despite some of the harsh accusations leveled at her by upper management, not all NBC colleagues were unhappy with Pfeiffer. One, quoted in Broadcasting, called her “plain and simple” adding that she “has no pretensions, no ego, she’s not trying to prove anything and she doesn’t engage in one-upmanship—which in business is a refreshing change.” Pfeiffer herself once said, “It is not easy, but you have to be willing to make mistakes. And the earlier you make those mistakes, the better.” After leaving NBC, she resumed her work as a management consultant. She later also served as a director on the boards of several companies, including Ashland Oil Co., International Paper Co., and J.C. Penney Co. In addition to her business achievements, she was also a member of various organizations, including the President’s General Advisory Commission on Arms Control and Disarmament and the Council on Foreign Relations.
Social and Economic Impact Despite her problems at NBC, Pfeiffer’s career and achievements helped pave the way for American women seeking acceptance and influence in business and politics. First in 1966, she was appointed by President Lyndon B. Johnson to serve as the first woman White House fellow, a program designed to enhance understanding between the business community and the government. While in the program, she worked with Robert Wood, undersecretary of the Department of Housing and Urban Development, on streamlining the Housing and Home Finance Agency. In 1972, she served as the first female vice president at IBM since World War II. As a vice president, Jane Cahill involved IBM as a television sponsor of high-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J a n e
quality entertainment and public affairs programs. IBM first sponsored the CBS-TV weekly news program Face the Nation in order to reach the businessmen in the audience, in Cahill’s opinion the decision makers for computer purchases. As chairwoman of NBC she held the highest position a woman had ever achieved in the broadcast industry. “With a salary of $225,000 a year plus bonuses ranging from $66,667 to $200,000 for each year of her three-year contract,” wrote Current Biography, “Mrs. Pfeiffer was believed to be the highest-paid woman executive in the country.”
C a h i l l
P f e i f f e r
Current Biography Yearbook. “1980.” New York: H.W. Wilson Co., 1980. Friendly, D.T., and S. Dentzer. “Shoot-Out at NBC.” Newsweek, 21 July 1980. “Hell No, I Won’t Go!” Time, 21 July 1980. Leavitt, Judith A. American Women Managers and Administrators. Westport, CT: Greenwood Press, 1985. “NBC’s First Lady.” Time, 25 September 1978. “NBC’s Mrs. Clean.” Time, 14 May 1979. “NBC’s Superwoman.” Newsweek, 25 September 1978. “Pfeiffer Seems to be Highest-Paid Female after Move to NBC.” Wall Street Journal, 7 March 1979. Rood, Jon. “University of Maryland Retrospective: Distinguished Women Alumni.” Business Line, Spring 1996. Available from http://dcs.umd.edu/corp/march96.html.
Sources of Information Contact at: National Broadcasting Company, (NBC) 90 Field Point Cir. Greenwich, CT 06830-7011
Schuyten, P.J. “Sure-Footed Climb to the Top.” New York Times Biographical Service, December 1978.
Bibliography
Who’s Who in America. New Providence, NJ: Marquis Who’s Who, 1996
Adams, J. “Fallen Idols.” Working Woman, February 1981.
Woodstone, A. “Has God Chosen Jane Pfeiffer to Run NBC?” New York, 23 October 1978.
Broadcasting, 23 October 1978. Brown, Les. Les Brown’s Encyclopedia of Television. Detroit: Gale Research, 1992.
Zilboorg, Caroline. Women’s Firsts. Detroit: Gale Research, 1997
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
6 2 3
T. Boone Pickens (1928-) Mesa Royalty Trust
Overview One of the best known and most skillful deal makers ever to emerge on the American scene, T. Boone Pickens rose to prominence during the 1980s as one of the decade’s premier “corporate raiders.” Colorful and outspoken, he combined uncanny business skill with the daring of a gambler as he launched one takeover attempt after another and shook up the oil industry in the process.
Personal Life Thomas Boone Pickens, Jr., was born in the small town of Holdenville, Oklahoma on May 22, 1928. He was the only child of Thomas Boone Pickens, Sr., a distant relative of American frontiersman Daniel Boone, and Gracee (Molonson) Pickens. Pickens’ father was an attorney employed in the land acquisitions department of Phillips Petroleum Co. when his son was born. “I was very fortunate in my gene—or genetic—mix,” T. Boone noted in a 1985 Time magazine interview. “The gambling instincts I inherited from my father were matched by my mother’s gift for analysis.” Around the mid 1940s, the family moved to Amarillo, Texas, where Pickens excelled in basketball at Amarillo High School. He then attended Texas A&M University on an athletic scholarship but transferred to Oklahoma State University after a broken elbow caused him to lose his financial support. Pickens received his bachelor’s degree in geology from Oklahoma State in 1951 and subsequently went to work in the petroleum industry.
6 2 4
T .
B o o n e
P i c k e n s
Pickens always demanded much of himself and routinely worked 12-hour days. He took great pride in being well organized and well informed about what was going on in the world. He has said that he has kept fit for years by playing tennis, racquetball, and golf and by working out daily in a physical fitness center. Pickens has provided considerable time and money through the years to Oklahoma State University, the University of Texas Cancer Center, and a variety of public service organizations. He also served as chairman of the board of the M.D. Anderson Medical Center in Houston, Texas, as chairman of the executive committee of the Texas Research League, and as chairman of the board of regents of West Texas State University. Pickens’ first marriage to Lynn O’Brien produced three children. They divorced in 1971, and on April 27, 1972, Pickens married his second wife, Beatrice Louise Carr. They vacation frequently at one of their several homes, including a retreat in Palm Springs, California, that they consider their favorite.
Career Details
T. Boone Pickens.
Not long after earning his college degree, Pickens took a job as an oil geologist for Phillips Petroleum. He left in 1955, however, because he found the work boring and felt stifled by the company’s conservative style. Pickens then started his own company, Petroleum Exploration Co., with $2,500 in cash, a $100,000 line of credit, and “an uncanny ability to find oil and gas,” in the words of reporter Lydia Chavez of the New York Times. Pickens focused his efforts on locating oil and supplying it to others. He managed to do this while avoiding the temptation to become involved with often costly sideline businesses such as pipelines, refineries, and service stations. By 1964 he had become successful enough to diversify some of his operations and incorporate. Thus was born Mesa Corporation, Inc., with headquarters in Amarillo, Texas. By 1969, profits had reached the point where Pickens could afford to start buying out other companies. His first acquisition was Hugoton Production Co. and its vast natural gas field in Texas. The following year, he was rebuffed when he made a bid to take over Southland Royalty. In 1973, however, he added Pubco Petroleum to Mesa’s holdings. In 1974 an ill-fated attempt to diversify into cattle cost him $19 million.
(AP Photo/Victoria Arocho.)
in a series of hostile takeover bids. Pickens also profited handsomely from the booming oil market during this decade. His shrewd deal-making netted him the Wall Street Transcripts “gold award” for the top executive in the oil industry in both 1981 and 1982. Pickens’ specialty was “greenmailing,” which involved buying huge blocks of a company’s stock as if preparing for a takeover, then selling them back at an inflated price so that the company can thwart the apparent buyout attempt. He first used this strategy in May 1982, when he tried to buy a controlling interest in a medium- sized oil firm called Cities Service Company. His efforts touched off a fierce bidding war among several oil industry rivals that drove up the company’s stock price. Occidental Petroleum ultimately made the best purchase offer for Cities Service Company, but Pickens and Mesa shareholders still won big. By losing the bidding war, Pickens had strategically positioned Mesa to realize over $31 million in profit on the merger deal.
Pickens fared much better during the 1980s thanks to a combination of his astute business skills, his love of gambling, and sheer luck. Using a variety of techniques, including some that were not entirely aboveboard, he managed to accumulate a massive amount of cash by selling off some of his assets at just the right time and by buying and trading stock in other petroleum companies
From that moment on, Pickens became a so-called “corporate raider,” pursuing what many believed were authentic bids to assume control of large oil companies, especially ones he felt were being mismanaged and therefore less able to fight off a takeover. Time and again, he lost bidding wars only to win at the stock manipulation game. In 1984, for example, after a highly competitive struggle involving some of the oil industry’s biggest names, Gulf Oil finally allowed itself to be purchased by Standard Oil Company of California to avoid
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
6 2 5
T .
B o o n e
P i c k e n s
Chronology: T. Boone Pickens 1928: Born.
have continued to take a tumble. The final blow came in 1996 when he was forced to resign as head of Mesa after running up $1 billion in debt as a result of overly generous payments to his shareholders. Pickens had bet that the price of natural gas would rise and bail his company out. But for once his gamble did not pay off, and Mesa suddenly found itself the target of raiders organized by a former Pickens protege named David Batchelder. Pickens officially stepped down as head of Mesa on December 31, 1996, but stayed on as a commodity market consultant for the company until late 1997 and then served as a member of the board of directors.
1951: Went to work for Phillips Petroleum. 1955: Founded Petroleum Exploration Co. 1964: Incorporated as Mesa Corporation, Inc. 1969: Acquired Hugoton Production Co. 1973: Acquired Pubco Petroleum. 1981: Won Wall Street Transcripts “gold award” as top executive in oil industry for two consecutive years. 1983: Won Henry G. Bennett Distinguished Service Award. 1985: Became highest-paid corporate executive in America. 1996: Forced to resign as head of Mesa Corporation, Inc.
being taken over by Pickens. The transaction resulted in the creation of a new oil company, Chevron, and Pickens and his partners walked away with a profit of $760 million. An article in Business Week magazine reported that Pickens was the highest paid corporate executive in America, earning more than $20 million in salary and deferred compensations that year from his newly renamed Mesa Limited Partnership, Inc. His personal wealth was estimated at over $100 million. But Pickens’ reign as the “king of the corporate raiders” was short-lived. In 1985, he went after Unocal Corporation, which responded by offering a unique stock buy-back plan that was open to all shareholders except Pickens and his Mesa partners. Pickens sued in the Delaware courts to block the plan and received a favorable ruling. Then the Delaware Supreme Court reversed the lower court’s decision and ruled that a company did indeed have the right to single out corporate raiders and treat them differently than other shareholders. Even though this decision was eventually overturned by the Securities and Exchange Commission, it marked the beginning of the end of Pickens’ career. In 1989, after becoming embroiled in a series of nasty political squabbles in Amarillo, Pickens moved Mesa’s headquarters to Dallas. Since then, his fortunes
6 2 6
B u s i n e s s
Social and Economic Impact A key part of Pickens’ strategy during the 1980s was his vocal, and often quite colorful, criticism of corporate America. He found many of the CEOs and managers he came in contact with to be greedy, careless, and ignorant about important aspects of their companies or their industries in general. He denounced the cushy perks these executives received and questioned their real value to the companies they headed. Instead, Pickens supported the then-revolutionary view that a CEO’s major responsibility is to create wealth for his shareholders and that the failure to do so might well result in the loss of his or her job. It also infuriated him that a number of corporate leaders did not even own stock in the businesses they ran, meaning that they had little incentive to improve performance and thus increase stock values. And even those who did own stock in their companies, noted Pickens in a 1985 Forbes magazine article, “have no more feeling for the average stockholder than they do for baboons in Africa.” Such outspoken corporate-bashing made Pickens a hero to those “average stockholders.” They applauded his efforts to shed light on inept management practices and were thrilled by the hefty returns they received on their investments as a result of his raids. In the end, Pickens opened more than a few eyes to the flaws in U.S. corporate culture and in no small way changed the way business is done in America.
Sources of Information Contact at: Mesa Royalty Trust 712 Main St. Houston, TX 79106 Business Phone: (713)216-6369
Bibliography Businessweek, 6 May 1985. Fortune, 26 December 1983. Harper’s Magazine, January, 1985.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
T .
Moritz, Charles, ed. Current Biography Yearbook, New York: H.W. Wilson, 1986. Nocera, Joseph. “T. Boone Pickens Gets the Boot at Mesa.” Fortune, 22 July 1996.
B o o n e
P i c k e n s
Time, 4 March 1985. Who’s Who in America, 1984-85, s.v. “T. Boone Pickens.” Willoughby, Jack. “Interview with T. Boone Pickens.” Forbes, 22 April 1985.
Thorpe, Helen. “Reversal of Fortune.” Texas Monthly, October 1995.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
6 2 7
Bob Pittman (1953-) America Online, Inc.
Overview The so-called boy wonder of broadcasting, Robert Warren Pittman earned his highly esteemed reputation by tapping into the collective mindset of the youth of America in the early 1980s, as he was instrumental in the 1981 launch and success of Music Television (MTV). The launch of MTV was only the beginning of the critically acclaimed and rapid ascent of Pittman in the American entertainment industry. He was also at the helm of Time Warner Enterprises, Six Flags Entertainment, Century 21 Reality, and America Online (AOL) between the late 1980s and the late 1990s.
Personal Life Pittman was born in Jackson, Mississippi, on December 28, 1953. His father, Warren, was a Methodist minister and his mother, Lanita Hurdle Pittman, was a homemaker. Pittman’s first foray into broadcasting came in 1968, when he began working part-time as a disc jockey at a Brookhaven, Mississippi, radio station when he was still in high school. Pittman bounced between a number of universities throughout the early 1970s, including the University of Pittsburgh and Oakland University. Also during this time, he was continuing to hone his radio and broadcast management skills at various stations. He worked as a disc jockey in Milwaukee, and from there traveled to WDRQ, in Detroit, to work as the research director. Pittsburgh’s WPEZ was his next port of call. Here he was the program director. In 1974 he started working
6 2 8
B o b
P i t t m a n
for the National Broadcasting Company (NBC) radio division in Chicago, where he stayed for the next three years. From there he went to WNBC, NBC’s flagship radio station, in New York City. It was in New York that Pittman really started to leave his mark in the field of broadcasting.
Chronology: Bob Pittman
Career Details In 1979 Pittman assumed the post of vice president and director at Warner Amex Satellite Entertainment Company. Not long after this, he was made the senior vice president of the company. He was in charge of programming and was one of the key players behind the invention and implementation of MTV. Pittman’s success in radio not only gave him the necessary clout to get the job done well, but made him the ideal “father figure” and guiding force behind the soonto-be-renamed MTV Networks. The idea was simple yet revolutionary—to establish and maintain a 24-hour allmusic channel on cable television. The brand-new network was to be run like a radio station that just happened to be televised. There were video jockeys who introduced the promotional song clips. The audience focus of the channel was on the primary fans of Top 40 radio, namely 12-24 year olds. When MTV debuted, in stereo, on August 1, 1981, it reached 6 million cable subscribers. By 1984, the number of people who subscribed to MTV totaled over 25 million Americans. Advertisers, initially leery of MTV, were lining up to hawk their goods and services to the members of the young and rather affluent audience. Pittman even claimed to be able to ascertain the views and beliefs of the different segments of the youth population based on their individual musical choices. MTV not only revitalized the record industry by opening up a new avenue of promotion; it also served as the cornerstone and flagship station for the Warner Amex Satellite Entertainment Company, which was then renamed MTV Networks. The newly renamed corporation quickly swallowed up its competition, namely Ted Turner’s rival video channel, in the autumn of 1984. This ensured MTV’s monopoly on music video programming in America. Seeking to branch out and to increase record sales by older segments of the population, Pittman helped to launch MTV’s sister station, Video Hits One (VH-1), in January of 1985. The new station was geared to older music listeners ranging in age from 25 to 45, who were not as interested in MTV’s young, trendy tastes.
1953: Born. 1979: Named senior vice president of Warner Amex Satellite Entertainment Company. 1983: Named executive vice president/chief operating officer for MTV Networks, Inc. 1985: Named president and chief executive of Warner Amex Satellite Entertainment Company. 1987: Went to work for Quantum Media. 1989: Became executive adviser to Warner Communications. 1990: Became president/CEO of Time Warner Enterprises. 1991: Named CEO of Six Flags Entertainment. 1995: Became managing partner/CEO of Century 21 Reality. 1996: Became CEO of America Online Networks. 1998: Promoted to president and chief operating officer of America Online, Inc.
time at Quantum Media before returning to Warner to act as an executive adviser in 1989. After Warner’s merger with Time, Pittman became the president and CEO of Time Warner Enterprises. It was a post he held from 1990 to 1995. Concurrent with this, Pittman also held the post of the CEO of Six Flags Entertainment, which was a subsidiary of Time Warner. In 1995, Pittman left the media business and took up a post at Century 21 Reality, where he served as a managing partner and CEO for a year, before the media industry lured him back.
Pittman continued to rise swiftly through the ranks at MTV. In 1983, he was named executive vice president and chief operating officer. Two years later, he was named the president and CEO of the Warner Amex Satellite Entertainment Company. The following year he spent
In 1996, after his tenure at Century 21, Pittman was recruited by AOL to manage AOL Networks, the fastgrowing consumer services wing of America Online. Pittman was brought into the fold at AOL because of his impressive track record at MTV and Time Warner. According to an article published in the Economist, Pittman’s latest challenge was to turn “AOL, the world’s largest on-line service and Internet-access provider, into a household name for more than its notorious service problems. He arrived (in October of 1996) to run AOL’s
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
6 2 9
B o b
P i t t m a n
consumer side, America Online Networks. His goal is to make AOL a mass media company.” Pittman focused on keeping present online subscribers while trying to attract new ones at AOL. The Internet subscription service was faltering because of the volumes of negative press it was receiving, due, in no small part, to the technical glitches of the system. AOL was adding new subscribers faster than its hardware could support, triggered by new competitive pricing that AOL introduced in 1996. Pittman’s job was to assure the customers and general public alike that AOL was working through the problems to improve service and quality and to tout the many services of AOL. How did Pittman think that he could bring new life to AOL? He felt that this was possible by emphasizing the convenience factor of the service. As he told Mediaweek’s Cathy Taylor, “so for me to be convenient I have to say, ‘Ok, you like to watch TV? Ok, so let me get you a great TV guide. You want to go to the movies? Let me get you great movie reviews all in one place.’ All I have to do is have parity. Make sure that nobody has a killer application that we don’t have access to. So, for us, we’ve got the easy job.”
keting campaign to slow the rate of subscriber growth to a more manageable level, and inked new deals that diversified AOL’s offerings and sources of revenue. In 1998 his efforts were recognized with a promotion to AOL’s president and chief operating officer. He has earned many accolades for his efforts in the broadcast industry. Performance chose him as Innovator of the Year in 1981, and Life named him one of its Original Thinkers of the 1980s. Pittman also received the Monitor Award for Lifetime Achievement in 1993.
Sources of Information Contact at: America Online, Inc. 2200 AOL Way Dulles, VA 20166 Business Phone: (703) 448-8700 URL: http://www.aol.com
Bibliography “Another Shake Up at AOL.” Broadcasting and Cable, 4 November 1996. “In Search of the Mouse Potato.” Economist, 19 April 1997. “Robert Pittman.” Adweek, 26 August 1991.
Social and Economic Impact Pittman was credited with stabilizing the world’s largest online and Internet service provider, AOL, improving its position as a mass-market service, and expanding the AOL brand. He cut AOL’s aggressive mar-
6 3 0
B u s i n e s s
“Robert W. Pittman.” Contemporary Newsmakers 85. Detroit: Gale, 1985. “Superboy’s Further Adventures.” Adweek, 11 June 1990. “Welcome, ‘You’ve Got Bob Pittman.’” Mediaweek, 2 December 1996.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J.D. Power Overview As the founder and chairman of the most prestigious marketing information firm in the world, when J. David Power III (best known as J.D. Power) speaks, businesses and consumers listen. He founded his company, J.D. Power and Associates, in the late 1960s based on the idea that consumers should be given a way to express their opinions about the automobiles for sale to U.S. drivers. Power’s company now has offices in several major cities around the world. The list of clients requesting its surveys of customer satisfaction data have expanded to include not only every automobile manufacturer or importer catering to the U.S. market, but also the telecommunications, passenger airlines, car rental, health care, financial, and hotel industries.
(1932-) J.D. Power and Associates
Personal Life Born in 1931, J. David Power III attended the College of the Holy Cross, graduating in 1953. After serving in the U.S. Coast Guard as a line officer aboard an icebreaker traveling the Arctic and Antarctic for four years, he went back to school and, in 1959, earned a master’s degree in business from the University of Pennsylvania’s Wharton School of Finance. He worked for a decade for both Ford Motor Company and General Motors, as well as for other gas-engine equipment manufacturing companies, then founded his marketing company in 1968. J.D. Power and Associates’ Customer Satisfaction awards are prized by manufacturers and relied on by consumers. Since their inception in the late 1980s, they have become highly visible components of
6 3 1
J . D .
P o w e r
Power held included a marketing research executive position with construction and farm equipment manufacturer J.I. Case and director of corporate planning for McCulloch Corporation, a Los Angeles-based engine manufacturer.
Chronology: J.D. Power 1931: Born. 1952: Began four-year service with U.S. Coast Guard. 1959: Earned MBA from University of Pennsylvania’s Wharton School of Finance. 1962: Joined Ford Motor Company as a financial analyst. 1968: Founded J.D. Power and Associates and begins consumer survey process. 1972: Early J.D. Power survey results cut short the career of Mazda’s Wankel engine. 1987: Began J.D. Power Customer Satisfaction Index. 1992: Receives Automotive Hall of Fame Distinguished Service Citation. 1996: Appointed chairman of the board of J.D. Power and Associates. 1998: Announced plans to sell the company.
thousands of advertisements for cars and trucks sold in the United States. Known for his strong advocacy of U.S. consumers, Power was recognized for his leadership role in documenting customer satisfaction within the auto industry in 1992, when he received the Distinguished Service Citation from the Automotive Hall of Fame. Rejecting countless offers of merger or acquisition over the years, Power would be joined by three of his four children in the business. He continued to play an active role until the late 1990s when, contemplating retirement from the firm, he expressed his intention to sell the company he had founded three decades ago.
Career Details Before setting up his market research company, Power had a career within the automotive industry. He began in 1962 as a financial analyst for the Detroit-based Ford Motor Company, and then worked for seven years for another of the “Big Three,” after signing on with General Motors as a marketing research consultant for that company’s Buick and GMC Truck divisions. Other jobs
6 3 2
B u s i n e s s
In 1968 Power decided there was a need for an independent method of collecting information on car quality, which could be supplied to potential purchasers before they bought a car. This need had become especially apparent, Power believed, with the increasing number of foreign cars reaching U.S. dealers in the 1960s—not only those from Saab, Volvo, Mercedes-Benz, and Volkswagen in Europe, but a whole new group of smaller, competitively priced cars from Japan. Attracted by the gas savings offered by these smaller cars, U.S. consumers viewed with increasing criticism the lack of design innovation coming from the Big Three (Ford, General Motors, and Chrysler). Large, heavy bodies and overpowered, high-performance engines made American-made cars costly to operate, particularly during the Arab Oil Embargo in the early 1970s, when gasoline prices reached ridiculous heights and gas was rationed at the pump. Deciding to target the cars marketed by Japanese auto maker Toyota first, Power (with the help of his wife, Julie) prepared survey questionnaires, stuffed them into envelopes that contained a quarter to encourage return of the survey, and tabulated the results. He then began marketing these survey tabulations to the auto industry, revealing significant results even in the first years that proved to the industry how useful Power’s work would be. By means of the surveys of the early 1970s, consumers expressed their preference for front-wheel drive cars over the traditional rear-wheel drive. They also voiced their frustration with parts that consistently failed, such as the O-rings on Mazda’s revolutionary “Wankel” rotary engine marketed in 1971-72. While Mazda publicly decried Power’s survey results, the engine was soon discontinued. Surveys for Power’s five major consumer studies are distributed annually to 100,000 car owners obtained from vehicle registration lists. Before Power began conducting and publicizing these surveys, there was no measurable way to compare one automaker’s product against another’s. Other than reading car enthusiast magazines or skimming issues of magazines such as Consumer Reports, consumers had to rely primarily on dealer promises and the recommendations of friends. When he established point-by-point comparisons through surveys, Power became the hero of consumers and the bane of the Big Three, whose cars did not always stack up well against the new Japanese competition. Even manufacturers lucky enough to earn the number one spot in his surveys were upset by his requirement that they pay fees to use the J.D. Power Customer Satisfaction ranking in advertising. But Power did not care about popularity as much as he believed in remaining independent of the auto industry as a way to gain credibility. As one industry analyst noted
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J . D .
in Business Week, Power’s “genius was not to depend on companies to finance proprietary studies, but to do independent studies and publish the results.” In the early 1990s J.D. Power and Associates began to expand its services to other industries, including such travel-oriented areas as hotel chains, rental car companies, and credit card services. As finding a health care provider has become a daunting task to many consumers, and the break-up of AT&T has caused a proliferation of telephone service providers, Power’s company also has stepped into these areas to survey consumer contentment. However, non-automotive rating services accounted for only 15 percent of the company’s $42 million in revenues in the mid-1990s. By 1997, the company took in over $61 million in annual sales. Recent years have seen changes in the competitive awards and micro-surveys that characterized the marketing information desired in the 1970s and 1980s when Power was establishing his enterprise. The company’s Initial Quality Study (or IQS), established a number of years ago and released each May, asks new-car purchasers to list defects noted within the first 90 days of purchase. The IQS has become a force to be reckoned with by auto manufacturers; as Paul A. Eisenstein noted in Automotive Industries, “Scoring well in the IQS charts almost always brings a rise in sales, while a poor performance sends a manufacturer scrambling for answers and fixes.” In later years the survey was criticized by manufacturers who claimed that such new-car “defects” reducing product ratings were often insignificant, due to the drastic improvements in quality over the last several decades. As a result, the survey was revamped in 1997. As Andrea Adelson explained in the New York Times, automobiles “don’t have the kinds of glaring faults they had in the 1970s and early 1980s. That is a change for which many inside and outside the industry give Mr. Power much credit.” In response, J.D. Power and Associates has increasingly focused other surveys on customer service. For example, in 1997 the company began offering awards to new-car dealerships, which number over 21,000 across the United States.
Social and Economic Impact In an era of increasing consumerism characterized by high expectations and a desire for immediate gratification, Power and his company provided a way for potential customers to intelligently weigh their options before making such a major life purchase as a car. Most significantly, the company’s 30 auto industry clients take these consumer judgments equally seriously, paying J.D. Power and Associates millions of dollars each year for long, detailed comparisons between everything from transmissions to owners’ manuals. These products are in contrast to the company’s Customer Satisfaction awards, which are generally positive and contain no specifics.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
P o w e r
Because of the Power reports, auto manufacturers are now able to plan future design and technology changes by understanding the changing needs and expectations of the car-buying public through an objective lens, without relying on information gathered inside the company. In recent years, automobile manufacturers around the world have requested surveys similar to those performed in the United States as a way to gauge their own auto-purchasing markets. Power initially planned to release his survey results only within the industry, but his business changed radically in 1983, when Subaru ran the first print add mentioning a J.D. Power IQS result, showing Subaru ranked second behind Mercedes-Benz in customer satisfaction. The use of Power ratings in print advertising helped to build the company’s reputation as a consumer advocate, without requiring the publication of detailed reports. It also has spurred the company’s growth into other industries where no objective measurement standard as yet exists. Some critics, however, believe that the practice of allowing manufacturers to use the Power name in their advertising creates a conflict of interest for J.D. Power and Associates and compromises its independence. Marketing the survey results to businesses for use in advertising had generated a significant amount of revenue, allowing the company to expand beyond its original vision servicing U.S. consumers. By 1998 J.D. Power and Associates had offices not only in the United States, but also in such cities as Toronto; Tokyo; London; Seoul, Korea; and Sao Paulo, Brazil. Success, as always, has spawned competition; but, because of Power’s reputation as a consumer advocate, his company has continued to be the leader in rating customer satisfaction.
Sources of Information Contact at: J.D. Power and Associates 30401 Agoura Rd., Suite 200 Agoura Hills, CA 91301 Business Phone: (818) 889-6330 URL: http://www.jdpower.com
Bibliography Adelson, Andrea. “People Buy the Cars He Says They Like.” New York Times, 16 October 1997. Armstrong, Larry. “Rating J.D. Power’s Grand Plan.” Business Week, 2 September 1996. Eisenstein, Paul A. “Behind the Power.” Automotive Industries, May 1997. Sharfman, Bill. “The Power of Information and Quality.” Automobile Magazine, February 1996. “About J.D. Power and Associates.” J.D. Power and Associates. Agoura Hills, CA: J.D. Power and Associates, 1998. Available from http://www.jdpower.com.
S t u d e n t s
6 3 3
Barbara Gardner Proctor (1933-) Proctor Communications Network
Overview Barbara Gardner Proctor rose from dire poverty to the head of the second-largest African American-owned advertising business in America. Her fearlessness and determination in the path of obstacles originated from her own harsh beginnings. She was unique in the advertising industry for using her values to guide her work, and she was not afraid to turn away accounts that she found objectionable, such as those that demeaned African Americans or women.
Personal Life Barbara Gardner Proctor was born in 1993 in Black Mountain, North Carolina, to a single mother, Bernice Gardner. She was raised by a grandmother and an uncle in extreme poverty with no electricity or running water. Her grandmother instilled early determination in Proctor, telling her, “You’re not cute, but you’re smart, and one day you’ll amount to something.” Proctor never forgot the advice and it turned out to be true. Proctor’s academic ability earned her a scholarship to Talladega College in Alabama, and she went on to earn a B.A. in English and another B.A. in psychology and social science. She graduated with both degrees in 1954. She also was awarded the Armstrong Creative Writing Award from the college in 1954. Later she attended law school. In 1960 Gardner married Carl Proctor, road manager for jazz singer Sarah Vaughn, but they divorced in 1963. She had one child named Morgan who later worked for her business. She claimed that the 15-hour days that she worked were the best relaxation for her.
6 3 4
B a r b a r a
G a r d n e r
P r o c t o r
Proctor was involved in the business community and received many awards for her work. She served on a number of boards, including the Illinois Bell Telephone Company, the 1988 Illinois Olympic Committee, the Better Business Bureau, the Illinois State Bar Association Institute for Public Affairs, and the White House Conference on Small Business. She was involved in efforts for the advancement of women and African Americans and worked with such groups as the League of Black Women (served as president from 1978-1982), the National Association for the Advancement of Colored People (lifetime member), and Handicapped Organized Women (served on honorary board). Proctor won a number of awards for her contributions to the fields of writing and advertising. Some of these included the Small Business of the Year Award (1978) and the Black Media Award for Outstanding Professional (1980).
Career Details Proctor began her career by using her writing skills in the music field. In 1958 she began working as a jazz music critic and contributing editor to Downbeat magazine. From 1961 to 1964 she worked for Vee-Jay Records International in Chicago, creating copy for jazz record covers and later serving as international director. After her divorce from Carl Proctor, Barbara Gardner Proctor shifted to the advertising industry. Between 1965 and 1970 she worked for three different advertising firms: Post-Keys-Gardner Advertising, Chicago, 1965-68; Gene Taylor Associates, Chicago, 1969; and North Advertising Agency, Chicago, 1969-70. Eventually, she served as copy supervisor at North Advertising Agency. She decided to launch her own business when she was fired from North Advertising Agency for refusing to work on an ad campaign to which she objected. The ad, which she found demeaning to women and African Americans, parodied the civil rights movement and featured protesting women running down the street and demanding that their hairdressers foam their hair. In 1971 Proctor launched her own business, Proctor and Gardner Advertising. To go into business she applied for a small business loan which she was denied for lack of collateral. Armed with data (three advertising agencies statements of what they would pay her as an employee), she convinced the lender to give her an $80,000 loan using herself as collateral. She faced a number of societal obstacles that did not deter her. As she explained in Ebony, “I happen to be born female and Black, but I am much more than that. To view one’s self in terms of those two small biological characteristics is very selflimiting.” In a time when not many women or African Americans ran businesses, Proctor purposefully named the business using both “Proctor” and “Gardner,” so that potential clients would assume that “Gardner” was a male partner behind the scenes.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Barbara Gardner Proctor.
AP/Wide World Photos, Inc.
After six months in business Proctor had her first client. At the end of four years in business, Proctor needed more working capital and applied for another loan from the Small Business Administration (SBA). But the SBA refused. Undaunted, she looked inward, refusing to blame any external situations. In the April 30, 1984 New Orleans Time-Picayune, Proctor explained, “In every case where something would have been an obstacle, I’ve found a way to turn it to an advantage. I cannot buy the concept that anyone outside is responsible.” She credited her impoverished upbringing with giving her the ability to take risks, since she had already been exposed to adversity in her life and had little fear of the unknown. Proctor brought to her business a firm belief that advertising should encompass quality and equality. According to Contemporary Newsmakers, the timing was right for minority business to succeed. In the advertising arena, the African American market was just beginning to be understood, giving Proctor’s company a virtually untapped market. Proctor was able to focus on this niche and maximize profits, as well as present a positive picture of the African American community. Proctor maintained a diverse staff with many women and minorities, and in a 1982 Ebony article she called her staff one of the best in the world. She described herself as a non-boss who did not believe in telling professionals how to do their jobs. On the other hand, she held employees accountable, specifying that if they challenged any directions that she had given, that they had “damn well better deliver” to the client. Her son Morgan served on her staff and expressed an interest in taking over the company in the future.
S t u d e n t s
6 3 5
B a r b a r a
G a r d n e r
P r o c t o r
Chronology: Barbara Gardner Proctor 1933: Born. 1954: Awarded Armstrong Creative Writing Award at Talladega College, Alabama. 1954: Graduated from Talladega College, Alabama. 1961: Married Carl Proctor. 1963: Divorced Carl Proctor. 1968: Received American TV Commercial Award.
American advertising agency in America. In 1983 the company had $12 million in billing. Some of Proctor & Gardner’s long-standing clients included Kraft Foods, Sears, Roebuck and Co., and Alberto-Culver. Another long-term client, Jewel Foods of Chicago, credited Proctor & Gardner Advertising with rescuing Jewel’s generic food line, which suffered poor sales. Proctor & Gardner redesigned the food campaign, giving it a stronger and more positive tone. Noteworthy of Proctor’s work in the advertising field was her adherence to her values. She refused to take work that degraded women, blacks, or that she found morally unacceptable. For example, Proctor & Gardner did no work for cigarette or liquor accounts. Proctor was wary of what she called “ethnically dubious advertising pitches” that were aimed at women and minorities. She maintained, “Advertising is the single most important way of reaching everyone in America and I feel a deep responsibility my work.”
1969: Received International Film Festival Award. 1971: Founded Proctor & Gardner Advertising. 1972: Received Cosmopolitan Chamber of Commerce Achievement Award. 1995: Filed Chapter 11 bankruptcy to restructure Proctor & Gardner. 1996: Dissolved Proctor & Gardner; started Proctor Communications Network.
Sources of Information Contact at: Proctor Communications Network 980 N. Michigan Ave., Ste. 1776 Chicago, IL 60611-7503 Business Phone: (312)867-2200 URL: http://www.pini.com
Bibliography By the mid-1990s sales had slowed, however, and in 1995 Proctor & Gardner Advertising filed Chapter 11 bankruptcy, a protective measure that offered a chance to restructure the firm’s finances and pay off debt. At the time of bankruptcy the company was more than $1.8 million in debt and reported assets of $361,000. The company had more than $5 million in account billings. In 1996 Proctor dissolved the advertising agency. Honing in on the increase in Internet use, she started a new company, Proctor Communications Network, which offered Internet marketing expertise and web site design. The business was later renamed Proctor Information Network, Inc.
Ball, Millie. “Ad Whiz was on Her Way with Her First SBA Loan.” New Orleans Time-Picayune, 30 April 1984. “Black Woman Advertising Entrepreneur Files for Chapter 11 Bankruptcy.” Jet, 9 October 1995. Brown, Michelle. “Barbara Gardner Proctor.” Contemporary Newsmakers, 1985 Cumulation. Detroit: Gale Research, 1986. Ebony, August 1982. The Ebony Success Library. Nashville: Southwestern Co., 1973. Francke, Richie L. “Proctor Takes a Gamble and Hits the Jackpot.” Working Woman, August 1979. Kroll, Luisa. “Where Are They Now?” Forbes, 18 May 1998. Smith, Jessie Carney, ed. Notable Black American Women. Detroit: Gale Research, 1992. Who’s Who in America. New Providence, NJ: Marquis Who’s Who, 1996.
Social and Economic Impact Proctor was able to rise from extreme poverty and create a business that became the second-largest African
6 3 6
B u s i n e s s
Who’s Who Among African Americans. Detroit, Gale Research, 1996.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
William Cooper Procter Overview William Cooper Procter spent his entire professional life with Procter and Gamble, the soap and household products company founded by his grandfather. Over the course of a half-century from 1883 to his death in 1934, Procter worked to improve conditions for workers, transforming his company from a hotbed of union dissent to a leading example of outstanding employee-management relations. He was known to have a very strong social consciousness and perhaps could best be described as a philanthropical capitalist.
(1862-1934) Procter & Gamble
Personal Life William Cooper Procter was born on August 25, 1862 in Glendale a suburb of Cincinnati, Ohio. His parents, William Alexander and Charlotte Jackson Procter, had five children—William C. was their only son. Procter attended Hughes High School in Cincinnati and graduated from Princeton University in 1883. On January 1, 1889, he married Jane Eliza Johnston of Glendale; the couple had no children. Procter was extremely involved with his church, Christ Episcopal Church, where he served as a senior warden; he was also one of the most noteworthy laymen in the Episcopal Diocese of Southern Ohio. Procter established a rifle range, Camp Procter, while serving as a commanding officer for the 1st Regiment of the Ohio National Guard—he later gave the property to the Girl Scouts of America. In addition to his work with Procter and Gamble, Procter sat on the board of the New York Central Rail-
6 3 7
W i l l i a m
C o o p e r
P r o c t e r
Chronology: William Cooper Procter 1862: Born. 1883: Graduated from Princeton and began working for Procter and Gamble 1890: Appointed general manager of Procter and Gamble. 1907: Became president of the company. 1911: Developed Crisco shortening. 1917: Developed the Chemical Division of the company for research. 1919: Revised company policy to include the statement “interests of the Company and its employees are inseparable. 1924: Created a market research department to study consumer preferences and habits. 1930: Elected Chairman of the Board of Procter and Gamble. The Company purchases a factory in England. 1934: Died.
road and the National City Bank of New York. He was active in politics with the Republican Party, and managed the unsuccessful campaign of General Leonard Wood for the 1920 Presidential nomination—fellow Ohioan Warren G. Harding got the nomination, and went on to the White House. Procter also served on many relief committees during the Hoover administration. Procter was extremely generous to his alma mater, Princeton University, and was a major donor to the Graduate School. His greatest philanthropic act in his hometown was the amount of time and money that he bestowed upon The Children’s Hospital at Cincinnati. Procter was an unselfish man, a fact born out by his efforts on behalf of his employees, as well as the contributions he made to numerous charities. He was a sportsman and athlete, active in his church, active in politics, and he received numerous awards and honors, which reflect his many philanthropic endeavors. A description of William C. Procter is not complete without mentioning his ancestors, James Gamble and William Procter. Gamble and Procter were immigrants
6 3 8
B u s i n e s s
from Ireland and England, respectively, and were headed West. Both men stayed in Cincinnati, and married two sisters, Olivia and Elizabeth Norris. William Procter was a candle maker and James Gamble was a soapmaker. Their father-in-law suggested that James Gamble and William Procter merge businesses. One essential ingredient for both candles and soap was animal fat—at the time, Cincinnati was a major hog-slaughtering center. The men peddled their products along the Ohio River. They became very successful and the company was the largest business in Cincinnati by the time the Civil War started—they supplied all the soap and candles for the Union army. In 1890, W.C. Procter’s father, William A. Procter, was named the company’s first president. William C. Procter was a child when Procter and Gamble’s trademark, a man in the moon and 13 stars within a circle, was first used. It was developed by wharf workers who would stamp the symbol on the wooden shipping crates of “Starlight Candles” to identify the manufacturer.
Career Details As the grandson of William Procter, William Cooper Procter’s future was set. Once he finished his schooling at Princeton University in 1883, he returned to Cincinnati to work for Procter and Gamble. Procter worked in every aspect of the business, both in the factory and office, and as a salesperson; in doing so, he became very much aware of the working and living conditions of the workers. By that time it was an enormous company with large nationwide sales of products such as Ivory Soap. It had developed what was then a model factory called Ivorydale near Cincinnati, but it had a number of problems in the area of worker relations. Procter helped to change the face of employee relations in his family’s company and, because of his firm’s size and influence, American industry itself. In an era when most business leaders seemed to believe that there was nothing wrong with their workers that pay cuts and the threat of job loss would not cure, his views were extremely progressive, and he set an example for other companies. When Procter went to work for the family business in 1883, the Knights of Labor, at that time a prominent labor union, were leading a strike at the Ivorydale plant. Whereas the older generation might have taken a hardline stance that could have caused the strike to go on longer, young William C. Procter talked his father and uncle into letting him use a very different approach. He gave the workers half the day off on Saturdays, an unheard-of concession, and instituted a new profit-sharing plan. He even worked with leaders among the employees to modify the profit-sharing package so it best suited their needs. By his skillful handling of workers’ grievances— motivated by what was a genuine concern for his em-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
W i l l i a m
ployees’ well-being—Procter was able to continue building a successful business in an era when labor unrest was sweeping American industry. Instead of trying to head off the Knights of Labor with billy clubs and rifles, as many of his counterparts in other businesses would have—a battle they would inevitably lose, because such hard-line tactics only strengthened the union’s sense of purpose—Procter killed them with kindness. The union never gained a foothold in his company’s plant. When the company became incorporated in 1890, Procter became general manager. By then, Procter and Gamble was selling more than 30 different types of soap and the company was placing large, color advertisements in national magazines. To meet the demand of the consumer, the company opened a second factory. In 1907 his father, William A. Procter, stepped down as company president, and William C. took his place. Once he became company president, Procter went even further. He revised the pension and benefit plans for his employees, and even gave them a voice on the board of directors. In 1918, he instituted a conference committee so that workers had a forum in which to present complaints to management, and in 1923 he guaranteed his employees that they would have work for at least 48 weeks out of every year—that is, they would not be laid off for more than 4 weeks in any 12-month period. When William C. Procter became president of the company, Procter and Gamble had two plants, the original factory at Ivorydale in Cincinnati and one at Kansas City, Kansas (1905). By the time of Procter’s death in 1934, several other plants were built: Staten Island, New York (1908), Macon, Georgia (1910), Hamilton, Ontario (1915), Dallas Texas (1919), Baltimore, Maryland (1930), and Long Beach, California (1931). Procter and Gamble also bought out several other companies including, the William Waltke Company, the Globe Soap Company, and entered the foreign market with its purchase of the James S. Kirk & Company in England and a soap and candle factory in Cuba. Just before Procter joined the family firm, Procter and Gamble had already became well known for its Ivory soap—the soap that “floats and is 99 44/100 pure.” Under his leadership, the company introduced several products, most notably Crisco Shortening in 1911. Crisco was the first vegetable shortening—it is made from cottonseed oil, also an ingredient used in making soap. Vegetable shortening was healthier than using animal fats and much less expensive than butter, so Crisco became very popular and the product eventually sponsored cooking shows on the radio. Procter and Gamble expanded its factory holdings to include cotton mills with facilities to crush the cotton seed for the production of oil and to process the seed waste to be used for the manufacture of cellulose materials. William C. Procter had created an expansive industrial empire. Procter developed research laboratories to make new
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
C o o p e r
P r o c t e r
products and he also developed one of the first market research departments to study consumer preferences and buying habits. A product was marketed according to its particular use or a specific need of the consumer. In 1932 Procter and Gamble sponsored “The Puddle Family” and in 1934 developed “Ma Perkins,” a serial program sponsored by Oxydol soap—soap operas! In 1930, William C. Procter stepped down as company president, but he remained chairman of the board until his death in 1934.
Social and Economic Impact William C. Procter was a nationally known manufacturer of household products, but perhaps more importantly, he known for his innovative business management techniques. Elements of Procter’s employee benefits package remained in effect two generations after his death, by which time all of American industry had more or less adapted to his view of employee management. Procter changed the American workplace as well as the American marketplace. He was a model citizen in that he sought to better the conditions of workers and shared his wealth with his community. In the wake of his impressive leadership, Procter and Gamble became the leading seller of household products and the nation’s most dominant advertiser. The company went on to revolutionize washday with the laundry soap, Tide. Procter and Gamble eventually entered the foods and paper markets. By the mid 1990s, Procter and Gamble sold over 300 brands of products in over 140 countries, and had employed over 100,000 employees.
Sources of Information Bibliography Company Web Sites “A Company Built On Innovation.”Available from http://www.pg.com/docinfo/library. Dupree, Richard Redwood. William Cooper Procter(1862-1934) Industrial Statesman. New York: Newcomen Society, 1951. Ingham, John. Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood, 1983. Lief, Alfred. It Floats: The Story of Procter & Gamble. New York: Rinehart, 1958. The National Cyclopedia of American Biography Vol. XXV. New York: James T. White, 1936. Procter and Gamble Company. Into a Second Century With Procter & Gamble. Cincinnati: P & G, 1944. It Floats (filmstrip.) Kling Film Productions, 1956. Who Was Who In America Vol. 1 1897-1942. Chicago: Marquis, 1943.
S t u d e n t s
6 3 9
Wolfgang Puck (1949-) Wolfgang Puck Food Company
Overview Wolfgang Puck spent nearly two decades developing and refining his uniquely prestigious culinary crafts in some of the most acclaimed kitchens in Europe. After emigrating to the United States in the mid-1970s, he brought not only his highly regarded talent to Indianapolis and later southern California, but his zestfully overriding drive to excel as well. Still under the age of 40, Puck became by the mid-1980s a celebrity chef who was known as much for his distinct culinary creations as for his cookbooks, videos, chain of Wolfgang Puck Cafes, highly touted restaurants, Wolfgang Puck Food Company, and for elevating and celebrating the California style of cooking.
Personal Life Puck was born on January 8, 1949, in the Austrian town of St. Veit an der Glan. His mother, Maria, was a restaurant chef, while his father, Josef, was a coal miner. Problems arose at home when young Puck declared that he wanted to be a chef and follow in his mother’s footsteps, rather than pursuing a career that his father approved of. Puck did try his hand at working on a construction site but quit because he hated it. When he was 14, he managed to get a job in a restaurant, as he related to Florence Fabricant of the New York Times, “I was so inept that after three days the chef was going to fire me. Here I was a good-for-nothing kid who had run away from home. I hid out in the cellar of the restaurant for two weeks. When the chef found me, he took pity on me and got me a job in another hotel.” His subsequent restaurant experiences would prove much more favorable, however.
6 4 0
W o l f g a n g
P u c k
Wolfgang Puck and his wife, Barbara Lazaroff, welcome people to their new restaurant in Las Vegas, Nevada. Chinois integrates classical French with the cuisines of Europe and Asia. (AP Photo/Lennox McLendon.)
Puck’s first marriage ended in divorce. He then married Barbara Lazaroff, who was also his business partner in many of his U.S. ventures. The couple have two children, Cameron and Byron.
Career Details
pled the savory delights prepared by a visiting chef from Dijon, France. After moving to France, Puck found work in the kitchens of Ostau de Baumaniere in Les Baux-deProvence. From there, he went to the Hotel de Paris, in Monte Carlo. Puck’s next position was at the esteemed kitchens of Maxim’s, in Paris.
For three years, Puck worked in various restaurant kitchens throughout Austria. He then left his homeland for France to hone his culinary skills after having sam-
By the mid-1970s, he was looking for a new challenge and America seemed to offer the earnest young chef the opportunity of a lifetime—to progress above and beyond his already esteemed reputation. Puck told Theresa
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
6 4 1
W o l f g a n g
P u c k
wanted a piece of Chinios. He even had to turn some of them away.
Chronology: Wolfgang Puck 1949: Born. 1980: Wrote Modern French Cooking for the American Kitchen. 1982: Opened Spago, his first restaurant. 1983: Opened Chinios. 1986: Wrote Wolfgang Puck Cookbook. 1987: Released video Cooking with Wolfgang Puck. 1989: Opened Postrio. 1991: Wrote Adventures in the Kitchen with Wolfgang Puck. 1991: Opened Granita. 1997: Named Nation’s Restaurant News Innovator of the Year along with wife Barbara Lazaroff.
Howard of Nation’s Restaurant News that “the 70’s and 80’s were an amazing time. The food media were learning about new foods and writing about them and providing a lot of exposure to the industry, prompting people to eat out more. I was lucky to come to America at that time. People were really into discovering new foods.” Puck’s first stop in America was at La Goulone, in New York City, where he worked as the chef. From there he traveled to Indianapolis and assumed a position as head chef at a local restaurant. In the late 1970s, Puck was persuaded by Patrick Terrail to move to Los Angeles to become head chef and part-owner at Ma Maison. In 1980 Puck wrote his first cookbook, Modern French Cooking for the American Kitchen. In 1982 he decided to leave Ma Maison and open his own restaurant. Failing to convince Terrail to be his partner, Puck went it alone on his bistro. The restaurant was called Spago and cost $500,000. The bistro, which was located on Hollywood’s Sunset Strip, earned a reputation as a trendy place where many of the rich and famous dined in an open kitchen setting, a trend-setting idea at the time. The menu featured such unusual fare as caviar, lox, and duck sausage pizzas along with new and unusual pasta dishes. The smashing success of Spago led Puck to open Chinios on Main, a Chinese restaurant, the following year. His new venture was considered so promising that Puck was bombarded with potential investors who
6 4 2
B u s i n e s s
Further seeking to expand his market and satisfy an ever hungry public, Puck wrote his second cookbook in 1986. It was entitled The Wolfgang Puck Cookbook: Recipes from Spago, Chinios and Points East and West. The following year saw the release of his instructional video, Cooking with Wolfgang Puck. By 1988, the two restaurants had grossed $9 million. The wildly popular reputation of Spago enabled Puck to open branches of Spago in Mexico City, Tokyo, Las Vegas, and Chicago. The year 1989 saw the opening of Postrio in San Francisco’s Prescott Hotel. Not long after this, Puck became a part owner of a brew pub called Eureka, which closed in the mid-1990s when the brewery operations failed. Granita, a Mediterranean seafood restaurant, was opened in a Malibu shopping center in 1991. It was soon followed by Puck’s ObaChine, first in Beverly Hills and then in Seattle. He even managed to find time in 1991 to write another cookbook, Adventures in the Kitchen with Wolfgang Puck. With the establishment of the Wolfgang Puck Food Company, Puck entered the retail food business. His most successful and well-known products were his exotic and gourmet pizzas, which were inspired by the food served at Spago. By the early 1990s, the retail food business earned him $4 million annually. Not content to rest on his past achievements, Puck also became a restaurant chain owner and developer when he opened his first Wolfgang Puck Cafe. By 1997 the Wolfgang Puck Food Company oversaw the operations of nine cafes, three Puck Expresses and five fast food franchises totaling over a million dollars a year in sales.
Social and Economic Impact Puck has been actively involved in charity and fundraising events for many years. He created the Wolfgang Puck Foundation, which donated $200,000 to Meals on Wheels in 1987. He also founded the American Food and Wine Festival, with his second wife, Barbara Lazaroff. The proceeds from the festival benefited Meals on Wheels as well. Puck’s promotion of California-style cuisine brought that style of cooking to the public’s attention. It has, over time, even become standard American fare. Puck is also a champion of his employees. Ruth Reichl of the Los Angeles Times was quoted as saying, “he knows how to keep his staff loyal. Also, he’s worked so hard that people in his field don’t begrudge his success.” Puck said it was the excellent quality of the staff he trained, not his personal touch, that made his restaurants successful. Puck was credited with creating a direct bond between the chef and the diners when he designed Spago’s kitchen to be fully visible to patrons. This ce-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
W o l f g a n g
mented the bond between the chef and the diners as they could more fully appreciate the work of the chef.
P u c k
Sources of Information
Over the years Puck has earned numerous awards, including the James Beard Awards for Chef and Humanitarian of the Year, the Nation’s Restaurant News 1997 Innovator of the Year Award, which he shared with his wife, Barbara Lazaroff. Spago, Chinios on Main, and Postrio have all been recognized in the Nation’s Restaurant News Fine Dining Hall of Fame.
Contact at: Wolfgang Puck Food Company 1210 Tellem Dr. Pacific Palisades, CA 90272 Business Phone:
Puck, the chef who loved nothing more than to share his gifts with others, summarized for Theresa Howard of Nation’s Restaurant News his professional vision: “. . . the most important thing is to show young people that this is a profession worth going into and getting people to understand that being a chef isn’t second class citizenry.”
“Chef’s Signature.” Supermarket Business, September 1996.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Bibliography “Chefs Come and Chefs Go.” New York Times, 17 July 1991.
“Puck’s Second Coming.” Los Angeles Magazine, April 1997. “NRN Names Puck, Lazaroff 1997 Innovators of the Year.” Nation’s Restaurant News, 2 June 1997. “Wolfgang Puck.” Nation’s Restaurant News, February 1996. “Wolfgang Puck.” Newsmakers 90, Detroit: Gale Research, 1990.
6 4 3
Joseph Pulitzer (1847-1911) Pulitzer Prize
Overview The modern newspaper was virtually created by Joseph Pulitzer during the latter half of the nineteenth century. It was a newspaper that seemed to meet the needs of the modern industrial world. With headlines, sensationalism with social conscience, a sports page, a business page, and the comic strips, it was a paper the average man could take to work with him to learn about the world, and be entertained. Largely, this was the social invention of Joseph Pulitzer.
Personal Life Joseph Pulitzer was born in Mako, Hungary, on April 10, 1848 and was one of three children born to Philip and Louise (Berger) Politzer. Politzer was the Hungarian spelling of their last name. As a young child, Pultizer was considered sickly. He was very thin, his lungs were weak, and his vision was poor. His father was a wealthy grain dealer, wealthy enough to retire early and be with his family. When Joseph was six years old, the family moved to a quiet estate in Budapest, Hungary, where Joseph was educated, with his brother and sister, by private tutors. Pulitzer was raised speaking Hungarian, German, and French fluently. The young Joseph Pulitzer was perhaps overlyenergetic, and was wild about seeking fame. He was brilliant, very independent, and intensely ambitious. There was early signs, in the extremes of his behavior as a young man, of the emotional problems that would hurt him later, as a grown man.
6 4 4
J o s e p h
P u l i t z e r
At the age of 17 he left home, and desperately sought fame in the military. He and attempted to join the Austrian Army, the British armed forces, and the French Foreign Legion. He was rejected from each army because of his poor eyesight. At one point, during the American Civil War, he was approached by a recruiter of the Union army. In September of 1864, he came alone to the United States to join the Lincoln Cavalry of the American Union army. In Boston, he jumped ship. He then went to New York where he enlisted on his own behalf, thereby collecting his own enlistment bounty. On September 30, 1864, Pulitzer joined a cavalry regiment that was organized by Carl Schurz, with whom Pulitzer would work after the War. Pulitzer was discharged from the Union army in July of 1865. He had little money and no prospects for work. He settled in St. Louis, Missouri, where there was a large German community. In St. Louis, Pulitzer found familiar customs that reminded him of his European origins. So, at age 18, the tall, slender young man, with an odd accent, attempted to make his way in the American frontier. Despite his problems with poor eyesight, emotional ups and downs, and his poor grasp of English, Pulitzer was nevertheless a brilliant and hard-working young man. Pultizer worked at a variety of jobs including a mule tender, waiter, and hack driver. He also worked for several lawyers and while doing so, studied the law books and was admitted to the bar. In 1867, Pultizer became an American citizen. Carl Schurz, who he had met during his army service, hired Pulitzer as a reporter for the Westliche Post, an influential German-language newspaper in St. Louis. The paper specialized in political articles, and was very much committed to social reform in a young America gone haywire with the corruption of unbridled politicians. Pulitzer became very interested in the local politics and in public affairs, and was exceptional reporter in these areas. As a result, Pultizer was nominated for the state legislature by the Republicans in 1969, and won. While serving his term as a representative, Pultizer also worked as a correspondent for the Westliche Post. In 1872, Pulitzer became very involved in the Liberal Republican movement which had nominated Horace Greely for president. After the election and defeat of Greely, Pulitzer became a Democrat. During the following few years, Pultizer bought and sold various newspapers and became a rigorous editorial crusader. He turned several struggling newspapers into successful, respected newspapers.
Joseph Pulitzer.
(Archive Photos, Inc.)
his emotional problems. He was described as a distant parent, lacking the confidence to assume a genuinely fatherly role to his children.
In 1878, Pulitzer married Kate Davis, who was an accomplished, beautiful, and socially well-connected woman. By his mid-thirties, Pulitzer’s health began to deteriorate. His eyesight became worse, and his mood swings, perhaps suggesting a manic-depressive disorder, were creating terrible personal problems. Joseph and Kate Pulitzer had seven children during their, reportedly, difficult marriage. Apparently, he was a difficult husband, and living with him was often torturous because of
Pulitzer spent much of his time away from his family, traveling widely. In later years, he lived aboard his yacht called Liberty, where annoyances and distractions were kept to a minimum. Pulitzer was constantly in poor health. He had several ailments including asthma, diabetes, insomnia, chronic exhaustion, and manic depression; by 1889 he had become blind. On October 29, 1911, at the age of 64, Joseph Pulitzer died of an apparent heart attack while aboard his yacht in the New York harbor.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
6 4 5
J o s e p h
P u l i t z e r
Chronology: Joseph Pulitzer 1847: Born. 1865: Emmigrated to the United States and joined the Union army. 1872: Bought first newspaper, the St. Louis Post. 1878: Bought St. Louis Dispatch newspaper and merged it with the Post newspaper. 1883: Bought New York World newspaper. 1902: First plans for a journalism school and literary prize. 1911: Dies. 1912: First journalism class at Columbia University. 1917: First Pulitzer Prize awarded.
Career Details In 1872, Joseph Pulitzer bought his first newspaper, the St. Louis Post for about $3 million. He also bought a German newspaper that had an Associated Press membership, which he quickly sold for a profit. In 1878, the same year he was married, Pulitzer purchased the St. Louis Dispatch. which he combined with the Post; the newspaper then became the St. Louis Post-Dispatch. He, as the publisher and editor of the paper, declared immediately that his paper would be devoted to issues of social reform. He vowed to his readers that the paper would be independent of political influence, but would be, instead, “the organ of truth,” as he put it in an early editorial. Along with his editor in chief, John A. Cockerill, Pulitzer printed verbal crusades against wealthy tax dodgers and corrupt gambling practices. For example, they printed the tax returns of local citizens, wealthy and poor, in parallel columns. They editorialized for the building and maintaining of streets and other public structures; they were instrumental in starting a city park system. They made the St. Louis Post-Dispatch a civic minded newspaper and it became very successful. Pulitzer edited the Post-Dispatch from 1878 to 1883. He became and remained involved in all aspects of the publication. By 1881, the newspaper had achieved a high profit and had wide readership, and moved to a new building where two Hoe presses were installed. Pulitzer’s health weakened and he gave more responsibility to
6 4 6
B u s i n e s s
Cockerill. In 1882 Cockerill shot and killed Alonzo W. Slayback who was a local lawyer running for Congress. Slayback, who Cockerill openly opposed and insulted, confronted Cockerill and was consequently murdered. Afterward, Pulitzer asked John A. Dillon, founder of the Post, to take over the management of the paper. During the aftermath of the scandal, Pulitzer’s health deteriorated further and he was advised to take a long rest by his physician. On his way to Europe, via New York, Pulitzer met with an opportunity he could not refuse: the New York World was for sale. In 1883, when he was 36 years old, Pulitzer bought the failing New York World newspaper, and applied the principles that led to success with his St. Louis paper. In 1883, the paper sold 15,000 copies daily. With Pulitzer’s genius for sensing what the public wanted, he built a newspaper which, by 1898, was selling 15 million copies a day. Pulitzer created the modern newspaper, one that caught the democratic and populist spirit of America at that time and instituted changes that had never been seen in American papers before. Pulitzer changed the form of how Americans received their news, and he created a format and prototype that countless other papers came to imitate. Pulitzer carefully picked his talent, and encouraged them. He paid high salaries to his reporters, and demanded hard work from them. He also started the first two-week paid vacation for newspapermen. Pulitzer used illustrations and political cartoons to attract readers. He initiated features such as greatly expanded sports coverage, and began to include line-drawings in the paper to give variety to the look of different sections of the paper. He began the colored cartoon strips, known as the “Sunday Funnies”, and captured a new readership for newspapers—children. Perhaps Pulitzer was able to do so much in changing the form of the paper because his own idealistic, crusading, flamboyant, up-and-down character mirrored much of the sentiments of the mixed character of America at that time. He remained an idealist, but he also learned how to sensationalize and exaggerate real issues to get public attention. Pulitzer became the master of detailing lurid stories of crime, and sex, and disaster. He had his reporters using bold headlines, illustrations and diagrams for murder scenes. Pulitzer was one of the first to understand that a successful newspaper had to entertain as well as provide the truth. This was the revolution in newspaper style that became the model for newspapers—sensationalism with a social conscience.
Social and Economic Impact Joseph Pulitzer’s approach to printing and publishing a newspaper became the model for the modern press
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J o s e p h
tradition. He almost single-handedly created the style of the American newspaper for the twentieth century. Pulitzer began to recognize the expanding potential audience for newspapers, and explored ways to give new readers of newspapers something for their money. He printed stories and reports of interest to new immigrants to America, to people who loved reading about sports, and even engaged children as readers, by initiating the comic strips. Pulitzer used his editorials to speak out against corruption and uncovered several scandals such as the insurance fraud and corruption in the construction of the Panama Canal. He also crusaded against unsafe working conditions, the Bell telephone monopoly, the Pacific Railroad Lobbyists of 1887, unpleasant conditions in mental hospitals, police corruption and inefficiency, and police brutality. Pulitzer used his power to rally public support around various causes. In one editorial, for example, he urged the completion of the pedestal for Bartholdi’s Statue of Liberty. With his health failing to the point where he could no longer work, Pulitzer turned his focus on his plan to provide Columbia University with a large sum of money for the establishment of a school of journalism. In 1902, while drawing up a memorandum, Pulitzer compared the preparation of journalists to that of lawyers and doctors.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
P u l i t z e r
In 1912, with an endowment of $2 million, Columbia University accepted its first class in the School of Journalism. The 1902 memorandum also stipulated that a portion of the endowment be used for annual prizes to journalists and writers. The first Pulitzer Prize was awarded in 1917. Dying in 1911, Pulitzer did not live to see either of his plans materialize.
Sources of Information Bibliography Ashley, Perry J, ed. Dictionary of Literary Biography: American Newspaper Journalists, 1873-1900. Detroit: Gale Research, 1983. Juergens, George. Joseph Pulitzer and the “New York World.” Princeton: Princeton University Press, 1966. Rammelkamp, Julian S. Pulitzer’s “Post-Dispatch” 1878-1883. Princeton: Princeton University Press, 1966. Seitz, Dan C. Joseph Pulitzer: His Life and Letters. New York: Simon and Schuster, 1924. Swanberg, W.A. Pulitzer. New York: Scribner’s Sons, 1967. Wittke, Carl. The German Language Press in America. Lexington: University Press of Kentucky, 1957.
S t u d e n t s
6 4 7
Sumner M. Redstone (1923-) Viacom Inc.
Overview Entertainment industry leader Sumner Redstone is known for his bold personality and fiercely competitive business style. As chairman and CEO of Viacom Inc., the Boston-born, Harvard-trained executive oversees an empire that includes MTV and Blockbuster Video. Though he admittedly shuns the limelight and perhaps is not as famous as other Hollywood studio heads, Redstone is known as a formidable foe. Some point to his training as a lawyer as the underlying reason for his infamous love of lawsuits, but others note that this son of a small-time drive-in theater mogul was instilled with a competitive spirit from an early age. Worth an estimated $5.6 billion, Redstone appears regularly on the Forbes magazine list of the wealthiest Americans.
Personal Life Redstone was born Sumner Murray Rothstein in Boston, Massachusetts in 1923, and grew up with his younger brother in that city’s West End section, home to Boston’s prosperous Jewish families. Like many others, the Rothsteins (who later changed their name to Redstone) weathered financial hardships during the Great Depression. Father Michael Rothstein first sold linoleum out of a truck and later became a liquor wholesaler. It was this profession that led him into the nightclub business, and by the 1940s he owned two popular Boston venues, the Latin Quarter and Club Mayfair. He also owned some movie houses and drive-in theaters beginning in the 1930s.
6 4 8
S u m n e r
M .
R e d s t o n e
The Redstones instilled a spirit of competition between Sumner and his brother Edward, and stressed the importance of excelling on a daily basis; according to Redstone, his mother sometimes turned the hands of the clock back to trick him into practicing the piano longer. Redstone attended Boston Latin School, the oldest public high school in the United States and an institution famous for its rigorous academic demands. He told Institutional Investor writer Ida Picker that these years were “the most stressful time in my life.” Head of the debate society, admirer of classical literature and history, and earner of the highest grade-point average in the history of the school at the time, Redstone graduated first in his class in 1940. From there he went on to Harvard University, where he studied languages. He would later note that, after attending Boston Latin, Harvard was no great challenge to him. Some of the languages studied by Redstone included German and Japanese, and during his college years the United States was at war with both countries. In 1943 he was hand-picked by a Japanese language expert at Harvard to join a team of cryptographers in successfully deciphering the secret code used by Japanese military and diplomatic corps. Redstone rose to the rank of first lieutenant in the U.S. Army during his two-year stint, and after the war used his G.I. discount to purchase surplus military goods such as office supplies and tools, which he then sold to department stores at a healthy profit. Redstone decided to become an attorney and earned his law degree from Harvard in 1947. That same year, he wed Phyllis Raphael, with whom he would have two children, Brent and Shari. But a 1979 near-death experience forever altered Redstone’s life. He was inside the Copley Plaza Hotel in Boston when a fire broke out. He escaped the flames and smoke by exiting his window; hanging on to the third-story ledge with one hand until rescued. Forty percent of his body was burned, with his legs burned down to their arteries. Doctors told him he would never walk again. Redstone underwent some 60 hours of surgery, and it was said he seemed to recover with a vengeance. Afterward, he admitted to battling depression, but realized that the incident had brought him to a turning point in his life, and that he both needed and wanted more challenge. This led him to enter the ranks of Wall Street corporate raiders in the takeover mania of the 1980s, and would eventually make him one of the most powerful executives in the entertainment industry. His 1979 injuries failed to hinder his love of sports or curb his workaholic tendencies. He plays tennis with a special hand strap on his racket and jogs daily. He and his wife still reside in Newton, Massachusetts, in a threebedroom home they bought in the 1950s.
Sumner Redstone.
(AP Photo/Peter Lennihan.)
General Tom Clark. In 1951, he entered private practice in Washington, D.C., but left after three years. He had quickly wearied of the field that he had entered as an idealistic young man realizing that it was instead a profitdriven business like any other. He joined the family firm, Redstone Management, which by then owned a chain of about a dozen theaters. He helped build up the business, working with brother Edward, and it became known for its drive-ins throughout the East Coast. At the time, driveins were considered second-class movie theaters by the major studios, who tightly controlled distribution; usually drive-ins received only second-run movies, which made it difficult for businesses like Redstone Management to turn a profit. To remedy this, Redstone took one studio to court in a case that paved the way for drive-ins to have access to first-run films. During this part of his career, Redstone later told Institutional Investor, “I learned everything I had to learn: Negotiate, negotiate, negotiate.”
One of Redstone’s first jobs out of law school was serving as special assistant to United States Attorney
In 1958 Redstone was named one of 10 “outstanding young men in New England” by the Boston Junior Chamber of Commerce. His reputation, as well as the revenues of his family business, continued to grow. He served as assistant president and then president of the Theatre Owners of America in the early 1960s and chaired the board of the National Association of Theatre Owners from 1965 to 1966. By 1968 he had become president and chief executive officer of the family business, now renamed National Amusements, which had grown into a chain that owned several dozen movie screens throughout the United
B u s i n e s s
S t u d e n t s
Career Details
L e a d e r
P r o f i l e s
f o r
6 4 9
S u m n e r
M .
R e d s t o n e
Chronology: Sumner M. Redstone 1923: Born. 1943: Served two years as codebreaker in U.S. Army. 1947: Earned Harvard law degree. 1954: Entered family theater business. 1967: Became president and CEO of National Amusements. 1979: Survived near-fatal fire. 1987: Acquired Viacom Entertainment. 1994: Merged Viacom with Paramount Pictures.
States and Great Britain. One difficult point in his career came in 1972 with a disagreement with his brother, which led to Edward Redstone’s resignation. As the decade progressed, Redstone realized that drive-ins and small, intimate movie houses were becoming obsolete. He began converting the drive-in properties to massive, multi-screen theaters, which he coined “multiplexes.” (Redstone even owns the trademark on this term.) Such palaces also featured plush seating and far superior sound. National Amusement’s rivals, Cineplex Odeon and AMC, copied this strategy. Soon, Redstone’s earnings helped him invest in the providers of entertainment themselves, and he began buying stock in film studios. Because he was dazzled by the 1977 George Lucas film Star Wars, he purchased five percent of the stock in 20th Century-Fox, the studio that had made the picture, and sold it a few years later at a huge profit. It was a strategy he used in other stock purchases, watching the box-office receipts at his theaters and acquiring stock in what seemed to be the most profitable studios. Redstone also purchased stock in Columbia Pictures, and continued to build National Amusements into an 800screen powerhouse. Its success with the multiplex strategy was so profitable that, in 1987, Redstone was able to buy Viacom Pictures in a $3.2 billion leveraged buyout. At the time, Viacom’s only real asset was MTV, the cable-television music video channel, whose imminent demise was predicted by many entertainment-industry watchers. Redstone himself was a newcomer: “No one knew who he was,” Thomas Freston, later the chair of MTV, told Institutional Investor. “He was just some fella from Boston operating out of a hotel room.”
6 5 0
B u s i n e s s
Redstone took the Viacom stock public the next day and made a small fortune. Still, it was considered a risky move, for Redstone then took on a huge debt, but he had made Viacom profitable just five years later. Part of that success came as a result of Nickelodeon’s becoming the top-rated non-premium cable channel, with its acclaimed shows such as You Can’t Do That on Television and a bizarre animated series called Ren & Stimpy. In 1988, Redstone battled fellow corporate shark John Kluge for Orion Pictures, a fight that Redstone lost but still earned him $18 million when he backed out. In 1993, he dueled with Barry Diller (head of the QVC cable network) for control of Paramount Pictures. A court battle resulted, and to shore up his resources Redstone acquired the extremely successful Blockbuster Entertainment Corporation, America’s giant video retailer and rental chain. Redstone triumphed over Diller in the end and in 1994 Viacom merged with Paramount in a $10 million deal. It had a successful year with the summer’s release of the Oscar-winning Forrest Gump. With his Paramount holdings, Redstone gained control of an illustrious movie studio, several television and radio stations, and cable television franchises, as well as the eminent book-publishing house Simon & Schuster, sports teams, and even theme parks. The deal made him one of the most influential media executives in the United States. His holdings also included half of National Amusements, which he retained in order to pass it on to his children. Also attorneys, they both work for the company at the executive level.
Social and Economic Impact One of the leading American bankers, Felix Rohatyn of Lazard Freres, who once engineered a deal to save New York City from bankruptcy, told Institutional Investor that Redstone was “one of the toughest men I know.” The 1994 Viacom-Paramount deal made Redstone one of the directors of the fifth-largest media provider in the world, and the conglomerate was seen as standing at the forefront of the business strategy known as “vertical integration.” It could take a Simon & Schuster bestseller, turn it into a movie, reap a profit on the video rentals, and finally sell it to cable. The company also was tied to another upstart broadcast provider, the United Paramount Network. According to U.S. News & World Report, five-time grandfather Redstone is “America’s Hippest Grandpa” for his involvement in cable content providers such as MTV, Nickelodeon, and Showtime. He served as chief executive alongside Marvin Davis, head of Paramount, and over the next few years took the company into the frontier of interactive communications. He forced Paramount to put out fewer films of better quality and was considered the executive who shepherded MTV into maturity. Ten years after Redstone’s Viacom purchase, the cable network had
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S u m n e r
become an influential media force for the under-21 generation; he also applied its formula to several overseas editions, beginning with a 50 percent stake in MTV Europe purchased just days before its previous owner, media mogul Robert Maxwell drowned at sea. Redstone has weathered criticism for his sacking of Viacom’s CEO Frank Biondi, Jr. in early 1996; the longtime executive was seen as the heir apparent to Redstone at the company. Later that year Viacom-Paramount signed a television distribution deal with a German media powerhouse, the Kirch Group. Two years later Paramount reaped huge profits from the hugely successful film Titanic, which it co-produced with another studio. Also in 1998, the company announced that it would put most of Simon & Schuster up for sale as a result of poor performance. In an effort to reduce its debt it had also sold part of USA Networks, one of its cable holdings.
Sources of Information Bibliography Contemporary Theatre, Film and Television. Detroit: Gale, 1994. Current Biography. 1996 Yearbook. New York: H. W. Wilson, 1996. Forbes 400, 18 October 1993.
B u s i n e s s
S t u d e n t s
P r o f i l e s
f o r
R e d s t o n e
boards of the Combined Jewish Philanthropies of Greater Boston and Boston’s Museum of Fine Arts. “I don’t consider myself a media mogul, and I don’t seek the limelight,” Redstone told Jim Impoco in a 1993 U.S. News & World Report interview. In 1993 his wealth was estimated at $5.6 billion. “To all the qualities I attribute to Sumner Redstone—toughness, vision, drive, smarts—I’d have to add luck,” Rohatyn told Institutional Investor.
Redstone is active in numerous philanthropic activities as well as liberal politics. He sits on the Presidential Advisory Committee for the John F. Kennedy Center for the Performing Arts, and is also involved in the late president’s Library Foundation. Redstone is a founding trustee of the American Cancer Society and is involved in the Will Rogers Memorial Fund. An occasional visiting professor, Redstone is the recipient of several humanitarian awards and honorary degrees, and sits on the
L e a d e r
M .
Impoco, Jim. “America’s Hippest Grandpa.” U.S. News & World Report, 27 September 1993. Lesly, Elizabeth. “Chairman Fix It at Viacom.” Business Week, 15 April 1996. Newsmakers, 1994 Cumulation. Detroit: Gale, 1994. Picker, Ida. “Sumner Redstone Fights Back.” Institutional Investor, November 1995.m
6 5 1
Jerry Michael Reinsdorf (1936-) Chicago White Sox and Chicago Bulls
Overview Jerry Reinsdorf, owner of the Chicago White Sox baseball team and the Chicago Bulls basketball team, is often called the most powerful figure in professional sports. His strong business sense and financial expertise rewarded him with a net worth estimated between $60 and $90 million. As the prototype of the team owner of the future, he treats his teams as strictly business. “I will not lose money in order to win,” is a succinct and oftenrepeated statement of his priorities.
Personal Life Reinsdorf was born in Brooklyn, New York, on February 25, 1936. His parents, Max and Marion Reinsdorf, were Jewish immigrants from Poland. His father, who never finished high school, was a sewing machine salesman and mechanic. An avid Brooklyn Dodgers baseball fan, Reinsdorf remembers playing stickball as a kid. In 1956 Reinsdorf married Martyl Rifkin. They have four children, David, Susan, Michael, and Jonathan. Reinsdorf received his B.A. from George Washington University in 1957, and a law degree from Northwestern University in 1960. Besides being an attorney, Reinsdorf is also a certified public accountant, a specialist in real estate securities, a registered mortgage underwriter, and a certified review appraiser. In 1981 Reinsdorf purchased the Chicago White Sox, which won the American League West Division title in 1983 and 1993. He has served on Major League Baseball’s Executive Council, on the Ownership Committee, and on the Player
6 5 2
J e r r y
Jerry Reinsdorf.
R e i n s d o r f
(AP Photo/Tim Boyle.)
Relations Committee. In 1985 Reinsdorf purchased controlling interest in the Chicago Bulls basketball team, which won the National Basketball Association (NBA) championship repeatedly during the 1990s. Although he prefers to stay out of the spotlight, Reinsdorf has received numerous awards for his community and charity work, most notably the Chicago Park District’s Chicagoan of the Year Award, Ellis Island Medal of Honor (1993), and Order of Lincoln Award (1997). He organized the Chicago White Sox Charities to raise funds for cancer research and for the Direct Instruction reading program in Chicago’s public schools. He has been active in numerous organizations, including Interfaith Organizing Project, American Academy of
B u s i n e s s
M i c h a e l
L e a d e r
P r o f i l e s
f o r
Achievement, Cystic Fibrosis Foundation, Trial Lawyers Club of Chicago, Chicago Jewish Sporting Hall of Fame, and the National Jewish Sporting Hall of Fame. Reinsdorf is described as unpretentious. He is an avid cigar smoker, does not spend a lot of money on clothes, and has never been an athlete. According to Sports Illustrated, he always carries with him a copy of the Serenity Prayer: “God, grant me the serenity to accept the things I cannot change, courage to change the things I can, and wisdom to know the difference.” Although Reinsdorf has been criticized by both baseball and basketball fans for some of his fiscal-oriented decisions, his employees are very loyal and describe him
S t u d e n t s
6 5 3
J e r r y
M i c h a e l
R e i n s d o r f
was sold to American Express for $53 million. Reinsdorf stayed on as chairman until 1987. The last five years of his association with Balcor netted Reinsdorf $50 million in commissions.
Chronology: Jerry Michael Reinsdorf 1936: Born in Brooklyn, New York. 1956: Married Martyl Rifkin. 1957: Received B.A. from George Washington University. 1960: Received law degree from Northwestern University. 1973: Cofounded Balcor Co. 1981: Purchased Chicago White Sox. 1986: Purchased Chicago Bulls. 1988: Won legislative support for a new stadium at Comiskey Park. 1994: Arranged for private financing of a new arena for the Bulls. 1996: Agreed to pay Albert Belle $55 million over a five-year period, a new high in baseball players’ salaries.
as fair and generous. Each time the Bulls made it to the NBA finals, Reinsdorf paid to fly the team’s full-time employees and their families to the out-of-town games, a perk that cost $1.5 million in 1996. “Even coaches Reinsdorf has fired are treated well,” reported Sports Illustrated. “The owner still sends former Bulls coach Doug Collins . . . an engraved watch every time the Bulls win a championship, in gratitude for having taught Chicago’s players ‘to believe in themselves.’”
Career Details Reinsdorf’s first job was as an attorney for the Internal Revenue Service (IRS) in Chicago. He worked there four years, learning the art of negotiation as well as how to set up tax shelters. After leaving the IRS, he combined his legal and accounting knowledge to help professionals, such as doctors, incorporate and set up tax shelters. In 1973 he cofounded Balcor Co. with Robert Judelson, creating one of the first businesses in the United States to specialize in real-estate partnerships. The firm quickly grew to 1,500 employees and had $5.5 billion in holdings. Less than 10 years after its founding, Balcor
6 5 4
B u s i n e s s
In 1981, with partner and former law school classmate Eddie Einhorn, Reinsdorf bought the White Sox for $19 million. “The first two years we lost $8 million,” Reinsdorf told Sports Illustrated. “The ballpark was crumbling, and we sunk $20 million into it. I was scared to death we were going to go broke during that period.” One of Reinsdorf’s first actions to raise some money was to prohibit the airing of games on television until the networks paid the organization adequately. In 1985 Reinsdorf paid $16 million to add the Chicago Bulls basketball team to his portfolio; he figured that owning the Bulls would give him more clout when negotiating with sponsors. That same year Michael Jordan was a rookie, and the Bulls were struggling to pull fans into Chicago Stadium. Since 1987, led by superstar Jordan, the team has had a continuous run of home sellouts at the box office. Ten years after his $16 million purchase, Reinsdorf’s basketball team was worth $178 million. Making the White Sox turn a profit was more challenging. In 1988, with the help of Einhorn and Illinois governor James Thompson, also a law school classmate, Reinsdorf was able to secure legislative support for a new stadium replacing the venerable Comiskey Park. Their first year in the new stadium, also called Comiskey Park, the White Sox sold 2.9 million tickets and showed a $22 million profit. Players Association executive director Donald Fehr explained Reinsdorf’s deal to Chicago magazine: “I’m not sure it’s appropriate to ask the public to pay for this stuff [the new stadium]. But if the question is, were the cards played well, they were played brilliantly.” Reinsdorf generated considerable ill will when he threatened to move the White Sox to St. Petersburg, Florida, if the new stadium was not approved. In 1990 he played a round of hardball with the National Basketball Association (NBA). The league had tried to thwart his negotiations with the Chicago-based television station WGN for a lucrative broadcasting contract for the Bulls. Reinsdorf filed suit because he believed that the Bulls needed to establish a presence on WGN. The NBA ended up paying $10 million in legal fees and facing embarrassment when evidence showed that some owners were under-reporting the revenue that was used to determine the highest salaries players could earn. In 1994 Reinsdorf was able to pull off a second stadium coup, this one built with private money for the Bulls and the Blackhawks, Chicago’s professional hockey team. The new arena, named the United Center, seated 23,000 fans. That same year, just when the White Sox were leading the American League, baseball players went on strike and—for the first time in 90 years—the World Series was cancelled. The strike lasted nine months, dur-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J e r r y
ing which Reinsdorf was portrayed by the fans and the media as a person determined to break the power of the players’ union, regardless of the cost. The escalation of players’ salaries were only one issue. For Reinsdorf, just as important was revenue sharing among the teams. He felt the sport would suffer if only teams in the largest markets survived. In 1994, 19 out of 28 teams were losing money, according to Chicago magazine. “Reinsdorf took positions over and over again that were in the best interest of the game, even if it meant a sacrifice to the White Sox,” Boston Red Sox general partner John Harrington told Sports Illustrated. “I came to admire his integrity because he was so unselfish. He felt that going into labor negotiations, we had to have additional revenue sharing before we could ask the union to do something about controlling salaries. He felt we could not be two-faced about it.” Reinsdorf actively lobbied members of the Ownership Committee to reject the five-year collective bargaining agreement reached by the owners’ and players’ negotiators because it failed to include any restraint on players’ salaries. He was unsuccessful in blocking the agreement, so when the players went back to work, the owners had adopted revenue sharing without salary caps. Game attendance after the strike fell to two-thirds of what it had been in early 1994. Desperate to reignite the Chicago fans, Reinsdorf signed a contract to pay White Sox home-run leader Albert Belle $55 million over a fiveyear period. Although he had fought for a cap on player’s salaries, with a stroke of his pen he set a new record for the highest salary paid. By 1997 the White Sox player payroll was more than $54 million, third highest in the American League. His initial White Sox investment of $16 million was worth $133 million 15 years later. Aware of his reputation as both a successful and an extremely unpopular sports mogul, Reinsdorf admitted to Sports Illustrated that he probably should clean up his public image, then explained why he doesn’t: “I know I could have a better public image if I were less open, if I ducked more issues and didn’t speak out. But it’s not my nature. I admire honesty more than any other trait.” He quoted his mother, saying, “You have to tell the truth, even if the truth is hurtful.”
The baseball players’ strike in 1994 ushered in a new era in American sports. Fans were forced to accept the fact that baseball is no longer just a game, America’s favorite pastime, but also a business. For almost 20 years, Jerry Reinsdorf epitomized the owner who made decisions based solely on economics. As a representative of the owners of 28 teams, he was a key figure in causing the strike when he proposed a limit to players’ salaries
L e a d e r
P r o f i l e s
R e i n s d o r f
and supported revenue-sharing to help subsidize struggling teams in smaller media markets. Reinsdorf also introduced a new concept in stadium financing. His insistence that the taxpayer finance the new Comiskey Park was unprecedented, but such stadiums were later built in several large American cities. When critics point out that the other ballparks are better designed or more unique architecturally, Reinsdorf always counters the same words, according to Chicago magazine: “Our ballpark will generate more revenues than those ballparks, which is ultimately the important thing.” Rather than using public money for United Center, Reinsdorf arranged for private leases on the 216 luxury suites called “skyboxes” that ring the stadium; again, a practice that was emulated elsewhere. These leases guaranteed that a fixed amount of money would be collected every month, regardless of how well or how poorly the team performs. All 216 skyboxes were leased before the United Center was completed, at prices ranging from $55,000 to $175,000 per year, which covers the annual loan payments on the stadium. Once again Reinsdorf showed his ability to draw on other people’s money while protecting himself financially. For his focus on the economic bottom line, Reinsdorf has not always been popular with fans. In a reflective moment during an interview with Sports Illustrated, he compared himself to Harry Truman, the man he most admires: “He was the first president to recognize Israel, the one who desegregated the armed forces, the one who gave the go-ahead to drop the atom bomb. . . . He made so many decisions without worrying about the criticism that would follow. He did what he felt was right. You know, Truman left office with a 25 percent approval rating, but history has judged him to be one of the great presidents.”
Sources of Information Contact at: Chicago White Sox and Chicago Bulls 333 W. 35th St. Chicago, IL 60616 Business Phone: (312)674-1000
Bibliography
Social and Economic Impact
B u s i n e s s
M i c h a e l
f o r
Chicago White Sox. “Officers.” CHISOX.com. Chicago, 1998. Available from http://www.chisox.com. Kiersch, Edward. “Playing Hardball.” Cigar Aficionado, 19 June 1998. Available from http://www.cigaraficionado.com. Kuznik, Frank. “The Houses That Jerry Built.” Chicago, August 1994. Swift, E.M. “Is Jerry Reinsdorf the Belligerent Union Buster He Appeared to Be During the Baseball Strike?” Sports Illustrated, 30 June 1997.
S t u d e n t s
6 5 5
R.J. Reynolds, Jr. (1906-1964) R.J. Reynolds Tobacco Company
Overview A son of the founder of R.J. Reynolds Tobacco Company, Richard Joshua Reynolds Jr. was successful in endeavors outside the tobacco industry despite a rather colorful personal life. He was a businessman and philanthropist who helped worthy causes, particularly in his home state of North Carolina and in Georgia. He was the founder of the Sapelo Island Research Foundation (SIRF) at the University of Georgia. According to his obituary in the New York Times in 1964, Reynolds was “an enigmatic combination of playboy, politician, financier, and philanthropist.”
Personal Life Reynolds was born in Winston-Salem, North Carolina, on April 4, 1906, to R.J. and Katherine (Smith) Reynolds. His father was a pioneer in the tobacco industry who had consolidated many smaller firms into R.J. Reynolds Tobacco between 1870 and 1920, producing such popular name-brands as Prince Albert tobacco and Camel cigarettes. The Reynolds family fast became prominent in Winston-Salem. As a youth, R.J. Jr. attended Culver Military Academy in Indiana, the Tome School in Maryland, and Woodberry Forest in Virginia. As a teenager, while still awaiting the large inheritance from his father, which he would receive at age 28, he worked in a cigarette factory and once ran away from home to work on a freighter that ran between New York and Hamburg, Germany. For less than a year, he attended North Carolina State College, where he played football.
6 5 6
R . J .
R e y n o l d s ,
J r .
During the late 1920s, Reynolds was known as a man-about-town in New York City, frequenting fashionable cafes and occasionally financing Broadway plays. At the age of 21, though not yet able to get his full inheritance, he had access to a trust income of $100,000; he used much of the money for buying expensive cars and airplanes, drinking, and buying extravagant presents for women. In 1927, he mysteriously disappeared, giving rise to sensational newspaper stories about suspected foul play. He was finally discovered in St. Louis, where he had gone with a woman. He told reporters that he had just taken a small vacation. Vowing not to return to Winston-Salem for seven years (when he would come into his inheritance), Reynolds then sailed to Europe. In 1929, while driving drunk, he caused a man’s death and spent five months in jail after being convicted for manslaughter. Another unpleasant chapter in Reynolds’s life was the shooting death of his brother, Zachary Smith Reynolds, at the Reynolds estate in Winston-Salem in 1932. His brother’s wife, singer Libby Holman, and a longtime friend of Zachary were indicted for the murder, but the charges were dropped. Reynolds was not at home at the time of the shooting. During World War II, he gave up his political jobs as finance director of the National Democratic Party and mayor of Winston-Salem to enter the U.S. Navy, even donating his own yacht to the Navy. He served as a navigator aboard the USS Makin Island and saw action in the Battle of the Philippines and at Iwo Jima and Leyte. During the Philippine battle, which supported General Douglas MacArthur’s return to the Philippines, Reynolds’s ship emerged unscathed despite the extreme danger from Japanese kamikaze planes. His skill as a navigator was highly praised by his superiors. During the worst fighting of the war at Iwo Jima, Reynolds’s ship again came under heavy fire but again escaped kamikaze hits. For his actions in the Philippines and at Iwo Jima, Reynolds later received the Bronze Star. Serving with the Seventh Fleet after the war, he personally took on the project of sending photographs of war activities to participants and their families. He held the rank of lieutenant commander upon his release from service. Reynolds was a member of the New York Yacht Club and the Reynolds Presbyterian Church. In his spare time he enjoyed poetry, yacht racing, flying, sailing, trotting horses, farming, and skeet shooting. He maintained large homes in New York, Florida, Georgia, and Europe, but considered his 44,000-acre estate on Sapelo Island, Georgia to be his real home.
R.J. Reynolds, Jr. wearing his U.S. Navy uniform. (Archive Photos, Inc.)
collapsed. At Sapelo, he lived alone with his servants for two years following his separation from Muriel in 1959. Toward the end of his life, Reynolds engaged in what some thought was quite erratic behavior. Dissatisfied with his lonely life in America and the threats of court appeals from his recently divorced wife, he prepared to leave the United States for Europe. He called his four older sons together to tell them of his plans, asking them to bring a family good-luck piece, handed down from his ancestors, called the Joshua Coin. A superstition held by all of the Reynolds generations was that the male heirs who possessed the coin would always have good luck. Incensed that his third wife had a diamond mounted in the middle of the coin, Reynolds ripped out the diamond and threw it into the surf. At the same time, bitter about his broken family life (despite the fact that he had chosen to have little contact with his children), he scolded his sons for living off family money instead of holding down jobs.
During the 1950s, he lived a rather eccentric lifestyle on Sapelo with his third wife Muriel. It was said, for example, that he had a pond built on the estate to represent the world’s oceans and the seven continents; that his wife read books on the occult and burned incense to Buddha; and that Reynolds secreted $1 million in bearer bonds in a locked closet to collect cash in case the world markets
Reynolds then deeded most of the land at Sapelo to SIRF, sold off most of his American assets, and gave up his seat on the Delta Airlines board of directors. In a final bizarre ending to his life at Sapelo, he and some servants dug up bags of gold that he had earlier hidden in the woods. He spent the final two years of his life in Lucerne, Switzerland, where he died on December 14, 1964. Doctors confirmed the ironic fact that this tobacco empire heir died of emphysema, brought on by a lifetime of excessive smoking.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
6 5 7
R . J .
R e y n o l d s ,
J r .
Chronology: R. J. Reynolds, Jr. 1906: Born. 1923: Entered North Carolina State College. 1933: Married Elizabeth McGaw Dillard. 1940: Elected mayor of Winston-Salem. 1941: Named chairman of finance committee, National Democratic Party. 1942: Became a director of R.J. Reynolds Tobacco Company. 1942: Entered U.S. Navy. 1946: Married Marianne O’Brien. 1947: Ended term on the R.J. Reynolds board. 1948: Donated family home to city of Winston-Salem. 1964: Died.
Reynolds married four times: in 1933, to Elizabeth McGaw Dillard, daughter of another tobacco baron, from whom he was divorced in 1946; in 1946, to Marianne O’Brien (an actress, stage name of Marian Byrne), from whom he was divorced in 1952 ; in 1952, to Muriel (Marston) Greenough, from whom he was divorced in 1960; and in 1961, to Annemarie Schmitt. He had four sons from his first marriage: Richard Joshua, John Dillard, Zachary Taylor, and William Neil. By his second marriage he had two more sons, Patrick and Michael. (Patrick achieved notoriety in 1986 when he testified before the House of Representatives against the tobacco industry, condemning the effects of smoking and advocating additional tobacco taxes.) His fourth marriage produced a daughter, Anne Irene-Sabina, born on December 16, 1964, just after her father’s death. Family dissension resulted when it was discovered that Reynolds had left the bulk of his estate to Annemarie and to SIRF; some even publicly questioned the paternity of Anne.
in 1917 with his friends Bill Sharpe and Bosley Crowther (who later became drama critic for the New York Times). In the 1920s, after leaving college, he became interested in airplanes, forming the Ireland Amphibian Company in 1926 at Mineola, Long Island, and Reynolds Airways, Inc. He owned Curtiss Field (later renamed Roosevelt Field) on Long Island until 1929; there his employees taught prospective pilots and escorted curious tourists through the site of Charles Lindbergh’s 1927 transatlantic takeoff site. Reynolds knew how to leverage his influence in other areas of the growing airline industry. He was once a major stockholder in Eastern Airlines, which ultimately failed to honor his wishes to make Winston-Salem the hub of its Carolina operations. In 1940 he had rescued Delta Airlines by buying up a large block of stock. Selling off some of his Eastern stock in 1946, he responded to a plea from Delta for additional investment, thus keeping that company in serious competition with Eastern. Among his business successes was the reorganization of the bankrupt American Mail Line of Seattle. He bought all of American Mail Line’s steamships, scrapped some of the older ones, and built new ships to take advantage of wartime shipping needs in the Pacific. In addition, he had interests in such concerns as Coca-Cola and Monsanto Chemical Corporation. He also invested in real estate and mining, among other things. He was a director of R.J. Reynolds Tobacco from 1942 to 1947 (after being denied a seat on the board in the 1930s), as well as a major stockholder for several years, but was not employed by the company. Reynolds had political ambitions as well. He was elected mayor of Winston-Salem in 1940, soon becoming embroiled in a controversy over public housing. Reynolds had always supported slum clearance and had a special interest in improving the lot of poor southern African Americans. After an ugly confrontation with Winston-Salem slumlords, the city council voted to approve Reynolds’s plan to apply for a grant from the U.S. Housing Authority. Reynolds also became chairman of the finance committee of the National Democratic Party in 1941. He lent $300,000 to the New York, New Jersey, and Illinois parties in 1940, later facing a congressional investigation for the loans. As Democratic National Committee treasurer, Reynolds and his then wife, Elizabeth (known as “Blitz”), were prominent on the Washington social scene during the first part of Franklin D. Roosevelt’s third term in office.
Social and Economic Impact Career Details Reynolds was involved in a variety of businesses throughout his life. His first brief venture as a youth was a weekly local newspaper, The Three-Cent Pup, begun
6 5 8
B u s i n e s s
Reynolds was known as much for his philanthropic efforts as for his business sense. Through the Z. Smith Reynolds Foundation (ZSRF), founded in memory of his brother, he contributed generously to many educational institutions and health-related projects in South Carolina
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
R . J .
and Georgia. The first substantial project of the foundation was to promote a program to combat syphilis, then a common disease in the southern states. The federal government later took on a national campaign modeled largely on the ZSRF pilot program. Reynolds also founded and largely financed the Sapelo Island Research Foundation, a marine research facility at the University of Georgia. In addition, he made possible the removal of Wake Forest University to a new campus in Winston-Salem and became a trustee of the University of North Carolina. Wake Forest later granted him an honorary Ph.D. In other projects, Reynolds contributed to the New York Maritime College in the Bronx and to the University of Georgia. He donated his family home to the city of Winston-Salem for a library and considerable funds for the establishment of Tanglewood Park and other capital projects, including Reynolds Park, SmithReynolds Airport, the Forsyth Country Club, the City and Baptist hospitals, the Young Women’s Christian Association, and the Wachovia Historical Society. Near his island home in Georgia, at the town of Darien, he donated funds to construct an American Legion hall, a gymnasium for an African American public school, and a swimming pool.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
R e y n o l d s ,
J r .
With a great deal to live up to in his prominent family, he spent many years finding his identity apart from the tobacco kingdom (today, a unit of the RJR Nabisco Holdings Corporation) founded by his father. Despite his rather unconventional personal life, however, he contributed much to the business world and to causes which benefited his region and the nation.
Sources of Information Contact at: R.J. Reynolds Tobacco Company 401 N. Main St. Winston-Salem, NC Business Phone: (336)741-5000 URL: http://www.rjrt.com
Bibliography International Directory of Company Histories. Detroit: St. James Press. Our l00th Anniversary, 1875-1975. Winston-Salem: R.J. Reynolds Tobacco Company, 1975. Reynolds, Patrick, and Tom Schachtman. The Gilded Leaf: Triumph, Tragedy, and Tobacco. Boston: Little, Brown, and Company, 1989.
S t u d e n t s
6 5 9
Sylvia Rhone (1952-) Elektra Entertainment Group
Overview With 25 years of experience, Sylvia M. Rhone has risen through the ranks to become one of the most influential women in the music industry. A pioneer, she was the first black woman to head a major record company. Her involvement with artist development and record promotions as well as her executive skills have resulted in financial success for her labels and artists such as singer Tracy Chapman, former lead vocalist of 10,000 Maniacs Natalie Merchant, rhythm and blues singer Gerald Albright, and rapper Busta Rhymes, among others.
Personal Life Sylvia M. Rhone was born on March 11, 1952, in Philadelphia, Pennsylvania. Her parents, James Rhone and Marie Christmas Rhone, moved to the Sugar Hill section of Harlem when Sylvia was very young, and she spent the rest of her childhood there. Her father was a prominent attorney who became involved in politics as a Republican adviser to New York governor Nelson Rockefeller. Her mother was a schoolteacher. Rhone’s family knew several famous musicians, and jazz greats Duke Ellington, Cab Calloway, Lionel Hampton, and Nancy Wilson were family friends. As a teenager, Rhone enjoyed going to see Nancy Wilson perform as her birthday present. She was also a fan of Aretha Franklin. Rhone attended parochial school and returned to Pennsylvania to earn an undergraduate degree in economics and marketing from the prestigious Wharton
6 6 0
S y l v i a
business school at the University of Pennsylvania. After graduation she spent less than a year in the management training program at Bankers Trust in New York, leaving over issues about dress code, among others. “I wore pants to work,” she told Ebony in 1988, “and all eyebrows turned up. No one actually said anything but they made it clear that what I’d done was unacceptable.” Taking a major pay cut, she found a job as a secretary with Buddah Records, an independent record company.
R h o n e
Chronology: Sylvia Rhone 1952: Born.
Career Details Although she was starting at the bottom level, Rhone knew right away that she was destined to work in the music business. Showing a flair for promotional work, she was eventually given the job of promotions coordinator at Buddah and then headed up national promotions for the label. From 1976 to 1978 she worked for ABC Records as a regional promotion manager, and then for Ariola Records in the same capacity in 1979. In 1980 Rhone joined Elektra Records, where for three years she was the northeast regional promotion manager in charge of special markets. She was promoted to director of marketing in 1983, a position she held until 1985. During this period she was learning the business and preparing herself for future opportunities. Rhone’s big break came in 1986, when record executive Doug Morris selected her to head up Atlantic Records’ black music division. Rhone had been in charge of the division’s promotion activities since 1985 and welcomed the challenge of turning around Atlantic’s onceprosperous black music operations. Under her leadership, Atlantic’s black music division rose to the number one spot in the United States in terms of market share, and it was making money again. By 1988 she was named senior vice president. The artist roster she built included Gerald Levert (son of the O’Jays lead singer Eddie Levert) and Miki Howard. She started Atlantic Street to sign and market groups such as En Vogue, MC Lyte, and D.O.C. In 1990 Rhone told Morris that she wanted to start her own label, preferably one that was multiracial and had mainstream acts. The next year she was named copresident and CEO of her own label, EastWest Records America. With a staff of more than 40 people, she was responsible for recruiting, marketing, and promoting the label’s artists. They included some artists from Atlantic, such as En Vogue, as well as hard rock groups from ATCO such as Pantera and AC/DC. Within four years, EastWest was generating revenues of $90 million a year. At the 15th Annual “Jack the Rapper” convention in 1991, Rhone was honored as one of four black record label heads. In August 1994 Rhone became the first black woman to be appointed head of a major record label when she was named chairperson of Elektra/EastWest. By the end
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
1974: Graduated from Wharton School of Business and Commerce, University of Pennsylvania, with a B.S. in economics. 1974: Landed job as a secretary at Buddah Records. 1980: Began working at Elektra Records, first as a regional promotion manager, then as director of marketing. 1985: Joined Atlantic Records as director of national black music promotions. 1986: Named vice president and general manager of the black music division of Atlantic Records. 1988: Named senior vice president of the black music division of Atlantic Records. 1991: Became chairperson and CEO of her own label, EastWest Records America. 1994: Named chairperson of Elektra Entertainment/EastWest Records Inc., which became the Elektra Entertainment Group.
of the year, a corporate reorganization resulted in Rhone being in charge of the Elektra Entertainment Group, which included the labels Elektra, EastWest, Asylum, and Sire. The merger required Rhone to lay off about 40 people in the Elektra and EastWest promotions, marketing, publicity, and artist development staffs, including several executives. Elektra’s sales were less than $200 million when Rhone took over in 1994, and her goal was to increase sales to $300 million in three years. Elektra, once a hot label, had recently been underperforming, and Rhone’s task was to rebuild the label. She took a personal interest in a comeback album by Tracy Chapman and in the solo debut of Natalie Merchant, both of which sold more than 3 million copies each. She also persuaded hard rock group Metallica, a band whose new albums and catalog sales accounted for some 20 percent of Elektra’s revenues, to stay with Elektra. Among Rhone’s setbacks at Elektra, though, was losing singer Anita Baker to sister label Atlantic. In 1995 Rhone survived corporate power struggles at parent company Time Warner after her mentor, Doug
S t u d e n t s
6 6 1
S y l v i a
R h o n e
Morris, was fired. Morris later became head of MCA Records and reportedly offered Rhone a job there, but she stayed with Elektra. By 1996 Rhone had reached her target of $300 million in revenues. She was the only Time Warner label head to reached her financial targets.
Social and Economic Impact Sylvia Rhone’s success as the head of a major record label has helped break down gender discrimination in the music industry for women who want to advance their own careers. It has also benefited female performers, who can now work in a more cooperative environment, according to singer Natalie Merchant. Moreover, as an African-American woman, Rhone has been able to provide positive representation of her race as well as her gender in a business that does not usually support minority leaders. “This is an important, symbolic moment not only for me, but for every AfricanAmerican and woman in our business. I know I have some very big shoes to fill, and I look forward to the challenges ahead,” she told the L.A. Times when she was appointed to head up Elektra. At that time, only three percent of corporate management positions in the U.S. were held by black women. Rhone not only helped create and control music in the industry, she participated in corporate ventures designed to showcase the contributions of black musicians as well. She helped formulate and support a highly acclaimed lecture series entitled “Our Roots Run Deep” in honor of Black History Month. Rhone told Rolling Stone, “I have to satisfy my artists, number one. And number two, I have to satisfy my corporate obligations.” She has nurtured rap artists to such an extent that Buster Rhymes allowed her to remove a sexually explicit rap from his 1997 CD, When Disaster Strikes. He told Rolling Stone, “I hated it — I still hate it, but I love Sylvia. She looks out for me, and [going with her on] this is one of the ways I showed my
6 6 2
B u s i n e s s
appreciation.” Elektra’s parent company, Time Warner, had borne the brunt of criticism in 1995 for distributing rap records with explicit lyrics. Rhone has used her position not only to make money for Elektra, but also to shape the public’s taste in pop music and develop the careers of her label’s artists.
Sources of Information Contact at: Elektra Entertainment Group 75 Rockefeller Plaza, 15th Fl. New York, NY 10019 Business Phone: (212)275-4000 URL: http://www.elektra.com
Bibliography Andrews, Suzanna. “Taking Care of Business.” Rolling Stone, November 13, 1997, p.169. Contemporary Black Biography, Volume 2. Detroit: Gale Research, 1992. Contemporary Musicians, Volume 13. Detroit: Gale Research, 1995. Jeffrey, Don. “Calm Follows Warner Music Group Storm.” Billboard, July 30, 1994, p.9. Jeffrey, Don. “Sylvia Rhone Leads Elektra’s Turnaround.” Billboard, November 9, 1996, p.1. Philips, Chuck. “Elektra Chief Labeled a Shining Star.” Los Angeles Times, November 27, 1995, p.D1. Philips, Chuck. “New Elektra Chief Breaks Male Bastion.” Los Angeles Times, July 22, 1994, p.D1. Rosen, Craig. “Elektra Fires 40.” Billboard, November 5, 1994, p.5. Smith, Jesse Carney, editor. Notable Black American Women, Book II. Detroit: Gale Research, 1996. “Sylvia Rhone Named New Head of Elektra/EastWest.” Jet, August 15, 1994, p.55. Who’s Who among African Americans. 1998-99 edition. Detroit: Gale Research, 1998.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Tony Ridder Overview Tony Ridder heads a communications company whose holdings include several dozen newspapers and a growing stake in electronic media, including information retrieval services and graphics and photo libraries. The papers owned and operated by the partly family-controlled Knight Ridder chain together boast the second-largest circulation figures in the United States, topped only by the Gannett Corporation, which publishes USA Today. Since taking over the helm in 1995, Ridder has earned both praise and condemnation for his cost-cutting measures. But the financial soundness of the company has demonstrated to naysayers that print journalism, as well as the strong local newspaper, is far from dead.
(1940-) Knight Ridder
Personal Life Born September 22, 1940, in Duluth, Minnesota, Paul Anthony Ridder is the son of Jane (Delano) Ridder and Bernard Ridder, a Princeton University graduate who headed the advertising department at one of the Ridder family’s newspapers, the Duluth News-Tribune. It was part of a small media empire founded in 1892 by Tony Ridder’s great-grandfather, Herman Ridder. Bernard Ridder eventually became publisher of the Duluth paper, a position he held until his retirement in 1972. The younger Ridder chose economics, not journalism, as his field of study at the University of Michigan, from which he earned his bachelor’s degree in 1962. Ridder married Constance Meach in 1960. They are the parents of four children—Katherine, Linda, Susan,
6 6 3
T o n y
R i d d e r
Free Press, Miami Herald, and Philadelphia Inquirer, among other well-regarded papers. Three years later, he was named president of Knight-Ridder, Inc. In late 1995, the company elevated him to the top job of chief executive officer and chairman of the board after the untimely death of a fellow executive. When Tony Ridder took over the Knight-Ridder media empire, he became the first of the Ridders to hold that post since its merger with the Knight newspaper chain in 1974. His track record in running a successful paper had been evident for quite some time. He was voted California Publisher of the Year in 1983, and eight years later he was honored as AdWeek magazine’s Newspaper Executive of the Year.
Anthony Ridder.
(Archive Photos/Gerald Davis.)
and Paul Anthony. Prior to taking over the family business, the athletic Ridder trained for his favorite sport, marathon running.
Career Details Ridder began his career in journalism in 1962 as a reporter for the Aberdeen American News in Aberdeen, South Dakota. A year later, he headed west to the Pasadena Star News and then went on to the highly regarded San Jose Mercury News in 1964. He spent the next 22 years of his career there, earning a promotion to business manager in 1968, general manager in 1975, publisher in 1977, and president in 1979. Over the next few years, Ridder steered the San Jose Mercury News toward covering more local business news, specifically the region’s emerging computer and high-tech industries. The San Jose Mercury News eventually became the Wall Street Journal of “Silicon Valley” (the nickname given to San Jose and the surrounding communities because of the area’s high concentration of semiconductor and related high-tech firms), and circulation doubled during Ridder’s tenure as publisher. His editorial practices, which included increasing the size of the news staff, helped the paper win a Pulitzer Prize for journalism. In 1986, Ridder was sent to Miami to take over the newspaper division of Knight-Ridder, Inc., whose holdings by then included the Charlotte Observer, Detroit
6 6 4
B u s i n e s s
Yet Ridder soon made a different kind of name for himself in the industry as a dedicated and somewhat ruthless cost-cutter. He fought to keep labor costs down by reducing editorial staff on a regular basis and implementing other organizational changes. As a result, he became the target of criticism for what some considered Knight-Ridder’s poor treatment of employees at the Miami Herald and Philadelphia Inquirer in particular. Such practices prompted increased competition for jobs at the newspapers and in the process sapped employee morale. Not long after taking over in 1995, Ridder faced the most serious labor conflict in the company’s recent history when members of several unions at the Detroit Free Press and its sister paper, the Gannett Corp.’s Detroit News, launched a strike that ended up lasting over three years. To some, the strike was a referendum on the hardline financial policies advocated by Ridder and others. Industry watchers predicted that the contentious walkout would have serious repercussions in the newspaper business because Detroit was such a pro-union town. Indeed, during the last few months of 1995 the Free Press lost $46 million in revenues. Yet Ridder managed the strike by keeping an eye on the long-term benefits for the company’s bottom line. And there were times when the walkout degenerated into vandalism and hostile picket-line confrontations that did little to help the union’s cause. The strike was also weakened when many workers returned before all of the unions’ demands were satisfied, and the company waged a vigorous legal defense of its actions, which the unions had challenged in court and before labor arbitrators. As chief executive, Ridder also shut down KnightRidder ventures that were losing money, including the Information Design Lab, which was trying to develop a flat-panel electronic newspaper. The company also withdrew from the cable television business and sold KnightRidder Financial, a data reporting service. Such tactics helped raise the price of Knight-Ridder stock by 18 percent within six months. The Knight-Ridder board and stockholders were pleased with such success, but Ridder himself was not always liked around his newsrooms. (Some employees
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
T o n y
R i d d e r
have even nicknamed him “Darth Ridder.”) Another furor erupted in 1997 when Knight-Ridder purchased the California-based Monterey County Herald, fired its staff, and then made everybody reapply for their jobs. Ridder’s strategy was to keep the company focused on its roots in the newspaper business. Major acquisitions made in 1997 included the Fort Worth StarTelegram and the Kansas City Star, both of which were purchased from the Disney Corporation after Knight-Ridder sold its electronic media division, Knight-Ridder Information, Inc. The $1.65 million deal was heralded as a strong indication of the viability of American newspapers, and Ridder was praised for his vote of confidence in the old-fashioned broadsheet. Under his directive, Knight-Ridder papers increased their local news coverage, which both pleases readers and yields higher advertising revenues. As a veteran of the newspaper industry and a key player in its current crises, Ridder often speaks about the future of the medium. In 1997 he warned a gathering of newspaper executives that the Internet poses a serious threat to classified advertising revenues. (Such ads sometimes bring in as much as 40 percent of a paper’s income.) Ridder himself, however, is media-shy and does little of the public affairs work that his predecessors undertook. Instead, he leaves most of that to Miami Herald publisher David Lawrence. He does, however, hold board positions with the United Way and the Center for Economic Policy Development at Stanford University.
Chronology: Tony Ridder 1940: Born. 1964: Joined staff of San Jose Mercury News. 1977: Became publisher of San Jose Mercury News. 1979: Named president of San Jose Mercury News. 1986: Named president of Knight-Ridder newspaper division. 1989: Named president of Knight-Ridder, Inc. 1991: Voted Newspaper Executive of the Year by AdWeek magazine. 1995: Became chairman and chief executive of Knight-Ridder, Inc. 1998: Announced company name change to Knight Ridder.
Sources of Information Social and Economic Impact Tony Ridder’s leadership of the Knight Ridder organization, whose name dropped the hyphen and “Inc.” in 1998, helped shape the course of the frail U.S. newspaper industry during the 1990s. His strategy of making unpopular but fiscally beneficial decisions to achieve profitability was largely a success. He took over the company during a period mired in doubt over the viability of newspapers in an electronic age, but Ridder’s regimen of financial austerity and content revitalization proved that newspaper publishing could still be a healthy business endeavor. While Knight Ridder and the broader newspaper industry continued to face challenges in the wake of reforms like Ridder’s, his achievements instilled confidence in both his company and the industry.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Contact at: Knight Ridder 1 Herald Dr. Miami, FL 33132 Business Phone: URL: http://www.knight-ridder.com
Bibliography Edmonds, Rick. “Mr. Bottom Line.” Florida Trend, March 1996. Foroohar, Kamiz. “Chip off the Old Block.” Forbes, 17 June 1996. Liberman, Si. “CEO Pay: Beats Workfare.” Editor & Publisher, 20 December 1997. Snoddy, Raymond. “This Dead Tree Technology Still Has Life in It Yet.” Marketing, 17 April 1997. Wenske, Paul. “Vote of Confidence for Dailies.” Columbia Journalism Review, May-June 1997.
S t u d e n t s
6 6 5
John D. Rockefeller (1839-1937)
Overview Founder of Standard Oil and the world’s richest man when he died, John D. Rockefeller began as a frugal accounting clerk who set up a merchant grain business in 1858. With a $4000 investment, he went into the oil refining business in 1863. Through strict economy and the swift elimination of competitors, he soon dominated the oil refining industry. In 1911 his monopoly was broken by antitrust government regulations and Rockefeller turned to philanthropy, donating more than $500 million to charity. Rockefeller’s descendants, have an estimated family worth of $6 billion through wise investments and astute business practices.
Personal Life John D. Rockefeller was born on July 8, 1839, in Richford, New York. His father was a farmer and trader. His mother was from a Purtain background, and she raised her large family with very strict values. The family moved from the east coast to Cleveland, Ohio, in 1853. At this time the area was beginning to grow into a large city. John graduated from high school there and began his first job at the age of 16 in a Cleveland mercantile firm. Following in the footsteps of his religious mother, Rockefeller was an active member of the Baptist Church, and beginning with his first job as a clerk, he gave onetenth of his earnings to charity. In 1864 Rockefeller married Laura C. Spelman. They had four children: Bessie, Alta, Edith, and John Davidson Jr. As his income grew,
6 6 6
J o h n
D .
R o c k e f e l l e r
so did his benefactions. The total of Rockefeller’s lifetime philanthropies has been estimated at approximately $550 million. Although he amassed an enormous fortune, Rockefeller preferred to live simply. His time was absorbed by business and later by organized giving. In both areas he imposed order, efficiency, and planning with extraordinary success and sweeping vision. He died on May 23, 1937, in Ormond, Florida, at the age of 97. John D. Rockefeller, Jr. attended Brown University, and following his graduation, he went to work for his father. According to Webster’s American Biographies, “Among Rockefeller’s notable achievements were the restoration of colonial Williamsburg, Virginia; the planning of Rockefeller Center in New York City; the donation of the site for the United Nations headquarters building in New York; the creation of numerous forest and wildlife preserves; and the establishment of the United Services Organization (USO) during World War II.” John Jr. married Abby Greene Aldrich and they had six children, Abby Aldrich, John D. III, Nelson Aldrich, Laurence Spelman, Winthrop, and David. One of his sons served as governor of Arkansas and the others worked in business and various philanthropies.
Career Details Success came early to John D. Rockefeller. His first firm, founded with Maurice B. Clark in 1859, grossed $450,000 in the first year of trading grain, hay, meats, and other goods. Clark did the fieldwork; Rockefeller was in charge of office management, bookkeeping, and relationships with bankers. According to the Concise Dictionary of American Biography, “In 1863 Rockefeller, sensing the commercial possibilities in the recent linking of Cleveland by a railroad to the new ‘Oil Regions’ in northwestern Pennsylvania, had joined in building a refinery, which in two years was the largest in Cleveland.” Within two years, guided by Samuel Andrews’ technical knowledge, Rockefeller left his partnership with Clark and devoted himself to the business that rapidly became Cleveland’s largest refinery. In 1865 Rockefeller bought out his original partners and—along with brother William Rockefeller, Samuel Andrews, and Henry Flagler—built a second refinery, the Standard Works.
John D. Rockefeller.
(The Library of Congress.)
corporated in 1870 and had capital of $1 million. Soon Standard Oil controlled one-tenth of American refining, but in an atmosphere of competitive chaos. Rockefeller’s next method for imposing order on the oil industry was to buy out most of the Cleveland refiners, then acquire others in New York, Pittsburgh, and Philadelphia. Standard Oil was efficiently organized, was managed with great foresight, and wielded tremendous economic leverage. As a result, the company was able to survive the temporary depressions that were difficult for smaller or less efficient companies. Its vertical structure was expanded to include pipeline systems, oil terminals, and direct-marketing facilities. By 1879 Rockefeller dominated the entire oil industry. Standard Oil was refining 90 percent of American oil using its own railroad tank cars, depots, ships, and docking facilities. Strict planning and economy were enforced throughout the process, which allowed the company to cut the price of refined oil from 23 cents per gallon to 7 cents per gallon during its first 20 years of operation.
With Flagler’s assistance, favorable railroad freight rebates were secured for Standard Works. William Rockefeller was sent to New York to expand the East Coast market. Within three years, the company expanded vertically to include warehouses, fleets of wagons, and timber tracts for the making of its own barrels. The company eventually became so large that it required reorganization. A joint stock company, the Standard Oil Company of Ohio, with Rockefeller as president, was in-
In the 1880s the nature of Rockefeller’s business started changing; he moved beyond refining oil into producing crude oil itself, and moved his wells westward as new fields opened up. He pioneered this expansion by acquiring oil land before it was certain that its sulfuric oil could be refined. He employed scientist Herman Frasch, who devised new methods for making these fields yield an enormous profit. He also developed markets for the byproducts of his business—kerosene, lubricants, varnish, and fuel oil. As the penetration of American mar-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
6 6 7
J o h n
D .
R o c k e f e l l e r
Chronology: John D. Rockefeller 1839: Born. 1859: Established first company, Clark and Rockefeller. 1863: Entered his first oil refining business with a $4000 investment. 1865: Bought out his partners and opened Standard Works. 1870: Incorporated a joint stock company, Standard Oil Company of Ohio. 1879: Refined 90 percent of American oil. 1882: Established the Standard Oil trust as a way to circumvent the laws of Ohio. 1892: Ohio Supreme Court ordered the dissolution of Standard Oil trust. 1911: United States Supreme Court ordered the dissolution of Standard Oil of New Jersey, a holding company. 1937: Died.
kets was assured, foreign markets in Europe, Asia, and Latin America were added. Since 1872 Standard Oil had circumvented Ohio regulations by placing its out-of-state acquisitions in the hands of Henry Flagler as “trustee.” All profits went to the Ohio company while the outside businesses, entrusted to a nine-man directorate that was itself incorporated, remained nominally independent. The Standard Oil trust, established in 1882, was the first of many such industrial combinations that caused public opposition to monopolies to change to hostility. By 1883, after winning control of the pipeline industry, Standard’s monopoly was at a peak. With a capital reserve of about $70 million, the trust was the world’s largest and richest industrial organization. Journalists condemned Standard Oil for various unethical business practices: railroad rebates, a system Rockefeller did not invent that was used by many refiners; price discrimination; industrial espionage and bribery; and elimination of smaller firms through unfair competition, such as cutting off their crude oil supplies or restricting their transport outlets. Standard Oil was investigated by the New York State Senate and by the U.S. House of Representatives
6 6 8
B u s i n e s s
in 1888. A rising tide of reform sentiment led to the passage of the Sherman Antitrust Act in 1890. By now the Standard Oil trust controlled about 95 percent of the petroleum industry in the United States; had extensive holdings in mining, manufacturing, and transportation; had virtual control of pipeline distribution in the United States; and was an economic power of global proportions. In 1892 the Ohio Supreme Court ordered the trust dissolved. Rockefeller formally disbanded the trust by requiring the directors to hand in their trust certificates, but in practice the organization remained intact and still met regularly to determine overall policy. Rockefeller’s most famous excursion outside the oil industry began in 1893, when he helped develop the Mesabi iron ore range of Minnesota. Three years later, his Consolidated Iron Mines owned a great fleet of ore boats and virtually controlled Great Lakes shipping. As an iron ore magnate, Rockefeller now had the power to dictate to the steel industry. In an alliance with steel king Andrew Carnegie, Rockefeller agreed not to enter steelmaking and Carnegie sold his ore holdings to the vast new merger created by Carnegie and J. P. Morgan, U.S. Steel. In 1896, Rockefeller’s fortune passed the $200 million mark for the first time. In 1899 Standard was recreated legally as a “holding company,” Standard Oil of New Jersey. Rockefeller retained the title of president until 1911, the year that firm was dissolved by the United States Supreme Court, but for more than a decade he had been retired from active business and had devoted himself to philanthropy. In his early career, Rockefeller had depended on the Baptist Church for advice; the Church wanted its own great university, and in 1892 the University of Chicago was Rockefeller’s first major philanthropic creation. As his fortune grew, he established and endowed philanthropic foundations including: the Rockefeller Institute for Medical Research (now Rockefeller University) in 1901, the General Education Board in 1902, the Rockefeller Foundation in 1913, and the Laura Spelman Rockefeller Memorial Foundation in 1918 (named for his wife who had died in 1915). As he was giving away a large percentage of his fortune, his successors at the helm of Standard Oil were raising prices and distributing record profits through enormous dividends. President Theodore Roosevelt was especially incensed at Standard’s acceptance of illegal railroad rebates, a practice that continued long after it was outlawed. In 1907 one of the company’s subsidiaries was fined $29.24 million, which was such an outrageous sum that the ruling was overturned on appeal. Undaunted, the government continued to pursue antitrust violations, and in 1911—after 444 witnesses and 1,374 exhibits were presented—Standard Oil of New Jersey was required to spin off 33 independent subsidiaries. Because Rockefeller’s business ethics were questioned, his philanthropic endeavors were initially received with suspicions. Some even turned down his of-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J o h n
fers of help, calling his benefactions tainted money. Eventually, through the use of publicity agents and by overcoming his own policy of silence about his affairs, he was able to bring about a change in public opinion and distribute a large portion of his wealth where it would work for the benefit of society.
Social and Economic Impact John D. Rockefeller’s genius was in his ability to organize, and this was shown in his business and his philanthropy’s efforts. He was able to recognize and seize opportunity, solve difficult problems, and bring together talented groups of men to implement his plans. He won the loyalty of his partners and associates by giving them the freedom to use their talents to their fullest extent. He was a man of few passions who lived for his work, and his great talent was his organizing genius and drive for order, pursued with great single-mindedness and concentration. His meticulousness attention to detail, though, kept him from understanding that business ethics and government intervention were forces to be taken into consideration. Laws that still regulate business and allow the government to break up monopolies were passed and tested in the court system because of Rockefeller’s unwillingness to consider the good of the general public. The government subsequently filed antitrust complaints against American Telephone & Telegraph, International Business Machines, and Microsoft Corporation based on the same laws that were used to break up Rockefeller’s monopoly.
D .
R o c k e f e l l e r
so far-reaching a struggle between industry and government.” The monopoly was broken when the Supreme Court ruled that Standard Oil’s trade restraints violated the public interest, but ironically the required reorganization ultimately tripled the worth of John D. Rockefeller. With the emerging automobile industry, the end of antitrust litigation, and the posting of dividends in excess of 50 percent, the public exhibited in insatiable appetites for shares in any of the companies. Exxon, Mobil, and Chevron—along with Standard Oil—are just a few of the subsidiaries that came to dominate the oil industry throughout the twentieth century.
Sources of Information Bibliography Abels, Jules. The Rockefeller Billions: The Story of the World’s Most Stupendous Fortune. New York: Macmillan, 1965. Byers, Paula K., and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1998. Chernow, Ron. Titan: The Life of John D. Rockefeller, Sr. New York: Random House, 1998. Concise Dictionary of American Biography. New York: Charles Scribner’s Sons, 1997, 1077-8. Ernst, Joseph W., ed. Dear Father-Dear Son: The Correspondence of John D. Rockefeller and John D. Rockefeller, Jr. Bronx, NY: Fordham University Press, 1994. Rockefeller, John D. Random Reminiscences of Men and Events. North Stratford, NH: Ayer, 1979.
According to Ron Chewnow’s 1998 biography, “Never before in the history of the U.S. had there been
Van Doren, Charles, ed. Webster’s American Biographies. Springfield, MA: G. & C. Merriam Co., 1979.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
6 6 9
Anita Lucia Roddick (1942-) The Body Shop
Overview Anita Roddick is one of the wealthiest women in Great Britain, but this is a honor bestowed on her almost unwillingly. As founder and chief executive officer (CEO) of the Body Shop franchise, specializing in all natural skin and hair care products, Roddick has revolutionized the retail beauty industry by following her own gut instinct. She has also consistently rejected established thinking that assumes that a company’s primary goal is to make as much profit as possible. In turn, millions of consumers have affirmed their belief in the Body Shop’s unique array of products at the cash register. By the mid—1990s, her empire amassed annual sales of $910 million, and a slew of imitators, none nearly as successful, stood as a testimonial to her vision.
Personal Life Roddick was born in England in 1942, but her parents were immigrants from Italy. Her mother, Gilda de Vita, ran a cafe in Littlehampton on the Sussex coast, with Donny Perella, the man Roddick assumed was father to herself and her three siblings. However, when she was eight, her mother left her unhappy marriage to Donny Perella and married his brother, Henry, with whom she had carried on a clandestine romance for some time. Anita and her younger brother were actually Henry’s children, although she did not learn this until she was 18. Tragically, Henry Perella died of tuberculosis less than two years after the marriage, leaving Gilda and her children to run the cafe on their own. Anything but posh, it catered to a clientele of local fishermen, and Anita put in her share
6 7 0
A n i t a
Anita Roddick.
L u c i a
R o d d i c k
(AP/Wide World Photos, Inc.)
of hours as a child. “Our house had a powerful work ethic and no leisure at all,” Roddick told Jules Older for Vermont Business Magazine. “We never took a holiday.”
stayed with her throughout life, and she credits this with fueling her much remarked upon tirelessness.
The Perella family also had an Italian Roman Catholic heritage, which was rather unusual in a quaint British seaside town and marked them distinctly as foreigners. Her classmates, Roddick would later tell Time writer Philip Elmer-Dewitt, had “never smelled garlic before we came.” She also experienced anxieties inspired by her religious education, the most notable being a fear of falling asleep at night; in her youthful mind, she was afraid she might not wake up. While this anxiety passed when she became an adult, Roddick has said that the joy and energy she felt upon waking up each morning has
Roddick was a good student and retreated from her chores to read or study. She dreamed of becoming an actress, but her traditional-minded mother discouraged this. So Roddick turned down an acceptance to Guildhall School of Music and Drama and instead enrolled in Newton Park College of Education in Bath, England. There she studied English and history, and trained to become a teacher. Her college studies also included a jaunt to Israel on a scholarship, where she worked on a kibbutz. She was ejected when she and a bearded colleague played a practical joke that had him appearing to “walk on water.”
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
6 7 1
A n i t a
L u c i a
R o d d i c k
Chronology: Anita Lucia Roddick 1942: Born. 1962: Earned teaching degree. 1970: Married Gordon Roddick. 1976: Opened first Body Shop in Brighton, England. 1984: Company went public in stock offering. 1988: Knighted, Order of the British Empire. 1988: Opened first store in the United States. 1990: Created the Body Shop Foundation. 1992: Cofounder of Businesses for Social Responsibility.
Wanderlust had already infected Roddick, and from the kibbutz she went hitchhiking through Israel. After finishing school, she taught history and English for a time but felt tied down. She moved to Paris, where she worked in the library of an English-language newspaper, then traveled through Greece and Switzerland. In Geneva, she was hired (even though she could not type and had limited secretarial skills) by the International Labor Organization (ILO), affiliated with the United Nations. Eventually, the Women’s Rights Department post gave Roddick an opportunity to travel, and in doing so she met women from around the world. Many of them had wonderful skin, and Roddick always inquired about what kind of products they used. In time, Roddick saved enough money from the ILO to travel solo and undertook a long trek that landed her in Tahiti, Australia, Madagascar, Mauritius, and South Africa, among other countries. She returned to England after she was kicked out of South Africa for attending a nightclub on a “blacks only” night, in violation of that country’s strict apartheid laws at the time. When she returned to England, her mother introduced her to a fellow wanderer, Gordon Roddick, a Scot who wrote poetry. Shortly thereafter, the two were married and had two daughters. In the early 1970s they owned a restaurant and small hotel.
Career Details The restaurant and hotel business left the Roddicks exhausted after three years. Gordon announced that he wished
6 7 2
B u s i n e s s
to fulfill a lifelong dream: to ride a horse from Buenos Aires, Argentina to New York, which only one other person had ever done. Far from being upset, the young wife and mother was pragmatic: “I have always admired people who follow their beliefs and passions,” she would later write in her 1991 autobiography, Body and Soul: Profits with Principals—The Amazing Success Story of Anita Roddick and the Body Shop. “It was impossible to be resentful.” He would be gone for two years; if Roddick opened a store of her own, she could earn a living and spend time with her daughters in the evening. So she sold the restaurant, and gave that money to her husband to finance his trip. She then used the hotel money as collateral for a $6,500 bank loan that launched her idea: a cosmetics store with bath and body products made from natural ingredients, inspired by what she had gleaned from her world travels. Roddick hired an herbalist from the phone book to concoct her lotions and soaps, and found a location on a counterculture, artsy street in Brighton. She opened her “Body Shop” in the spring of 1976, and the store was immediately successful. The goods were packaged in plastic bottles bought from a medical supply store, and her products offered no miracle promises other than to clean and protect. There were oils that customers could pick to scent their products, which was much cheaper than offering a variety of pre-scented products. The store also encouraged recycling by offering a discount on bottles brought back for refills. Roddick trailed perfume on the streets to lure pedestrians toward her green-and-black store. Her first Body Shop was such a success that she opened the second one a few months later with money borrowed from a local mechanic, Ian McGlinn, who became owner of half of the company. Gordon Roddick came home a year early, in spring of 1977, after his horse took a fatal fall in the Andes. By this time there was a huge demand to purchase a franchise in The Body Shop, and he took over the business end of the partnership. The management of his wife’s brilliant concept would yield a global presence in only a decade. By 1978, The Body Shop had opened in Sweden and Greece, and were becoming ubiquitous throughout England. Roddick credits her mother with helping her through these years by baby-sitting her daughters before she sent them off to boarding school. In 1984, the Roddicks decided to heed the advice of the financial world and take their company public in an initial stock offering. This change would help them to shed a somewhat bohemian image that brought image problems, such as landlords reluctance to rent them space. It would also give Roddick the chance to offer her employees and franchisees a stake in the fortune. There also was simply the thrill of going public in the 1980s; as she later told Andrew Davidson in an interview for Management Today, it “was a sexy thing to do at the time . . . . When you have a crazy idea that should never have existed, all you want to do is push it to see how far it will go. It was a huge barometer of reassurance and a way of getting more money. It was like growing up.”
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
A n i t a
But the move would bring its own demons into Roddick’s life, and conflict with many of her beliefs. After one day of trading, the stock nearly doubled in price, which made the Roddicks quite rich, at least on paper. “The accolades were so bizarre,” she recalled in the interview with Time’s Elmer-Dewitt. “Because what they’re patting you on the back for is how much money you are worth . . . . It was then that [Gordon and I] decided that we wouldn’t sell out, that we would put up obstacles to thinking like a large corporation.” That attitude did not stop the stock’s climb: over the next decade, shares would rise 9,500 percent. By 1996 there were 1,200 Body Shop stores around the globe, and it had become the most successful international retail business ever sprung from British soil. According to Hoover’s Online in 1998 The Body Shop Incorporated a U.S. (subsidiary of The Body Shop International) has about 290 owned and franchised stores in the United States. The management of the of The Body Shop Incorporated has been turned over to the Bellamy Retail Group.
Social and Economic Impact Many have followed in Roddick’s footsteps, but none with as much conviction or success. Early on, Roddick was one of the most important voices in the campaign against the testing of products on animals by the cosmetics industry. She greatly publicized the practice, and also rallied others to oppose it. Now many other beauty products also trumpet the fact that their products are not tested on animals. From the start, Body Shop store windows, instead of showing their own wares, instead gave space over to posters from the environmental-action group Greenpeace. There still are in-store displays and leaflets that publicize a variety of causes not generally covered by the mass media. In 1986 Roddick launched the company’s Environmental Projects Department, which, among other tasks, commissions “environmental audits” to make sure that Body Shop products or policies are not adversely affecting the environment, customers, or their trading partners.
L u c i a
R o d d i c k
from the Brazil nut, an arrangement that directly benefits the Kayapo Indians with no intermediaries. Body Shop outlets in the United States follow the same principles. They have been used as voter registration sites, and employees are paid for doing outside volunteer work one afternoon a week. One store runs a program that brings pets from animal shelters to visit with residents of nursing homes; the staff of another volunteers at a hospice for the terminally ill. “Nor do the stores have images of perfect women that might make the customer feel inadequate and driven to seek perfection through cosmetics,” wrote Trish Hall in the New York Times. Roddick has consistently criticized the ethics of the rest of the beauty industry, whose products are lavishly advertised to induce subtle connections with subconscious fantasies of beauty, wealth, and love. Still, Roddick’s nontraditional business attitudes have caused a few problems with franchisees, and the company’s stock nose-dived in 1992 when many investors dumped shares; she and her husband claimed to have lost $100 million on paper. The following year, Roddick appeared for the first time in an advertising image, after being paid by American Express to appear in a series of commercials showcasing corporate renegades. She suffered some criticism for this, and for a time received some flak for her seeming omnipresence in the media. Still, she has used her resources for numerous charitable projects, including the refitting of orphanages in Romania and the launch of a newspaper in London called the Big Issue, sold by the homeless. In 1992 Roddick formed Businesses for Social Responsibility with several other altruistic entrepreneurs, including the founders of the Ben & Jerry ice cream empire. At the Body Shop headquarters in Littlehampton, battery-powered taxis take visitors to and from the complex of naturally ventilated buildings; its employees enjoy flexible working hours and on-site childcare. Roddick has hinted that she would like to take her company private, or off the stock market, and instead put its ownership into the hands of a perpetual foundation that would survive her and Gordon when they no longer jointly head the business. Still a tireless traveler, Roddick is also a popular guest lecturer at some of the best-known business schools in North America. Her favorite topic is ethics in business, an increasingly recognized part of an MBA curriculum in the 1990s. One of Roddick’s future goals is to spread her message through her own school, which she would name the New Academy of Business; in the late 1990s she was investigating possible locations and courting investors.
The Body Shop has tried to focus on long-term good rather than short-term profits. One example of this was its decision to build a soap factory in an impoverished area of Glasgow, Scotland in 1988, even though its operation actually would cost the company 30 percent more. Yet it provided jobs and stability to a forgotten section of the city, which fit in with the Body Shop mission. The “Trade Not Aid” program is another example of Roddick’s business philosophy, imparted in her 1991 book Body and Soul: Profits with Principals. Pointing out that, in some cases, foreign aid to developing countries is wasted or falls into corrupt hands, Roddick has tried to set up direct economic ties with indigenous peoples. One example is the Brazilian factory her company helped launch that supplies Body Shop hair products with oil
Contact at: The Body Shop Watersmead Littlehampton, West Sussex BN17 England Business Phone: 44-1-90-373-1500 URL: http://www.the-body-shop.com
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Sources of Information
6 7 3
A n i t a
L u c i a
R o d d i c k
Bibliography
Hall, Trish. “Striving to Be Cosmetically Correct.” New York Times, 27 May 1993.
Contemporary Authors. Detroit: Gale, 1993. Current Biography Yearbook. 1992. New York: H. W. Wilson, 1992.
Lippert, Barbara. “Green Team: The Environmentally Correct Founder of the Body Shop Gives the American Express Card a ‘90s Kind of Charge.” Adweek, 8 March 1993.
“The Body Shop Incorporated.” Hoover’s Online, 14 September 14 1998. Available from http://www.hoovers.com.
Newsmakers. 1989 Cumulation. Detroit: Gale, 1990.
Davidson, Andrew. “Anita Roddick.” Management Today, March 1996.
Older, Jules. “Q&A: A Whirlwind Called Anita Hits Burlington.” Vermont Business Magazine, May 1993.
Elmer-Dewitt, Philip. “Anita the Agitator.” Time, 25 January 1993.
6 7 4
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Helena Rubinstein Overview Helena Rubinstein’s name was synonymous with women’s beauty products worldwide, during the early twentieth century. Starting out with only a few pots of face cream, a little formal education, and high ambitions she built one of the world’s first businesses which massproduced cosmetics.
(1870-1965) Helena Rubinstein, Inc.
Personal Life Helena Rubinstein was born in Kracow, Poland in 1870. She was the oldest of the eight daughters born to Horace and Augusta Rubinstein, a Jewish couple. Every evening the Rubinstein girls underwent a beauty ritual, at the end of which their mother applied a cream to their faces, telling them it would make them beautiful. While Helena was attending academic high school in Kracow, her business instincts awoke. She began to keep the books for her father, an egg merchant, discussed his plans with him, and made her first “good deal” when she went to a business meeting for him. As her father wished, Helena entered medical school at the University of Cracow. She loved laboratory research, but hated being around sick people. When she was twenty, Helena left home in Kracow to live with her uncle Louis in Melbourne, Australia. It was there that the very successful career of the woman with straight black hair, pulled back severely into a knot, began. Once Helena became rich, she always wore masses of jewelry in public—especially rubies with ruby red lipstick and nail polish to match them—but she carried her lunch in a brown paper bag. She never followed
6 7 5
H e l e n a
R u b i n s t e i n
Helena Rubinstein.
6 7 6
(AP Photo/Ann Walsh.)
the beauty routines which she recommended for her wealthy clientele; she was always too busy working.
Twenty years her junior, he died in 1956. Two years later, her son Horace died.
In 1908, Rubinstein married American journalist, Edward J. Titus. They had two sons, Roy and Horace who later joined the Rubinstein cosmetic business. With the start of World War I, they fled to the United States, but returned to Europe after the War. However, they were forced to leave again with the outbreak of World War II. Rubinstein and Titus divorced in 1937, and in 1938 Rubinstein married Prince Artchil GourielliTchkonia, a Russian nobleman who became an American citizen. After her second marriage, Helena herself adopted the title “Madame Rubinstein.” Helena and her second husband lived primarily in New York City.
Rubinstein had a hobby of collecting old manuscripts and books on beauty. She wrote several books herself as well. The Art of Feminine Beauty and This Way To Beauty were published in 1936, Food for Beauty in 1938, and her autobiography My Life for Beauty in 1966.
B u s i n e s s
Career Details When she went to Australia, Helena Rubinstein took with her twelve pots of her mother’s face cream, a
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
H e l e n a
special formula developed by Hungarian chemist Jacob Lykusky. Rubinstein soon discovered that skin and hair preparations were desired desperately by Australian women who had to deal with severe variations in climate. In 1890, she got her first job in Mr. Henderson’s pharmacy. There she learned how to compound simple formulas and run a business, while she eagerly served her customers’ individual needs. One day, she started selling the Polish face cream at Mr. Henderson’s store and the demand quickly rose. In 1898, overwhelmed by Helena’s new business, Uncle Louis urged her to move out. She then went to Brisbane and worked as a governess for two years. With the idea of her beauty salon in mind, but without any resources, she went back to Melbourne in 1900. Working in a cafe as a waitress, she met two important individuals—the manager of a tea company who gave her pointers on how to set up her business, and a lady with a poor skin who offered to loan Rubinstein $1,500, her life savings. Rubinstein opened her first beauty salon, where she sold her cream and advised women individually on proper skin care. The Polish cream, sent to her from Krakow, sold very well in Australia. Good word of mouth from satisfied, well-known clients helped her shop prosper, teaching her the importance of publicity. After Eugenia Stone, a popular editor from Sydney, wrote about Rubinstein’s salon, Helena suddenly received fifteen thousand orders with money in them from everywhere in Australia. To deal with the rising demand, she worked eighteen hours a day, a pace she never cut back much throughout her life. Rubinstein urged Dr. Lykusky to come to Australia. He came, and taught her how to mix the cream, which they called “Creme Valaze,” and how to make cleansing cream, lotion, and soap. Rubinstein hired Australian chemists, set up her own small factory, and regularly advertised in the Melbourne newspaper. After two years, she traveled to Europe to broaden her knowledge of cosmetics, studying with several well known skinspecialists in various cities. Back in Australia in 1904, Rubinstein opened a bigger salon in Melbourne, invited her sister Ceska to manage her business there, and opened another successful salon in Sydney.
R u b i n s t e i n
Chronology: Helena Rubinstein 1870: Born. 1902: First Beauty Salon opened in Melbourne. 1908: Helena Rubinstein Salon de Beaute opened in London. 1911: Cosmetic factory near Paris opened. 1915: Maison de Beaute Valaze in New York City opened. 1918: US Department stores start selling Rubinstein cosmetics. 1937: Prestigious salon on New York’s Fifth Avenue opened. 1937: Day of Beauty introduced. 1950: Over 2 million Mascaramatic sold in first year. 1965: Died. 1966: Autobiography, My Life for Beauty, is published.
new idea, natural looking makeup, Rubinstein traveled frequently to Paris, where women were more experimental. Eventually, Rubinstein moved to Paris where she opened a new salon. In 1911, she opened a cosmetic factory outside Paris.
Rubinstein brought her sister Manka in to the Sydney salon, so she could move to London. She arrived with $100,000 in capital, rented a four-story house in the elegant Mayfair district for $20,000 a year, and started acquiring a wealthy and leisured clientele. The success of the salon was fueled by Rubinstein’s unusual decoration, which copied the vivid decor of Leon Bakst and Alexandre Benois for the Ballett Russe. To work on her
After emigrating to the United States in 1915, Rubinstein opened salons in New York City, San Francisco, Boston, Chicago, Los Angeles, Washington, and Philadelphia by 1917. She leased a factory on Long Island and employed special sales representatives. Rubinstein went back to Europe after World War I ended in 1918. She moved her Paris salon to a bigger location, modernized her French factory, and refurbished the London business. In Vienna, a young chemist suggested she triple her production and improve quality at the same time with some new machines. She immediately allowed a department store in San Francisco to sell her products, on the condition that orders were worth at least $10,000 and Rubinstein could personally train the saleswomen. Many important department stores in the United States began selling her cosmetics. To keep the business going, she offered them 40 percent in cash for every item sold, 5 percent of the retail price for every advertisement of a Rubinstein product in a local paper, 10 percent commission for the salesperson, and another incentive for the
B u s i n e s s
S t u d e n t s
When Rubinstein first met Edward Titus, he offered to help promote the business. She made him an employee and he created the famous scheme of the Rubinstein ads, featuring the elegant, rich and beautiful Helena, dwelling upon her scientific knowledge and always giving a specific reason to women for buying her cosmetics.
L e a d e r
P r o f i l e s
f o r
6 7 7
H e l e n a
R u b i n s t e i n
“Product of the Month.” She put out a magazine for her salesgirls and had them visit the stores regularly. Rubinstein spent approximately one quarter of the year traveling. To rescue her marriage, she tried to slow down her pace by selling her American business to a Wall Street firm, Lehman Bros. A year later, after they brought out a cheap line to sell in drug stores, she bought it back. The stock market had just crashed in October 1929, and Rubinstein made a $5.8 million profit. Between 1927 and 1930 Rubinstein opened salons in Vienna, Toronto, and Rome. Some competitors gave up during the difficult Depression years, but the Rubinstein business survived. Finally, in early 1937, she opened her most prestigious salon: a seven-story building at 715 Fifth Avenue in New York City. The rooftop library with rare books on beauty, the miniature doll museum, and the unique “Day of Beauty” program for $35 to $150, contributed to its success. Continually enlarging its product range, the Rubinstein business distributed 160 different products to 3,000 retailers by 1939. During World War II, Rubinstein employed Polish people who were able to escape to the United States, and developed makeup for disfigured soldiers, rose wages after a strike in her plant on Long Island, and sold her lipsticks in cardboard containers because of metal shortages. Surpassed by aggressive competitor Revlon, her sales volume nonetheless rose from $13 million after the war to $23 million in 1956 and $42 million in 1965. Rubinstein took more and more members of her family into the business, but she never really retired. In her last years, she often conducted business meetings from her bed. She visited her office for the last time just two days before she died at ninety-four years of age on April 1, 1965.
Social and Economic Impact Helena Rubinstein was among the pioneers in modern beauty culture, creating a huge market for the multimillion dollar cosmetics industry. Helena Rubinstein, Inc. grew into a cosmetics empire with factories, laboratories, flower plantations, and salons in fourteen countries, which in the mid sixties employed 32,000 people around the world. The Helena Rubinstein product line was still on the market in 1998. Rubinstein foresaw the huge amount of money women would spend on beauty products, and provided a solid product line that oiled, moisturized, tanned, and colored the cheeks of women around the world. In 1941, during World War II, American women spent over $517 million on powder, lipstick, perfume, and cold cream; at the time of her death they spent $7 billion annually. In 1959, Helena Rubinstein officially represented the United States cosmetics industry at the American National Exhibition in Moscow.
6 7 8
B u s i n e s s
A remarkable innovator, Rubinstein introduced tinted face powder and foundation, she developed the idea of the health farm for beauty, her line of men’s cosmetics was one of the first in the world, and she trained her salesgirls to teach women the basics of skin care. Other innovations were massage and dieting for beauty and the “Day of Beauty,” in which clients at her salons underwent eight hours of reconditioning. In the late thirties, Rubinstein created hormonal skin creams, but with her advertising, claiming the creams would rebuild skin cells, caused runins with the Food and Drug Administration (FDA). She modified her wording, but continued her research on age retardants, and “Ultrafeminine” became the first beauty product that was approved as a drug by the FDA. In the fifties, Rubinstein first marketed “Mascaramatic”, the mechanical mascara applicator, and sold over two million in the first year. She designed self-care evening classes for young working women and participated in beauty therapy programs for the physically and mentally ill. Rubinstein also understood that cosmetics were not only sold for skin-care. She offered status by selling women world-wide the illusion of wealth and glamour that she cleverly built into her products, using the force of advertising, and promoting herself as a woman of supreme glamour. She opened her New York penthouse to the public for charitable benefits, tours, and journalists. She loved unusual promotional techniques, striking motifs, and creative packaging. To introduce the new perfume Heaven Sent, for example, she rained down five hundred little baskets with angel-shaped bottles, attached to blue and pink balloons, onto New York’s Fifth Avenue. It is estimated that Rubinstein earned $25 million from her business which made her one of the richest women in the world. She acquired five houses in Europe and the United States. Later, Rubinstein donated money to the new State of Israel after World War II, and founded the Helena Rubinstein Pavilion of Contemporary Art in Tel Aviv where her exquisite collection of miniature rooms is housed. In 1953, she created the Helena Rubinstein Foundation to fund organizations concerned with health, medical research, and rehabilitation facilities for children. It also supported the America-Israel Cultural Foundation, and provided scholarships for Israelis. Rubinstein’s jewelry collection, valued at more than one million dollars in 1943, contained pieces that once belonged to empress Catherine of Russia. In 1964, three burglars entered Rubinstein’s Manhattan apartment and demanded her jewelry collection. Over ninety years old, Rubinstein refused, saying they could shoot her. Unnerved, the robbers left with only $200 in cash.
Sources of Information Bibliography “Beautician’s Booty.” Time, 29 April 1966. “Beauty Merchant.” Time, 9 April 1965.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
H e l e n a
Contemporary Authors. Detroit: Gale Research, 1985 Current Biography Yearbook. New York: H.W. Wilson Co., 1943. Fabe, Maxene. Beauty Millionaire. New York: Crowell, 1972. Fucini, Joseph J., and Suzy Fucini. Entrepreneurs. Boston: G.K. Hall & Co., 1985. James, T.F. “Princess of the Beauty Business.” Cosmopolitan, June 1959. Leavitt, Judith A. American Women Managers and Administrators. Westport, CT: Greenwood Press, 1985.
L e a d e r
“Madame Rubinstein, the Little Lady from Krakow.” Life, 21 July 1941 Rubinstein, Helena. My Life for Beauty. New York: Simon and Schuster, 1966. Sicherman, Barbara, and Carol Hurd Green, eds. Notable American Women, The Modern Period. Cambridge: Harvard University Press, Belknap Press, 1980. “Tiny, Tireless Tycoon of Beauty.” Life, 15 May 1964. Who Was Who in America. Chicago: Marquis Who’s Who, 1968. Zilboorg, Caroline. Women’s Firsts. Detroit: Gale Research, 1997
“Madame.” Newsweek, 12 April 1965.
B u s i n e s s
R u b i n s t e i n
P r o f i l e s
f o r
S t u d e n t s
6 7 9
Margaret Rudkin (1897-1967) Pepperidge Farm Inc.
Overview Margaret Rudkin achieved acclaim as one of America’s most successful female entrepreneurs, during an era when being a housewife was considered the appropriate goal of a woman. Her concern for her son’s health prompted this already wealthy housewife to begin baking her own “health bread,” and within 10 years her Pepperidge Farm ovens were producing thousands of loaves a day at a baking facility she designed herself. Her business was later acquired by the Campbell Soup Company, which further expanded the successful brand of baked goods Rudkin had developed.
Personal Life Margaret “Peggy” Rudkin was born Margaret Fogarty on 14 September 1897 in New York City, one of five children born to Joseph and Margaret Fogarty. Her father drove a truck, and the family lived with their grandmother until Margaret was 12, when her grandmother died. The family then moved to Flushing, New York, where Rudkin later graduated from Flushing’s City High School as class valedictorian in 1915. Following graduation she went to work as a bookkeeper in a bank in Flushing and eventually became a bank teller. At age 22, Rudkin began working on Wall Street at the brokerage firm of McClure, Jones & Co. There, she became a customer representative, helping people understand their investment choices more clearly. She met her husband, Henry Albert Rudkin, at the brokerage house, where he was one of the firm’s partners. They
6 8 0
M a r g a r e t
R u d k i n
were wed on April 8 1923 and made their home in New York City. The first years of the Rudkins’ marriage were prosperous. They had three sons, and in 1928 they decided to build a house in nearby Fairfield, Connecticut, where they had purchased 125 acres of land. The farm became their permanent home in 1931. The Rudkins named their large Tudor-style house and the surrounding acreage “Pepperidge Farm,” after an old pepperidge, or black gum, tree that was on the property. At this time Henry Rudkin sustained a serious injury while playing polo and their activities afterward became more limited. In 1937, Rudkin’s youngest son, John, was diagnosed with asthma. The allergist said the additives in store-bought foods were probably aggravating the condition. Hearing this, Rudkin began to make all of her son’s food from scratch, including bread. Having never baked bread before, Rudkin used a recipe from her grandmother’s cookbook. The recipe called for butter, whole milk, honey and whole wheat flour, which Rudkin ground herself. Her son’s health improved so much that the allergist requested she bake more loaves for his other asthma patients. At this point, Rudkin started to bake in earnest and began to think of baking as an occupation rather than as a component of her son’s health regime. From this time on, Rudkin, together with her husband and children, pursued the business. In later years the Rudkins divided their time between homes in Hobe Sound, Florida, and County Carlow, Ireland. Henry Rudkin died in 1966, and a year later Rudkin herself died of cancer in New Haven, Connecticut, at the age of 69.
Career Details Beginning in 1937, after her son’s allergist asked her to provide him with some of the “health bread” she had made for her son, Rudkin began to explore the wider sales potential of her bread. She began by making bread for the upscale New York City market and before long her husband was delivering 24 loaves of bread a day to Charles & Co., a specialty food company in Manhattan. By the end of her first year of baking, using ovens installed in one of the abandoned horse stables on their property, Rudkin was making and selling 4,000 loaves a week, though the price was more than twice the price of a regular loaf of bread. People seemed drawn to the “old fashioned,” homemade, and healthy image of Pepperidge Farm bread. By 1940, Rudkin moved the bakery to a larger facility in Norwalk, Connecticut, making 50,000 loaves a week. All this time, she was maintaining the high quality of all the ingredients. By 1947, launching a new bakery designed to Rudkin’s own specifications, the Pepperidge Farm Co. was producing 4,000 loaves of bread per hour.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Margaret Rudkin.
(Courtesy of Pepperidge Farm, Inc.)
Growth and maintaining quality while expanding were Rudkin’s main concerns. Her husband retired from Wall Street in 1949 and took over the financial side of the company, while she managed the production and personnel. By this time, there were three bakeries: one in Connecticut, one near Chicago, and one near Philadelphia. Rudkin maintained quality control despite the massive expansion. Pepperidge Farm bread was not to be sold after two days on the shelf, and the bread, when it was returned, was recycled into poultry stuffing at a good profit. The 1950s were a boom decade for Pepperidge Farm under Rudkin’s management. She employed over 1,000 workers. By 1956, she introduced cookies that were “healthy,” and in 1958 frozen pastries made their debut. By this time, Pepperidge Farm, within 15 years of its start, was a brand name recognized nationally and was to be found in virtually every market. Among the growing list of products offered by the company during this period were rolls, coffee cake, Melba toast, stuffing, and Goldfish cocktail crackers. By 1960, when Rudkin was 63, she and her husband decided to sell the Pepperidge Farm company to the Campbell Soup Company for $28 million in Campbell stock. However, the Rudkins kept a controlling interest in Pepperidge Farm itself, and for the next decade the company was run as an independent subsidiary of Campbell. During the final years of her life, Rudkin appeared in television commercials for Pepperidge Farm products
S t u d e n t s
6 8 1
M a r g a r e t
R u d k i n
Chronology: Margaret Rudkin 1897: Born. 1923: Married Henry Albert Rudkin on April 8. 1928: Bought 125-acre Pepperidge Farm in Fairfield, Connecticut. 1937: Began baking homemade bread in response to her son’s health problems. 1940: Moved bakery to a larger facility in Norwalk, Connecticut. 1955: Received Distinguished Award to Industry by the Women’s International Exposition, Women’s National Institute. 1960: Sold the company to Campbell Soup Company.
In the closing decades of the twentieth century, Rudkin’s legacy continued in the popularity of Pepperidge Farm products offered by the Campbell Soup Company, including garlic bread, gourmet cookies, fat-free croutons, stuffing, puff pastry, and Goldfish crackers. According to the 1997 Campbell annual report, the Pepperidge Farm line was considered one of the “jewels in [Campbell’s] portfolio, delivering outstanding, doubledigit sales growth.” The report further stated that “a third of all American households with children now eat Goldfish” and singled out “Milano” as “the consumers’ favorite Pepperidge Farm cookie.” Rudkin’s managerial style allowed company growth in response to consumer demand while retaining quality control of Pepperidge Farm products as the production facilities grew. Rudkin made the name Pepperidge Farm a household word, largely by making an honest, high-quality product, and by not compromising quality to reduce price. She also succeeded in selling, with her bread, the idea of the store-bought “homemade” product. She did this just as fewer people were eating truly homemade foods in the 1940s and 1950s and as more and more American foodstuff became commercially mass-produced.
1963: Published Pepperidge Farm cookbook. 1967: Died in New Haven.
Sources of Information and authored a cookbook in 1963. She also became a part-time public speaker as a kind of hobby.
Social and Economic Impact
Bibliography
Rudkin was clearly one of the most successful and nationally prominent businesswomen of her generation, a woman who started baking bread for her son and ended by making products with wide appeal among national consumers. During the 1950s and 1960s, when the Pepperidge Farm product line was at the height of its popularity, it is likely that the “homemade” quality of the products was the most appealing feature to the American woman shopper, who was likely making less bread herself.
6 8 2
Contact at: Pepperidge Farm Inc. Campbell Pl. Camden, NJ 08103-1799 Business Phone: (609)342-4800 URL: http://www.pepperidgefarm.com
B u s i n e s s
Brendan, Gill. “Better Late than Never.” Sales & Marketing Management, September 1996. “Biscuits and Confectionery.” Campbell Soup Annual Report, 1997. Available from http://www.pepperidgefarm.com/financialcenter/1997AR/pages/bis_conf.html. “Rudkin, Margaret.” Dictionary of American Biography. New York: Scribner’s, 1988. Rudkin, Margaret. The Pepperidge Farm Cookbook. New York: Grosset & Dunlap, 1965.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
David Sarnoff Overview David Sarnoff, who is commonly regarded as the “father of television,” began his career as a Russian immigrant working as a messenger for a telegraph company. He conceived the idea of “radio music boxes,” predicting they would become household items. He also predicted the advent of television and fostered its technical development. He himself was broadcast from the 1939 World’s Fair in one of the first televised pictures announcing that the National Broadcasting Company (NBC) would begin daily programming. He went on to build the Radio Corporation of America (RCA), which owned NBC at that time, into a worldwide conglomerate, retiring in 1966.
(1891-1971) National Broadcasting Company, (NBC)
Personal Life David Sarnoff was born in Uzlian, Russia, on February 27, 1891, to parents Abraham and Lena (Privin) Sarnoff. The family emigrated to the United States in 1900 and settled in New York City. Before the family came to the United States, Sarnoff had studied to become a Jewish scholar. Once they arrived in America, however, he found it necessary to take odd jobs, such as selling newspapers, in addition to school in order to help support the family. Sarnoff eventually left school and devoted his talents to the emerging broadcasting industry. While working for the Commercial Cable Company as a teenager, he developed interest in telegraphy
6 8 3
D a v i d
S a r n o f f
pionship fight, the RCA company began manufacturing sets to receive radio signals. Within three years, $83 million worth of sets had been sold. In 1926, under Sarnoff’s guidance, the National Broadcasting Company was formed to pursue possibilities of the medium. Sarnoff was named president of RCA in 1930. During the 1930s, Sarnoff was responsible for creation of many popular cultural programs and established the NBC Orchestra led by Arturo Toscanini, one of the highest-regarded conductors of the 20th century. He was responsible for the company’s investment and research into the possibility of broadcasting images, which was realized in 1939. The new industry did not really expand, though, until after World War II.
David Sarnoff.
(AP/Wide World Photos, Inc.)
and learned Morse code. In 1907, he joined the Marconi Wireless Telegraph Company and was promoted through the company. At this time, he also studied electrical engineering at the Pratt Institute. He was a wireless operator on ships sailing off the Atlantic Coast and in the Arctic. In 1912, while working in New York City, he received messages from the sinking Titanic passenger ship. He remained on duty for 72 hours reporting news of the disaster. Sarnoff continued to rise in the company and, during World War I, handled contracts for and consulted with the U.S. military. When Marconi became part of the newly organized RCA, Sarnoff was named commercial account manager of the company he would eventually lead for over three decades. David Sarnoff married Parisian-born Lizette Hermant on July 4, 1917, and had three sons: William, Edward, and Thomas. During his career, Sarnoff was honored with dozens of honorary degrees and awards. His civic and philanthropic activities were varied and extensive, including memberships and serving as a Director for over forty organizations. He was an eloquent speaker, and many of his speeches have been reprinted.
Career Details In 1921, after David Sarnoff has demonstrated the possibilities with an account of a Jack Dempsey cham-
6 8 4
B u s i n e s s
Sarnoff joined General Dwight Eisenhower’s staff in 1944, and was responsible for building a broadcasting station that could reach all of his forces. Many of the innovations in television weaponry were advanced by RCA during the war. The company developed and produced airborne and shipborne missiles guided by TV, and many other types of equipment including electronic navigation systems. After the war, Sarnoff was instrumental in restoring communication systems in France. For his service during the war, Sarnoff was named brigadier general and decorated with the Legion of Merit. He was also presented with the Medal of Merit as head of RCA for the company’s contribution to the war effort. During the war, RCA established a unified research center in Princeton, New Jersey, which was renamed in 1951 to honor Sarnoff. When he returned after the war to RCA, he preferred to be addressed as “General.” David Sarnoff was elected chairman of RCA in July 1947. Color television was now a distinct possibility and Sarnoff was a leader in the successful effort for the Federal Communications Commission to approve a compatible system allowing sets to receive both black and white and color signals. The 1950 RCA annual report revealed the company employed 54,000 persons and had a profit of $46 million on revenue of $312 million. The company continued to expand its operations under Sarnoff until it made practically every type of electronic communications device ranging from tiny ferrite cores for computers to huge radar sets for tracking satellites and missiles. By the time Sarnoff resigned as CEO in 1966, RCA was a huge conglomerate involved not only in electronics, radio and television but also sound films, phonograph records, computers and space exploration equipment. Sarnoff also led the company’s expansion into the field of book publishing and auto rentals with the purchase of Random House Publishing and the Hertz Corporation. Sarnoff remained honorary chairman and also continued to serve on the board on NBC. After a severe illness in 1968, Sarnoff no longer had an active role in the company. He died in 1971 in New York City and is buried in an ornate mausoleum in Valhalla, New York.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
D a v i d
S a r n o f f
Social and Economic Impact David Sarnoff had unique and major roles in the development of commercial radio and television as he presided over what was formerly the United States’ preeminent consumer electronics and media company. At his suggestion, RCA invested in radio sets, and later he was responsible for a $60 million research effort on television signals. The research necessary to develop these new technologies also led to innovations in many other industries. In addition, the National Broadcasting Company under his direction initiated the concept of nationwide radio and television networks, which have had a huge impact on daily life in this country. Sarnoff later built RCA into a major United States military supplier and one the largest corporations in the United States. Sarnoff himself held two important patents, one for a secret signaling system and the other for an early warning relay system. The NBC Symphony Orchestra, which, under the direction of the Sarnoff, recruited the celebrated maestro Arturo Toscanini as conductor, is generally regarded as one of the finest orchestras in U.S. musical history. A close associate, Kenneth Bilby, described Sarnoff’s view on management: “his cardinal leadership principle was growth through innovation. Core businesses must be germinated through in-house creation of technology. How often he had said: ‘the heart of RCA is its scientific laboratories.’” As such, Sarnoff’s interest lay in technology rather than entertainment and programming. Commenting on CBS rival William S. Paley’s talent raid on NBC in the late 1940s, Sarnoff remarked “a business built on a few comedians, isn’t a business worth being in.”
Chronology: David Sarnoff 1891: Born. 1915: Submitted proposal to Marconi Company for “radio music box.” 1921: Appointed general manager of RCA. 1926: Launched the National Broadcasting Company (NBC). 1939: Led first public demonstration of television by NBC at World’s Fair. 1944: Promoted to brigadier general and awarded Legion of Merit for service in World War II. 1947: Elected chairman of RCA. 1950: Led efforts to establish color television standards. RCA reported $46 million profit and employed 54,000 persons. 1966: Retired from RCA. 1971: Died in New York City.
Bibliography Contemporary Authors. Detroit: Gale Research, 1985. Current Biography Yearbook, 1951. New York: H.W. Wilson Co., 1951.
Sources of Information
Layman, Richard, ed. American Decades. Detroit: Gale Research, 1994.
Contact at: National Broadcasting Company, (NBC) 30 Rockefeller Plz. New York, NY 10112 Business Phone: (212)664-4444 URL: http://www.nbc.com
B u s i n e s s
L e a d e r
P r o f i l e s
National Cyclopedia of American Biography. New York: James T. White & Co., 1975. Who Was Who in America. Chicago: Marquis Who’s Who, 1973.
f o r
S t u d e n t s
6 8 5
Dorothy Schiff (1903-1989) New York Post
Overview As the owner and publisher of the New York Post newspaper from 1939 to 1976, Dorothy Schiff transcended her reputation as a Manhattan socialite to steer the creaky Post back to a level of profitability it had not seen since its founding by Alexander Hamilton in 1801. Changing the newspaper to tabloid format, and filling its pages with the gossip and scandal of which she was so fond, Schiff was the first woman to publish a major New York newspaper. The New York Post would survive stiff competition to become, in 1967, the only remaining afternoon daily circulated in New York City.
Personal Life Dorothy Schiff was born in New York City on March 11, 1903. The daughter of Mortimer and Adele (Neustadt) Schiff, she benefited from the wealth amassed by her paternal grandfather, Jacob Schiff, who had become a successful investment banker in New Jersey. While she and her brother, John, grew up with all the luxuries that their family’s money could provide, Schiff gained little in the way of family affection due to her parents’ active lives and their estrangement from each other. After attending the Brearley School in New York City, Schiff enrolled at Bryn Mawr, a prestigious women’s college, but was expelled at the end of her freshman year due to poor grades. Finding herself back at the home of her parents in an era when women did not often choose careers over marriage, Schiff wed stockbroker Richard W. Hall in
6 8 6
D o r o t h y
S c h i f f
Dorothy Schiff and pressmen hold newspaper copies from the presses that began to roll on March 4, 1963, after an 86-day hault while bargaining with the International Typographical Union. (AP/Wide World Photos, Inc.)
1923. While the couple would have two children, the marriage was an unhappy one—Schiff later claimed that her husband, an Episcopalian, found her Jewish heritage a social liability. In the early 1930s her parents died and her large inheritance assured her financial security. Shortly thereafter, Schiff and Hall divorced. She then married George Backer, an active liberal Democrat. Through Backer’s social circle Schiff came to know members of the Algonquin Round Table, a colorful group of journalists and writers that included well known figures such as Dorothy Parker. Her marriage to Backer coincided with Schiff’s eventual rise to publisher of the
New York Post and her influential position within New York City.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Career Details In addition to adopting her second husband’s liberal Democratic politics and becoming close friends of both Eleanor and Franklin Roosevelt, Schiff also began investing some of her wealth in communications companies. In 1939, with the encouragement of both her
6 8 7
D o r o t h y
S c h i f f
when their support of opposing presidential candidates finally broke down their working relationship.
Chronology: Dorothy Schiff 1903: Born. 1939: Becomes vice president and treasurer of New York Post. 1942: Becomes co-publisher and co-president of New York Post. 1943: Becomes owner and sole publisher of New York Post. 1951: Begins writing her “Dear Reader” columns for the New York Post. 1963: The New York Post survives a three-month strike and begins the process of automation. 1967: The New York Post becomes the sole afternoon daily circulated in New York City. 1976: Sells the New York Post to Australian newspaper publisher Rupert Murdoch. 1989: Dies in New York City.
husband and President Roosevelt, she became the majority stockholder of the debt riddled New York Post, moving from that position to vice president, director, treasurer, and then publisher and owner of the paper in 1942. When Schiff took over control of the Post from its past publisher, J. David Stern, it had been floundering in a sea of competition for several years; the paper lost $2 million during its first year under Schiff’s ownership. Determined to make the paper profitable, Schiff set about actively managing the Post. While she had little business training or experience, she knew what people wanted to read. Together with features editor Theodore Thackrey, Schiff began to revitalize the paper. Publishing syndicated columns by such noteworthy journalists as Elsa Maxwell, Drew Pearson, and Eleanor Roosevelt, Schiff and Thackrey watched the Post’s circulation soar. Championing Roosevelt’s New Deal policies and supporting the causes of the working classes gained “Dolly” Schiff, as she was known to her staff, a loyal readership. Ultimately, Schiff’s involvement in the paper ruined her marriage to Backer and in 1943 the couple divorced. Schiff quickly remarried, this time to Thackrey, whom she promoted to editor and who would be the third of her four husbands. Their marriage would last until 1948,
6 8 8
B u s i n e s s
In addition to supporting the politics of New York City’s working class, Schiff was determined to appeal to the popular appetite for glamour and gossip. Reworking the Post into a more appealing tabloid format and incorporating the Bronx-based Home News into the Post in 1948, she included more comic strips and human interest stories. Her reports on the city’s upper class society were more than a little scandalous. She also established a foreign bureau and published a Paris edition. While others in the industry questioned her tactics, Schiff proved she had a firm grasp on her readership’s taste; by 1950 the New York Post had shown it could withstand competition, moving into the black to become one of the city’s most read afternoon dailies. Schiff herself contributed a column, “Dear Reader,” to the paper during the 1950s, and added editor-in-chief to her duties at the Post in 1962. While Schiff’s control of the Post continued to drive the paper’s profit margin steadily uphill, she worried constantly about the possibility of losing everything and ending up impoverished. A 114 day newspaper strike in early 1963 sent her into a panic, but the paper managed to hold out and stay in business. In 1965 she began automating the Post newsroom, both as a means of cutting employee overhead and as a means of guarding against future strikes. Throughout her career she remained active in charitable work, donating both time and money to causes for social betterment. In 1976 Schiff surprised everyone, including her own Post staff, by announcing the sale of the successful daily to Australian publishing magnate Rupert Murdoch. In fact, Post reporters were still in the dark at press time and the announcement of the paper’s sale broke to the public the following morning through a rival’s headlines. With a reported sale price of $32 million, the seventythree year old Schiff was able to retire from business, living the remainder of her life in relative seclusion. Diagnosed with cancer in May of 1989, she refused treatment and died three months later, leaving three children and fifteen grandchildren.
Social and Economic Impact As the first woman to head a New York newspaper, Schiff blazed a trail for future generations of businesswomen and journalists. Her savvy, common sense, and perseverance in supporting the Post in the face of opposition from spouses, and ridicule from journalistic competitors, came at a time when women were still expected to have little head for business and to relegate their lives to domestic matters rather than a career. While other papers laid off workers, Schiff managed to keep her paper not only afloat, but sailing ahead at a steady clip. From her beginnings as a New York City socialite, she even-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
D o r o t h y
tually gained the respect of her peers, bringing the New York Post to a golden age during the 1950s and gaining respect for herself as an experienced journalist.
Sources of Information
L e a d e r
Bibliography Annual Obituary 1989, Chicago: St. James Press, 1990. Benjaminson, Peter. Death in the Afternoon: America’s Newspaper Giants Struggle for Survival. Fairway, KS: Andrews, McMeel, 1984. Dictionary of Literary Biography, American Newspaper Publishers, 1950-1990. Detroit: Gale, 1993.
Contact at: New York Post 1114 National Press Bldg. Washington, D.C. 20045 Business Phone: (202)393–1787 URL: http://www.nypostonline.com
B u s i n e s s
S c h i f f
P r o f i l e s
Potter, Jeffrey. Men, Money, and Magic: The Story of Dorothy Schiff. New York: Coward, McCann, 1976. Riley, Sam G., Biographical Dictionary of American Newspaper Columnists. Westport, CT: Greenwood Press, 1995.
f o r
S t u d e n t s
6 8 9
Howard Schultz (1953-) Starbucks Corporation
Overview Howard Schultz is not a household name to most North Americans, but those living in urban or suburban communities know his company: the specialty-coffee retailer Starbucks. In the span of a decade, Starbucks has grown into the largest coffee roaster and retailer of specialty coffee in North America. As the millennium approaches, Schultz’s company is busy establishing its successful, cozy coffee bar formula around the globe; even President Bill Clinton has been photographed with a Starbucks to-go container in his hand. According to the trade journal Chain Store Age Executive, Schultz’s “merging of the three C’s—coffee, commerce, and community—surely ranks as one of the ‘90s greatest retail successes.”
Personal Life Schultz was born in 1953 and grew up in the federally subsidized Canarsie housing project in the Brooklyn borough of New York City. His mother worked as a receptionist, and his father held a variety of jobs, none of which offered decent pay or benefits such as medical coverage for himself or his family. When “Howie” was seven, his father lost his job as a driver for a diaper service when he broke his ankle. Sick pay or even legallymandated disability assistance were luxuries to many in low-paying jobs at the time, and in the ensuing months, the family was literally too poor to put food on the table. It was a memory that Schultz would carry with him into adulthood.
6 9 0
H o w a r d
S c h u l t z
After cutting the ribbon to inaugurate Starbucks’ first store outside of North America, in Tokyo, Howard Schultz waves to the crowd of anxious customers. (AP Photo/Koji Sasahara.)
During his youth Schultz was ashamed of his family’s “working poor” status. He escaped the hot Brooklyn summer one year to attend camp, but would not return when he discovered that it was funded with government money for low-income families. When he began dating, he feared that his girlfriends’ fathers would ask where he lived. He turned to sports as an escape: competitive by nature, he marshaled that drive into succeeding on his high school’s football, baseball, and basketball teams. He was awarded an athletic scholarship to Northern Michigan University, and earned a degree in business administration in 1975 which made him the first person in his family to graduate from college.
When he graduated, Schultz was offered a job with the Xerox Corporation, and was trained as a sales and marketing associate. It was a job at which Schultz naturally excelled, and he spent three years there. Sensing more opportunity in working for a smaller company, he then left the Fortune 500 name to head the U.S. operations of Hammerplast, a Swedish housewares company. After a few years, Schultz noticed that a small Seattle company named “Starbucks” was buying an unusually high number of Hammerplast’s manual cone coffee filters and espresso machines. Intrigued, he flew across the
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Career Details
6 9 1
H o w a r d
S c h u l t z
Schultz left to launch his own chain of coffee providers, which he named Il Giornale, Italian for “the daily.”
Chronology: Howard Schultz 1953: Born. 1975: Earned a BA from Northern Michigan University. 1982: Joined Starbucks as director of marketing. 1986: Opened first Il Giornale store. 1987: Returned to Starbucks as president and CEO. 1988: Opened 12 stores in Chicago. 1992: Took Starbucks to Wall Street in initial public offering (IPO) of stock. 1993: Starbucks opened 100 additional stores. 1997: Starbucks packaged coffees made available in selected grocery stores.
country to investigate, where he found four Starbucks outlets, named after the first mate in the Hermann Melville novel Moby Dick, selling roasted coffee beans and specialty coffee products. Starbucks, however, set itself apart from its few competitors and had quickly gained a cult following by using stronger, more flavorful beans. An arabica bean, Schultz learned that day, yielded the strongest coffee he had ever tasted; by the end of his first cup, he too was a devotee. Schultz set up a meeting with the pair who had founded Starbucks in 1971, Gerald Baldwin and Gordon Bowker, and begged them to hire him as director of marketing. He believed so strongly in their product that he saw great potential for expansion. His enthusiasm made them wary. “After Baldwin called to tell Schultz they were not offering him the marketing director’s job, fearing he’d be disruptive, Schultz pleaded with them to reconsider,” wrote Lee Moriwaki of the Seattle Times. Twenty-four hours later, they called and offered him the post. Thus in 1982 Schultz became director of Starbucks retail operations, which meant a move from New York City to Seattle with his wife Sheri Kersch, an interior designer. Under Schultz, Starbucks expanded its retail presence and catalog sales, but he had an even greater vision. On a trip to Italy around 1984, Schultz was moved by the profusion of corner coffee bars in Milan; they seemed to serve as a focal point for the neighborhood much as convenience stores do in America, but were also places where people lingered a bit as well as bought their lottery tickets. Baldwin and Bowker had different plans for expansion, so
6 9 2
B u s i n e s s
The first Il Giornale store opened in Seattle in April of 1986, and is still home to a Starbucks. It was a hit, and within a year he had opened more, but knew he needed much more funding in order to expand and purchase his own roasting facility. In a stroke of good timing, the partners at Starbucks, Baldwin and Bowker, wished to sell their assets. Schultz decided to try to raise the investment money to make the purchase. He pitched his idea to a total of 242 potential investors; 24 were impressed enough with his vision to give him money, but it was a dicey venture for a while. Sheri Kersch Schultz was pregnant at the time, and continued to work to support them. “It was humbling and scary,” Schultz told the Puget Sound Business Journal’s Sather about this makeor-break time in his life. Furthermore, Schultz learned that one of his investors was trying to engineer a coup of sorts to secretly purchase Starbucks, and then make Schultz simply a manager instead of a major shareholder. He met with the turncoat, and “the investor laid out his plan and gave Schultz a takeit-or-leave it ultimatum,” wrote Moriwaki in the Seattle Times-a proposition to which Schultz replied: “It’s my idea.... You’re not taking it away.” He then retreated to the lobby where, overwhelmed, he wept. In the end, it was the verve and dedication that Schultz had displayed to his other investors that saved him: a group of them rallied to raise the money. In 1987, Schultz became president and chief executive officer of Starbucks. The company soon began opening more stores, expanding to other cities in the Pacific Northwest, but it was not just the arabica beans and specialty drinks that made Starbucks a success, it was the enthusiasm and professionalism of its employees. From the start, the hiring and personnel practices that Schultz implemented were almost radical: he trained them intensively, and paid them a far higher wage than the average hourly food-service worker. It was a reasoning described by Chain Store Age Executive as “treat your employees well and that is how they will treat your customers.” A competitor in the coffee industry, Larry Mindel, told Nation’s Restaurant News that “the real secret of Howard’s success is that he put together an infrastructure of professional people who make every one of those stores operate like a Swiss watch.” Starbucks had become a major presence in Seattle, Chicago, Washington, D.C., all of California, and most American cities by the early 1990s. It even expanded into New York City in 1993, a notoriously difficult market to conquer. The following year Schultz stepped down as president of the company, but remained its chief executive officer and board chair. He did this in part to devote more time to other projects that the company became involved in, such as Cucina Cucina, a chain of Italian restaurants, and the Fresh Fields gourmet health-food supermarkets. By 1997, Starbucks had over 1,300 outlets in North America, stores in Japan, Hawaii, and Singa-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
H o w a r d
pore, and served 5 million customers in an average week. Annual sales were expected to reach $1 billion before the end of 1998.
Social and Economic Impact Starbucks employees, about two-thirds of whom are part-time, receive full medical, dental, and even optical insurance for working at least 20 hours a week. This generous employee benefit program, in an era when most companies prefer to hire only part-time workers so that they can skirt regulations requiring them to offer such benefits to full-timers, is a direct result of Schultz’s own hardscrabble childhood. “I watched my dad’s self-esteem fracture and I watched his self-respect fracture,” Schultz told Puget Sound Business Journal writer Jeanne Sather. “It had a lot to do with how he was treated in the workplace as a blue-collar worker.” Schultz also implemented “Bean Stock,” Starbucks’ stock option plan. Once a year, the company awards between ten and fourteen percent of an employee’s base salary in stock. The stock, however, is not fully transferable to employees until they have been with the company for five years, which gives many a great incentive to stay on board. When the company’s stock was first traded on Wall Street in 1992, it sold for $2.25 a share. Six years later, it was trading at over $47 a share. Some longtime Starbucks employees now own property in some of Seattle’s most exclusive areas. “I believe very strongly that the success of our company has been achieved because of the relationship with our people,” Schultz told Sather in the Puget Sound Business Journal. “Bean Stock has meant everything to the growth and success of the company.” The company’s record profits are not just reinvested in employees. Since 1991 Starbucks has also contributed to CARE, the Georgia-based international relief and development organization, and has since become its largest corporate donor. Starbucks stores sell products specifically for CARE, and the proceeds given to CARE are designated to be used in developing countries from which the company purchases its coffee beans, such as Guatemala, Kenya, and Ethiopia. Schultz’s 1997 book Pour Your Heart into It: How Starbucks Built a Company One Cup at a Time, written with Dori Jones Yang, is a corporate history twined with Schultz’s personal and corporate philosophy. Proceeds from the book were donated to literacy programs via the Starbucks Foundation, which was established to fund worthwhile causes. “Success is empty if you arrive at the finish line alone,” he wrote in Pour Your Heart Out. “The more winners you can bring with you—whether they’re employees, customers, shareholders, or readers—the more gratifying the victory.”
S c h u l t z
“Pathfinder” had indeed sent back proof of life on the planet: it had found a Starbucks and a Gap store. Some urban residents have picketed the openings of Starbucks outlets in their neighborhoods, viewing the mermaid logo and its two-dollar-plus coffee drinks as the arrival of the “bourgeois” lifestyle in what was once a formerly mixedincome community. Schultz takes it personally when people poke fun at Starbucks and its ubiquitous presence. “It’s difficult when you try and do good work, try and build the kind of company that I think we’re all proud of, and people for whatever reason don’t like you,” he told Washington Post reporter Margaret Webb Pressler. “It’s emotional.” He reportedly hires protection for his two school-aged children. Schultz plans to take Starbucks to an international level of recognition, becoming a presence in Asia and even Europe by the year 2000. He dedicated his book to the memory of his father, to whom he had once spoken harshly and accused of a lack of ambition. They were words Schultz would regret the rest of his life; his father died of lung cancer before his son became a millionaire. Schultz once told a San Diego audience that his greatest success was that “I got to build the kind of company that my father never got to work for,” according to the San Diego Business Journal.
Sources of Information Contact at: Starbucks Corporation 2203 Airport Way S., PO Box 34067 Seattle, WA 98124-1067 Business Phone: 1-800-STARBUC URL: http://www.starbucks.com
Bibliography Harman, Liz. “Starbucks’ Schultz Reveals How Firm Keeps Perking.” San Diego Business Journal, 29 September 1997. “Howard Schultz.” Chain Store Age Executive with Shopping Center Age, September 1997. Liddle, Alan. “Howard Schultz: Chairman, Chief Executive, Starbucks Corporation, Seattle.” Nation’s Restaurant News, January 1995. Moriwaki, Lee. “Company Was a Hot Idea Worth Crying About.” Seattle Times, 28 August 1997. Newsmakers. 1989 Cumulation. Detroit: Gale, 1990. Nufer, Doug. “Pour Your Heart into It: How Starbucks Built a Company One Cup at a Time.” Nation, 13 October 1997. Pressler, Margaret Webb. “The Brain Behind the Beans: Starbucks’ Schultz Has Drawn Praise, Derision in Building His Coffeehouse Empire.” Washington Post, 5 October 1997. Prinzing, Debra. “ Starbucks: 400,000 Coffee Customers a Week and Counting. Puget Sound Business Journal, 24 June 1991. Sather, Jeanne. “The Schultz house blend: Vision, drive, modesty.” Puget Sound Business Journal, 23 December 1994.
Still, the success of his company set in record time has earned Schultz some barbs. On the Tonight Show in 1997, Jay Leno joked that cameras on the Mars
“Starbucks’ Captain.” Business Journal-Portland, 3 March 1995.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
6 9 3
Richard Schulze (1941-) Best Buy Co., Inc.
Overview Richard M. Schulze revolutionized the marketing of electronics by introducing the superstore concept to the field. He began with a single audio store and expanded it to a nationwide consumer electronics chain, Best Buy. He has continued to reinvent the store’s product line and expand the number of outlets to boost sales. In 1998 Best Buy was the top retailer of consumer electronics in the United States.
Personal Life Schulze was born in 1941 in St. Paul, Minnesota. He attended St. Paul Central High School and then entered the Air Force, where he received extensive training in electronics. After leaving the Air Force, he worked as a consumer electronics salesman, traveling over a fourstate area. In 1966 he founded Sound of Music in St. Paul, a store that specialized in stereos and components. Schulze credits his wife Sandy with the decision to remortgage their house to make his first retailing investments. Sound of Music soon bought out area competitors and expanded into a multi-store chain. In 1983, the company adopted the name Best Buy and subsequently introduced mass-marketing techniques to electronics retailing. Schulze has noted that he studied other discount retailers such as Wal-Mart, Toys ‘R’ Us, Target, and Home Depot in developing Best Buy stores. He remains chairman and chief executive officer of the firm. Schulze is deeply involved in children’s causes, and became even more so after his grandson Taylor was born with a rare form of juvenile cancer. The Best Buy Children’s Foun-
6 9 4
R i c h a r d
S c h u l z e
dation was established in partnership with the Ladies Professional Golf Association, and he is one of the leading fundraisers for the United Way.
Career Details Schulze began his retailing career operating the Sound of Music stores in St. Paul. The small start-up company eventually expanded to nine stores. After a tornado leveled one of their stores, the company held a “Tornado Sale” with a large selection of goods at a single location with low prices and heavy advertising. The sale was successful and the concept stuck with Schulze. So Schulze pioneered an 18,000-square-foot store in 1983 and adopted the name Best Buy. Best Buy was the first electronics superstore, and its name reflected its marketing strategy: whatever the product, it would be inexpensive and a good deal. The superstore concept proved popular with consumers. In its first year, the Best Buy superstore sold more than Schulze’s entire chain had sold the year previous. The company grew to over 40 stores within six years. The marketplace was changing as consumer electronics, especially videocassette recorders, became household items. Always strong on soliciting consumer feedback, Schulze found that most shoppers disliked the pressures associated with salesmen working on a commission basis. Based on such feedback, Schulze took the superstore concept a step further by eliminating sales commissions. The company referred to this new direction as Concept II. With the brand-name selection of a specialty store and a grab-and-go style of merchandising, sales took off. In addition, Schulze added entertainment and computer software titles, music, movies and computer hardware to Best Buy’s offerings. The additional products were important in that they created traffic of repeat visits (normally an electronics consumer would only purchase once or twice year). The first Concept II store opened in Rockford, Illinois, in 1989, encompassing 33,000 square feet. The risks associated with the expansion of the superstore concept paid off. By 1995, revenues had grown tenfold to more than $5 billion. The store count had risen to 155 in 19 states, along with associated distribution facilities and service centers.
Chronology: Richard Schulze 1941: Born. 1968: Opened Sound of Music audio store. 1969: Took Sound of Music public. 1981: Store and inventory partially destroyed by tornado. 1983: Company resurfaced as Best Buy. 1989: Opened first Concept II store. 1990: Store revenues topped $500 million. 1994: Introduced Concept III stores. 1996: Added appliances and gourmet cooking accessories to product mix. 1997: Added 21 new stores for a total of 272 locations.
new stores each required upwards of $3 million of working capital to open. Richard Schulze was again taking risks with his new stores, and Wall Street became intensely focused on his actions. Much of his new financing was arranged through a $230 million offering of convertible preferred securities. The offering proved to be successful, and the company continued to expand in subsequent years. The company ran into some turbulence in the mid1990s, however, when rapidly falling computer prices left it with a large inventory of computers it had paid too much for. This coupled with the high costs of Best Buy’s rapid expansion program ate into corporate profits and caused Schulze to slow the pace of expansion and scale back inventories of less profitable merchandise.
National expansion of Schulze’s Best Buy chain was now underway and the company increasingly went headto-head with its main competitor Circuit City, opening new stores in Circuit City markets. Key to this strategy was a new store layout called Concept III, introduced in 1994 and increasing store sizes to either 45,000 square feet or 58,000 square feet. The goal of the new stores was to get consumers to linger longer and purchase more by making the visit an experience. In his Concept III stores, Schulze installed interactive information kiosks featuring fifteen-minute product videos, plus demonstration areas for video games and computer software. The
Schulze for some time promoted within his company, but in the late 1990s he began to lure senior executives from other companies for the added experience needed to manage the company’s explosive growth. From the beginning, Schulze paid attention to consumer research and his own employees. Schulze, in the book 301 Great Management Ideas, pointed out you can talk to store managers, but you won’t get the whole story. His solution is to take the cashiers to breakfast. He stated, “if you’ve got a problem, go to the last point the customer visits.” He notes that cashiers hear customer complaints and observe how a store runs. He prefers breakfast chats rather than traditional meetings because the relaxed at-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
6 9 5
R i c h a r d
S c h u l z e
mosphere fosters conversation. According to Schulze he gets “absolutely invaluable results.” As chairman and chief executive, Richard Schulze described how he saw his role: “My job has shifted from staying in lock-step with the customer to being in front where the company is going. We have 40,000 employees now, and we want them all to enhance their careers, to grow personally and professionally and to grow in earnings. If that doesn’t happen, we’re not doing our job.”
Social and Economic Impact Through the growth of his Best Buy superstores, Schulze introduced mass-merchandising concepts that have changed the way most Americans buy consumer electronics. The company stores evolved with the marketplace to stay successful, eliminating sales commissions, opening increasingly larger stores and introducing other products, while creating an entertaining shopping experience. The publicly traded company’s stock has risen sharply over the years, and the firm’s moves are closely watched by investors. Analysts who follow Best Buy point to Schulze’s leadership style as well as mar-
6 9 6
B u s i n e s s
ketplace innovations for the company’s growth. Barry Levin, a market analyst, explained, “This is a guy who is always thinking. It’s not so much that he’s a workaholic, but his mind is always running.”
Sources of Information Contact at: Best Buy Co., Inc, 7075 Flying Cloud Dr. Eden Prairie, MN 55344 Business Phone: (612)947-2000 URL: http://www.bestbuy.com
Bibliography “Best Buy: Richard Schulze, Chairman and Chief Executive Officer.” Computer Retail Week, 18 November 1996. Hisey, Pete. “Richard Schulze - Specialty Discounter of the Year.” Discount Store News, 19 September 1994. Schafer, Lee. “Richard Schulze’s Manifest Destiny.” Corporate Report-Minnesota, March 1995. Who’s Who in America. New Providence, NJ: Marquis Who’s Who, 1996.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Charles Schwab Overview After Charles Schwab’s struggling investment firm took part in the Securities and Exchange Commission’s (SEC) 1975 experiment to eliminate fixed rates on securities trades, Charles Schwab and Company became the largest discount brokerage firm in the United States. His brokers were paid salaries rather than commissions, and clients paid fees instead of commissions when they bought and sold stocks and other securities. His company did not provide any research or other information, it simply executed trades. It began to offer mutual funds when they became popular with investors, and by 1996 Schwab and Company was the fifth-largest brokerage firm, with client assets of $195.6 billion. In 1997 Forbes estimated Charles Schwab’s personal net worth to be $1.7 billion.
(1937-) Charles Schwab Corporation
Personal Life Charles Schwab was born in 1937 in Sacramento, California (his actual birthdate has not been published). He was raised in nearby Woodland, a farming community, in upper-middle-class surroundings. His father was a lawyer and district attorney. As a young man Schwab found several ways to make money, from selling walnuts and magazine subscriptions to raising chickens. In 1949 the family moved south to Santa Barbara, California, where Schwab developed a passion for golf. He played on the high school golf team, which was captained by future professional Al Geiberger. As an adult, Schwab had a nine handicap and often played in tournaments, including the Pro-Am at Pebble Beach.
6 9 7
C h a r l e s
S c h w a b
animal park; a three-day music festival that lost $100,000; and several start-up companies that quickly went bankrupt.
Chronology: Charles Schwab 1937: Born. 1961: Received M.B.A. from Stanford University. 1971: Opened investment firm Charles Schwab and Company. 1975: Company became a discount brokerage firm; opened first branch office in Sacramento. 1976: Reached sales of $1.3 million in first year as a discount brokerage; opened second branch office in Los Angeles. 1978: Began automating order processing. 1981: Company acquired by Bank of America. 1987: Bought firm back from Bank of America and took the company public. 1990: Began offering Charles Schwab Company name-brand mutual funds. 1992: Introduced OneSource, which offered customers no-load mutual funds of other companies.
After graduating from high school, Schwab attended Stanford University, where he earned a bachelor’s degree in economics in 1959 and then an M.B.A. in 1961. He went to work for an investment advisory firm in San Francisco, where he spent several years studying growth stocks and market cycles. His research was frequently published in the firm’s newsletter. In the late 1960s he branched out and managed a mutual fund. Schwab has been married twice and has three children from his first marriage and two children from his second marriage. He has been described as a trim 5 feet 9 inches with a full head of hair. His associates call him Chuck and invariably describe him as a nice guy. Schwab was diagnosed with dyslexia, a reading disability, after his son Michael was diagnosed with the same condition in the mid-1980s. Developing other traits to compensate for his reading difficulties, Schwab told Business Week, “I’ve always felt that I have more of an ability to envision, to be able to anticipate where things are going, to conceive a solution to a business problem than people who are more sequential thinkers.” Schwab was not always a successful investor. His failures include Congoland USA, a drive-through wild-
6 9 8
B u s i n e s s
Career Details Schwab opened his investment firm, Charles Schwab and Company, in 1971 with an office in San Francisco. He ran into legal problems with the state of Texas, which prohibited him from taking orders from Texas residents because he was not a registered broker in that state. His legal battles with Texas left him in debt for about $100,000, which he paid off with the help of his uncle, Bill Schwab, who also invested another $100,000 in the brokerage firm. Schwab’s company was only marginally successful until his high school friend, Hugo Quackenbush, suggested he look into discount brokering. At that time the Securities and Exchange Commission (SEC) was reexamining the old fixed-rate system for buying and selling stocks and bonds. Schwab signed up to participate in the SEC’s experimental discount brokerage program, and when the SEC abolished the old system on May 1, 1975, his firm was among the first to offer discounted trading. He pursued this niche even more aggressively when it became clear that the large established brokerages were using the new unregulated trading system to provide lower rates to their large institutional clients and raising the rates for smaller individual investors. Schwab’s company had sales of $1.3 million in its first full year of discounted trading and opened branch offices in Sacramento and Los Angeles. The company expanded rapidly in the 1970s and 1980s, opening branch offices as fast as it could. That set Schwab apart from other discounters, and soon Schwab was one of the first brokerage firms to automate all of its order processing. Another factor that helped to distinguish Schwab from the other discount brokerage firms was its personal touch in advertising. Schwab himself appeared, although at first somewhat reluctantly, in the company’s advertisements, thereby providing a personal link between the firm and its clients. The company’s rapid expansion cut into profits, and Schwab had trouble raising capital to finance his company’s growth. In 1981 he agreed to sell his company to Bank of America in exchange for 2.2 million shares of BoA stock. At the time of the sale, Schwab owned 38 percent of the company, and 20 percent was held by United Financial Corporation, which had paid $4.5 million for its interest. The rest of the company stock was part of an employee stock option plan or belonged to key employees. The company had sales of $41 million, with 40 branch offices, 600 employees, and 220,000 customers. With the backing of Bank of America, Schwab’s company grew in five years to 93 branches, 1.6 million customers, and sales of $308 million. However, his as-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
C h a r l e s
sociation with Bank of America was troubled from the start. The stock he had received quickly dropped in value even before the sale was closed, due to losses incurred by the bank. At the time of the sale the Bank of America stock was selling at $25 a share and was worth $55 million. Within days it was selling for $21 a share. As the stock price fell, Schwab held onto his shares. When he and his wife finally sold most of them in 1985, it was at prices ranging from $14 to $19 a share. Friction developed between Bank of America’s CEO Armacost and Schwab over how Schwab and Company was to expand as well as how the bank should be managed. As part of the sale, Schwab had been given a seat on the Bank of America’s board of directors and headed his own fairly independent board at Schwab and Company. Finally, in 1987 Schwab repurchased his brokerage firm for $230 million. A few weeks later, he took the company public to raise capital to pay down its $200 million debt and finance further expansion. Schwab’s goal was to increase the number of branches to about 120 by the end of the year and expand into London, West Germany, and Japan. By 1990 Schwab had 100 branches worldwide and was the largest discount brokerage firm in the United States. The company had diversified and was offering its own branded mutual funds. In 1992 it introduced OneSource, which offered clients 380 no-load mutual funds from other companies. Schwab was riding the bull market of the 1990s, enjoying 43 percent compound annual growth from 1990 to 1996 in terms of client assets. It was the fifth-largest U.S. brokerage firm (behind Merrill Lynch, Smith Barney, Dean Witter, and PaineWebber) with $195.6 billion in client assets as of February 1996.
S c h w a b
large established funds such as Fidelity and Vanguard by offering his customers no-load mutual funds from other companies. Schwab and Company’s Mutual Fund Marketplace grew at an astounding 61 percent annual rate, growing to $58.3 billion in assets by 1996. Institutional Investor estimated that Schwab had taken away some $34 billion out of the big funds’ pockets. Schwab ranked as the third-largest distributor of mutual funds, after Fidelity and Vanguard, which both perceived Schwab as a competitive threat. Just as Schwab pioneered discount brokering and automated trading, his company has aggressively sought to capture the electronic trading market over the Internet. In early 1997, Wired magazine estimated Schwab owned 47 percent of the electronic brokerage business.
Sources of Information Contact at: Charles Schwab Corporation 101 Montgomery St. San Francisco, CA 94104 Business Phone: (415)627-7000 URL: http://www.schwab.com
Bibliography “CEOs of the Decade.” California Business, May 1990. Ferguson, Tim W. “Do It Yourself: Charles Schwab Has Ridden the Bull Market to a Splendid Present, But Its Future Is in Boomer Retirements.” Forbes, 22 April 1996. Hector, Gary. “Charles Schwab is Feeling Fettered.” Fortune, 20 January 1986. Ingham, John N., and Lynne B. Feldman. Contemporary American Business Leaders. Westport, CT: Greenwood Press, 1990.
Social and Economic Impact As soon as it offered discount trading for a fee rather than a commission, Schwab and Company was perceived as a threat by the established brokerage firms and other members of the financial establishment. After the SEC deregulated securities trading in 1975, the established firms used their newfound freedom to lower rates for their biggest clients while raising them for smaller investors. Schwab, on the other hand, has always focused on the individual investor. He combined the traits of an entrepreneur with those of a crusader. Business Week wrote, “By all accounts, Schwab’s populist sentiments are genuine.” When Schwab began aggressively marketing mutual funds in the early 1990s, he was directly competing with
Lappen, Alyssa A. “Chuck Schwab’s Search for the Next Paradigm.” Institutional Investor, April 1996.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Mitchell, Russell. “Seeing the World through a Different Lens.” Business Week, 19 December 1994. Moreau, Dan. “Charles Schwab Built His Empire with a Simple Idea: Discounted Fees for Small Investors.” Changing Times, October 1990. Schwab, Charles. Charles Schwab’s Guide to Financial Independence. New York: Crown, 1998. Who’s Who in America 1998. New Providence, NJ: Marquis Who’s Who, 1997. “The Wired Index.” Wired, June 1998.
6 9 9
Frederick August Otto Schwarz (1836-1911) F.A.O. Schwarz
Overview It could be said that Frederick A.O. Schwarz, founder of the F.A.O. Schwarz toy store, lived the immigrant fairy tale that most 19th-century newcomers dreamt of when they came to the United States. An entrepreneur who started working at age 14 in his homeland, Schwarz became hugely successful in his adopted country, establishing what would become America’s most famous toy store. The F.A.O. Schwarz name is now instantly recognizable to consumers, who have come to see the chain as a mecca for toy shopping. F.A.O. Schwarz, which specializes in distinctive products attracts both shoppers as well as collectors. The “ultimate toy store,” as the retail outlet has come to be known, has 13 branches throughout the United States. Its flagship stores are located in New York City, San Francisco, Las Vegas, Chicago, and Orlando, Florida. The chain has also installed over 20 “mall-flagship” stores across the country. In all, F.A.O. Schwarz had 38 locations by 1998.
Personal Life Frederick August Otto Schwarz was born in Herford, Westphalia, Germany, on October 18, 1836. He was the son of Frederick and Frederica (Rothe) Schwarz. His father was a jeweler who enjoyed a reputation as an expert goldsmith and silversmith. As a boy, Schwarz was educated in a Westphalia school. For him, higher education meant active involvement in the business world at a young age. When he turned 14, he secured an apprenticeship with one of the
7 0 0
F r e d e r i c k
A u g u s t
O t t o
S c h w a r z
city’s leading merchants. He remained apprenticed to the merchant for four years. From this experience he received a broad business training that would benefit him when he eventually moved to the United States. Schwarz was just 20 years old when he embarked from his homeland to America in 1856. He made the sea voyage in a sailing vessel, a trip which lasted over two months. Once in America, he located himself in Baltimore, Maryland. His two older brothers had already settled in that city and had become successful importers of toys and fancy goods. Schwarz married Caroline, on March 12, 1862, in New York City. They had six children, three sons and three daughters. Throughout his life, he traveled to Europe, which was then the most important toy-producing region, each year in order to do business. He died on May 17, 1911 in New York City.
Career Details Schwarz graduated to the next step in his personal education when his brothers took him on as an employee with the intentions of making him a partner. He worked for the brothers, also as an importer, for six years before they admitted him into a partnership in 1862. Eight years later, in 1870, Schwarz finally went into business for himself. He relocated to New York City and, using his own money, he opened the Schwarz toy bazaar. Schwarz was aided in this enterprise by his experience working for his brothers. His brothers, who had contacts with the best toy sources in Europe, continued to help him and his business prospered. The store was located at 765 Broadway, where Schwarz remained for nine years. That location allowed the business to continue to grow, as it was in the center of one of the city’s most fashionable shopping districts. The first F.A.O. Schwarz catalog was published in 1876. The catalog would become one of the store’s merchandising staples.
Frederick Otto August Schwartz.
(AP/Wide World
Photos, Inc.)
himself when the company introduced its first catalog in 1876. Legend has it that in 1875 Schwarz used the first live dressed-up Santa Claus to ever be used to promote seasonal sales. Schwarz was involved in other business adventures during his lifetime. He was one of the founders of the Astor Place Bank and the Fourteenth Street Bank, both located in New York City. He became director of both institutions. He would later serve on the advisory board of the Astor Place Bank.
F.A.O. Schwarz has been noted not only for the quality and uniqueness of the store’s merchandise, but for the way in which the merchandise has been promoted. The advertising success of the company began with Schwarz
The company continued to thrive after Schwarz’s death in 1911. By the 1980s, though, the company suffered a period of stagnation and faced competition from chain stores such as Toys ‘R’ Us. F.A.O. Schwarz CEO and president Peter Harris returned to the old Schwarz philosophy of magic displays and special merchandise. In an effort to revive the entertaining environment that the store had been known for, Harris installed 100 thematic boutiques throughout the New York store. Branch stores also received new looks in an attempt to restore the enchantment customers once experienced in a Schwarz store. The stores also returned to emphasizing specialty toys, producing a collectibles catalog along with the regular catalog. Today, many visit the F.A.O. Schwarz stores to view and interact with the stores’ displays, including the giant pinball track and xylophone bridge at the Chicago location. As did the original store, today’s stores sell many exclusive products, maintaining a toy hotline that customers can call to gain assistance in finding older
B u s i n e s s
S t u d e n t s
Schwarz then moved the business to 42 East 14th Street. In this location, he became the largest toy dealer in the world. He moved the business once again, in 1897, to 39 and 41 West 23rd Street, where his toy store occupied an entire seven-floor building and sat atop a basement that stretched an entire city block. New competition emerged when New York department stores began selling toys. In 1875 Macy opened the first toy section of a department store, and in the mid1880s both Ward’s and Sears and Roebuck began featuring dolls in their catalogs. None of these efforts seemed to hurt Schwarz, however. By 1908, Schwarz offered 16,000 items in his giant store.
L e a d e r
P r o f i l e s
f o r
7 0 1
F r e d e r i c k
A u g u s t
O t t o
S c h w a r z
Chronology: Frederick August Otto Schwarz 1836: Born. 1850: Began business apprenticeship. 1856: Immigrated to America. 1862: Became partner in his brothers’ Baltimore Business. 1870: Opened own toy store in New York City. 1876: Published first F.A.O. Schwarz catalog. 1879: Moved his store to East 14th Street and became largest toy dealer in the world.
For much of its existence, the store that Frederick Otto August Schwarz built has enjoyed a reputation as one of the finest toy dealers in the world and as the top toy seller in America. Distinctive product and store design, attention to service, exclusive merchandise and an interactive display approach all combined to elevate F.A.O. Schwarz above the competition in both the hearts and minds of customers, whether they were an average consumer or a toy connoisseur. The store has occupied a unique niche since it opened, operating with a flamboyant flair that makes the stores as much tourist attractions as retail outlets. Heading into the next century, F.A.O. Schwarz still has a reputation of offering the newest and most unusual toys of highest quality. At least 30 percent of its inventory cannot be found in any other toy store. And much of the rest of its inventory is hard to find in other merchandise outlets. Following the lead of their founder, toy buyers for F.A.O. Schwarz still seek out the most unique toys made by toy makers around the world.
1897: Moved store to 23rd Street.
Sources of Information
1911: Died.
or more unusual toys. The mail-order service that has always been a part of the F.A.O. Schwarz tradition continues today through catalogs and through online shopping possibilities available through the company’s web site.
Contact at: F.A.O. Schwarz 767 Fifth Ave. New York, NY 10001-0112 Business Phone: (212)644-9400 URL: http://www.faoschwarz.com
Bibliography “At F.A.O. Schwarz, Now Even the Window Interacts.” Chain Store Executives with Shopping Center Age, May 1995. Charles, Lisa. “For Kids Who Have It All: Minks and Cars.” Newsweek, 2 November 1987.
Social and Economic Impact
Dunkin, Amy. Business Week, 21 April 1986
F.A.O. Schwarz, a privately held company that does not partner with any outside organizations, has managed to endure for more than a century. This could be attributed to both respect for tradition, hearkening back to Schwarz’ own approach, and a willingness to look ahead. Recent management has sought to keep one eye directed at the past and one toward the future, wide open to accept technological advancement and the opportunity it presents. Today, F.A.O. Schwarz is owned by KBB, a large Dutch retail group.
7 0 2
B u s i n e s s
“FAO Schwarz Performs a Miracle in Chicago.” Playthings, February 1993. F.A.O. Schwarz. “About F.A.O.” 1998. Available from http:// www.faoschwarz.com. Scross, Gary. Kids’ Stuff: Toys and the Changing World of American Childhood. Cambridge, MA: Harvard University Press, 1997. Stern, Sydney Ladensohn, and Ted Schoenhaus. Toyland: The High-Stakes Game of the Toy Industry. Chicago: Contemporary Books, Inc., 1990.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Richard Sears Overview Along with his partner A.C. Roebuck, Richard Warren Sears founded the first large-scale mail-order business and one of the world’s largest retail stores. The company’s extensive catalog eventually became a fixture in American homes and changed the way people shopped. It also helped foster the growth of the mail-order industry worldwide.
(1863-1914) Sears, Roebuck and Company
Personal Life Richard Sears was born on December 7, 1863, in Stewartville, Minnesota. He was the son of Eliza A. Benton and James Warren Sears, a successful wagonmaker. When Richard was 15, his father lost his substantial fortune in a stock farm venture; he died two years later. Young Richard then took a job in the general offices of the Minneapolis and St. Paul Railroad to help support his widowed mother and his sisters. Once he had qualified as a station agent, Sears asked to be transferred to a smaller town in the belief that he could do better there financially than in the big city. Eventually he was made station agent in Redwood Falls, Minnesota. There he took advantage of whatever selling opportunities came his way, using his experience with railroad shipping and telegraph communications to develop his idea for a mail-order business. In 1895, Sears married Anna Lydia Mechstroth of Minneapolis. They had two daughters and two sons. Sears retired from business in 1909 and lived his remaining years on his farm north of Chicago. He died on September 28, 1914.
7 0 3
R i c h a r d
S e a r s
preneur. Hoping to expand his market, Sears advertised his watches in national magazines and newspapers. With low costs and growing customer base, he made enough money in his first year to move to Chicago and publish a catalog of his goods. Once in Chicago, Sears hired Alvah C. Roebuck to fix watches that had been returned to the company for adjustments or repairs. Soon the men became business partners and started handling jewelry as well as watches. A master salesman, Sears developed a number of notable advertising and promotional schemes, including the popular and lucrative “club plan.” According to the rules of the club, 38 men paid a dollar a week into a pool and chose a winner each week by lot. Thus, at the end of 38 weeks, each man in the club had his own new watch. Such strategies boosted revenues so much that by 1889, Sears sold the business for $70,000 and moved to Iowa to become a banker.
Richard W. Sears.
(AP/Wide World Photos, Inc.)
Career Details The man who was known as the “P.T. Barnum of merchandising” had a humble and unremarkable start in business. As a railroad station agent in a small Minnesota town, he lived modestly, sleeping in a loft right at the station and doing chores to pay for his room and board. Since his official duties were not all that time consuming, Sears soon began to look for other ways to make money after working hours. He ended up selling coal and lumber and also shipped venison purchased from Indian tribes. In 1886, an unexpected opportunity came his way when a jeweler in town refused to accept a shipment of watches on which no rail freight charges had been paid. Rather than having the railroad pay to return the shipment, Sears obtained permission to dispose of the watches himself. He then offered them to other station agents for $14 each, pointing out that they could resell the watches for a tidy profit. The strategy worked, and before long Sears was buying more watches to sustain a flourishing business. Within just a few months after he began advertising in St. Paul, he quit his railroad job and set up a mail-order business in Minneapolis that he named the R.W. Sears Watch Company. Offering goods by mail rather than in a retail store had the advantage of low operating costs. Sears had no employees and was able to rent a small office for just $10 a month. His desk was a kitchen table, and he sat on a chair he had bought for 50 cents. But the shabby surroundings did not discourage the energetic young entre-
7 0 4
B u s i n e s s
Sears soon grew bored with country life, however, and before long he had started a new mail-order business featuring watches and jewelry. Because he had agreed not to compete in the same business in the Chicago market for a period of three years after selling his company, he established his new enterprise in Minneapolis. Once again he hired Roebuck, and this time he dubbed the product of their partnership A.C. Roebuck and Company. In 1893, Sears moved the business to Chicago and renamed it Sears, Roebuck and Company. Once established in Chicago, the company grew rapidly. The first edition of the Sears catalog published in the mid-1880s had included a list of only 25 watches. By 1892, however, it had expanded to 140 pages and offered “everything from wagons to baby carriages, shotguns to saddles.” Sales soared to nearly $280,000. A mere two years later, the catalog contained 507 pages worth of merchandise that average Americans could afford. Orders poured in steadily, and the customer base continued to grow. By 1900, the number of Sears catalogs in circulation reached 853,000. Sears was the architect of numerous innovative selling strategies that contributed to his company’s development. In addition to his club plan, for instance, he came up with what was known as the “Iowazation” project. This famous undertaking had the company ask each of its best customers in Iowa to distribute two dozen Sears catalogs. These customers would then receive premiums based on the amount of merchandise ordered by those to whom they had distributed the catalogs. The scheme proved to be spectacularly successful and ended up being used in other states, too. Such tremendous growth led to problems, however. While Sears was a brilliant marketer (he wrote all of the catalog material), he lacked solid organizational and management skills. He frequently offered merchandise in the catalog that he did not have available for shipment, and after the orders came in he had to scramble to find the means to fill them. Workdays were frequently 16
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
R i c h a r d
hours long; the partners themselves toiled seven days a week. Fulfilling orders accurately and efficiently also posed a challenge. One customer wrote, “For heaven’s sake, quit sending me sewing machines. Every time I go to the station I find another one. You have shipped me five already.” Exhausted by the strain of dealing with these concerns, Roebuck sold his interest in the company to Sears in 1895 for $25,000. With his partner out of the picture, Sears badly needed a manager. He eventually found one in Aaron Nussbaum, who bought into the company with his brother-in-law, Julius Rosenwald. By 1895, Sears, Roebuck was grossing almost $800,000 a year. Five years later, that figure had shot up to $11 million, surpassing sales at Montgomery Ward, a mail-order company that had been founded back in 1872. In 1901, Sears and Rosenwald bought out Nussbaum, who didn’t get along with Sears, for $1.25 million. According to John Steele Gordon in an article published in American Heritage, it was Rosenwald, not Sears, who transformed Sears, Roebuck “from a shapeless, inefficient, rapidly expanding corporate mess into the retailing titan of much of the twentieth century.” He streamlined the system by which orders were processed, employing a color-coding scheme to track them and an assembly-line method of filling them. These efficient new techniques enabled the company to meet the challenge of handling an ever-increasing number of orders. By 1906, for example, Sears, Roebuck was averaging 20,000 orders a day. During the Christmas season, that jumped to 100,000 orders a day. That year, the company moved into a brand-new facility with more than 3 million square feet of floor space. At the time, it was the largest business building in the world. In 1909, Sears resigned as president of the company he had founded. His health was poor, and many of his extravagant promotional schemes had begun to run into opposition from his fellow executives, including Rosenwald. Retiring to his farm north of Chicago, he turned the company over to his partner. At the time of his death in 1914, Sears left behind an estate of $25 million and an enduring legacy of success in the highly competitive world of retailing.
Social and Economic Impact Richard Sears had a genius for marketing and exploited new technologies to reach customers nationwide via mail-order. At first he targeted rural areas, where people had few retail options and appreciated the convenience of being able to shop from their homes. He made use of the telegraph as well as the mails for ordering and communicating and relied on the country’s expanding rail freight system to deliver goods quickly. Passage of the Rural Free Delivery Act made servicing remote farms and villages even easier and less expensive.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S e a r s
Chronology: Richard Sears 1863: Born. 1880: Went to work for Minneapolis and St. Paul Railroad. 1886: Founded R.W. Sears Watch Company. 1889: Founded A.C. Roebuck and Company. 1893: Moved business to Chicago and renamed it Sears, Roebuck and Company. 1895: Julius Rosenwald joined company as manager. 1900: Distributed more than 850,000 Sears mail-order catalogs. 1905: Implemented “Iowazation” project to boost sales in rural areas. 1909: Retired to farm north of Chicago. 1914: Died.
However, the rapid growth of the mail-order business dominated by Sears, Roebuck had a negative impact on smaller retailers. Unable to compete with both the industry giant and its main competitor, Montgomery Ward, some merchants angrily began referring to the company as “Rears and Soreback” or “Shears and Rawbuck.” They steadily lost customers to Sears’ lower prices, wider selection, and aggressive promotional campaigns. But as residents of rural areas found themselves able to purchase the kinds of goods that had once been available only in big cities, they came to feel a greater sense of social connection with the rest of the country. Skyrocketing sales could not be maintained without sound business practices, however. Sears offered fixed prices and money-back guarantees as well as a liberal adjustment policy. These standards assured customers that they would be treated fairly and that Sears, Roebuck merchandise was of good quality. Such practices eventually forced other retailers to improve their relations with customers or risk losing them to Sears, Roebuck. Sears’ ability to understand and communicate with his customers was perhaps his most remarkable quality. According to an essay in Webster’s American Biographies, his catalog copy “was liberally sprinkled with adjectives and was ‘folksy’ enough to be readable as popular fare.” Gordon noted that “Sears had a deep, intuitive
S t u d e n t s
7 0 5
R i c h a r d
S e a r s
feel for the commercial needs and aspirations of the people of rural America, and a genius for writing catalog and advertising copy that awakened those needs and aspirations.” To be sure, sometimes his descriptions exaggerated the facts, which occasionally led to customer dissatisfaction and merchandise returns. (On that subject, Sears is reported to have said that “honesty is the best policy; I know because I’ve tried it both ways.”) By 1970, the Sears catalog boasted a circulation of 50 million, making it the second most popular publication in U.S. homes after the Bible.
the United States and large-scale operations overseas. While company headquarters are now located in suburban Chicago rather than in the city itself, downtown is home to the impressive Sears Tower. At 110 stories, it is one of the tallest buildings in the world and a fitting testament to an entrepreneur who revolutionized the American retail business.
So profound was Sears, Roebuck’s influence in America that Senator Gene Talmadge was once prompted to joke that the typical Georgia farmer had only three friends in the world—Jesus, Sears, Roebuck, and Senator Talmadge himself. And President Franklin D. Roosevelt humorously suggested the best way to prove America’s superiority to the Soviet Union would be to bomb the country with Sears catalogs.
Contact at: Sears, Roebuck and Company 3333 Beverly Rd. Hoffman Estates, IL 60179 Business Phone: (847)286-2500 URL: http://www.sears.com
Although it ceased its catalog operations in 1993, Sears continues to be a leading retailer in the United States. It had begun experimenting with the idea of opening stores in 1925 to attract urban customers. These proved to be so successful that retail sales surpassed catalog sales by 1931, with the stores capturing a little over 53 percent of $180 million in total sales. By 1979, Sears posted sales of nearly $24 billion, making it at that time the largest retail company in America as well as one of the largest retailers in Canada. According to 1997 figures, Sears had more than 800 department stores across
7 0 6
B u s i n e s s
Sources of Information
Bibliography Bowman, John S., ed. The Cambridge Dictionary of American Biography. New York: Cambridge University Press, 1995. Emmett, Boris, and John E. Jeuck. Catalogues and Counter: A History of Sears, Roebuck and Company. Chicago: University of Chicago Press, 1950. Gordon, John Steele. “No Respect: A Rule of Thumb on Executives’ Salaries—They Aren’t Overpaid If There’d Be No Company Without Them.” American Heritage, September 1993. Littell, Robert. “The Great American Salesman.” Fortune, February 1932. Weil, Gordon L. Sears Roebuck U.S.A. New York: Stein and Day, 1977.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Melvin Simon Overview The son of a New York tailor, Melvin Simon became one of the preeminent commercial real estate developers in the Midwest. Together with his brother Herbert, the “Marx Brothers of malls” made their fortune covering America’s heartland with unpretentious shopping centers. Melvin Simon expanded his portfolio to include movie production and ownership of the Indiana Pacers professional basketball team.
(1926-) Melvin Simon and Associates and the Indiana Pacers
Personal Life Melvin Simon was born in Brooklyn, New York, on October 21, 1926. He was raised in another New York City borough, the Bronx, just a mile from Yankee Stadium. His father, Max Simon, worked as a tailor. He earned his bachelor of science in accounting from City College in New York and entered military service during the Korean War. Stationed at Fort Benjamin Harrison in Indianapolis, Indiana, Simon remained in that city after the war ended. It was from Indianapolis that he oversaw the development of his real estate empire. Simon divorced his first wife and married Bren Burns in 1972. He is the father of five children: Deborah, Cynthia, Tamme, David, and Max. In 1983, long after he became a successful developer, he was awarded a master’s degree in business from City College. Simon has also been granted honorary doctorates from Butler University and Indiana University. He sits on advisory boards at the Wharton School of Business in Pennsylvania and Indiana University. He is a
7 0 7
M e l v i n
S i m o n
formed Melvin Simon and Associates (MSA), a real estate development corporation. Melvin Simon served as board chairman and owned a two-thirds stake in the new company.
Chronology: Melvin Simon 1926: Born. 1955: Became leasing agent for the Albert Frankel Company. 1960: Herb Simon and Melvin formed Melvin Simon and Associates (MSA). 1982: Produced Porky’s. 1982: Named one of Forbes 400 richest people in America. 1983: Purchased Indiana Pacers basketball franchise. 1993: Sold majority of his real estate holdings to public. 1995: Indiana Pacers reached NBA conference finals. 1996: Reached net worth of $620 million.
member of the board of directors of the Muscular Dystrophy Association, United Cerebral Palsy, and the Jewish Welfare Foundation of Indianapolis. Simon serves as a trustee for the Urban Land Institute and the International Council of Shopping Centers. Simon is famous for his colorful clothes and brash, exuberant personality. Known as “Meshuggener Mel” after the Yiddish word for “crazy,” Simon has practiced a very profitable form of insanity. In 1996, his worth was estimated at $620 million. He downplays the success he and his brother have enjoyed, agreeing with his brother Herb’s assessment that they are “just a couple of naïve guys from the Bronx.”
Career Details While still in the military, Simon got his first job selling encyclopedias door to door. Upon leaving the service in 1955, he became a leasing agent for the Albert Frankel Company. Simon later declared the $100-perweek job “easy money.” His responsibilities included leasing out space in an Indianapolis shopping center. “I enjoyed it, but in a couple of years I decided I wanted to be the person to make the decisions,” he later told Indiana Business magazine. In 1959 Melvin Simon summoned his brother Herb Simon to join him in Indianapolis. The next year, they
7 0 8
B u s i n e s s
MSA started out by developing “strip malls”—typically a row of small businesses in a long, one-story building anchored by supermarkets or drugstores. One of their first projects was the Southgate Plaza in Bloomington, Indiana. Eventually, they moved on to develop enclosed malls. They raised money for these new ventures by selling off many of their previous holdings. By the end of the 1960s, MSA had expanded outside Indiana and was developing shopping centers across the country. During the 1970s, Simon tried his hand at producing movies. “I thought I could make more money,” he crowed of his decision to become a Hollywood mogul. But most of the projects he purchased were unpopular, and he lost millions of dollars. His most successful film, Porky’s, earned $105 million, but the raunchy film was considered by some a low point in U.S. cinematic history. Other films Simon produced included the vampire comedy Love at First Bite, the romance My Bodyguard, and the farce Scavenger Hunt. Simon gave up on the movie business in 1982, later calling his work in Hollywood “a big mistake.” Meanwhile, the Simon real estate empire continued to grow. During the boom years of the 1980s MSA expanded its holdings to include “mixed use” projects that linked many different types of businesses into downtown complexes. But developing community centers remained a prime source of profits. By the mid-1980s, MSA was building about eight small shopping centers a year. All this rapid growth came at a stiff price, however. When the real estate market took a downturn toward the end of the 1980s, Simon was forced to lay off hundreds of employees. As the recession deepened, credit became increasingly tight, and Simon and his brother found it difficult to scare up the money to complete its ambitious projects. The “golden age” of commercial development was coming to an end, a fact which may have influenced the Simon brothers decision to sell the majority of their company to the public in 1993. There were still mountains left to climb, however. The urban mall became something of a pet project for Simon, beginning in the 1980s. It posed a challenge for the developer, who was used to having large tracts of suburban land at his disposal for construction purposes. In the congested city, space was harder to come by. There were also the problems posed by existing buildings and historic sites that exist in downtown metropolitan areas. Nevertheless, Simon rose to meet this challenge. His urban projects included the Circle Centre in downtown Indianapolis, the St. Louis Centre, and an innovative “vertical mall” in midtown Manhattan. Not all of these urban projects were successful. By 1996, more than half the St. Louis Centre mall was vacant, and the shopping center had yet to turn a profit. The
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
M e l v i n
Circle Centre in Indianapolis fell short of Simon’s promise to revitalize the downtown area. And there were other setbacks. In 1993, a Florida jury ordered Simon to pay $5.5 million to Chase Federal Bank to reimburse the bank for monetary promises made on real estate projects. Despite these reversals of fortune, the Simon brothers were still able to raise about $820 million by taking their holdings public in 1993.
S i m o n
In December 1993, the Simon brothers sold more than half of their mall holdings to the public via stock offering. The 32.8 million shares of stock were sold at roughly $25 a share in what was then a record-breaking initial public offering (IPO). The proceeds from the stock sale catapulted the “Marx Brothers of malls” into the upper stratosphere of the world’s wealthiest men. With a combined net worth well over $1 billion, the two “naïve guys from the Bronx” both rank among Forbes magazine’s 400 richest people in America.
Social and Economic Impact Melvin Simon and his brother Herb preside over one of America’s largest commercial real estate companies. By 1996, their empire comprised 111 regional shopping centers and 66 strip malls. They also owned a 22.5 percent stake in the Mall of America, the world’s largest shopping mall, located in Minneapolis, Minnesota. The 4.2 million-square-foot shopper’s paradise includes a seven-acre amusement park. But Melvin Simon’s influence goes far beyond his real estate holdings. In 1983, he had a chance to make a positive impact on the Indianapolis community as well. Together with Herb, he purchased the Indiana Pacers National Basketball Association (NBA) team, staving off potential relocation of the franchise to another city. The team, Indiana’s only professional franchise, is a source of great civic pride throughout the state. A basketball fan, Simon often showed up at games to cheer his players. The Pacers under Simon’s stewardship advanced to the NBA Eastern Conference finals in 1995 and 1998. A new arena, the Fieldhouse, was scheduled to open in the year 2000.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Sources of Information Contact at: Melvin Simon and Associates and the Indiana Pacers 300 E. Market St. Indianapolis, IN 46204 Business Phone: (317)263-2100 URL: http://www.nba.com/pacers
Bibliography Andrews, Greg. “Simon IPO Is Record Breaker.” Indianapolis Business Journal, 27 September 1993. Danner, Patrick. “Commercial Developers Owe Bank $5.5 Million.” Miami Daily Business Review, 22 June 1993. Faust, Fred. “St. Louis Centre: Still Shopping for Downtown Success.” St. Louis Post-Dispatch, 19 May 1996. Harton, Tom. “Indy’s Most Powerful Developers.” Indianapolis Business Journal, 6 April 1987. “Melvin Simon, Herbert Simon.” Forbes, 17 October 1994. Pockrass, Steven. “The Mall Moguls.” Indiana Business, April 1991.
S t u d e n t s
7 0 9
Isaac Merrit Singer (1811-1875) Singer Manufacturing Company
Overview Isaac Merrit Singer revolutionized home sewing when he developed the first practical domestic sewing machine. In partnership with Edward Clark, Singer founded the largest manufacturer of sewing machines in the world. He also pioneered consumer credit plans, which later became a common practice by manufacturers and retailers in order to boost their sales.
Personal Life Isaac Merrit Singer was born October 27, 1811, in Pittstown, New York. He was the son of German immigrants Adam Reisinger, a millwright and farmer, and his wife Ruth. Singer was raised in Cherry Valley, New York, where he attended public schools until the age of 12. At that time he ran away from home. He settled in Rochester, New York, where he worked as an apprentice in a machine shop. Between the ages of 19 and 39, Singer worked as an itinerant actor, mechanic, and cabinetmaker. He occasionally adopted the names Merrit and Matthews in addition to his real surname. An Episcopalian, Singer loved music and was known for his energy and sunny disposition. He reportedly had five wives and fathered 24 children. Two of the children died in infancy, while one, Adam Mortimer, grew up to be knighted by the British crown. After leaving from the sewing machine business in 1864, Singer retired to Paris. In 1870, he moved to England on the recommendation of his old business partner Edward Clark. There he took up residence in a custom-
7 1 0
I s a a c
M e r r i t
S i n g e r
built palace on the English coast known as the Wigwam. He died in Torquay in Devonshire on July 23, 1875.
Career Details Singer began inventing things at an early age. One of his first important inventions was a rock-boring machine, which he dreamed up while living in Lockport, Illinois, in 1839. On May 16 of that year he received his first patent for this device, known as an excavator. In need of money, Singer promptly sold this patent for $2,000 and returned to acting. For the next few years he was the leader of The Merrit Players, a troupe of wandering actors which included his wife and family. The troupe played in churches and halls across the country but was constantly plagued by money troubles and eventually went bankrupt. In 1849, Singer’s troupe became stranded in Fredericksburg, Ohio. He took a job in a local sawmill and quickly went to work designing a machine to carve wood and metal. Singer tried to get his new device manufactured but met with little success. Finally, a company in New York City agreed to produce the machine, but a freak explosion destroyed the prototype shortly after its completion. Singer was destitute and out of a job, so he moved to Boston and took a job in a machine shop. In 1850, Singer got a chance to study a sewing machine close up when one was brought into the machine shop for repairs. He was amazed at how clunky the device was and irritated by how frequently it needed fixing. He required only 12 hours to design a new, improved device that employed a straight needle, horizontal table, and rotating feed mechanism. He then needed to have his new sewing machine built. This time he took matters into his own hands. He borrowed $40 from a friend and spent the next 11 days constructing the world’s first straight needle, perpendicular action sewing machine. Singer’s machine was powered by a foot treadle, with a vertical presser to hold the material in place while the operator stitched. For the first time, a user could enjoy continuous sewing along straight lines and curves, and begin sewing at any point on the fabric. However, what worked in theory at first failed in practice, as the prototype machine would not work properly. Even the workers who had assisted Singer in building the device declared it a failure. But Singer discovered a flaw in the construction and rectified it immediately. He eventually had a perfectly working prototype.
Isaac M. Singer.
(Public Domain.)
1852 to 1954, Singer was granted three separate patents for various parts of his new machine. Other parts of Singer’s machine already had patents, however, which belonged to Elias Howe. Both the needle and the lockstitch Singer employed had been invented and registered with the government by Howe in 1846. In 1853, Howe sued Singer for $25,000 in damages for infringing on these patents. Singer contested Howe’s suit but lost his case in federal court in 1854. The court ordered Singer to purchase a license from Howe and compensate him $15,000 in royalties. Ill will from the lawsuit did not stop Singer and Howe from joining forces in 1856 to form an industrial trust with the other major sewing machine manufacturers. This powerful combination granted licenses to all other manufacturers and charged them a $15 royalty on each machine they produced. While this arrangement helped stifle competition, the individuals who made up the trust continued to make and market their own machines. By 1860, Singer headed the largest company of them all, in partnership with his attorney, Edward Clark.
Together with two partners, Singer formed Singer, Phelps, & Co. in 1851 to manufacture the sewing machine. Originally based in Boston, the company moved to New York the following year. When his partners backed out, Singer renamed the business I.M. Singer & Co. In time, Singer adapted his device to work on leather and upholstery in addition to clothing. This innovation spurred the company on to even greater growth. From
In charge of advertising and marketing, Clark helped Singer innovate in these areas as well. He introduced traveling salesmen, installment purchases, and special trade-in allowances. Clark and Singer also hit upon the idea of destroying any trade-ins they received to eliminate the second-hand market. Meanwhile, Singer continued to make improvements to his machine. All told, he received a total of 20 patents on his sewing machine.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
7 1 1
I s a a c
M e r r i t
S i n g e r
minute, a vast improvement over the 30 to 40 that a hand sewer could provide.
Chronology: Isaac Merrit Singer 1811: Born. 1823: Left home. 1839: Received first patent for a rock-boring machine. 1849: Invented a wood carver. 1850: Invented a new sewing machine. 1851: Formed sewing machine company. 1856: Lost patent infringement case to Elias Howe. 1864: Incorporated company. 1864: Retired. 1875: Died.
While the practicality of Singer’s machines helped make them popular, his success was also the product of innovative marketing. He was one of the first businessmen to understand the power of advertising. Singer’s use of an installment credit plan, the first of its kind, allowed him to sell his machines at a very high price for the time, around $75. He also initiated the practice of providing service with sales, a policy that is still used today. By the 1860s, these strategies had helped the Singer Manufacturing Company become the world’s leading manufacturer of sewing machines. By the 1990s, Singer sewing machines were still one of the leading brands in the industry. State-of-the-art computerized models commanded prices up to $3,500. The Singer Company branched out from its core business to produce vacuum and carpet cleaners as well. The company still employs a unique service center that repairs and restores old-fashioned models for antique enthusiasts. Surprisingly, in this age of advanced technology, many factories and home users still employ these old machines to create new garments.
Sources of Information In 1864, Singer incorporated his company, which from then on was known as the Singer Manufacturing Company. Singer retained 40 percent of the stock and retired to England. He kept his stake in the company until his death in 1875. He left a fortune worth $13 million to various heirs.
Contact at: Singer Manufacturing Company 2 Chinachem Plz., 26th Fl. 68 Connaught Rd. Hong Kong, Hong Kong Business Phone: (905)475-8607 URL: http://www.singer-nv.com
Bibliography Fucini, Joseph J. Entrepreneurs. Boston: G.K. Hall & Co., 1985. Hoovers Online. Available from http://www.hoovers.com, 1998.
Social and Economic Impact
Legends in Their Own Time. New York: Prentice Hall Reference, 1974.
Isaac Merrit Singer’s sewing machine not only revolutionized home sewing, but also helped to usher in a major new industry. Before Singer’s invention, there was no industrialized system for the production of clothes. All garments were made by hand. With the introduction of Singer’s machine, 900 stitches could be produced per
7 1 2
B u s i n e s s
Van Doren, Charles, ed. National Cyclopaedia of American Biography. Ann Arbor, MI: University Microfilms, 1967. Van Doren, Charles, ed. Webster’s American Biographies. Springfield, MA: Merriam Webster Company, 1979. World of Invention. Detroit: Gale Research, 1994.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Samuel Slater Overview A couple of years before Samuel Slater died in 1835, President Andrew Jackson called him the “Father of American Manufactures.” Slater pioneered the American textile industry by introducing machinery that revolutionized textile production in the United States. Drawing on his memory of machinery in his birth country, England, Slater reconstructed the complicated spinning machines when he relocated to the United States, thus playing a key role in launching the American Industrial Revolution. His technological contribution and unique management style made him one of the most successful New England entrepreneurs of his era.
(1768-1835) Entreprenuer
Personal Life Samuel Slater was born in Belper Township in Derbyshire, England, the son of an educated farmer who appreciated his son’s mathematical gifts. After an apprenticeship with a mill owner, Slater emigrated to the United States on September 13, 1789 and, two years later, he married Hannah Wilkinson, with whom he had six sons, Samuel Jr., George, John, Horatio, William, and Thomas (two daughters and one son died in infancy). After Hannah’s death in 1812, he married Esther Parkinson, a wealthy widow from Philadelphia, Pennsylvania. The family resided in one of the finest homes in Pawtucket, Rhode Island. The industrialist was admired by many and at least two presidents, James Monroe and Andrew Jackson, visited Slater at his home. Jackson, who saw Slater in 1833,
7 1 3
S a m u e l
S l a t e r
England, served as an apprentice under the famous Sir Richard Arkwright, his father’s partner and a celebrated inventor. Arkwright had invented the water frame, which was capable of spinning many threads simultaneously. The mill operation fascinated Slater so much so that he spent his holidays at the mill, observing the whirring machinery. Later, he was given the job of supervising machine construction in one of the Strutt mills. Slater arrived on the manufacturing scene in the early days of the U.S. Industrial Revolution as American manufacturers were just beginning to adopt technology from the more advanced British manufacturers. Slater had revealed his managerial capabilities while in England, as he oversaw mill operation and acted as a go-between from the owner to the workers, as well as constructing and repairing most of the machinery. He even invented a way to evenly wind the yarn on the spindles, receiving a monetary reward from his employer in return. He would later carry these skills with him to the New World.
Samuel Slater.
(The Library of Congress.)
said “I understand you have taught us how to spin.” Slater died at the age of 66 on April 20, 1835.
Career Details Before the Industrial Revolution came to Great Britain in the mid-eighteenth century, clothmaking was a tedious process requiring hours of hand labor. Wool, flax, or cotton fibers had to be washed, picked clean by hand, carded and combed, drawn out, and twisted into yarn by a spindle or, later, by a spinning wheel. Looms were used to weave the yarn into cloth. Thus only the well-to-do could afford clothing of refined cloth; ordinary people made do with “homespun,” a rough fabric akin to burlap. In 1733 the flying shuttle was invented in England by John Kay, increasing the speed of weaving cloth. By the late eighteenth century, spinning machines invented by Samuel Crompton and James Hargreaves, and Sir Richard Arkwright’s water frame further cut down on the time needed for the spinning process. In addition, the spinning jenny came into use in homes, and devices for carding and combing improved textile technology. As a result of these improvements, the textile industry in Britain began to grow rapidly in the latter part of the eighteenth century. Thus was the era Slater was born into. Following the death of his father, Slater, while a teenager living in
7 1 4
B u s i n e s s
In 1789, Slater became aware of bounties offered in the United States for skilled workers in the textile trade. This news intrigued Slater, who had grown hungry for new opportunities. He soon booked passage to the United States. Getting out of England was not easy, as the country was protective about skilled workers leaving the country and taking valuable technological secrets with them. This concern resulted in severe restrictions for skilled workers desiring to emigrate. So Slater posed as a farmer and hid his apprenticeship indenture certificate. Details of the mill operation were safely stowed in his mind: he had memorized even the slightest detail of the technology used in Arkwright’s mill. Fearing British customs officers, he did not even tell his mother of his intentions. In fact, Slater could be called one of the first industrial spies. After arriving in Philadelphia, he soon went to New York City, where he worked for a short time with the New York Manufacturing Company. He soon grew disappointed with the company’s poor equipment and lack of access to water. He then sought out Moses Brown (for whom Brown University is named), a Quaker manufacturer in Pawtucket, Rhode Island, who was saddled with spinning machinery that just did not work. Brown offered Slater a partnership and all the profits in the Almy and Brown mill if he would agree to fix the machinery. Declaring the machinery useless, Slater worked for a year reconstructing from memory the complex machinery used in Arkwright’s mill. He designed and built carding machines, drawing and roving frames, and two spinning frames, modeled on Arkwright’s designs. Unfortunately, the textile machinery failed its first test of operation. With the help of Brown’s brother Sylvanus, however, the problem was solved, and the machinery began to work perfectly. In 1790, Slater became partner in the new firm of Almy, Brown, and Slater, the first cotton mill in the United States. In a short time, Almy, Brown, and Slater
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S a m u e l
controlled cotton yarn production in much of New England. Soon many other mills were founded, mostly near the rivers of New England. Slater and his partners opened another mill in Pawtucket, which still exists as the Old Slater Mill, today a historic site. The Pawtucket mill relied on child labor—not an unusual practice for that time—to produce its textiles. Slater was not a negligent employer, however, providing a Sunday school, good food, and kind treatment for the children. Slater also was known for helping many immigrant mill workers who flocked to the United States from England in the early nineteenth century.
S l a t e r
Chronology: Samuel Slater 1768: Born.
In its day, the Old Slater Mill was a phenomenal monument to American ingenuity. Oziel Wilkinson, Slater’s father-in-law, was a co-investor with Moses Brown in the mill, which Slater superintended. The early technology of the placement of the dam, the millpond, the flume (a narrow channel for carrying water), the water wheel, the tailrace (the lower part of the current driving the mill wheel), and the mill itself was crucial to the success of the operation. Almy, Brown, and Slater chose to ignore the water rights of any other users, building a dam on the Blackstone River. The mill itself was two-and-a-half stories, constructed wholly of wood taken from New England forests, with masonry outside walls. The mill had a bell tower with a 60-pound bell which called employees to work before dawn.
1784: Apprenticed to Jedediah Strutt.
The location of the New England mills was not accidental. The configuration of most New England rivers, sloping from the source to the mouth, was favorable to creating water-power sites. Rivers also provided easy access to seaports and the clearness of New England rivers was conducive to bleaching spun yarn. Moreover, New England farmers residing on rocky hillsides were looking for ways to supplement their meager incomes when the mills began appearing.
1833: President Andrew Jackson called him the “Father of American Manufactures.”
In 1798, Slater left his partners and, along with Oziel Wilkinson and others, formed Samuel Slater & Company and independently established other mills in Rhode Island, Massachusetts, Connecticut, and New Hampshire. One of these, known as the White Mill because of its white walls, showcased Slater’s skills. A Slater biographer quoted in a national newspaper in 1801 described the mill’s ability to make various kinds of yarn for “warp, filling, two-and-three-thread stocking yarn, suitable for weaving and knitting, whitened or brown, wholesale or retail, at a short notice . . . equal, if not superior, to any manufactured in America.”
1789: Emigrated to America. 1790: Became partner in Almy and Brown’s mills in Providence, Rhode Island. 1790: Almy, Brown, and Slater became first spinning mill in America. 1791: Married Hannah Wilkinson. 1793: Established second mill at Pawtucket, Rhode Island. 1798: Began Samuel Slater & Company. 1817: Married Esther Parkinson. 1831: Employed largest number of mill workers in the United States.
1835: Died.
his purposes. He assigned his brother John the task of finding a site and developing a new mill in the wilderness along the Blackstone River in Rhode Island, upriver from Pawtucket. As construction started, John was made partner in the company and also became superintendent of the new mill. Soon a village grew up around the mill and was eventually incorporated as Slatersville in 1806. At the time of his first wife’s death in 1812, Slater was already developing a new mill at Oxford South Gore, Massachusetts. This mill was created largely because of the increased demand for textiles during the War of 1812, when British textiles were embargoed.
Slater’s father-in-law became a partner in Samuel Slater, and Company, and his wife, Hannah, received a patent for her development of the first cotton sewing thread. This “cotton yarn,” as it was called, became the mainstay of the company. In time, cotton yarn would be in high demand in both farming areas and cities.
The period following the war was a difficult time for the textile industry, but a new protective tariff act and the introduction of the power loom helped to restore the industry to its former glory. Slater shared with the famous Francis Cabot Lowell, founder of Lowell, Massachusetts, the credit for profitable decades in the textile mills in the mid-nineteenth century.
Because of the difficulty of persuading farmers’ sons and daughters to move to cities to work, Slater decided that expansion into the countryside would better serve
In all, Slater participated in, or founded 13 textile mills. In the late 1820s, he brought his sons George, John, and Horatio into the business, establishing Slater & Sons.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
7 1 5
S a m u e l
S l a t e r
Despite setbacks during the depressions of 1815 and 1829, Slater became one of the country’s most successful businessmen. He was known for being a paternalistic but fair employer who attracted many skilled English immigrants to his factories. He also helped many young, aspiring businessmen in their manufacturing efforts. By the time of his death in 1835, Slater’s estate was worth over $1 million.
export of machinery or technology. Manufacturing secrets from Britain were hard to come by, and few in the new United States had any familiarity with the techniques of textile mass production. Slater’s success in the United States diminished the dominance of the British cotton trade. By the end of Slater’s life, thousands of people were employed in the New England textile industries which he helped initiate. Slater himself probably employed more workers than any other manufacturer of his time.
Social and Economic Impact Slater was very important to the development of the American spinning mill business, and influenced the development of American manufacturing. He astutely understood the mounting needs for textiles in an expanding new country, successfully transferred technology from the British system, and, by his initiative and technical facility, transformed mill manufacturing from a cottage industry to a major force in the American economy. He is also often cited as a pioneer of the division-oflabor system that changed American manufacturing. At the time Slater arrived in America, the new nation was just beginning to assert its economic independence from Great Britain. Prior to this time, most manufactured goods, including cloth, were imported from Britain; and the textile industry in the American colonies was virtually nonexistent. Great Britain, even after the American colonies won its independence, tried to keep its monopoly on cheap, quality cloth by prohibiting the
7 1 6
B u s i n e s s
Sources of Information Bibliography Benes, James J. “An Industry Evolves: Lathes to Computers.” American Machinist, August 1996. Cameron, E.H. Samuel Slater: Father of American Manufactures. E.H. Cameron, 1960. Conrad, James L., Jr. “‘Drive That Branch’: Samuel Slater, the Power Loom, and the Writing of America’s Textile History.” Technology and Culture, January 1995. Gordon, John Steele. “Technology Transfer.” American Heritage, February 1990. Gustaitis, J. “Samuel Slater: Father of the American Industrial Revolution.” American History Illustrated, May 1989. “Samuel Slater.” DISCovering Biography. Detroit: Gale Research, 1997.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Alfred Sloan, Jr. Overview Alfred P. Sloan Jr. was one of the most influential executives in twentieth century American manufacturing. As chief executive officer, president, and chairman of the board for the automaker General Motors (GM) over several important decades, Sloan was responsible for implementing strategies and practices that helped GM emerge as one of the most successful American companies of the century. In 1998, over 30 years after Sloan’s death, GM still held the number one position in American business, leading Fortune magazine’s list of the Top 500 American enterprises.
(1875-1966) General Motors Corp.
Personal Life Sloan was born in New Haven, Connecticut in 1875, the son of Alfred P. Sloan Sr. and Katherine Mead Sloan. His father was a machinist with investments in a number of businesses, including a tea and coffee import company. When Alfred Jr. was five, the family moved to Brooklyn, New York, where he excelled academically in its public schools. As a teen, he passed the entrance examination for Massachusetts Institute of Technology, but was denied admission because of his young age. He was allowed to enter at the age of 17, and earned his degree in electrical engineering in three years. Sloan married Irene Jackson and maintained a home on New York’s Fifth Avenue. According to the profiles of him published during his lifetime in magazines like Time and Forbes, Sloan was the quintessential midcentury auto executive, with no interests or hobbies outside of the office. He and his wife had no children, but
7 1 7
A l f r e d
S l o a n ,
J r .
the auto industry, Sloan came to know many of the most important names in the business; Henry Ford, for example, was both a customer and a friend of Sloan’s. Hyatt Roller Bearing’s success in making and marketing the anti-friction bearings used in the auto industry led to an investment involvement with one automaker, the United Motors Corporation. This company had originated a practice of linking to its suppliers in a mutually beneficial relationship, thus Sloan and Hyatt teamed with United in 1916 to become its only supplier of steel roller bearings. The investment of $13.5 million made Sloan a vice-president when United Motors merged with General Motors two years later. By 1923, he became president of GM when Pierre DuPont, a major shareholder, retired after three years on the job and became board chair.
Alfred Sloan, Jr.
(The Library of Congress.)
Sloan was close to a half-brother, Raymond, who was 18 years his junior. When Raymond died in the 1940s, Sloan was deeply saddened, and increased the funding and time he gave to the Sloan-Kettering Institute for Cancer Research. His half-brother had been a hospital administrator and had drawn Sloan into medical philanthropy. Sloan was also known to be generous with his resources when he learned of a GM family in trouble; he once spent a Christmas holiday working toward finding the best medical care for the burned child of a plant manager, neither of whom he had ever met. He also refused to publish his autobiography, My Years with General Motors, until all of the people mentioned had passed away. Sloan himself died just two years later on February 17, 1966, and is buried in Cold Spring Harbor, New York.
Career Details Sloan’s father was an investor in a New Jersey business called the Hyatt Roller Bearing Company, which made billiard balls. After Sloan, Jr. received his degree from the Massachusetts Institute of Technology in 1895, he went to work at Hyatt as a draftsman. In just under a decade he had risen through the ranks to become its president. Part of the reason for both his and Hyatt’s success came from Sloan’s recognition of Hyatt’s ability to expand its business by producing steel roller bearings for the auto industry. Through his sales to the executives who were usually the founders of their firms and pioneers in
7 1 8
B u s i n e s s
Sloan’s talent for running a thriving financial enterprise is one of the most significant success stories in twentieth century American business. GM was so financially sound that it was barely affected by the Great Depression; despite the Wall Street crash of 1929, its stock continued to pay shareholder dividends. In 1937 Sloan was elected board chair, and continued as both chair and CEO until 1946; he remained chairman of the board of directors until 1956, when he officially retired.
Social and Economic Impact Sloan’s autobiography, My Years with General Motors, was published in 1964 and it remains required reading in most business school graduate programs. It was one of the first corporate-focused biographies ever written by a leading executive, and it remained on the bestseller lists for weeks. Sloan’s coauthor was John McDonald, a senior writer at Fortune. In his memoirs, Sloan recounts how GM came to be the biggest manufacturing operation in the world, second only to the conglomeration known as U.S. Steel. Sloan was responsible for giving GM, its operations, and its innovative management style, his own personal stamp—one that endured decades beyond his retirement. During his first years as president in the 1920s, GM doubled its manufacturing output and broke sales records. It also absorbed much of its competition, and some of the smaller carmakers either folded or were folded into General Motors during this time. Its biggest competitor was another Detroit-run operation, the Ford Motor Company, and during Sloan’s tenure GM succeeded in surpassing Ford’s industry lead in just a few short years. Sloan’s encouragement of a close friend and head of his Buick operations, Walter P. Chrysler, to strike out on his own led to the launch of what would become the number three automaker, the Chrysler Corp. The way in which Sloan structured GM, which is detailed in his book, revealed him as one of the first theorists of management as a discipline in modern American business. Sloan was responsible for structuring GM into five separate divisions, each producing and market-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
A l f r e d
ing cars aimed at a particular segment of the market, from affordable Chevrolets to elegant Cadillacs. In this way the divisions were able to share development and engineering costs among themselves, which added greater profit to the higher-priced luxury models. Such a strategy was later adopted by the Japanese automakers in the 1980s when they launched their upscale divisions such as Acura and Lexus. Sloan also put into place a decentralized management structure with centralized financial operations at GM, which was later widely copied by other American companies in the years after World War II. When Sloan became chair of GM’s board of directors in 1937, he was the highest-paid executive in the country. The economic success of General Motors, however, did lead to labor unrest and the beginnings of the United Auto Workers union. Sloan’s refusal in 1936 to meet with its representatives to address grievances over job security, wages, and safety launched a sitdown strike at GM plants, and led to the eventual formation and legal recognition of the United Auto Workers a year later, a significant moment in American labor history. Not surprisingly, Sloan was a staunch supporter of Republican politics. Sloan would also be remembered as a great philanthropist. At the height of the Great Depression in 1934, he founded the Alfred P. Sloan Foundation. It gave grants primarily for research into science and technology; in 1996 it bestowed $53 million. The auto executive also endowed the Sloan School of Management at his alma mater, the Massachusetts Institute of Technology. At its founding in 1931, it was one of the first graduate programs of its kind for executives already established in their careers. He also endowed the Sloan-Kettering Institute for Cancer Research at New York City’s Memorial Hospital.
S l o a n ,
J r .
Chronology: Alfred Sloan, Jr. 1875: Born. 1895: Graduated from Massachusetts Institute of Technology. 1895: Joined Hyatt Roller Bearing Co. 1916: Became an investor in United Motor Corp. 1918: United Motors merged with General Motors. 1923: Named president of GM. 1934: Established the Alfred P. Sloan Foundation. 1937: Became chairman of GM board. 1964: Wrote My Years with General Motors. 1956: Retired from GM.
Bibliography Current Biography Yearbook, 1940. New York: H. W. Wilson, 1940. Current Biography Yearbook, 1966. New York: H. W. Wilson, 1966. Drucker, Peter. “The Best Book on Management Ever.” Fortune, 23 April 1990. Flint, Jerry. “Alfred Sloan Spoken Here.” Forbes, 11 November 1991.
Sources of Information Contact at: General Motors Corp. 100 Renaissance Ctr. Detroit, MI 48243 Business Phone: (313)556–5000 URL: http://www.gm.com
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
7 1 9
C. Harold Smith (1860-1931) Binney & Smith
Overview In 1885 C. Harold Smith founded a company with his cousin, Edwin Binney. First producing industrial pigments, they gravitated toward educational supplies and developed the world famous Crayola crayon which is used worldwide and is considered by some to be an important piece of Americana.
Personal Life C. Harold Smith was born in London, England in 1860 and lived for a while in New Zealand as a teenager until coming to the United States in 1878. He married Paula Smith and they had two children, Bertha B. Hillas and Sidney V. Smith. Harold Smith was known for being outgoing. He established business friendships all over the world while traveling, a pastime he enjoyed. He kept notes on his traveling, and used this in his later years in his writing. He wrote several fictional and philosophical books which aroused interest from the public, particularly his autobiography which gave a glimpse of his personal philosophy. He had an interest in philanthropy and organized discussions to pursue charitable actions. He was involved in civic organizations such as the Union League Club of New York, the Transportation Club, the Uptown Club, and the Hudson River Country Club. He died in 1931 at 71 years of age.
Career Details Smith first became interested in the carbon industry when he arrived in the United States of America in 1878.
7 2 0
C .
H a r o l d
S m i t h
He spent the next several years acquiring knowledge of the industry and accumulating the capital to found his company. Smith was respected in the business community for his solid base of technical knowledge and was nicknamed “The Carbon King.” He founded Binney & Smith with Edwin Binney in the late 1800s. The opportunity to start up Binney & Smith originated with Edwin Binney’s father, Joseph, who had founded the Peekskill Chemical company in New York during 1864. The company produced black and red pigments for industrial uses such as coloring tires and barns. Edwin Binney and his cousin, Smith, formed a partnership and took over the company in 1885. Binney & Smith increased the products they offered to include shoe polish and ink. In 1900 they moved offices to New York City and bought a stone mill in Pennsylvania to produce slate for pencils. They began to get a taste for the needs of educational institutions after offering the pencils and dustless chalk. The dustless chalk won Binney & Smith a gold medal at the St. Louis World Exhibit. While touring schools, Binney & Smith realized that schools needed coloring crayons that were affordable and safe. At the time, crayons were used primarily in industry. They were thick and hard to handle. The crayons were also toxic. Binney & Smith were working on wax crayons to be used to mark crates and barrels in their own factory. They took this crayon and began working to develop nontoxic pigments to color the wax. They produced their first eight pack of crayons in 1903. The debut product featured the colors Green, Black, Blue, Brown, Orange, Red, Purple, and Yellow at $.05 a pack. The name Crayola was coined by Binney’s wife (a teacher), and used a combination of the French words for stick of color, craie, and oily, ola. The crayons were a huge success. In addition to expanding products and finding new markets, Smith went on to become involved in other related companies including: the Columbia Carbon Company where he served as vice president, L. Martin Company and Sebs Chemical Company where he served as president of both, and Peerless Carbon Company for whom he served as director. During the Great Depression, Binney & Smith hired farm families in the local vicinity to assist with crayon production. The families drew the labels for the crayons; each family taking a different color. Soon each farm became associated with their particular Crayola color. The company continued to employ farm families after the Depression, which helped farmers supplement their yearly income during slow times. Product safety had always been an issue for Binney & Smith, particularly for crayons which previously had been toxic and unsafe for children. The company stayed abreast of safety issues and in 1936 founded the Crayon, Watercolor, and Craft Institute which promoted the production of safe art materials.
Chronology: C. Harold Smith 1860: Born. 1878: Emigrated to United States of America. 1885: Binney & Smith Company founded. 1902: Won gold medal at St. Louis World Exhibition for dustless chalk. 1903: Introduced first box of crayons. 1931: Died. 1936: Binney & Smith Company founded the Crayon, Watercolor, and Craft Institute. 1978: Binney & Smith Company introduced Crayola markers. 1996: 100 billionth crayon produced. 1998: Company opened 20,000 square foot Crayola Factory in Easton, Pennsylvania.
the flesh crayon, for instance, was changed in 1962 to peach to acknowledge that not everyone had the same skin color. In 1949, a 48 color box was offered to consumers, which included the colors Bittersweet and Prussian Blue. A 64 color box hit the market in 1958, and included the addition of a built-in sharpener. Representative of the times, florescent crayons were introduced in 1972 including colors like Atomic Tangerine, Hot Magenta, Blizzard Blue, and Shocking Pink. In 1978 the company diversified further and added Crayola markers, a product that could be washed from skin and clothes if needed. Less popular crayon colors were dropped in 1990 including Green Blue, Orange Yellow, Maize, and Lemon Yellow. 1992 saw the additional of Crayola multicultural crayons, which included a variety of skin tones. In 1993 the company commemorated 90 years of producing crayons by introducing a Big Box, which included 96 colors. Sixteen of these were new colors which customers had been asked to name; some of the names included: Denim, Macaroni and Cheese, Tickle Me Pink, and Tumbleweed.
Binney & Smith continued to add color to its crayon palate to reflect changing times in society. The name of
In 1996, The Crayola Factory opened at Two Rivers Landing in Easton, Pennsylvania. The building totaled 20,000 square feet and offered a family discovery center with creative activities. The opening was celebrated as ColorJam 96 .
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
7 2 1
C .
H a r o l d
S m i t h
Social and Economic Impact Since their invention, Crayola crayons have been instrumental in educational settings and have helped encourage children to express themselves and use their creativity. The colors in the Crayola box at any given time have been reflections of the times. The addition of new colors highlighted the multicultural diversity found in America. By 1998, 104 colors were available for Crayola consumers and more than 2 billion crayons were produced each year. According to a December 1996 article in the Los Angeles Times, the average American kid in the United States had used up 730 crayons by the time he or she reached the age of 10. By 1998, Binney & Smith continued to do business worldwide and employed over 2,600 workers. Its annual sales in 1996 peaked at $524 million, including crayons and other items produced. Crayola remained the leader in the United States crayon industry, capturing more than 50 percent of the $130 million American crayon market. The producers of Crayola crayons continued to expand into new markets to reflect changing needs and desires of their target markets. In 1997, Crayola introduced the Crayola Magic 3D Coloring Book, a CD-ROM package for children which allowed them to color on the computer. In 1995, the company created a line of nine new greeting cards featuring designs submitted by kids and drawn with Crayola crayons, markers, or pencils. Binney & Smith continued to look for ways to maximize profits and in 1997, closed a Crayola plant in Winfield, KS and moved operations to the existing plant in Easton, PA. The Kansas plant, owned by Hallmark Cards, had provided 345 jobs and local residents were angered for their aburpt decision. Crayola officials claimed that a previous attempt to automate operations in the Kansas plant had not proven as profitable as expected and that closing the plant would result in $8-$9 million in savings annually. The company offered employees the option to relocate and keep their jobs or to receive other benefits such as job training. Regardless, the Kansas plant had provided an $18 million payroll for the town and had bought in additional tourist dollars with 10,000 visitors a year. Some collectors considered Crayola crayons a piece of American culture and history. In 1998, The U.S. Postal Service featured a stamp, as part of its Celebrate the Century series which pictured a vintage box of Crayolas. Some stamp collectors objected to the use of a commercial product on collectable stamps, arguing that the integrity of the stamps would be compromised if every famous American product were featured on stamps.
7 2 2
B u s i n e s s
Vintage Crayola crayons and their containers have become valuable collectibles. In 1998, a cylindrical box of Crayolas from the 1970s was worth from $15 to $35. In assigning value, collectors considered not only the authenticity and condition of the container, but the condition of the crayons, which are relatively fragile over time. Crayons that have withstood the elements over time commanded a higher price as collectibles. The Smithsonian Institute also recognized Crayola crayons as historically significant in 1998. The Institute added several Crayola products, including the 64-color box of crayons, to its permanent collection. Since Binney and Smith first introduced Crayolas in 1903, the crayons have been a symbol of childhood creativity in the United States.
Sources of Information Contact at: Binney & Smith 1107 Broadway New York, NY URL: http://www.crayola.com
Bibliography “A Colorful History.” Inside Crayola, 1998. Available from http://www.crayola.com/history/. “Crayola Crayons.” The Invention Dimension: Invention of the Week. Available from http://web.mit.edu/invent/www/crayons.html. “Crayola Crayons Gain Place of Honor on U.S. Stamp.” Krause Collectibles Corner, 15 February 1998. Available from http://www.krause.com/corner/html/c980209.html. Downs, Winfield Scott, ed. Encyclopedia of American Biography. Volume 9. New York: The American Historical Society, Inc., 1938. Edwin Binney and Harold Smith. Available from http://www. bsfcs.org/AnneMacDougall/crayola.htm. Hallett, Anthony and Diane Hallett. Encyclopedia of Entrepreneurs, New York: John Wiley, 1997. Healy, Michelle. “Imported Crayons are Lead Threat.” USA Today, 6 April 1994. “A History of Many Colors.” The History of Toys. Available from http://www.yippeee.com/what/colors/html. Kronstain, Jennifer. Crayon-Makers Vision Sprouts from Educational Needs. Entrepreneurial Edge Online, 1998. Available from http://www.edgeonline.com/main/update/9803094.htm. “National Perspective: Tis the Season of Trees and Toys.” Los Angeles Times, 18 December 1996. Palmer, Eric. “Seeing Red - Crayola Plant Closing Angers Residents of Kansas Town.” St. Louis Post-Dispatch, 20 February 1997. Williams, Martyn. “Internet Update.” Newsbytes News Network, 21 November 1995.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Frederick Smith Overview Frederick W. Smith took a good idea and made it a reality, creating a company whose logo is recognized around the world. Millions of people every year solve the problem of how to get a letter or package to its destination in a hurry by using Federal Express. Established in 1971, Federal Express has grown from a small shipping company servicing fewer than 25 cities out of its home-base in Memphis, Tennessee, to a company whose cargo and information handling services now span the globe.
(1944-) Federal Express
Personal Life Frederick Wallace Smith was born in Marks, Mississippi, on August 11, 1944. He was named after his father, who made the family fortune by founding the Dixie Greyhound Bus Lines, which is now a part of Greyhound Bus Lines; Smith’s mother was the former Sally Wallace. The elder Smith was always something of an achiever. In addition to his bus line, he and an older son founded the Toddle House Restaurant chain, which offers Southern-style cooking at locations throughout the United States. When he died in 1948, the elder Smith was able to pass along a tidy fortune to his two sons and two daughters. However, worried that young Fred Jr., then only four years old, and his siblings would squander their money and waste their lives because of reliance upon such affluence, the inheritance was placed into a trust fund, to be released when each child reached the age of 21.
7 2 3
F r e d e r i c k
S m i t h
ond lieutenant who was sent overseas to fight in Southeast Asia during the Vietnam War. During his first tour of duty, he was promoted from platoon leader to company commander, and was part of 27 named operations. During his second tour, he enrolled in flight school and flew over 200 ground support missions over Quang Tri Province. By the time he left the Marines in July of 1969, Smith was ranked captain, and had earned many honors, among them a Silver Star, Bronze Star, and two Purple Hearts. A month later, he married Linda Black Grisham; the couple would divorce in 1977.
Frederick W. Smith.
(AP/Wide World Photos, Inc.)
Smith was born with a birth defect called Calve Perthes disease, which forced him to rely on crutches and braces to stabilize his hip joint sockets throughout elementary school. Fortunately, by the time he was in high school, Smith had outgrown the disease and became very active in interscholastic sports activities. As a teen, he was a U.S. Civil War buff and avid amateur pilot. He attended Memphis University prep school, where he excelled scholastically. Even in high school his interests veered toward business: Smith and a group of friends started a small recording studio, the Ardent Record Company, which went on to become a viable company several years later, although Smith ended his involvement when he left Memphis in 1962 to attend Yale University in New Haven, Connecticut. At Yale, Smith planned a course of study in both economics and political science, although by his own admission he, academically, scraped along as a below-average student because of the range of available social activities. But one of his college achievements has become the stuff of American business legend: during his junior year, Smith wrote a term paper for an economic class outlining his idea for a company that could guarantee overnight delivery of small, time sensitive, goods like replacement parts and medical supplies to major U.S. cities. While the paper was not successful—Smith’s professor, failing to be convinced that the scheme would work, gave the young man a grade of C. Smith, however, was undeterred. Graduating from Yale in 1966, Smith enlisted in the U.S. Marine Corps, where he was commissioned as a sec-
7 2 4
B u s i n e s s
Upon returning stateside in 1970, Smith decided to invest some time, money, and hard work in making his dream a reality. His zeal was in part a reaction to being in Vietnam. Tired of seeing so much destruction, he had the urge to create. Beginning by purchasing a controlling interest in his father-in-law’s aircraft maintenance company, Ark Aviation Sales, Smith began to flex his entrepreneurial muscle, expanding the small company into a clearing house firm that bought and sold used corporate jets. Even after annual revenues increased to $9 million and Ark began to turn a profit, the 27-year-old exMarine was still haunted by the possibilities in his college economics paper, and on June 18, 1971, Federal Express Corporation was officially created to put those ideas to the test.
Career Details Federal Express, more recently renamed FedEx, got its name because Smith’s initial idea was to get a contract to do work for the Federal Reserve System transporting, sorting, and rerouting checks. Planes picking up packages for delivery would be flown at night, when air traffic was minimal; packages would be dropped at a central location, sorted, and then sent by a combination of air and land transportation to their destination. While by his calculations the service would have saved the nation’s banking system over $3 million a day, individual banks were still not convinced that Smith’s delivery plan would work. While his idea—an overnight, door-to-door package delivery service—was both simple and practical, it presented several problems. Financially, the business required that the young entrepreneur invest a large amount of start-up capital: money for planes, pilots, and insurance. And logistically, Smith had to have in place an intricate system linking any two parts of the country: a package sent from any major city had to arrive at one of 100 other major cities within 24 hours of receipt or Smith’s business would not be able to make good on its promise of overnight delivery, something yet unheard of in cargo delivery. Although Smith was unable to convince the Federal Reserve his plan would work, he decided to spend money on heavy-duty advertising to convince everyone else. He enhanced the original “hub and spokes” system
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
F r e d e r i c k
he developed for the Federal Reserve, using Memphis’ major airport as the hub due to its moderate climate and available work force. Rather than relying on passenger planes—the traditional means by which packages had been transported via air—to transport goods, Smith developed a system that used both freight planes and trucks to move cargo. Because packages did not have to take the most direct route, as long as they made it to their destination within 24 hours, a web of interlinking plane and truck routes soon covered the United States, providing service to smaller cities and thus increasing its customer base. Amassing over $91 million in startup capital through bank loans, venture capital loans from independent investors, and $8 million in family capital, the company lost almost a third of its cash during its first three months of operation. In fact, on its first night of business, the fledgling company shipped only 186 packages onto its 14 Falcon jets routed to 22 cities. It was a discouraging start that proved to Smith that publicizing the service offered by Federal Express was key to his company’s future. The company would continue to lose money due to high advertising costs and escalating prices for aircraft fuel and gasoline as a result of the Arab Oil Embargo of 1973. Other factors made the company’s first few years an uphill battle. Outdated federal restrictions on aviation and various demands from the International Brotherhood of Teamsters caused FedEx to lose $29 million in its first two years of operation. Unlike rival United Parcel Service (UPS), FedEx is considered an airline and must negotiate national contracts with its Teamsters employees. Nonetheless, by 1978 FedEx had gained enough confidence from investors to begin selling shares on the New York Stock Exchange. Throughout the 1980s and into the 1990s, FedEx has continued to adapt to advancing technology and increased demand for speed. In 1984 Smith devised ZapMail, a satellite-based system of linked stations, each containing an ultramodern facsimile machine, whereby customers could send documents to any part of the United States. Unfortunately, this new technology never caught on with consumers and was discontinued a few years later, but not before losing $300 million. The company also moved aggressively into the package business, taking on such rivals as UPS and Emory Air Freight. In 1989 Smith surprised analysts when he expanded his company into the largest all-cargo airline in the world by acquiring Los-Angeles-based international freight carrier Flying Tigers. He followed with acquisitions of several trucking companies in a bid to make the company a diversified freight and parcel powerhouse. The company was renamed FDX Corporation to reflect this diversification. By 1997 the company had expanded its international traffic to the point where it had over 560 planes—19 Boeing 747s, 24 DC-10s, six DC-8s, and 114 727s—flying out of three hubs, while its domestic business was enhanced by the introduction of InterNetShip, which allows customers to coordinate
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S m i t h
Chronology: Frederick Smith 1944: Born. 1959: Began flying lessons. 1966: Graduated from Yale and began four-year stint in U.S. Marines. 1969: Returned to United States and joined Ark Aviation Company. 1971: Incorporated Federal Express in Delaware. 1973: FedEx began doing business with general public. 1977: New federal legislation allowed FedEx to add larger cargo planes to fleet. 1978: Issued shares of FedEx stock on the New York Stock Exchange. 1983: FedEx became the first U.S. corporation to reach the $1 billion mark during its first decade of operation. 1985: FedEx ranked among the top 10 employers. 1989: FedEx purchased its main international competitor, Flying Tiger International, to expand parcel service. 1997: Received Peter Drucker Strategic Leadership Award.
deliveries via Internet-linked computer software, and BusinessLink, a marketing service that provides businesses an online catalogue of their goods directly linked to FedEx’s guaranteed next-day delivery. In 1997 alone, the company’s 120,000 employees delivered an average of 2.5 million packages a day in 211 countries and territories. Smith’s hard work and perseverance, even in the face of great economic losses during the company’s early years and increasing pressures from competition from newcomers entering the field he created, have allowed him to not only preserve but increase the family fortune he inherited from his father. In 1997, Forbes listed Smith among the 400 wealthiest people in the United States. That same year, more than 37,000 trucks bearing the bold orange and purple FedEx logo hit the road each day, continuing the service and upholding the guarantee of nextday delivery Smith created decades ago.
S t u d e n t s
7 2 5
F r e d e r i c k
S m i t h
Social and Economic Impact From its hubs at major international airports in Tennessee, California, and Texas, FedEx has not only become the standard by which overnight carriers are measured; it has changed the way the world does business. Days formerly lost from productivity due to transporting goods-everything from machine parts needed for a repair, returned manuscripts from a typesetter, or a unique pair of shoes for a last minute party—can now be had within a day of requesting them. Such speed of delivery has always been the core of the company’s success, a response to what Smith predicted would be the broad reach of business headquarters around the nation, as well as manufacturing firms’ increasing reliance on small, hightechnology parts like computer chips and motherboards that would cause significant “downtime” in production lines if not replaced in a hurry. However, Smith was one of the first to foresee such changes; it took U.S. business owners, who were used to waiting up to two weeks for packages, a little longer to recognize the opportunities for cost savings, increased productivity, and improved efficiency that overnight delivery could provide. As Smith told a reporter for Nation’s Business, “Steamboats and trains were the logistics arm of the Industrial Revolution’s first stage. Trucks became a good logistics arm later—and still are because of their flexibility. But moving the parts and pieces to support the Electronics Age requires very fast transportation over long distances.” Smith’s foresight proved accurate; the rise of computers and the Internet in an increasingly global economy have linked businesses and their expectations for information and products in a whole new way. While the Internet can transmit data, delivery services like Federal Express move objects. In addition to benefiting businesses around the country, Federal Express has also provided employment for thousands of people—many of them college students—
7 2 6
B u s i n e s s
who earn generous hourly wages working part-time, six nights a week between the hours of 11 p.m. and 3 a.m. to keep the packages on schedule. For his foresight and skill as a risk-taking entrepreneur over several decades of operation, Smith was awarded the Strategic Leadership Forum’s Peter F. Drucker award in 1997. The award served as an acknowledgment of Smith’s willingness to accept new technology, and to “single handily change . . . the way global business functions,” according to John Geci in Strategy & Leadership. Smith achieved this, Geci continued, “not because he happened to be in the right place at the right time, or because he had access to a new groundbreaking technology, but because he had a vision of how to combine existing technologies and develop new processes to realize new possibilities.”
Sources of Information Contact at: Federal Express 2005 Corporate Ave. Memphis, TN 38132 Business Phone: (901)369–3600 URL: http://www.fedex.com
Bibliography Contemporary American Business Leaders. Westport, CT: Greenwood Press, 1990. Contemporary Newsmakers. Detroit: Gale Research, 1986. Geci, John. “Presenting the Winner of the 1997 Peter F. Drucker Strategic Leadership Award.” Strategy & Leadership, SeptemberOctober 1997. Gellene, Denise. “Federal Express and Its Pilots Are Tested in Vote over a Union.” Los Angeles Times, 26 October 1989. Rosewater, Leslie. “FedEx Delivers Business Development to MidSouth Economy.” Memphis Business Journal, 27 January 1997.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Jack Smith Overview Jack Smith became head of General Motors, the world’s largest automaker, in 1992. A believer in a bottom-up management style in which employees have input into production, Smith presided over a turnaround that saw the ailing corporation climb out of debt and back into profitability. However, some controversies remained over whether his reforms were sufficient to ensure the continued health of GM.
(1938-) General Motors
Personal Life John F. Smith, Jr. was born April 6, 1938, in Worcester, Massachusetts. He earned his bachelor of business administration degree from the University of Massachusetts in 1960. In 1965, he was awarded a master of business administration (MBA) from Boston University. He joined GM in 1961 while still in graduate school. Smith is known to be a reserved and unassuming man who is uncomfortable giving interviews. Smith’s interests include serving on a variety of civic and business boards. He is a member of the board of directors and executive committee of Detroit Renaissance, the Economic Club of Detroit, the American Automobile Manufacturers Association, and the Memorial SloanKettering Cancer Center. In addition, he serves on the board of trustees of the United Way of Southeastern Michigan and the New American Revolution. Smith is president of the Beta Gamma Sigma’s Director’s Table. Smith also sits on the Procter & Gamble board of directors. He is a member of the Business Roundtable’s Pol-
7 2 7
J a c k
S m i t h
Chronology: Jack Smith 1938: Born. 1960: Received B.A. in business administration from University of Massachusetts. 1961: Joined General Motors (GM). 1965: Received MBA from Boston University. 1974: Named GM assistant treasurer. 1980: Named comptroller of GM. 1982: Named GM director of worldwide planning. 1984: Elected vice president of GM. 1992: Elected chief executive officer and president of GM. 1996: Became GM chairman.
icy Committee, as well as chairman of the Government Regulation Task Force, the Business Council, the U.S.Japan Business Council, and the American Society of Corporate Executives. He is a director of the Polish-American Enterprise fund. He is also a member of the Chancellor’s Executive Committee of the University of Massachusetts and on the Board of Trustees at Boston University. Smith has been awarded honorary doctoral degrees from both of those institutions, as well as from Providence College.
Career Details Smith was working as a payroll auditor at a GM plant in Framingham, Massachusetts, when he first attracted the attention of his superiors. Assistant treasurer Roger Smith (later CEO of GM) offered Jack Smith a job in the company’s New York financial office. At first, Smith was reluctant to leave Framingham, which was close to his hometown of Worchester. However, Roger Smith talked him into it, and Smith departed for “the Big Apple” in 1966. As Roger Smith moved up in the corporate hierarchy, so did Jack Smith. By 1974, Jack Smith had taken over the position of assistant treasurer. He was given increased responsibility over management at GM and by 1980 had risen to the post of corporate comptroller. Two years later, he was promoted to an even more important position—GM’s director of worldwide planning.
7 2 8
B u s i n e s s
In this position, Smith negotiated his first major deal on GM’s behalf. He forged an alliance with Toyota Motor Corp., the Japanese auto giant. Together the two companies formed New United Motor Manufacturing (NUUMI), a joint venture to make cars based in GM’s Fremont, California, auto plant. For his success at sealing the NUUMI deal, GM once again promoted Smith to president and general manager of General Motors of Canada. Here, starting in 1984, he took responsibility for all of GM’s operations in Canada. Having held full responsibility for operations in one country, Smith next moved on to conquer a continent, becoming head of operations for GM Europe in 1987. In under a year on the job, he helped turn one of GM’s perennial money losers into a profitable arm of the company. As his reward, in 1988 Smith was given dominion over all of the auto giant’s international operations. Smith’s success at handling this vast portfolio led to his being named vice chairman of the company in 1990. That summer, Roger Smith was replaced as chairman by Robert C. Stempel. A severe recession helped curtail GM’s growth, and by mid-1992 the company was staring at a $2.7 billion loss. By this time, Jack Smith had been promoted to president and chief operating officer (COO), but some on GM’s board continued to agitate for giving him total control of the company. Those voices were heeded in November of 1992. Stempel was ousted as CEO and replaced by Smith. Almost immediately, the automaker’s fortunes began to turn around, no doubt in part due to an improving overall economy. For 1993, Smith’s first full year on the job, GM registered profits of $2.5 billion, the first time in four years that it had been able to show a profit. The upward trend continued in the ensuing years, as an economic boom spurred consumers to purchase GM cars and trucks at record rates. While Smith’s tenure was marked by many improvements at GM, some observers accused him of not doing enough to make GM competitive. On many key measures such as employee productivity, profitability, and labor relations the leading U.S. automaker lagged behind a number of its domestic and foreign counterparts. The most visible of these problems were the recurring labor confrontations throughout the 1990s that often resulted in strikes—some of which crippled the entire company for weeks. The most damaging of these was a 1998 strike at two Flint, Michigan, plants; the labor stoppage cost GM over $2 billion in lost sales, making it one of the costliest strikes in history. Such failures led for some to call for Smith’s removal, as he, like his predecessor, came to be seen as an obstacle to GM’s progress in these areas.
Social and Economic Impact Jack Smith took over as GM CEO at a time of enormous crisis. Losses were at record levels, defective ro-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J a c k
bot arms were going out of control and smashing windshields within view of the company’s world headquarters, and the management structure was in serious need of reform. Analysts were skeptical about Smith’s prospects for reversing this decline. To meet this challenge, Smith instituted a “bottom-up” management approach that was intended to re-orient the gargantuan corporation on a human scale. On the design level, this approach meant building cars and trucks that meet consumers’ needs and not the whims of auto executives and engineers. During Smith’s tenure, GM introduced over 35 new vehicles. Under Smith, GM began to manage many of its assets more efficiently. The company embarked on the most ambitious manufacturing expansion in its history. Several new plants were added outside of the United States, where labor costs are cheaper. In the United States, job cuts were ordered in order to decrease production costs and improve efficiency. At the same time, GM closed or sold a slew of operations it did not need or could no longer afford, cutting costs and forcing it to focus on its core operations. Even bolder steps were taken on the management level, as Smith restructured the automaker for the 21st century. He gutted GM’s central bureaucracy from 13,000 employees to 1,100 and reorganized operations into geographic sectors. The process of making decisions was streamlined, as “strategy boards” were convened to provide direction for each sector and the company as a whole. All of this was accomplished without the infighting that might have been expected to accompany such sweeping changes. Many GM executives were simply too battered by financial losses and very receptive to new ideas. But as drastic as these changes seemed, they were far short of what some analysts believed was necessary to place the automaker on solid footing.
S m i t h
Center in downtown Detroit. “The decision to make the Renaissance Center General Motors’ new home is symbolic of what we believe in as a corporation,” Smith told the newspaper Crain’s Detroit Business. “Detroit has been our home for the last 76 years. Keeping our headquarters in the city while our business interests stretch globally was important to General Motors.” For his efforts in this area, Crain’s Detroit Business named Smith its 1996 Newsmaker of the year. Despite ongoing problems at GM, Jack Smith’s tenure as CEO is largely considered a success. Some have credited a soaring economy for the auto giant’s turnaround, but even the normally humble Smith isn’t afraid to take his share of the credit. “Every day, something is wrong somewhere,” he told the Detroit News. “It’s a large company. We had mountains to clear and roads to build to get this place running well. But it wasn’t the market that got us where we are today.”
Sources of Information Contact at: General Motors 100 Renaissance Center Detroit, MI 48243-7301 Business Phone: (313)556-5000 URL: http://www.gm.com
Bibliography Ankeny, Robert. “GM Chief at Center of Renaissance Effort.” Crain’s Detroit Business, 20 January 1997. Howes, Daniel. “GM Now Running Leaner, Faster.” Detroit News, 2 November 1997. Howes, Daniel. “Two Division Chiefs Step Down in GM’s Brand Strategy.” Detroit News, 5 December 1996.
Smith’s principal civic accomplishment was to move GM into a new global headquarters at the Renaissance
Smith, David C. “The Kid from Framingham.” Ward’s Auto World, January 1996.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
7 2 9
Russell M. Solomon (1925-) Tower Records
Overview The founder of Tower Records and the driving force behind its remarkable growth, Russell M. Solomon has often attributed his success to incidental innovation and an understanding of the changing marketplace. These he claims are key ingredients in Tower’s dominating presence in the retail music business. Solomon pioneered the concept of the superstore and oversaw the expansion of Tower from a single store in Sacramento, California, to more than 150 stores in 14 countries, selling music, videos, and books, with annual sales of nearly $1 billion.
Personal Life Born in 1925 and a native of Sacramento, California, Russell M. Solomon learned retailing by working in his father’s drugstore in the old Tower Theater Building. In 1941, at the age of 16, he opened his first record store in his father’s drugstore. He bought the store from his father in 1952, which failed. As Solomon recalled, “I was too young to know any better.” A poor student, Solomon was thrown out of high school and was a junior college dropout, leaving school to join the army. During the 1950s, Solomon worked for eight years as a rackjobber, wholesaling records to discount stores, but he went broke in 1960. He had tried to expand the store with insufficient capital to finance the expansion. “It was a dumb mistake,” Solomon admitted, “to think you can finance a business on creditor financing. So I went back to what I did best.” Solomon returned to retailing and reopened the Tower Theater store that creditors had closed, opening his second Tower store in Sacramento a month later.
7 3 0
R u s s e l l
M .
S o l o m o n
It was the creation, however, of a big store in San Francisco in 1968 that launched the Tower empire. Married but separated for over 25 years, Solomon has two sons, Michael, a lawyer who is Tower’s general counsel, and David, who provides Tower’s financial advice. Tower has remained a private company with a net worth estimated at around $400 million. Usually casually dressed in blue jeans and sports shirts, like most of his employees and customers, Solomon has been described as “a hippie who learned to run a business.” He is a collector of contemporary art.
Chronology: Russell M. Solomon 1925: Born. 1941: Began to sell records in his father’s drugstore. 1960: Opened first Tower Records store in Sacramento, California.
Career Details Solomon’s first Bay area record store was a success from the start, offering what became the formula for Tower Records future popularity: wide selection and discount prices. Tower was the first record store chain to stock virtually every record title, using hot-selling albums to lure customers for purchasing other, less popular records. This approach was much like how supermarkets use discount items to increase overall sales. “We stole all our ideas from supermarket merchandising,” Solomon confessed. Like a supermarket, Tower stacks popular items in piles on the floor to encourage impulse buying and to project an image that Tower always has the albums that consumers want long after competitors have run out. Tower was also the first record stores to open from 9 a.m. to midnight. As Walter Yetnikoff, chairman of CBS Records, has said, “Taking your date to Tower Records has become an institution, and it’s cheap if you don’t buy too many records. Late store hours has been called a stroke of Solomon’s marketing genius, but he has said that it just made sense since ‘people stay up late everywhere; what is there to do if you don’t want to go out and hang around a bar?’” Tower Records’ San Francisco store was only 5,000 square feet when it opened, now small by Tower’s standard, but at the time it was almost double the size of the average record store. Pioneering the large-store concept, Solomon began to expand into other markets. The Los Angeles Tower Records store opened in 1970; outlets in San Diego and Berkeley followed in 1972; and other California locations debuted in 1974 and 1976. In 1976, Tower expanded beyond California, entering the Seattle and Phoenix markets. In 1981, Tower went international, opening retail stores in Japan. In 1983, Tower moved east to New York City to its flagship Manhattan store at Fourth and Broadway, a success that earned Tower its second of four Merchandiser of the Year Awards from the National Association of Recording Merchandisers. Stores in Washington, D.C. and Boston followed, and Tower headed even further east to London in 1985. Solomon by chance acquired its prime Piccadilly Square location, which helped ensure Tower’s success abroad.
1963: Unveiled Tower’s first bookstore. 1968: Opened San Francisco store. 1976: Expanded Tower outside California. 1983: Opened store in New York City. 1986: Plunged into European market with Piccadilly Circus store in London. 1995: Opened first Wow store in Las Vegas. 1998: Expanded Tower Records to more than 150 stores in 14 countries.
Chicago, Nashville, New Orleans, and Philadelphia, and throughout Asia, Europe, and Central and South America. Foreign stores in the late 1990s accounted for at least a third of Tower’s sales. Tower also diversified its product line, opening its first book location as early as 1963, and in 1981 it became one of the first music chains to offer videos. As vice president of video sales John Thrasher explained, “It was a logical extension for us. Russ always saw video as a collectable product. Most people thought we were crazy, but we had success with it. Then the mass merchants came along and proved that you can sell video.”
During the 1980s and 1990s, Tower expanded both at home and aboard, opening up stores in Atlanta,
Tower reorganized its store-management structure in the 1990s, integrating all three of its lines—music, books, and videos—under one general manager at each location. Tower is the only chain that still practices decentralized buying with each store with its own staff of buyers. In this way, it is the local buyers who are responsible for knowing what is on hand and how many copies of a release to stock, paying attention to local market conditions. This is one major reason why Tower has been so successful throughout the world, tying inventory decisions to local customer interest. This practice is contrary to conventional retail logic, which holds that stores gain economies of scale by purchasing at the chain level, often based on electronic purchasing data generated at each store. In 1995 Tower launched its Wow stores, combining records, videos, books, and software with con-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
7 3 1
R u s s e l l
M .
S o l o m o n
sumer electronics. Tower has also brought its mail-order business online. In sales of both prerecorded music and videos Tower ranks in the top ten among U.S. retailers.
Sources of Information
Social and Economic Impact Russell Solomon has seen his single store in Sacramento, California, grow to a global enterprise that has changed the way people buy records, videos, and books around the world. Solomon recognized that variety and discounts would be an unbeatable combination. By keeping his stores open late, he also has helped encourage shopping as an evening social event. Tower’s global reach has been an important agent for distributing various cultures’ art throughout the world. If television has managed to better connect people around the world, chains like Tower also contribute to the wider exposure of culture internationally. With only about 15 percent of Tower’s sales from the “top 40” genre, Tower also provides a market for alternative and classic recordings that have a more difficult time being stocked in smaller stores. In the era of the giant retailer, which Tower helped to
7 3 2
usher in, Solomon has shown how larger stores can also be responsive to local tastes and markets.
B u s i n e s s
Contact at: Russell M. Solomon 2605 Del Monte West Sacramento, CA 95691 Business Phone: (916)373-2561 URL: http://www.towerrecords.com
Bibliography Angel, Karen. “Tower of Stength.” Publishers Weekly, 27 October 1997. Fabrikant, Geraldine. “Tower Record’s Giant Steps.”New York Times, 25 April 1987. Jeffrey, Don. “Tower’s Solomon Weighs Expansion, Stock Offering.”Billboard, 27 May 1995. Mayfield, Geoff. “The Flowering of Tower.”Billboard, 14 March 1998. “Russell Solomon and Family.” Forbes, 17 October 1994.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Steven Spielberg Overview Steven Spielberg has turned out some of the most popular, highest-grossing films in movie history. With his movie Jaws, he played a large part in ushering in a new era in modern cinema: the big-budget megahit. His critics claim his movies often depend too heavily on spectacular special effects. His fans call him the king of good storytelling. Whatever the opinion, no one can deny that Spielberg has impacted moviegoers since the 1970s, and in the process has built a movie-making empire of unmatched dimensions.
(1947-) Amblin Entertainment and DreamWorks SKG
Personal Life Steven Spielberg was born on December 18, 1947, in Cincinnati, Ohio. His father, Arnold Spielberg, was an electrical engineer who designed computers for RCA, GE, and IBM, and his mother, Leah Spielberg, was an accomplished pianist. Spielberg was the eldest of four children. Spielberg’s father moved the family frequently as he pursued jobs around the country, settling in Phoenix, Arizona, from 1957 to 1964. School proved to be difficult for Spielberg. He had trouble making friends because he moved so often, and at school he was constantly teased because he was often the only Jewish student. At a very young age, Spielberg decided to make movies. His three sisters were his favorite subjects and appeared in many of his earliest attempts at filmmaking. His mother would help with the special effects. By age 13, Spielberg had already won a contest for his 40-minute
7 3 3
S t e v e n
S p i e l b e r g
The American Film Institute honors Steven Spielberg at the Beverly Hilton Hotel in California. He is accompanied by his wife, Kate Capshaw. (Archive Photos/Lee.)
war movie Escape to Nowhere. In 1964, he turned out Firefly, an earth-versus-alien epic nearly two-and-a-half hours in length. Upon his high school graduation, Spielberg had hoped to attend film school at the University of California at Los Angeles, but his C grade average was not good enough to gain admittance to the competitive program. Instead, he attended California State College at Long Beach. College held little interest for Spielberg, though, and he spent most of his time at the movies. In a 1996 Cosmopolitan article, Spielberg told of the day that he began sneaking into Universal Studios in 1966. “I went back there every day for three months. I walked past the
7 3 4
B u s i n e s s
guard every day, waved at him and he waved back. I always wore a suit and carried a briefcase, and he assumed I was some kid related to some mogul . . . . So every day that summer, I went in my suit and hung out with directors and writers and editors.” Spielberg married actress Amy Irving in 1985. They had one son before divorcing in 1989. In 1991, Spielberg married Kate Capshaw, an actress who starred in Indiana Jones and the Temple of Doom. Between them they have seven children. Now known as a family man, Spielberg is often described as a giant kid. He typically dresses in jeans and
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S t e v e n
sweatshirts and wears a baseball cap. He admits to a fondness for bad television movies and a love for video games. In a 1994 New Yorker article Tom Hanks described him fondly, saying, “The thing about Steven is he’s still the A.V. guy in junior high school. You know, the guy who brings the movie projectors around and knows how to thread them, and all that kind of stuff.”
S p i e l b e r g
Chronology: Steven Spielberg
Career Details
1947: Born.
Though he may dress like an overgrown child, Spielberg has a reputation for being a shrewd businessman. Unable to direct all of the products he was interested in, Spielberg formed his own production company in 1980. The company was called Amblin Entertainment, after one of his first films. Movies that have been released under the Amblin banner include Gremlins, Back to the Future, Goonies, and Men in Black. Amblin also produced several animated films, including Who Framed Roger Rabbit, An American Tail, and Land Before Time. Amblin was likewise responsible for such television shows as the hit drama ER and the animated series Tiny Toons Adventures and Animaniacs. Many of his early films were made with his close friend, director George Lucas. In 1994, Spielberg merged his company with a new production company. He formed the company with former Disney president Jeff Katzenberg and billionaire music producer David Geffen. The power trio planned to combine their talents and envisioned the creation of their own multimedia entertainment projects. Criticized for its slow start, the company has been involved in making records, films, animated movies, toys, and video games. Despite the diversity of the company’s endeavors, Spielberg concentrates mostly on filmmaking. He continues to focus on what he has always done best, directing movies. Spielberg began his career in 1969 when Universal Television’s Sid Scheinberg saw Spielberg’s short film, Amblin’. Spielberg left school and signed a seven-year contract with Universal. His first assignment was an episode of a 90-minute pilot for Rod Serling’s Night Gallery series. He then directed episodes of several other television shows. In 1971, Spielberg directed his first movie. Duel cost only $350,000 to make, drew rave reviews, and grossed over $5 million in foreign releases alone. Spielberg made two more television movies before directing his first theatrical film. The comedy-drama, The Sugarland Express was released in 1974. The film received positive reviews, even earning Spielberg a bestscreenplay award at the 1974 Cannes Film Festival, but it did not fare extremely well at the box office. Spielberg’s next effort was more successful. Entrusted with the screen adaptation of Peter Benchley’s best-selling novel Jaws, the director unleashed a sensation; the story of an Atlantic seaside town terrorized by a great white shark seized the public imagination. The
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
1975: Directed Jaws. 1979: Directed Raiders of the Lost Ark. 1981: Directed and co-produced E.T. The ExtraTerrestrial. 1984: Directed and co-produced The Color Purple. 1985: Directed and co-produced Empire of the Sun. 1991: Directed Hook. 1993: Directed Jurassic Park and Schindler’s List. 1994: Established DreamWorks SKG. 1997: Directed Amistad. 1998: Directed Saving Private Ryan.
1975 film became the highest-grossing motion picture to date. Its big budget and the incredible special effects used to portray the mechanical shark named Bruce set the stage for a new generation of high-budget, megahit movies. Though not every film was a hit, it was clear from the beginning that he knew how to win at the box office. In 1977 Spielberg released his next film project, the science fiction story Close Encounters of the Third Kind, another enormous box office hit. Spielberg released Raiders of the Lost Ark in 1981. The action drama set in the 1930s, with Harrison Ford starring as archaeologistadventurer Indiana Jones, was so successful that Spielberg released two sequels, Indiana Jones and the Temple of Doom, in 1984 and Indiana Jones and the Last Crusade. in 1989. In 1982 Spielberg made movie history again with the release of E.T.: The Extra-Terrestrial. The movie, a story about a boy and his friendship with a loveable alien trying to find his way home, is close to Spielberg’s heart. He has drawn comparisons between the emotions that are portrayed in the movie and those that he felt when his parents divorced. Despite its overwhelming popularity with fans and critics alike, and its many nominations, E.T. received no Academy Awards. In 1986 he made The Color Purple, based on Alice Walker’s Pulitzer Prize-winning novel of the same name. While the film received some impressive reviews, Spielberg received criticism for patronizing African Ameri-
S t u d e n t s
7 3 5
S t e v e n
S p i e l b e r g
cans and for sentimentalizing rural Southern poverty. Nonetheless, the movie did well at the box office and introduced two new stars, Oprah Winfrey and Whoopi Goldberg. The movie received a record-tying 11 Academy Award nominations, but failed to win in any category, and Spielberg himself was not even nominated. Empire of the Sun was released in 1987. Based on a true story, the movie recounted the adventures of a young British boy in Shangai during World War II. The film earned fair reviews and box office attendance. Also, in 1987 Spielberg finally received recognition for his work as the Academy of Motion Pictures bestowed on him one of its highest honors, the Irving J. Thalberg Award. The award recognizes a distinguished body of works. Taking a break from serious films which had not fared as well as some of his others, Spielberg’s megahit Jurassic Park was released in 1993. The subject of one of the most intensive pre-release promotions in film history, the story centered on a present-day theme park that featured genetically engineered dinosaurs as the main attraction. Based on a book by Michael Crichton, the film was such a hit that Spielberg could not resist the temptation to do a sequel, and subsequently released Jurassic Park: The Lost World in 1997, which grossed $229 million. In the years 1993-98, Spielberg finally quieted all the critics who did not believe he could make an “adult” movie. His film Schindler’s List, a black-and-white movie filmed in Poland, was a lengthy Holocaust drama based on the true story of a German factory owner who saved the lives of thousands of Jews who worked for him. The critically acclaimed film earned seven Academy Awards, including awards for best picture and best director. The film held personal meaning for Spielberg who had shunned his Jewish heritage as a child because he had been an outcast. He described his Jewish awakening as the birth of his son Max in 1985, when he began thinking about his family and the stories about the Holocaust that had been told to him when he was young. He told Harper’s Bazaar in 1994, “Not since E.T. had I felt such a personal calling, to do something I actually feel part of.” Spielberg set up two public foundations with his earnings from the movie for the purposes of studying the Holocaust and keeping it alive the memory of the Jews who died in it. A later Spielberg work, Saving Private Ryan, released in the summer of 1998, told the story of eight American soldiers during World War II who go behind enemy lines to retrieve a lost paratrooper after it is discovered that all three of his brothers had been killed during the war. The movie received excellent reviews. Spielberg’s realistic portrayal of the D-Day invasion of the beaches of Normandy have led many to call it the greatest war movie of all time.
7 3 6
B u s i n e s s
Social and Economic Impact Spielberg entered filmmaking at a time when big budgets that paid for high-tech special effects and major marketing campaigns were not the standard. With the unprecedented success of Jaws, that all changed. In a time when no movie had grossed $100 million in the United States or Canada, Jaws grossed almost half a billion dollars. Ticket sales skyrocketed Close Encounters of the Third Kind into the top-ten moneymakers up to that time. E.T. not only topped box office sales, but also became an overwhelming merchandising and video success. The movie made $700 million, the largest box office take at the time, and earned over $1 billion in merchandising. Jurassic Park quickly became the highest-grossing film at its release. Spielberg has made big movies into big business. His estimated gross income for 1997 was $283 million. A Forbes correspondent asked the question, “Has Spielberg had his hand in every single blockbuster coming out of Hollywood—or does it just seem that way?” Spielberg has once been accused of making only kids’ movies with plots full of action and special effects, but without depth. Yet, his success with Schindler’s List in 1994 and Saving Private Ryan in 1998 have changed his image. These movies brought issues to the forefront that spoke to many people. He presented history in ways that no one had before him. In 1998, Time magazine named Spielberg in its list of the 100 most influential people of the twentieth century. In Time’s tribute to Spielberg, film critic Roger Ebert affirmed Spielberg’s place on the list. “In the history of the last third of twentieth century cinema, Spielberg is the most influential figure, for better and worse. In his lesser films he relied too much on shallow stories and special effects for their own sake . . . . In his best films he tapped into dreams fashioned by our better natures.”
Sources of Information Contact at: Amblin Entertainment and DreamWorks SKG 100 Universal City Plz. Universal City, CA 91608 Business Phone: (818)733–7000
Bibliography Appelo, Tim. “First Critic.” Entertainment Weekly, 17 December 1993. Brown, Corie, and Richard Turner. “Fishing Buddies: As DreamWorks Finally Releases its First Movie, the Partners Are Still Learning to Work Together.” Newsweek, 29 September 1997. Contemporary Authors. Detroit: Gale Research, 1997. Corliss, Richard. “Hey, Let’s Put on a Show!” Time, 27 March 1995. Corliss, Richard. “Peter Pan Grows Up: But Can He Still Fly?” Time, 19 May 1997.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S t e v e n
S p i e l b e r g
Current Biography Yearbook 1996. New York: H.W. Wilson Co., 1997.
Maser, Wayne. “The Long Voyage Home.” Harper’s Bazaar, February 1994
Ebert, Roger. “Time 100: The Most Important People of the 20th Century.” Time, 29 May 1998.
Sanello, Frank. “Spielberg: the Man, the Movies, the Mythology.” Cosmopolitan, July 1996.
Encyclopedia of World Biography. Detroit: Gale Research, 1998.
Schiff, Stephen. “Seriously Spielberg.” New Yorker, 21 March 1998
Hallett, Anthony and Diane Hallett. Encyclopedia of Entrepreneurs. New York: John Wiley & Sons, 1997.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
7 3 7
Leland Stanford (1824-1893) Central Pacific Railroad
Overview Leland Stanford combined his legal knowledge, business ability, and political influence to become one of California’s leading citizens in the nineteenth century. With three colleagues, he established the Central Pacific Railroad, which built the western portion of the first transcontinental railroad, and served as its president from 1861 until his death in 1893. The Big Four, as they came to be known, earned an estimated profit of $54 million from that venture alone. Stanford later served as president of the Southern Pacific Corporation for five years. Stanford also had a distinguished political career. He served one term as the California’s first Republican governor in 1861 and was instrumental in keeping the state loyal to the Union during the Civil War. He later served as a U.S. senator until his death in 1893. As a memorial to his deceased 15-year-old son, Stanford established the Leland Stanford, Jr. University in Palo Alto, better known as simply Stanford University, by donating land and funds worth approximately $30 million.
Personal Life Leland Stanford was born on March 9, 1824, in Watervliet, New York. He was the fourth son of Josiah and Elizabeth (Phillips) Stanford. The family could trace its American roots back to Thomas Stanford (or Staniforth), who lived in Concord, Massachusetts, in 1644. Stanford’s father was a prosperous farmer who also worked as a contractor in the building of bridges, roads, and railroads.
7 3 8
L e l a n d
S t a n f o r d
Stanford’s early education was typical of the period, a combination of formal schooling and home tutoring. He began to study law at the age of 20 and in 1845 entered the law office of Wheaton, Doolittle & Hadley in Albany, New York. He was admitted to the New York Bar in 1847, but he moved to Port Huron, Wisconsin, the next year to open his own law office. He stayed there until 1852, when his law office burned down. Stanford decided to join three of his brothers in Sacramento, California, where they had a successful business selling mining and agricultural supplies. They helped him establish a mining store in Cold Springs, which proved unsuccessful. He then opened a general store in Michigan Bluff. Finally, in 1856 he moved to Sacramento and became a partner in his brothers’ business. Stanford married Jane Elizabeth Lathrop of Albany, New York, in 1850. They had one son, Leland Stanford, Jr., who by all accounts was a sickly boy. While he was touring Europe with his parents, he contracted typhus and died in Florence, Italy, at the age of 15. After Leland, Jr.’s death, his father decided to establish a university in memory of his son. After consulting with Charles W. Eliot, the president of Harvard, Stanford established the Leland Stanford, Jr. University in Palo Alto, which opened in 1891. Stanford’s many interests outside of business and politics included operating the world’s largest vineyard at the 59,000-acre Vina Ranch near Sacramento. When the extremes of climate proved unsuitable for wine production, they began producing brandy. On his 9,000-acre Palo Alto ranch, Stanford devoted himself to raising some of the world’s fastest race horses. To prove that a horse lifted all four of its hooves off the ground, he commissioned photographer Edward Muybridge to set up a battery of cameras triggered by trip wires to photograph a trotting horse. Muybridge was able to project the still images so the horse appeared to be moving, an early example of “filmmaking.” Both ranches were eventually donated to Stanford University. Stanford was also a noted art collector, acquiring paintings, sculpture, and other art objects to adorn his residences in San Francisco and Palo Alto. His San Francisco house was destroyed after his death in the earthquake and fire of 1906.
Career Details
Leland Stanford.
(AP/Wide World Photos, Inc.)
whom he had met as a delegate to the 1860 Republican National Convention in Chicago. In 1861 Stanford, together with Mark Hopkins, Collis P. Huntington, and Charles Crocker, formed the Central Pacific Railroad with Stanford as president. Stanford handled the legal and governmental affairs of the railroad. When President Lincoln signed an act pledging federal support for a transcontinental railroad, it was the Central Pacific Railroad that was assigned to construct the portion from Sacramento east to meet the Union Pacific Railroad, which was building the portion west from Omaha, Nebraska. Stanford persuaded the California legislature to give more than $750,000 to the cash-starved Central Pacific to allow it to build part of the first transcontinental railroad. For its part, the Central Pacific would get five miles of land on either side of the track it laid and up to $48,000 per mile. When the transcontinental was completed in 1869, Stanford and his associates were some $54 million richer.
Once in Sacramento, Stanford became interested in politics. A Republican in a predominantly Democratic state, he suffered defeat in 1857 when he ran for state treasurer, and again in 1859 when he ran for governor. In 1861 he was successful in his bid for the governorship, taking advantage of a split in the Democratic Party caused by the outbreak of the Civil War. During his single term, Stanford successfully kept the evenly divided state loyal to the Union. It was around this time that he developed a friendship with President Abraham Lincoln,
The Big Four, as Stanford and his associates were known, went on to pursue other interests in rail and water transportation. They formed the Southern Pacific Railroad in 1870 to purchase and build railroad lines south from San Francisco. The company later completed a second transcontinental railroad from California to New Orleans. The Big Four eventually established a virtual monopoly over transportation in California, and in 1885 they formed the Southern Pacific Corporation as a holding company for their interests. Stanford served as its president from 1885 to 1890.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
7 3 9
L e l a n d
S t a n f o r d
featured Spanish mission-style buildings designed by Charles A. Coolidge and landscaping by noted landscape architect Frederick Law Olmsted.
Chronology: Leland Stanford 1824: Born.
With renewed political ambitions, Stanford ran for the U.S. Senate in 1885 and defeated A.A. Sargent, who was a personal friend of one of the Big Four, Collis P. Huntington. Huntington and Stanford disagreed over Stanford’s political career, and in 1890 Huntington managed to have Stanford replaced as president of Southern Pacific. Stanford was reelected to a second term in the U.S. Senate, where he served until his death in 1893 at the age of 69.
1845: Entered first law office. 1847: Admitted to New York Bar. 1848: Relocated to Port Huron, Wisconsin, to practice law. 1856: Became partner in brothers’ business in Sacramento. 1857: Entered California politics. 1861: Elected first Republican governor of California. 1861: Organized Central Pacific Railroad (CPR) with three colleagues and became president of the company. 1869: CPR completed the western portion of the first transcontinental railroad, and Stanford drove in the last gold spike at Promontory, Utah, on May 20. 1885: Elected U.S. senator from California. 1891: Leland Stanford, Jr. University opened in Palo Alto, California, as a memorial to Stanford’s deceased son. 1893: Died.
Social and Economic Impact Stanford’s philanthropy, principally through the establishment of Stanford University, has made his legacy the biggest of the Big Four, who are remembered today largely by the banks and hotels in California that bear their names. While Stanford himself did not live to see the university grow and prosper, it has become recognized as one of the finest universities in the United States. As a co-founder and president of the Central Pacific Railroad, Stanford was responsible in part for running one of the most successful transportation monopolies in U.S. history. The economic impact of the completion of two transcontinental railroads was substantial, as people and goods were able to travel westward more easily from the South and the Midwest. It contributed greatly to the expansion of the West and the commerce of the nation. Within California, the building of that state’s railroad infrastructure was largely accomplished by companies in which Stanford played key roles. Politically, Stanford was an effective lobbyist, if not unselfish, on issues of concern to him. He also gained considerable influence through his friendship with President Lincoln.
Stanford began devoting less time to his railroad interests around 1870, when his son was born. He spent more time at his Vina and Palo Alto ranches and on the education of his son. He and his wife took Leland, Jr. on a grand tour of Europe in 1885, where he contracted typhus and died. Following his son’s untimely death, Stanford decided to establish a university in his honor. He said, “I was thinking that since I could do no more for my boy, I might do something for other people’s boys in Leland’s name.” He persuaded the California legislature in 1885 to pass an act enabling the establishment of a university. His $30 million endowment to the university consisted of the 9,000-acre Palo Alto ranch, the 59,000-acre Vina Ranch, the Stanford home in San Francisco, the 22,000 acre Gridley ranch, other real estate, and interest-bearing securities. When the Leland Stanford, Jr. University opened to students in the fall of 1891, its president was David Starr Jordan from Indiana University. The campus
7 4 0
B u s i n e s s
Sources of Information Bibliography Encyclopedia of World Biography. Detroit: Gale Research, 1998. Hutchison, John N. “Leland Stanford’s Great Vina Ranch.” Wines and Vines, March 1993. McGuire, William, and Leslie Wheeler. American Social Leaders. Santa Barbara, CA: ABC-Clio, 1993. The National Cyclopaedia of American Biography. New York: James T. White & Co., 1891. Reprint, Ann Arbor, MI: University Microfilms, 1967-71. Snow, Richard F. “Biggest of the Four.” American Heritage, December 1987. Story of the Great American West. Pleasantville, NY: Reader’s Digest Association, 1977.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Thomas Stemberg Overview A retail pioneer and innovator, Thomas G. Stemberg founded the office supply superstore Staples, Inc. He developed and launched the first line of generic food sold in the United States and revolutionized the office supply business by eliminating wholesalers and selling directly to customers in his warehouse-like superstores. With a clear but simple message, Stemberg always emphasized that his “priority is saving people money.” Stemberg’s simple formula has spawned imitators who collectively have helped transform modern retailing.
(1949-) Staples, Inc.
Personal Life Thomas G. Stemberg was born in Orange, New Jersey, on January 18, 1949. His father was an Austrian restaurateur. When Stemberg was 13, his father died and he moved with his mother to Vienna. He was a student at the American International School from 1962 to 1967. He returned to the United States to attend Harvard College, graduating in 1971. In 1973, Stemberg graduated from the Harvard Business School as a George F. Baker Scholar. He was married for nearly ten years to Maureen Sullivan, with whom he had one son. Stemberg married Dola Davis Hamilton in 1988, and they have four children. Stemberg is an active alumnus of his alma mater and serves as the president of Friends of Harvard Basketball.
Career Details Before founding Staples, Stemberg applied his marketing and efficiency skills learned at Harvard Business
7 4 1
T h o m a s
S t e m b e r g
Chronology: Thomas Stemberg 1949: Born. 1971: Graduated from Harvard College. 1973: Received M.B.A. from Harvard. 1973: Hired by the Jewel Companies. 1982: Promoted to vice president of sales and merchandising, Star Market. 1982: Hired as senior vice president of sales and merchandising, First National Supermarkets. 1986: Opened first Staples store. 1988: Became chairman of Staples, Inc. 1996: Proposed merger with Office Depot. 1997: Merger blocked on antitrust grounds.
School to the competitive world of supermarkets. After receiving his M.B.A. he went to work with the Jewel Companies, owner of Massachusetts’ Star Market, where he rose to become vice president of sales and merchandising in 1982. Stemberg developed and launched for the store a line of generic foods because he sensed that customers would choose savings over brand names. He also introduced warehouse specials on selected items. His innovations revolutionized retailing and raised Star Market’s sales from fourth to a tie for first place in the competitive Boston market. In 1982, Stemberg moved to Connecticut-based First National Supermarkets to become president of its Edwards Finast division. There he applied the lessons he had learned at Star Market, opening the Edwards Food Warehouse megastores, which emphasized savings through volume buying and reducing operating costs. In 1984, however, Stemberg was fired due to a dispute with management. It was while Stemberg was out of work interviewing for a position as a chairman of a wholesale club that he came up with the idea that lead to Staples. Over a Fourth of July weekend, Stemberg needed a printer ribbon for his computer. The computer store did not carry ribbons and all the office supply stores were closed. As Stemberg recalls, “I was saying to myself this is crazy. There’s no place to buy this stuff from Thursday morning to Monday. There’s got to be a better way.” The office supply business was ready for Stemberg’s brand of efficiency management. He conducted an analy-
7 4 2
B u s i n e s s
sis of the office products market and wrote the business plan which would redefine the industry. His conception was Staples—”the office superstore.” It would be a chain of discount office supply stores that served smaller and home businesses with discounts averaging 50 percent of list prices and convenient store hours. Stemberg’s partner in launching Staples turned out to be Leo Kahn, the founder of Purity Supreme, Stemberg’s chief competitor when he was with Star Market. Kahn had sold Purity and was looking for a good investment. During a conversation at a Harvard basketball game, the two former rivals joined forces to launch Staples, Inc. in 1986. The first Staples store opened in Brighton, Massachusetts. Stemberg set about transforming office supply retailing in the same way that Toys ‘R’ Us had done in toys and Home Depot had done in building supplies. Stemberg cut out wholesalers, buying directly from manufacturers and passing the savings on to consumers. Despite the eventual growth and success of Staples, Stemberg faced a number of challenges. The first was to get customers into the stores. Staples sent merchandise coupons to area office managers, but it took months for the first one to visit the store. Accustomed to traditional purchasing methods, office managers required several months and personalized direct marketing before becoming loyal customers. There were also difficulties in getting manufacturers to accept dealing directly with Staples instead of traditional wholesalers. Once products reached the stores, customers were tearing apart identical packaging to see what they were purchasing. Staples campaigned to convince suppliers to change their packaging. If they refused, Staples went to another supplier. Stemberg attributes his success to maintaining focus on his primary goal: “Devote your career to developing and implementing bold new ways for customers to save money.” He takes credit for coming up with the “pretty simple idea” of slashing the costs and hassles of running an office and with having the foresight to hire the most talented managers. As Stemberg observed, “I’d advise anyone wanting to build an organization to bring in the best people you can and then give them the latitude to make decisions. Let them take prudent risks—people should not be penalized by their mistakes.” Critics have given Stemberg high marks for his management style in showing, according to Gary Balter of Donaldson, Lufkin & Jenrette, “the right combination of applying the pressure in the right places and allowing the people to grow on their own to take as much responsibility as they can manage. He’s obviously emerged as the top player in the office-supply business, and it’s all been because of his leadership and making sure he’s surrounded himself with the right people.” The company at first concentrated its growth into the Northeast in the Boston to Washington corridor, which has the highest concentration of office workers in the country. By 1989, when Staples went public, sales had climbed to about $120 million and nearly $300 million
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
T h o m a s
by 1991. Staples first topped the $1 billion mark in 1993, increasing its number of stores to 360, with plans to open 30 to 35 new stores each year. The 1996 bid to merge with Staples’ principle competitor Office Depot would have created a 1,100 store giant with annual sales projected at $7.5 billion. However, the Federal Trade Commission overruled the merger claiming that Staples would achieve a monopoly in the office supply business, which would have an adverse effect on future prices, a contention that Stemberg denies. Rather than wanting to buy its competitor to raise prices, Stemberg argued that the move was to gain efficiency that would save $5 billion in the next five years. Staples has expanded into Canada and Europe and its growth has been remarkable. As Stemberg remarked in 1995, “If someone had told me back when we started that we’d be opening stores in Portland, Maine, or West Lebanon, New Hampshire, or Ithaca, New York, I’d have told you to get your head examined.”
S t e m b e r g
transform the way many conducted their businesses. He centralized deliveries and inventory and bought directly from manufacturers in order to pass savings along to his customers. The formula was irresistible, and Staples, along with its competitors, reached cities throughout the country as it continued to grow worldwide.
Sources of Information Contact at: Staples, Inc. One Research Dr. Westborough, MA 01581 Business Phone: (508)370-8500 URL: http://www.staples.com
Bibliography Barrier, Michael. “Tom Stemberg Calls the Office.” Nation’s Business, July 1990. Caminiti, Susan. “Seeking Big Money in Paper and Pens.”Fortune, 31 July 1989.
Social and Economic Impact Stemberg is a pioneering retailer who has revolutionized the way businesses and individuals shop. With Staples, Stemberg reached the large market of small businesses, including the rapidly growing home business segment, which had often been ignored by retailers previously. Stemberg introduced his multibillion-dollar office superstore chain by applying techniques he learned from the supermarket business. Stemberg recognized that desire for discount pricing in the office supply market could
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Hyatt, Josh. “Staples, Gutsy & Growing.” Boston Globe, 9 June 1992. Hyten, Todd. “Notepad Nirvana: Staples Finds Success.”Boston Business Journal, 12 May 1995. Jones, Sarah P. “Staples Supplies the Right Stuff.”Boston Herald, 30 January 1997. Stemberg, Thomas G. Staples for Success: from Business Plan to Billion-Dollar Business in Just a Decade. Santa Monica, Calif.: Knowledge Exchange, 1996.
S t u d e n t s
7 4 3
John Stevens (1749-1838) Inventor
Overview John Stevens was one of America’s early inventors and engineers. A pioneer of steam-powered transportation and of patent laws, John Stevens devised efficient innovations for steam engines and helped popularize their use in ships and locomotives.
Personal Life John Stevens was born into a wealthy family in New York City in 1749. Stevens was born more than 25 years before the signing of the Declaration of Independence and more than 30 years before the United States existed as a sovereign state. His father was a ship owner and merchant and provided handsomely for his family. When John was a boy, the Stevens family moved to Perth Amboy, New Jersey, where he attended Kenersley’s College. The family moved back to New York City and there John attended King’s College, which today is Columbia University. He graduated in 1768. John Stevens became a lawyer and was admitted to the bar in 1771. His attention quickly turned to politics. During the revolution, he served as treasurer of New Jersey during the years 1776 to 1779 and surveyor general of eastern New Jersey from 1782 until 1783. He achieved the rank of colonel for his services in the revolution. Stevens had three sons: John Cox, Robert Livingston, and Edwin Augustus. All three worked with their father during his career as an engineer and inventor. In 1784, John Stevens bought a huge estate on the west side of the Hudson River for his growing family.
7 4 4
J o h n
S t e v e n s
The estate comprised most of present-day Hoboken, New Jersey.
Career Details After his brief career in law and politics, Stevens turned his attention to steam navigation. He was truly a pioneer of this science, as it was then only in an experimental stage. His political connections came in handy later, however. In order to protect his inventions, Stevens petitioned Congress for patent laws to prevent others from unjustly appropriating proprietary inventions. The first American patent law was passed in April 1790. Its form was essentially what Stevens had outlined to Congress, and the new law allowed Stevens to claim his first patent in 1791. Stevens’ early work produced improved steam boilers and steam engines. Stevens teamed up with his brother-in-law and college friend, Robert R. Livingston, to attempt to build a steamboat. After a few years of unsuccessful experiments, Stevens and Livingston teamed up with mechanic Nicholas Roosevelt. Robert Livingston purchased an exclusive charter for steamships on the Hudson River. Soon thereafter, he went to France to serve as the U.S. minister. During his tenure there, he convinced Robert Fulton, the man credited with the invention of the steamboat, to produce his 5-mile-per-hour steamship in America. One of Stevens’ most important inventions came in 1802, still early in his steam experimentation. He designed the screw propeller, which was a great advance in steamship operation. The screw propeller was a large screw with four blades on it, driven by the steam engine. In 1803, Stevens used this technology in building the Little Juliana. It was powered by a multitubular boiler, which Stevens had patented. Using a new high-pressure steam engine and two screw propellers, the Little Juliana crossed the Hudson river in 1804. Upon Livingston’s return to the United States, he met with Stevens to discuss their steamship plans. He was unimpressed, however, with the Little Juliana. The ship failed to meet the speed requirements of his Hudson River charter. He offered Stevens a partnership in Fulton’s future steamboat. Stevens declined this proposal, feeling betrayed by Livingston. From then on, there was fierce competition between Stevens and the Livingston-Fulton team. Next, John Stevens designed an engine for a paddle-wheel steamboat. His hope was to establish a ferry service between New Jersey and Manhattan and another between New York City and Albany. Unfortunately for him, Livingston fulfilled his charter when Fulton’s Clermont made its first successful voyage from New York City to Albany, New York, in 1807. Fulfilling the charter gave Livingston-Fulton monopolistic rights to steam navigation on the Hudson.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Col. John Stevens.
(AP/Wide World Photos, Inc.)
Just one year later in 1808, Stevens launched his 100-foot Phoenix. Since Stevens’ ship could not sail the Hudson, the Phoenix took a trial run to Philadelphia by sea in June 1809. With that maiden voyage, captained by John Stevens’ son Robert Livingston Stevens, the Phoenix became the world’s first ocean-traveling steamboat. Stevens used the Phoenix to set up steam-powered ferry service on the Delaware river. In 1811, Stevens’ built another steamship, the Juliana which was used as a ferry on Long Island Sound. After building and launching the Juliana, John Stevens turned his attention to using steam locomotion for land travel. Again, his political past facilitated his endeavor. He argued the advantages of rail transportation over canals in Congress. His efforts resulted in the passage of the first American railways act. In 1815, Stevens received the first railroad charter in America from the state of New Jersey. The charter granted him rail rights from the Delaware River, near Trenton, to the Raritan River in New Brunswick. He was granted a similar charter in 1823 from the Pennsylvania state legislature. With that, he and partners Horace Binney and Stephen Girard established the Pennsylvania Railroad. The rails ran from Philadelphia to Columbia, Pennsylvania, but soon failed financially. John Stevens constructed the first steam locomotive in the United States in 1825, when he was over 75 years old. He operated the train on a circular track on his Hoboken estate. In 1830, he formed the Camden & Amboy Railroad and Transportation Company, his first success-
S t u d e n t s
7 4 5
J o h n
S t e v e n s
stitute. Stevens developed a two-wheeled guide called a pilot that he attached to the front of the locomotive. This important innovation reduced derailments on sharp curves. In 1844, Stevens returned to his naval roots and designed Maria, a yacht recognized as the world’s fastest sailing ship for the next twenty years.
Chronology: John Stevens 1749: Born. 1771: Admitted to the Bar Association. 1776: Became treasurer of New Jersey. 1790: Presented patent law to Congress. 1791: Received first patent for first multitubular boiler. 1804: Little Juliana crossed the Hudson River. 1809: Phoenix made the world’s first sea voyage by a steam vessel. 1815: Received first U.S. railroad charter.
Also an inventor, Edwin Augustus Stevens was the businessman of the family. He managed his father’s estate and oversaw the family’s commercial ventures. He invented a plow in 1821 with his brother that came into wide use. He initiated construction of the Union Railroad between Philadelphia and New York City in 1825 as its manager. By 1827, the Stevens family owned the Union Railroad and later merged it with the Camden & Amboy Railroad Company. Edwin Stevens served as manager and treasurer of the Camden & Amboy Railroad Company for 35 years. He worked with his brother on the design of metal-clad ships. Congressional approval of the project was won in 1842, but construction did not begin until 1854. Robert’s death in 1856 ended the brothers’ efforts in producing armored ships for the navy.
1825: Constructed first steam locomotive in the United States.
Social and Economic Impact
1838: Died.
ful rail company. Before his death in 1838, Stevens also designed a bridge and underwater tunnel to run from Hoboken to New York City and an elevated railroad system for New York City. Two of Stevens’ sons, Edwin and Robert, worked closely with their father on his steam-powered transportation projects. Both are respected inventors in American history. Robert assisted his father in the construction of Little Juliana, the small screw-propeller steamboat that crossed the Hudson in 1804. In 1809 he captained their Phoenix on its maiden voyage to Philadelphia. After this trip, Robert Stevens piloted the Phoenix as a ferry along the Delaware River. The War of 1812 led him to the idea of developing metal-clad ships with his brother Edwin, but navy officials showed no interest in the project until the 1840s. Stevens was unable to construct one before his death. In 1830, he joined his father’s rail company and went to England to study locomotives. As a result, he designed the T-shaped type of rail which is still used. He also discovered that iron rails over wooden cross ties over a gravel bed—as is used today— provided a safer, more comfortable ride than others of that day. Robert Livingston Stevens was named president and chief engineer of the Camden & Amboy Railroad Company that year. Steam railroad service in New Jersey began in 1831. The English locomotive used on the John Bull line was later preserved at the Smithsonian In-
7 4 6
B u s i n e s s
The ability of entrepreneurs to protect their inventions can be traced back to John Stevens. Stevens outlined a patent law and is credited with convincing Congress to pass it. He was also among the first to be granted a patent under that law. Stevens patented several important inventions in steamboat engine design. Stevens, in competition with Fulton, Livingston, and Roosevelt, was among the first to introduce commercially successful steamboats. Stevens’ oceangoing steamboat offered new possibilities for ferrying people and for trading between cities. A dedicated inventor, Stevens did not stop experimenting and learning once the steamboat had been invented. Instead, he used his knowledge to promote something he strongly believed in, rail travel by steam locomotive. Stevens’ impact on the world continued long after his death. His promotion of rail travel and invention of the steam locomotive changed trade, travel, and expansion in the United States in ways that he did not see during his lifetime. His children’s contributions to steamboats, railways, naval ships, and plows are attributed in part to him because they worked with him during most of his career. Models of Stevens work can be found at the Smithsonian Institute and the Massachusetts Institute of Technology. The Stevens Institute of Technology in Hoboken, New Jersey, is named for the Stevens family. The Stevens Institute was endowed with land and money by Edwin Augustus Stevens on his death.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J o h n
S t e v e n s
“Tales of the Early Republic.” Available from http://www.panix. com/hal/
Sources of Information Bibliography Preston, Wheeler. American Biographies. New York: Harper & Brothers Publishers, 1940. Reprint, Detroit: Gale Research, 1974.
Van Doren, Charles, ed. Webster’s American Biographies. 1979 ed. Springfield, MA: G & C Merriam Co., 1974. World of Invention. Detroit: Gale Research, 1994.
Thurston, Robert H. “A History of the Growth of the Steam Engine.” Available from http://www.history.rochester.edu/steam/ thurston/1878/index.html.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
7 4 7
Martha Stewart (1941?-) Martha Stewart Living Omnimedia
Overview Described as the guru of good taste in American entertaining and the person who has had the biggest impact on the aesthetics of the average suburban American household, Martha Stewart has turned her lifestyle and tastes into a business empire. As a domestic arts expert and lifestyle consultant Martha Stewart has left her stamp on the way America currently views cooking, home decoration, gardening, and entertaining. In the process, Martha Stewart has revolutionized how-to and self-help into a state of mind and a way of life. Successful in her many roles, Stewart has demonstrated a unique entrepreneurial skill in marketing not so much a product as herself and her sense of taste, turning her own life into a business empire. As any other good business person, Stewart has shown that she understands her audience and has captured their imagination. Stewart summed up her influence on the American public when she said, “My books are ‘dream’ books to look at, but they’re practical. Women can take the recipes, the ideas, and use them every day, because what I’m giving them is not a fantasy but a reality that looks like a fantasy.”
Personal Life Martha Stewart was born on August 3, in 1941 or 1942, in Jersey City, New Jersey. She is the daughter of Edward and Martha Kostyra, of Polish-Catholic ancestry. Her father was a pharmaceutical salesman; her mother was a sixth-grade schoolteacher. She was the second of six children. When Martha was three, the family
7 4 8
M a r t h a
S t e w a r t
moved to a three-bedroom frame house in suburban Nutley, New Jersey. She recalled, “We were brought up unpretentiously, but with a lot of spirit and a lot of ‘You can do anything you want to do’ hammered into our heads.” Stewart was a favorite of her father, who taught her about gardening, carpentry, and public speaking. She described herself as a child as “very proper, very busy, very driven.” She alone among her siblings had a flair for gardening and did not mind spending hours weeding. She was also fascinated by food and cooking and learned a good deal from her maternal grandmother. While still in grammar school, Stewart organized birthday parties for neighborhood children for fun and to augment her baby-sitting income. By high school, her blonde good looks earned her modeling assignments in fashionable stores and on television. A straight-A student, Stewart turned down a full scholarship to attend New York University to work her way through Barnard College in New York City. She abandoned early plans to become a chemist and decided to study art, European history, and architecture instead. In 1961, while still in her sophomore year of college, she married law student Andrew Stewart. To support them, Stewart took modeling jobs and appeared in television commercials for Clairol, Lifebuoy soap, and Tareyton cigarettes. She graduated from Barnard in 1963 and continued to model until the birth of her daughter, Alexis, in 1965. Stewart contemplated entering graduate school to study architecture, but decided that her father-in-law’s profession as a stockbroker interested her more. From 1965 to 1973, she worked at the small brokerage firm, Monness, Williams, and Sidel. She was successful and “liked the sales part of it, the human contact,” but the 1973 recession was traumatic. As she explained, “I wanted to sell things that were fun to sell. And stocks weren’t anymore.” In 1973 the Stewarts moved from their apartment in New York City to a home in Westport, Connecticut, that they began to restore themselves. Once the house was renovated, Stewart began to concentrate on another hobby, gourmet cooking. In 1976 Stewart began a catering business, working out of her home’s basement kitchen, which led to her career as a cookbook author and domestic lifestyle expert.
Martha Stewart.
(AP/Wide World Photos, Inc.)
nightly. Most mornings begin at 6:00 a.m. with an hourand-a-half session with a personal trainer before her work schedule begins. As her friend Mort Zuckerman, chairman of U.S. News & World Report, has observed, “Martha is a unique combination of the beauty of the orchid and the efficiency of a computer.” Her marriage to Andrew Stewart, who cofounded the publishing company of Stewart, Tabori, and Chang, ended in divorce in 1989. Stewart spends her time at Turkey Hill Farm, her Westport home, with her collection of six cats and two dogs. She also has an apartment in New York City, a weekend beach house in East Hampton, New York, and a 30-acre property in Fairfield, Connecticut.
Stewart sustains her many ventures with seemingly boundless energy. As she admitted to Cosmopolitan,”I tend to get over enthusiastic, and often that’s translated as workaholism. For example, I’m writing a garden book, so I garden twelve hours a day. If people like to characterize that as workaholism, it’s their problem. I work at what I do, but to me it’s fun. I have the ideal career, because I’m constantly writing about or photographing things I like. Whatever work is involved is something I really enjoy doing. Actually, I think I’d characterize myself more as an enthusiast than a perfectionist. But as far as being a perfectionist, I’m like that in anything I do.” To maintain her frenzied pace, she claims that she only needs to sleep four hours
Martha Stewart has, from childhood, traded on her talents and her interests from gardening and cooking to arranging neighborhood birthday parties and modeling, so the transition from hobbies to business was a natural one. While on a modeling assignment in the early 1960s, Stewart visited Europe for the first time and studied the restaurants she visited in Italy, Germany, and France. As a stockbroker she had sampled haute cuisine on expense account meals with clients. In 1976, she placed an advertisement in a local newspaper offering her services as a caterer. Almost immediately she found herself prepar-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Career Details
7 4 9
M a r t h a
S t e w a r t
Chronology: Martha Stewart c. 1941: Born. 1961: Married Andrew Stewart. 1963: Graduated from Barnard College. 1965: Began work for a Wall Street brokerage firm. 1976: Began catering business. 1982: Published first book, Entertaining. 1987: Named lifestyle consultant for Kmart Corp. 1989: Divorced Andrew Stewart. 1997: Formed Martha Stewart Living Omnimedia.
ing for a wedding for 300. Over the next ten years, Martha Stewart, Inc. grew into a $1 million business, serving corporate and celebrity clients drawn to her tasty menus and unique presentations. She and a staff cooked meals for as many as 1,500 people at a time. Herbs and ingredients came from her own gardens. She has also contributed articles to the New York Times, worked as a freelance food “stylist” for photographers, and served as the food and entertaining editor and cooking columnist for House Beautiful. Stewart’s first book, Entertaining, an oversized, lavishly illustrated book of her hostessing techniques, was published by Crown Publishers in 1982. The book’s introduction served as a declaration of the Martha Stewart style and method, which called for a “new style of entertaining that is informal, relaxed, and expressive, based not on intimidating prescriptions but on personality and personal effort.” The personality that is revealed is Stewart’s own: casual elegance, natural materials, and handcrafted sophistication. The famous Martha Stewart book reached a receptive public, selling more than 625,000 copies. A string of successful sequels followed, such as, Martha Stewart’s Quick Cook Menus, Martha Stewart’s Hors d’Oeuvres, Martha Stewart’s Weddings, and Martha Stewart’s Christmas. Other endeavors have included videotapes, television specials, lectures, and seminars. Stewart’s ideas for enhancing domestic life have tapped into a vast market of fans who appreciate the ingenuity of her suggestions, the authority with which good taste is presented, and the deeper dream of elegance and sophistication that her books, programs, and persona project. As she explained to a New York interviewer, her
7 5 0
B u s i n e s s
success is due to Americans’ “interest in self-improvement . . . I’m just approaching it from an aesthetic point of view, rather than a scientific point of view or psychological.” Critics have been quick to charge her with overindulgence in materialism, with raising style to an almost religious devotion, and with offering a standard of domestic achievement well beyond the reach of most of her fans. Stewart has defended her approach, saying, “Having something to dream about is very important to most people.” The fantasy has proven to be a potent one, and has allowed Stewart to create a business empire around her tastes and lifestyle. In 1987 Kmart signed Stewart as its lifestyle consultant, and she promotes her own line of bed and bath products through Kmart. With Time Warner, she has published her own magazine, Martha Stewart Living, which has appeared since 1990 and has a circulation of 2 million. She also makes regular appearances on television morning shows. In February 1997, Martha Stewart acquired Martha Stewart Living Enterprises from Time Inc. Stewart serves as the company’s chairman and CEO, overseeing a monthly magazine, a syndicated television show, a web site, a daily radio show, books written by her and the editors of Martha Stewart Living, a syndicated newspaper column (“Ask Martha”), a mailorder catalog company (“Martha by Mail”), and retail products. These are remarkable accomplishments that grew from a small catering business run out of her home. Through it all, Martha Stewart has become a phenomenal success, selling both herself and her vision of domestic elegance.
Social and Economic Impact Martha Stewart has, in a number of ways, helped to bring about a contemporary sense of style that is expressed in the way Americans live, eat, and entertain. Joining the concept of self-help with consumption, Stewart has instructed a mass audience in the lessons of good taste and the values she has cultivated in her own life. Lessons she learned in New Jersey and at Turkey Hill Farm in Connecticut have provided for her loyal followers a vision of domestic perfection that comes with an unmistakable Martha Stewart signature. In the ultimate identification of what Stewart sells and who she is, she has declared, “I’m a brand,” and she continues to market her brand around her creativity, taste, and sense of style. The business that she pioneered with its insistence on natural materials, fresh ingredients, and tasteful elegance has been imitated throughout the country in the foods we now find in stores, in the small specialty shops offering kitchen devices and rare ingredients, and in an enhanced sense of interior design. Martha Stewart through her enthusiasm, hard work, and charm has become a tastemaker in domestic things and lifestyle.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
M a r t h a
S t e w a r t
Hitchens, Christopher. “Martha Inc.” Vanity Fair, October 1993.
Sources of Information
Kasindorf, Jeanie. “Living with Martha.” New York, 28 January 1991.
Contact at: Martha Stewart Living Omnimedia 20 W. 43rd St. New York, NY 10036 Business Phone: (212)827-8000 URL: http://www.marthastewart.com
Martha Stewart Living Omnimedia. “Martha Stewart Living.” New York: New York, 1997. Available from http://www.marthastewart. com.
Bibliography
Oppenheimer, Jerry. Martha Stewart—Just Deserts: The Unauthorized Biography. New York: William Morrow, 1997.
Bland, Elizabeth L. “A New Guru of American Taste?” Time, 19 December 1988.
Stewart, Martha. “The Importance of Being Myself.” Cosmopolitan, July 1997.
Cantwell, Mary. “The Mauve-ing of America.” New York Times Magazine, 17 March 1991.
Working Woman, December 1986.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
7 5 1
Dave Thomas (1932-) Wendy’s International Incorporated
Overview As the founder and chief spokesman of Wendy’s chain of fast-food restaurants, Dave Thomas has built his company into the third-largest hamburger chain in the world, with more than 4,000 restaurants in over 30 countries and sales of $3.8 billion. Thomas started out as a drug store soda-counter helper at age 12 and became a millionaire by the age of 35. As the star of Wendy’s television commercials, the plain-speaking Thomas’s success was based on knowing what customers wanted and reaching the audience with honestly and sincerely.
Personal Life Dave Thomas was born July 2, 1932, in Atlantic City, New Jersey. Adopted by Rex and Auleva Thomas from Kalamazoo, Michigan, when he was six weeks old, Thomas never knew his biological parents. His adoptive mother died of rheumatic fever when Dave was five years old. His father, a construction worker, remarried three times, moving his family frequently throughout the South and the Midwest to take different jobs. Thomas’ lifelong interest in adoption comes from his own less-than-happy experiences. Thomas revealed to Marilyn Achiron in a profile for People, that he had learned at the age 13 that he had been adopted, and said, “It really hurt that nobody told me before. It is a terrible feeling to know my natural mother didn’t want me.” The few constants in his early life were the summers he spent with his adoptive grandmother on her small farm in Michigan. Thomas credits her with teaching him the value and pleasure of hard work.
7 5 2
D a v e
T h o m a s
Dave Thomas serves a customer at a newly opened Wendy’s in Fort Wayne, Indiana. He was visiting the store, which had been built on the site of the Hobby Horse restaurant where he worked as a bus boy in 1947. (AP Photo/Wendy’s/Tom Strattman.)
To help with his family’s finances, Thomas began working at the age of 12 as a counter boy at Walgreen’s Drug Store in Knoxville, Tennessee. He spent his offhours eating in cheap restaurants with his father, an activity that would influence his career choice. In his autobiography, Dave’s Way, Thomas recalled, “It was then that I decided I wanted to own my own restaurant because I like to eat, and I just thought restaurants were really neat, exciting places.” When his family moved to Fort Wayne, Indiana, in 1947, Thomas took a job as a busboy in the local Hobby House restaurant. After finishing the 10th grade, he dropped out of school to work
there full-time. When Thomas was 15, he stayed on in Fort Wayne when his family relocated again, living on his own in the local YMCA .
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Serving in the Army during the Korean War, Thomas attended the army’s Cook and Baker’s School and became the youngest soldier ever to manage an enlisted-men’s club. In Germany Thomas was a cook and staff sergeant feeding up to 2,000 people a day. He recalled in his autobiography that the experience taught him “some important skills about the big picture of feeding a lot of people.” Thomas married Lorraine Buskirk, who he met in the Hobby House restaurant, in Fort Wayne on May 21,
7 5 3
D a v e
T h o m a s
Chronology: Dave Thomas
teenagers, urging them to stay in school, Thomas practiced what he preached, earning his general equivalency diploma (GED) from Coconut Creek High School in Florida in the early 1990s. An avid golfer, Thomas now resides in Fort Lauderdale, Florida. Despite enormous wealth, he has remained true to his background, living modestly, with his dream meal still a double cheese burger with mustard, pickles, and onion, a bowl of chili, French fries, a Frosty, and a diet Coke.
1932: Born. 1947: Began work at the Hobby House Restaurant in Fort Wayne, Indiana. 1962: Managed Kentucky Fried Chicken franchises in Columbus, Ohio. 1968: Sold his share of his Columbus franchises for $1 million. 1969: Opened First Wendy’s Old Fashioned Hamburgers restaurant. 1973: Wendy’s franchises sold around the country. 1982: Resigned as chief executive of Wendy’s and retired from day-to-day operations of the company. 1989: Returned as Wendy’s spokesman and starred in television advertising. 1990: Appointed national spokesman on adoption issues by President George Bush. 1992: Established Dave Thomas Foundation for Adoption. 1993: Wendy’s franchises reached a total of 4,200 in more than 30 countries.
1954. They have five children. In 1969, his eight-year old daughter Melinda Lou provided the inspiration for the name of his chain of hamburger restaurants. Her siblings mispronounced her name as “Wenda,” eventually becoming the nickname “Wendy.” An outspoken advocate of adoption, Thomas was appointed by President George Bush as the national spokesman on adoption issues in 1990. He has established the Dave Thomas Foundation for Adoption, and has pledged the profits from his 1991 autobiography to national adoption awareness. Declaring in a 1992 article in Profit, “I think every baby and every boy and girl deserves a home. Yes, it is a mission. I like to talk about it; it’s the right thing to do.” Thomas received the Horatio Alger Award in 1979 and the 1995 Pioneer Award from Nation’s Restaurant News, issued annually to a veteran in the restaurant business who is recognized for professional dedication and contribution to the industry. Speaking frequently to
7 5 4
B u s i n e s s
Career Details Thomas’ drive and work ethic was developed early in his first restaurant job. He reported in Profit that his boss “wore a three-piece suit, and you would see him mopping the floor, working behind the dishwasher, cleaning tables, you name it. I thought, ‘If my boss can do everything, then I can too.’” One of Thomas’ important mentors was Harland Sanders, the founder of the Kentucky Fried Chicken (KFC) restaurant chain, who he met in the mid-1950s. Sanders impressed Thomas with his flair for promotion and commitment to quality fast food. When Thomas’ boss at the Hobby House, Phil Clauss, failed to make profitable four restaurants in Columbus, Ohio, he proposed that Thomas take over their management and in exchange for paying off the restaurant’s debts would receive partial ownership of the chains. Against the advice of Colonel Sanders and friends who thought the nearly bankrupt stores were unsalvageable, Thomas took up the challenge. He realized that the stores were failing because the store’s 100-item menu was intimidating and confusing to customers. He made them Kentucky Fried Chicken franchises, reducing their menu to include mainly chicken and salad and introduced the famous rotating bucket of chicken sign that became a KFC trademark. Trading buckets of chicken for radio advertising, Thomas began to make the stores profitable, adding four additional locations in the Columbus area. In 1968 Thomas sold the restaurants back to the KFC company for $1.5 million. Thomas then took a position at the parent company as a regional operations director, but left KFC within a year. He helped found the Arthur Treacher’s Fish & Chips chain, but longed to build his own chain that would specialize in hamburgers. In Thomas’ view, McDonald’s and Burger King, who dominated the hamburger fastfood business, were not selling the kinds of hamburgers he liked. He would offer a variety of toppings, use fresh meat instead of frozen patties, and be cooked to order rather than prepared in advance. Detecting a niche in the fast-food hamburger market for quality, fresh food, Thomas opened the first Wendy’s Old Fashioned Hamburgers restaurant in Columbus, Ohio, on November 15, 1969. With an original menu of hamburgers, chili, French fries, soft drinks, and the Frosty Dairy Dessert, Thomas created a relaxed and homey atmosphere for his restau-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
D a v e
rant with carpeting, Tiffany-style lamps, and bentwood chairs. Within six weeks of its opening, Wendy’s began to show a profit. Thomas anticipated opening only a few Wendy’s as local stores where his children could work in the summers. But due to their popularity, in 1973, Thomas began selling Wendy’s franchises for entire cities and regions in an unprecedented innovation in the industry. In the next decade, more than 1,000 franchises had opened. The number of franchises would increase over the years to more than 4,000 restaurants worldwide to make Wendy’s the third-largest hamburger chain in the world, behind McDonald’s and Burger King. In the late 1970s, Thomas agonized over whether to stray from his original menu and vision by introducing a salad bar and reluctantly agreed to the change. When salad bars proved to be a considerable success, Thomas, who had grown tired of the bureaucratic side of the business, decided it was time for him to step down. As he was quoted as saying in a Forbes article, “I think an entrepreneur has limitations. I thought it was the best time to back off and let other people who were smarter than me to do things.” In 1982 Thomas gave up his title as chief executive of Wendy’s and hands-on executive supervision, retaining the title of senior chairman. During the 1980s, Wendy’s achieved great success with its “Where’s the beef?” ad campaign, achieving such public recognition that Walter Mondale used the line in his debate with George Bush during the 1984 presidential campaign. Despite record profits in 1985 of $76.2 million, a huge investment in a breakfast program failed because made-to-order omelets and French toast could not be produced fast enough to satisfy customers, and many franchises were purchased by owners who were unconcerned about Wendy’s high standard of customer service and quality products. In 1986, with a $5 million loss and company morale dropping, Thomas hired James Near as Wendy’s new president. Near assumed the position with the condition that Thomas would come out of retirement as the company’s spokesman and morale booster. Thomas toured franchises and encouraged his troops with the simple business wisdom that had served the company so well and seemed to have been forgotten. He stressed that each of Wendy’s employees should have an “MBA,” a “mop bucket attitude,” that stressed cleanliness and customer services. Better training and incentive programs including an employee stock-option plan helped create team spirit and company loyalty that had eroded. Thomas next turned to advertising to help communicate the message about Wendy’s philosophy of quality food at a reasonable price. He was such an earnest pitchman to Wendy’s advertising agency that members of the agency convinced him to star in Wendy’s commercials, despite his ordinary looks, deadpan approach, and lack of polished diction or skill as an actor. Wendy’s commercial starring Thomas succeeded precisely because of his ordinary qualities. As the Detroit Free Press reported, “Wendy’s has done something none of its chief rivals, with their faceless boards of directors, could possibly
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
T h o m a s
do—it has identified its nice-guy-down-the-street founder with its all-American product line.” Starring in some of the most popular television ads, Thomas helped Wendy’s rebound to a $51.3 million profit in 1991 with Thomas’ stock shares worth more than $80 million. Asked in an article for Restaurants & Institutions how long he would stay involved in front of the TV cameras, Thomas replied, “As long as I’m having a good time. When I stop having a good time and having fun, I’ll stop. I don’t know when that’s going to be. I’ve got a dual message: selling hamburgers and chicken sandwiches at Wendy’s and adoption. After I do commercials, I use TV to talk about adoption and education.” Thomas has remained committed to his two primary interests: sustaining a quality restaurant chain and speaking out on behalf of adoption awareness.
Social and Economic Impact Thomas, like other successful fast-food executives, has helped to change the way in which America and the world eat. With the goal of a quality product at a reasonable price, Thomas has offered a vast mass market a new definition for the dining experience with irresistible tastes at affordable prices. The success formula of Wendy’s, McDonald’s, and Burger King has spread throughout the world and has rivaled other national cuisines and tastes. For Thomas, his innovation in fast-food was a “nobrainer.” As he explained in an article for Restaurants & Institutions, “We make our sandwiches to order. It sounds real simple . . . . There’s nothing better than a freshly made sandwich.” Thomas has shown that attention to quality and customer satisfaction make a difference in the fast-food business. Thomas cites as the source of his success his work ethic and experience as a “grill man” to show him what could and should be done in his restaurants. Thomas also offers an important lesson that success is derived not simply from having a good idea but in sustaining it as the business grows beyond the capacity of a single person’s oversight. As Thomas learned in the 1980s, remarkable success can quickly be followed by disastrous failure if a company’s core values and vision are neglected. As the fast-food franchise business continues to expand internationally, Thomas is mindful of his company’s responsibility to maintain product quality. To the question of the future of his industry, Thomas reported to Restaurants & Institutions that “The whole industry really has to step up, from food safety to being nice. We got competition out there! We got chain stores, grocery stores, we’ve got kitchens in everybody’s home.” Despite nutritional and environmental concerns, Thomas is ever mindful of his important message: if the food doesn’t taste right, people won’t buy it. It is this deceptively simple lesson that Thomas has preached to oversee Wendy’s growth from a single restaurant in 1969 to a global giant and neighborhood presence throughout the United States and the world.
S t u d e n t s
7 5 5
D a v e
T h o m a s
Thomas has made a considerable impact as well in his advocacy for adoption. Drawing on his own experiences, Thomas has campaigned to overcome the stigma of adoption and to make adoptions easier. Under Thomas’s leadership, Wendy’s has implemented an innovative program, paying often prohibitive adoption costs so its employees can take in orphaned children, and Thomas has entreated executives of hundreds of major U.S. corporations to follow suit. As Thomas has argued in Profit, “It’s the basics we have to get back to, the fundamentals of how this country was founded. That’s what I am trying to do.”
Bibliography Achiron, Marilyn. “Dave Thomas.” People Weekly, 2 August 1993. Killian, Linda. “Hamburger Forbes.” Forbes, 5 August 1991. Nocera, Joseph. “Wendy’s Burger King.” Esquire, November 1989. “Plain-Speaking Wendy’s Owner Plainly Persuasive.” Detroit Free Press, 18 February 1991. Profit, July/August 1992. Restaurant & Institution, 15 February 1994. Thomas, Dave. Dave’s Way: A New Approach to Old-Fashioned Success. New York: Putnam, 1991.
Sources of Information Contact at: Wendy’s International Incorporated 4288 W. Dublin-Granville Rd. Dublin, OH 43017 Business Phone: (614)764-3100 URL: http://www.wendys.com
7 5 6
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Susie Tompkins Overview The fashion designs of Susie Tompkins made Esprit a popular maker of colorful, casual clothes for teenage girls in the 1980s. Tompkins later led campaigns to establish an additional clothing line for older, working women, and to promote Esprit as a company with a social conscience.
(1943-) Esprit de Corps
Personal Life Born Susan Russell in 1943, Susie Tompkins spent much of her childhood in San Francisco’s wealthy Russian Hill neighborhood. Though her childhood may have been privileged, it was less than ideal—she was sent to boarding school at age three. And as Tompkins recalled in Business Week, “When I was little, I wanted to be a nun, a cowgirl, a cheerleader, a professional ski racer . . . . Mother said to me a dozen times: ‘You’ll never amount to a row of pins.’” When she was 15, Tompkins’s father lost his business and the family lifestyle was altered. She was a rebellious young adult and did not finish high school or go to college. In 1963 Tompkins was working in a Reno, Nevada, casino. One day she picked up Doug Tompkins while he was hitchhiking and the pair married the same year. Susie and Doug Tompkins were married for 25 years and had two daughters, Summer and Quincey. In 1996, Susie Tompkins remarried and changed her name to Susie Buell.
Career Details In 1968 Susie started the Plain Jane dress company with friend Jane Tise. Doug soon became involved, hop-
7 5 7
S u s i e
T o m p k i n s
Chronology: Susie Tompkins 1943: Born. 1963: Took job in a casino. 1969: Founded Plain Jane, a dress company, with Jane Tise. 1979: Founded Esprit with partner Doug Tompkins. 1989: Divorced Doug Tompkins. 1990: Bought out ex-husband’s U.S. interest in company. 1996: Susie and Doug Tompkins sold all interests in company.
ing to turn the successful small business into a big one. Tise and Allen Schwartz, another partner, left the company after 10 years of corporate unrest, at which time the company name was changed to Esprit de Corps. The clothing line changed, too, to brightly printed casual clothes for young women. The concept of “ageless dressing” was promoted and they began to advertise their clothing line. They also sent out catalogs to upper-income households. Doug ran business operations and Susie was design director. Under the Tompkinses’ direction, Esprit was extremely successful. Esprit clothes were sold in upscale stores such as Macy’s, I. Magnin, Nordstrom, and Saks 5th Avenue. The company did well until late 1987, when earnings began to drop. Doug and Susie did not agree on how to respond to the financial crisis and began publicly criticizing each other’s work. Their marriage and business were falling apart simultaneously. Soon, the Tompkinses filed for divorce and agreed to sell the company. Susie was now only nominally involved in the company as a consultant, and a new CEO replaced Doug. In early 1990 Tompkins met Bruce Katz, the founder of Rockport Shoe Co., who told her how much he regretted having sold the company he had created. Tompkins subsequently made up her mind to buy out Doug’s interest in Esprit. With three partners, she struck a deal with her ex-husband that gave him $125 million. The company may have been worth as much as $380 million, based on an independent appraisal. Under Susie’s direction, Esprit changed both stylistically and philosophically. Tompkins had always wanted to design work clothes for older women, and could now do so. In 1992 she launched an adult line under the Susie
7 5 8
B u s i n e s s
Tompkins label, which was aimed to regain customers who had worn Esprit clothes 10 to 15 years earlier. Metropolitan Home described this collection as “a fresh interpretation of classic shapes from the Forties and Fifties.” Tompkins also steered the company away from the excesses of the 1980s, when it was known as “Camp Esprit” for its lavish perks, and used Esprit to support a variety of social causes through employee volunteerism programs and marketing. Tompkins’s attempt to sell fashion with a social conscience came from a deep personal commitment. This approach was something of a departure from company policy in earlier years, when it lavished its attention on employees with rafting trips and foreign language lessons. Tompkins explained in Working Woman, “The wave of the ‘90s is to do good things. . . The ‘80s were all about style and lifestyle. The ‘90s are about soul-searching.” Tompkins’s own soul searching led her to make the company a more responsible manufacturer, to minimize negative impact on the environment by using more enzymes and fewer chemical pollutants in the manufacturing process. An “Eco-Desk” run by daughter Quincey audited corporate practices. She used Esprit to promote programs run by the Glide Memorial Methodist Church, which assists battered women, drug abusers, people with AIDS, and the homeless. Also, Tompkins gave employees time off to do volunteer work. “We can be a company that inspires its employees, that tries to do more in the community, that tries to make a more conscientious product,” she said in Working Woman. But these changes failed to revive Esprit. A 1992 Business Week headline queried, “Will Politically Correct Sell Sweaters?” Seemingly, it did not. The Susie Tompkins line was closed in 1995, after having been introduced not with a fashion show, but by a sermon on inner-city troubles from the pastor of Tompkins’s favored Glide Memorial Methodist Church of San Francisco. Furthermore, the company was plagued by distribution problems, caused by a long-standing use of department store “boutiques.” In 1996, Doug and Susie Tompkins sold their Asian and European interests in Esprit to Michael Ying, in Hong Kong, and their U.S. interest was bought out by Oak Tree Capital Management and Cerberus Partners in October 1996.
Social and Economic Impact While her husband was largely responsible for the innovative marketing strategies that propelled Esprit to its financial pinnacle in 1986 with $800 million in sales, Tompkins’s clothes were the key to the company’s success. Her designs for playful, casual separates were also innovative and placed the company as an important stylistic predecessor to stores such as the Limited and the Gap. Her influence on Esprit and on the fashion industry was very straightforward and personal. In keeping with this, she was known at the company simply as “Susie.” Never having studied design or marketing, her ideas came from the heart. She told Metropolitan Home,
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S u s i e
“When you don’t know the ‘right’ way to do something . . . you’re less inhibited by dogma.” When the Tompkinses argued over design decisions, however, Doug often prevailed. He vetoed Susie’s idea to create more sophisticated, mature designs. An industry consultant cited in Working Woman said that Esprit had thus “dropped the ball” and missed out on a major fashion trend; “Their customer was growing up—and they weren’t growing up with her.” Tompkins’s return after a two-year hiatus during the couple’s breakup had a big impact on the company’s direction. Sue Copeland, an Esprit design director, opined in Working Woman, “what Susie brought back to the company overnight, in the eyes of the industry, is a feminine point of view— style, print, the foundation for the success of Esprit.”
T o m p k i n s
Bibliography Appelbaum, Cara. “A Tight Fit.” Adweek’s Marketing Week, 16 March 1992. Beard, Patricia. “Generation Gab: Five Mother-and-Daughter Sets.” Town & Country Monthly, 1 September 1994. Contemporary Newsmakers. Detroit: Gale Research, 1987. D’Innocenzio, Anne. “Tompkinses In Deal To Sell Last Holdings in Esprit to Partner.” WWD, 16 October 1996. McGrath, Ellie. “Esprit the Sequel.” Working Woman, September 1991. Rapp, Ellen. “The War of the Bosses.” Working Woman, June 1990. Saeks, Diane Dorrans. “Always True in Her Fashion.” Metropolitan Home, September 1992. Tuhy, Carrie. “Catching the Spirit at Esprit.” Money, July 1986. White, Constance C.R. “Patterns.” New York Times, 4 February 1997.
Sources of Information
Zinn, Laura, and Michael O’neal. “Will Politically Correct Sell Sweaters?” Business Week, 16 March 1992.
Contact at: Esprit de Corps 900 Minnesota St. San Francisco, CA Business Phone: (415)648–6900 URL: http://www.esprit.com
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
7 5 9
Donald John Trump (1946-) The Trump Organization
Overview Billionaire real estate developer Donald Trump showed the world that millions could be made in developing expensive commercial and residential properties. His intuitive sense of business and sharp eye for spotting a deal made Trump one of the most respected—and most hated—business persons of the 1980s. Without question, Trump became one of the most famous poster boys of an era known for its big-time financial wheeling and dealing and conspicuous consumption.
Personal Life Born Donald John Trump in 1946, he was the fourth of five children of Frederick C. and Mary MacLeod Trump. He was raised in Queens, New York, where his father was a builder and real estate developer who later specialized in constructing and operating middle-income apartments in Queens, Staten Island, and Brooklyn. Donald was a bright, energetic, and assertive child who grew up in a 23-room house with his siblings. But by age 13, it was evident to his parents that he lacked discipline, so they sent him to the New York Military Academy. Trump did well there both socially and academically, and became a star athlete and student leader by the time he graduated in 1964. While at the Academy, Donald spent his spare time looking around at construction sites and renovating old houses. It seemed Trump would follow in his father’s footsteps, but on a much grander scale. He attended Fordham University but later transferred to the University of Pennsylvania, where he obtained an undergraduate de-
7 6 0
D o n a l d
J o h n
T r u m p
gree in finance from its Wharton School of Business in 1968. Following graduation, he worked in his father’s business, the Trump Organization. Soon, Trump began putting his newly acquired business training to use, and was able to finance an expansion of the company’s holdings by convincing his father to be more liberal in the use of loans based on the equity in the Trump apartment complexes. Eventually, Trump bypassed his older brother and became president of his father’s company, which concentrated on building houses and apartments. Though this was an important position, it was not really fulfilling for Trump. He had bigger dreams of putting his signature on the Manhattan skyline. Yearning for bigger, more profitable projects, Trump used $200,000 to move his residence to a small studio apartment in Manhattan in 1971. There, he was closer to the affluent and influential set who, he felt, could make dreams come true. “If I ever wanted to be known as more than Fred Trump’s son, I was eventually going to have to go out and make my own mark,” Trump once said. In 1973, Trump persuaded his father to invest in the Manhattan real estate market. By then, the company’s worth had grown from $40 million when Donald had joined the firm to a whopping $200 million. Four years later, Trump married New York fashion model Ivana Zelnickova Winklmayr, who had been an alternate on the 1968 Czech Ski Team. After their first child was born, Trump named his wife vice president in charge of design in the Trump Organization. Ivana, an attractive and stylish woman, had a flair for design, and played a major role in supervising the renovation of the Commodore Hotel. She nicknamed her husband “The Donald,” and added a touch of style that he appreciated and welcomed, like color-coordinating his tie to her outfit. But later, as Trump’s empire began to crumble, so too did his marriage. There were constant reports in the tabloids that Trump and his wife were having marital problems, and that the source of those problems was model Marla Maples. Trump and Ivana, who had three children, divorced, and Trump married Maples in 1994. Time magazine recorded the moment, reporting that “more than a thousand guests attended the 15-minute ceremony in the Grand Ballroom of Trump’s Plaza Hotel, causing limolock in the surrounding streets. In their wake trailed 17 television-camera crews, 90 paparazzi and a small army of bodyguards.” The new Mrs. Trump wore an off-theshoulder white satin dress, topped off with a $2 million tiara. For all the pomp and circumstance, however, the marriage was brief, and ended in divorce. Trump and his second wife have a daughter, Tiffany.
Donald Trump.
(AP Photo/Richard Sheinwald.)
ties when prices were cheap, fix them up, and then make a huge profit when the economy picked up. He would either sell the real estate for a higher price than he paid or, more often than not, lease out space at steep prices. He made his first major deal in 1975, when he acquired the bankrupt Penn Central Railroad’s Commodore Hotel and rail yards near the Hudson River. Trump then sold the rail yards to the city for a hefty commission, and won an unprecedented $120 million, 46-year tax abatement to tear down the Commodore and build the new Grand Hyatt Hotel in partnership with the Hyatt Corporation. To that amount he added $70 million in loans to construct the hotel. The deal incensed a number of community and political people in New York, who claimed that he used political connections to broker a deal with the city. But Trump had supporters, too. Urban analysts credit Trump with helping to ignite a building renaissance in a deteriorating part of town. “Nobody believed I could pull it off,” he boasted.
Trump’s climb to the apex of the business world is remarkable. His strategy was to buy dilapidated proper-
Ignoring naysayers and supporters alike, Trump continued to negotiate complex deals that made him the bestknown and most controversial developer in New York. Against the wishes of New York City, Trump was able to convince the courts that he was entitled to a large amount of tax abatements, which the city was forced to pay. Trump used the abatements to help finance his flagship building, the posh Trump Tower on Fifth Avenue at 56th Street, completed in 1980. The 58-story building featured a six-story atrium lined with pink marble, and included an 80-foot waterfall. The luxurious building at-
B u s i n e s s
S t u d e n t s
Career Details
L e a d e r
P r o f i l e s
f o r
7 6 1
D o n a l d
J o h n
T r u m p
hopes of making a mark in the high-stakes game of corporate raiding.
Chronology: Donald John Trump 1946: Born. 1971: Moved to Manhattan from Queens. 1975: Purchased Penn Central Railroad for $62 million. 1986: Renovated Wollman Skating Rink in Central Park. 1986: Purchased large stakes in major corporations. 1986: Acquired Eastern Airlines’ shuttle operation. 1986: Made unsuccessful bid to purchase American Airlines for $7.5 billion. 1988: Wrote best-selling Trump: The Art of the Deal. 1990: Missed $73 million in payments; creditors put him on a $450,000-a-month living expense limit. 1997: Estimated net worth of $2.5 billion.
tracted well-known retail stores and celebrity renters. Residential condominiums sold for a pricey $10 million and higher. Of course, all this overt show of opulence and wealth attracted national attention for Trump, as the Trump Tower became a major tourist attraction. As quoted in the New York Times, Trump dubbed the project “the finest apartments in the top building in the best location in the hottest city in the world.” By now, a pattern had emerged. Trump had a penchant for glitzy, controversial deals, and maintained this interest throughout the 1970s and 1980s. In 1978 he bought the site of the Bonwit Teller department store and built a 68-story tower on Fifth Avenue, complete with a $2 million marble indoor waterfall. In the early 1980s he purchased a team in the upstart United States Football League, the New Jersey Generals, which sparked the league’s antitrust lawsuit against the National Football League. But even Donald Trump could not make every deal happen. He once offered to construct a project on the site that later was occupied by the Jacob Javits Convention Center if New York City would name the building after Trump’s father; the city declined. City officials balked at Trump’s plan to build a $5 billion complex on a strip of land running along the Hudson River from 59th to 72nd streets. Trump continued moving from one deal to another. He opened casinos, and entered other real estate ventures. In time, he ventured beyond the real estate market in
7 6 2
B u s i n e s s
Early in his career, Trump earned significant notoriety for artificially driving up real estate prices. He drew similar criticism as he sought to acquire companies that were not looking for suitors. Beginning in 1986, he engaged in stock market deals that made him look like a corporate raider. He bought large stakes in a series of publicly traded companies, including MCI and Pillsbury, fueling takeover speculation that raised stock prices and allowed him to sell at a handsome profit. Though many criticized Trump’s deals, he was playing the game much as other speculators did. Extravagant speculation was rampant at that time, and created a high-stakes climate. Anyone with less than several million was not invited to play. The process was simple: he would identify a company whose stock was undervalued, buy enough shares to take a noticeable position in the company, and make overtures of buying the company. This would immediately attract the attention of other stock traders, who would label the stock a buy, driving the stock price higher. Trump, of course, was never really interested in buying, nor was the company interested in selling; but his actions prompted a significant increase in the value of his shares, and enabled him to sell at a huge profit. Some acquisitions, however, really did take place. In 1989, Trump acquired Eastern Airlines’ shuttle operation for $365 million, and renamed it the Trump Shuttle. In 1990, he was interested in acquiring American Airlines, bidding $7.5 billion for it. But the parent company was not interested in selling. Nonetheless, it seemed Trump was on a roll that would never end. A genius at self-promotion, Trump named several huge projects after himself—making his name a household word by the end of the 1980s. He built or bought a succession of hotels and apartment houses in Manhattan—including the Plaza Hotel, Trump Plaza, and Trump Parc—and became a major hotel and casino operator in Atlantic City, having astutely purchased property in the New Jersey seaside resort before the passage of a 1976 referendum legalizing gambling. This was where the Trump Princess Yacht was docked, and where the Trump Shuttle airplane landed. Trump’s Castle and the Trump Plaza and Taj Mahal casinos quickly became big moneymakers and helped raise Trump’s profile nationally by sponsoring boxing championships. “The first time I did it, with Trump Tower, maybe it was ego,” he once said. “But now it’s economics. If somebody tells you you’ll do a hundred million dollars more business if you call a building Trump Parc than if you call it Tower on the Park or some other name, you’d have to be some kind of masochist not to do it.” By 1990 many wondered how much Trump was really worth behind his complex financing schemes. His net worth had been estimated by some at as much as $3 billion. Trump never confirmed or denied it. But Forbes magazine decided to take a closer look, concluding that
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
D o n a l d
his property was worth just under $3.7 billion, but he had debts totaling $3.2 billion, for a net worth of only a halfbillion dollars. The magazine went on to predict that Trump could expect difficult times ahead. This bleak prognosis proved accurate. The real estate market soured in 1990 and property values began plummeting. Trump’s casinos suffered from oversaturation. Moreover, the credit market tightened, making it difficult for Trump to borrow additional money to cover his debts. Consequently, he missed $73 million in payments due in June 1990, and was extended an emergency $65 million loan, which the banks granted in order to save him from default and to protect their own investment. But that loan came at a hefty price: in return, Trump lost his freedom and was forced to relinquish much of his income, and clear important business decisions with his creditors. Trump was bitter about friends who turned on him during the bleak days. “I view these people as being born with garbage in their genes,” he once said. But somehow, Trump bounced back and was reported to be worth more than $2 billion in 1997. He also found some Chinese investors to help him build huge housing projects on Manhattan’s West Side rail yards, a site which he had been fruitlessly trying to develop for years.
Donald Trump is noted in the business world primarily for his impact on the real estate and casino industries, but he is perhaps best known to the public as a wealthy and eccentric celebrity. His businesses were major developers of real estate during the 1980s and contributed to the rapid growth—and later, decline—of the real estate market in that period. More recently, he focused increasingly on amassing a large entertainment and gambling concern that now ranks as one of the largest in the United States. Overshadowing these achievements in the minds of many, however, have been the ongoing tabloid sagas of his marital life, his conspicuous wealth, and his troubled personal finances.
Sources of Information Contact at: The Trump Organization 725 Fifth Ave. New York, NY 10022 Business Phone: (212)832-2000
Bibliography
B u s i n e s s
S t u d e n t s
P r o f i l e s
f o r
T r u m p
Social and Economic Impact
The book on Trump continues, as many wonder what he may do in the future. Trump’s flamboyance, immense wealth, and aggressive business practices— vividly displayed in his attempt to force tenants out of one of his properties by tinning up windows and offering to shelter the homeless in empty apartments—are resented by some New Yorkers. But there is little doubt that Trump was a pacesetter for the 1980s.
L e a d e r
J o h n
Byers, Paula K., and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1998. Contemporary Authors. Detroit: Gale Research, 1990. “I Am Donald, Hear Me Whine.” Forbes, 18 December 1995. “Married, Donald Trump and Marla Maples.” Time, 3 January 1994.
7 6 3
Earl Silas Tupper (1907-1983) Tupperware
Overview The story of Earl Tupper is an American ingenuity story, in which a young man with a basic high school education, an inventive genius, and a commercial eye was able to transform an ugly hunk of oil refinery waste known as “slag” into a form of plastic that could be made cheaply into many useful things. Tupper’s new plastic and his methods of forming the plastic changed the shape and design of household objects, as well as commercial objects in the last half of the twentieth century. His marketing technique of hosting product demonstration parties in the home became extremely successful and has been imitated by other companies selling such items as underwear, home decorations, gardening supplies, and cooking utensils. Earl Tupper’s Tupperware is one of the most recognized names in home furnishings in the world.
Personal Life Earl Tupper was born on July 28, 1907, in Berlin, New Hampshire, and was the only child of Ernest and Lulu Tupper. His father, Ernest Leslie Tupper, ran a family farm and greenhouses. His mother, Lulu Clark Tupper, took in laundry to wash for neighbors and ran a boarding home. Earl’s father was a person who loved to build and tinker, and created several labor-saving gadgets. He was granted a patent for a device to facilitate the cleaning of chickens. Perhaps Earl Tupper developed his talent for inventing things by watching his father. Earl was energetic as a youngster, interested in business, and in making money. He discovered he
7 6 4
E a r l
S i l a s
T u p p e r
could sell a lot of the family’s farm produce if he went door-to-door rather than selling it at the farmer’s market. By age 10, Earl learned that bringing the product to the customer was lucrative as well as enjoyable. He would use this method years later in the form of the Tupperware party. Earl graduated from high school in New Hampshire in 1925, when he was 17 years old. After graduation he continued to work in the family businesses until he was 19. By then, he had determined that somehow, as a businessman, he would make a million dollars by age 30. Earl’s early employment also included working as a mail clerk, and as part of a railroad labor crew. In his spare time he took a course to learn tree surgery, so he could start his own business tending trees and landscaping. In 1931, at age 24, Earl married. He and his wife had five children, one daughter and four sons. Though he started his landscaping business during the Great Depression, it was a modestly successful venture. His Tupper Tree-Doctors Company stayed open for six years. During this time, Earl also kept himself busy conducting various experiments and wrote a series of scientific papers which described his vast interests and many ideas for inventions. But, at age 30, Tupper, instead of having made his first million, was forced into bankruptcy. In 1936, after his bankruptcy, Earl met Bernard Doyle, an inventor working at the plastics manufacturing division of the Du Pont Corporation, in Leominster, Massachusetts. Earl became intrigued with the possibilities of plastic, and went to work at the plastics plant where he later said, according to records of the National Museum of American History, “It was at Du Pont that my education really began.” It was also where Tupper conducted his earliest experiments with plastics prior to World War II. In 1973, Tupper retired and moved to Costa Rica where he eventually became a citizen. Tupper lived to age 76. He died of a heart attack in his adopted homeland on 3 October 1983 and was survived by a sister, 5 children, and 14 grandchildren. Although Tupper built an enormous company making all kinds of things out of plastics, he never liked the term “plastic.” He used to insist on calling what he made “Poly-T,” because “a lot of plastic that is made is junk.”
Chronology: Earl Silas Tupper 1907: Born. 1928: Established Tupper Tree Doctors landscapers. 1936: Tupper Tree Doctors went bankrupt. 1937: Secured employment with Du Pont. 1938: Developed Poly-T plastic. 1938: Established the Earl S. Tupper Company. 1945: Invented air-tight plastic containers— Tupperware. 1946: Introduced Tupperware into department and hardware stores. 1951: Began selling Tupperware through home parties. 1958: Sold Tupperware business to Rexall.
was translucent, white, flexible, lightweight, odorless, non-toxic, and not greasy to the touch. This improved plastic, called Poly-T, became a revolutionary substance in the modern world. Tupper’s modern plastic was made to withstand almost anything except sharp knife-cuts, and near-boiling water. Tupper also designed injectionmolding machines to make shaped objects out of his new plastic, and subsequently developed his famous, patented, air-tight lid.
Earl Tupper worked for Du Pont for only one year. In 1938, he left Du Pont and started the Earl S. Tupper Company which advertised the design and engineering of industrial plastics. He wanted to experiment with plastic and asked Du Pont for some polyethylene slag, a waste product of the oil refining process. It was black, hard, putrid, and unworkable in that form. Tupper refined and cleaned the slag, and produced a plastic that
Most of the work during his company’s first few years was performing subcontract work for Du Pont. The company made much of its money producing molded parts for gas masks and signal lamps for the U.S. Navy during World War II. After the war, Tupper, along with hundreds of other manufacturers, turned his attention to the postwar consumer market. He made items such as plastic sandwich picks, unbreakable drinking tumblers, and plastic cigarette cases. These consumer products were often given away with other well-known products. The tumbler was offered with Tek toothbrushes and the cigarette cases were offered along with brand-name cigarettes with the cigarette company’s logo imprinted on the case. Tupper also focused on creating a line of plastic food storage containers that would hold foods “air tight” in the refrigerator, sealing them against other odors, and keeping foods fresh longer. These containers were known as “Tupperware,” and were first distributed in department and hardware stores. Unfortunately, because of the bad reputation of
B u s i n e s s
S t u d e n t s
Career Details
L e a d e r
P r o f i l e s
f o r
7 6 5
E a r l
S i l a s
T u p p e r
other plastics, sales were dismal in stores. Consumers knew little of Tupper’s new type of plastic. Also, the ingeniousness of Tupper’s air-tight seal needed to be demonstrated to customers. Tupperware was also distributed through private household product companies, such as Stanley Home Products. Some home product salespeople were selling fairly large quantities of Tupperware products to the point where Tupper took notice, contacted them, and met with them to discuss possible new ways to market and distribute Tupperware. A Stanley Home Products saleswoman, Brownie Wise, who was a single mother with a chronically ill son, and who was working three jobs, suggested that Tupper develop a marketing strategy modeled after the Stanley Home Product Company’s inhome selling parties. Thomas Damigella and several other Tupperware distributors also strongly urged Earl Tupper to pull his products out of department stores, and to pursue direct-marketing to the buyer using the “home party.” The idea, was to demonstrate the products in the home of a person who sponsored a “Tupperware party,” where all questions could be answered, where there was fun and laughter, with a party-like or social gathering type of atmosphere. At one point, small Tupperware products were given away to those who attended the parties. Brownie Wise was a very innovative, ambitious, and smart saleswoman and became vice president of the company Tupperware Home Parties in 1951, and she remained in that position until 1958. Home demonstration parties have remained the primary outlet for Tupperware and have become an institution. Anyone with any sales skills could sell the products and sales skyrocketed using this idea. By 1951, Tupper set up world headquarters in Orlando, Florida, on an 1,100-acre site chosen by Brownie Wise. By the time he decided to retire, at age 51, Earl Tupper had created an enormously successful worldwide organization involved in the manufacture and direct sales of plastic containers—containers that were beautiful enough to be collected regularly by the Museum of Modern Art, in New York City, and displayed there, as early as 1947. Tupperware has also earned a place in the Musee des Arts Decoratifs in Montreal, the Philadelphia Museum of Art, and the Victoria and Albert Museum in London. The beauty and functionality of these products, and the direct face-to-face sales, became an unbeatable combination. In 1958, Tupper sold Tupperware to Rexall Corporation for $16 million.
Social and Economic Impact By the late 1940s, Earl Tupper had brought a clean, durable, attractive kind of plastic into the world of commerce. Developing a high-quality plastic along with an ingenious method of production served as a catalyst
7 6 6
B u s i n e s s
for numerous plastic products that have since flooded the marketplace. Molded plastic products are everywhere. The direct face-to-face selling technique of the company became extremely popular and the home party idea has continually evolved. Tupperware created literally millions of jobs and its sales force has been mostly women. When Tupperware started to become popular household items, the work force in the United States was going through major changes. During World War II, while so many of the country’s men were in the armed forces, many women had entered the maledominated job market, for example, in factories. Women also worked at jobs created for the war effort and when the war ended, so did the jobs. Upon the servicemen’s return, women were squeezed out of the job market. Also, after World War II, many children were born—the baby boom—and at that time, many women who had children did not work outside the home. Selling Tupperware provided convenient part-time or full-time employment for many of these women who sought a career outside the home. The Tupperware party has flourished for a halfcentury, and it is estimated by market analysts that in the 1990s, there was, somewhere in the world, a Tupperware sales event going on every few seconds, about 75,000 parties a day with an estimated 118 million attendees yearly, and that one half of all American women over the age of 18 had attended a Tupperware party. In addition, by the mid-1990s, it was estimated that 90 percent of U.S. homes owned at least one piece of Tupperware. Tupperware products are also sold in approximately 85 foreign markets. In 1960, Tupperware was being distributed in Canada and western Europe, and in 1961, Tupperware expanded into Pacific rim countries. Since 1990, Tupperware has been distributed in several Eastern European countries, and Turkey, Russia, India, Indonesia, and China. As the number of different countries where Tupperware was sold increased, Tupperware diversified its products. For example, in Japan, Tupperware kimono keepers can be purchased. Tortilla keepers can be found in Central and South American countries, and in South Korea Tupperware sells Kimchee keepers. Always expanding and attempting to meet the needs of many people, Tupperware has recently started to imprint Braille designations on some of its products in the U.S. market. In 1996, Tupperware became an independent company. Its Tupperware International unit is the world’s third-largest direct selling company, behind Avon and Amway. Aside from quality children’s toys, lettuce corers, orange peelers, tea strainers, gardening tools, and cake keepers, Earl S. Tupper is remembered for other reasons as well; the Earl S. Tupper Research and Conference Center is located at the Smithsonian Tropical Research Institute. The facility includes the Earl S. Tupper Tropical Sciences Library, laboratories for chemistry, plant physiology, histology, acoustic communication, entomology and a scanning electron microscope.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
E a r l
National Museum of American History. “Earl S. Tupper Papers.”
Contact at: Tupperware 14901 S. Orange Blossom Trl. Orlando, FL 32837 Business Phone: (407)826-5050 URL: http://www.tupperware.com
L e a d e r
T u p p e r
Bibliography
Sources of Information
B u s i n e s s
S i l a s
P r o f i l e s
The New York Times Biographical Service. Sanford, NC: Microfilming Corp. of America, 1993. Tupperware Corporation. A Worldwide Success Story. Orlando, 1998. Available from http://www.tupperware.com.
f o r
S t u d e n t s
7 6 7
Ted Turner (1938-) Turner Broadcasting
Overview Robert Edward (Ted) Turner III, also known as the “Mouth of the South,” has put his money where his mouth is to become a multimedia mogul. From his ownership of two professional sports teams and love of yachting to his empire of seven cable networks and two movie studios, Ted Turner has not only become a billionaire three times over but has also become 1997’s biggest charitable donor by pledging to the United Nations $100 million each year for the next 10 years.
Personal Life Ted Turner was born in Cincinnati, Ohio, on November 19, 1938. His parents, Ed and Florence Rooney Turner moved Ted and his younger sister, Mary Jane to Savannah, Georgia, when Ted was nine. Ted’s father, Ed, was described as an authoritarian who, at times, asserted his power by beating Ted with a wire coat hanger. Ted never felt like he could, or would ever live up to his father’s high standards. Ed Turner enrolled his son in the Georgia Military Academy where Ted remained until high school. His father then sent Ted off to McCallie, a Tennessee military preparatory school. In 1955 Ted, representing his high school, won the Tennessee state debate contest, but he was also somewhat of a rebel. After graduating from high school, Turner wanted to attend the U.S. Naval Academy in Annapolis, Maryland. However, his father put his heavy foot down and told Ted that he would attend Brown University and pur-
7 6 8
T e d
T u r n e r
sue a business degree. Yet, Ted denied his father’s authority and decided to study humanities and the classics instead of business. This show of independence ignited a battle that became public after Turner published, in Brown’s student newspaper, a letter that his father wrote which completely made fun of him and his decision. However, this did not stop Turner’s father. Ed continued wielding his influence until Turner finally broke down and changed his major to economics. Yet, Turner would never earn any degree from Brown. He was kicked out— twice. First, Turner was suspended because of a rowdy party. Although he was allowed to return six months later, after a tour of duty with the Coast Guard, Ted, for the second time was kicked out. He had broken Brown’s rule forbidding students from having guests of the opposite sex in their dorm rooms. Turner was not asked back. Turner has married three times—first to Judy Nye with whom he had two children, Laura Lee and Robert Edward IV; second, in 1964, to Jane Smith, with whom he had three children, Beau, Rhett, and Jennie; and third, in 1991, to Jane Fonda.
Ted Turner.
Career Details Turner actually began a full-time “career” at just nine years old when his father had him work summers at his billboard company—Turner Advertising. Turner mowed the lawn around billboards and maintained their poles. He continued working summers at his father’s company, although by college he had stopped cutting grass and started working with customers as an account executive. Yet, Turner was not happy. He had wanted to work at the Noroton Yacht Club in Connecticut, a club that would let Turner pursue his love of sailing by giving him the chance to race, but his father said no. In 1960, Turner became Turner Advertising Company’s general manager at its branch office in Macon, Georgia. For the next three years, Turner found that he did have, if not a love, then a strong like for business. As Turner’s success grew, so did his confidence, and in 1963, with this new found confidence, Turner battled his father once again. In 1962, Ed Turner had overextended his budget by buying into the General Outdoor Advertising Company, and by 1963, Ed felt that he had too many financial obligations. He decided to sell his business. Turner became furious and confronted his father. He had become a successful businessman, just as his father wanted, and was not willing to simply give up on the business. But, on March 5, 1963, Ed Turner did give up—he killed himself. Turner stopped the sell-out plans and sold two family plantations to help cover business debts. Over the next seven years, Turner worked hard to get the family business, now his business, back on track.
(Archive Photos/Malafronte.)
vision and the world would never be the same again. Merging with Rice Broadcasting, Turner bought Channel 17, an independent Atlanta UHF station. With this station, Turner stomped out the local competition by cornering a 16 percent share of the TV audience. Turner won this huge audience by broadcasting Atlanta sports teams’ games, movie reruns, and sitcoms. Just six months later, Turner further expanded his TV audience when he bought a second independent station, WRET-TV in Charlotte, North Carolina. For the next five years, Turner kept an eye on the progress of cable television, and in 1975 his station—now known as WTBS—became the first wholly cable station to be delivered to TV audiences via satellite. By the end of 1976, Turner’s “superstation” was estimated to be worth $40 million dollars.
In 1970 after rebuilding the company—now known as Turner Communication Corporation—into a huge success, Turner stepped into the world of television. Tele-
Turner was not solely focused on his work, however. In 1976 he bought Atlanta’s baseball team, the Braves, and Atlanta’s basketball team, the Hawks. He also bought controlling interest in Atlanta’s hockey team, the Flames. Turner was also a sportsman in his own right. In 1977 he captained his yacht the Courageous and won the America’s Cup. This win granted him the title “Yachtsman of the Year.” This award also, according to Les Brown’s Encyclopedia of Television, “earned him the nickname Captain Courageous.” However, “the [TV] industry and press [named him] Captain Outrageous, for Turner’s outspokenness, eccentric behavior, and derringdo in the business world.” With this “derring-do,” the purchase of three of Atlanta’s sports teams, and his growing library of network reruns and movies Turner’s WTBS, in 1979, began broadcasting 24 hours a day.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
7 6 9
T e d
T u r n e r
Chronology: Ted Turner 1938: Born. 1960: Took over family business, Turner Advertising Company. 1970: Purchased first TV station. 1976: Bought the Atlanta Braves and the Atlanta Hawks. 1977: Won America’s Cup yacht race. 1980: Formed Cable News Network (CNN). 1982: Launched Headline News. 1986: Established Turner Network Television (TNT). 1986: Purchased MGM/UA’s movie studio and film library. 1991: Named Time’s Man of the Year. 1991: Married Jane Fonda. 1992: Introduced Airport Channel and Cartoon Network. 1994: Began Turner Movie Classics, his seventh cable network. 1997: Pledged $1 billion in donations to United Nations causes.
However, Turner was not happy with just one cable station, albeit a “superstation.” In 1980 Turner got what he wanted by creating the first U.S. 24-hour news station—Cable News Network (CNN). The television industry laughed at Turner’s creation. Some wondered, how Turner could profit with a 24-hour cable news station when broadcast networks like CBS, NBC, and ABC could not profit with their daily half-hour newscasts? But Turner persevered. He launched a second news channel, Headline News Network, in 1982. This new network offered continuous half-hour news summaries. Both would prove to be huge successes. Still, Turner faced setbacks during the 1980s. He first made an unsuccessful bid to buy CBS. He then closed a $1.6 billion deal to gain control of the movie studio MGM’s film library; this acquisition benefited Turner but its terms were less than favorable. To finance this deal, he had to give up some of his power when he was forced to sell off parts of his media empire to cable operators such
7 7 0
B u s i n e s s
as Tele-Communications, Inc. (TCI) and Time Warner. By 1986, Turner was once again standing tall when CNN began showing a profit and increasing its audience steadily. Also, in 1986, Turner established his fourth cable station— Turner Network Television (TNT)—now known for its programming of WCW wrestling matches, theatrical movie reruns, and original movies. In 1986, Turner’s love of sports yet again pushed him into another new venture. Turner founded, financed, and broadcast the Goodwill Games. Turner, according to the Encyclopedia of World Biography, wanted these Olympiclike games to “foster better relations” between Russia and the United States. For the next five years, Turner continued building his empire by purchasing the Hanna-Barbara animation studio and its cartoon library. He also continued promoting peace through the second Goodwill Games in 1990, even though this endeavor cost Turner millions of dollars. Also, during these five years, the popularity of CNN exploded due to its accurate and up-to-the-minute reporting of the Persian Gulf War. Thus, Turner was dubbed by some the “King of Cable,” and was named “Man of the Year” in 1991 by Time magazine. That year Turner also married Academy Award-winning actress Jane Fonda. In 1992 Turner established two more cable and satellite channels: the Airport Channel, which offered flight information at U.S. airports, and the Cartoon Network, which was supported by his recently purchased cartoon library. Two years later, Turner established yet another channel when he started broadcasting his MGM film library on Turner Classic Movies (TCM). In a surprise move in 1995, Turner accepted a $7.5 billion bid from Time Warner to buy Turner Broadcasting. With this deal, Turner became Time Warner’s vice chairman and largest shareholder. The purchase in part helped Turner and Time Warner to fend off an aggressive television-market attack by holdings of Rupert Murdoch’s News Corporation, owner of the Fox network among many other media interests. Turner was seldom hesitant to share the fortune he’d made from his many business ventures. Most dramatically, in 1997 he announced that he would donate $1 billion to the United Nations through a special foundation he created for the cause. His massive contribution came in the wake of his periodic criticisms of other billionaires for not giving enough back to society. Turner had long been associated with environmental and other charitable causes. In an explanation of his gift to the UN, Turner told Howard Fineman in Newsweek, “According to Jesus Christ, money is worthless. It won’t buy you anything in heaven, if there is one. It might not even get you in.”
Social and Economic Impact Ted Turner has made an indelible mark on the world’s television markets through his founding of sev-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
T e d
eral of the leading networks viewed on cable and satellite television. His revolutionary concepts like CNN’s allnews format created wholly new and profitable genres of broadcasting that had not previously existed. He has also been a notable personage in international sporting and social causes through his participation in yachting competitions, his ownership of Atlanta-based professional sports teams, and his philanthropy and social activism.
T u r n e r
Bibliography Brown, Les. Les Brown’s Encyclopedia of Television. 3rd ed. Detroit: Gale Research, 1992. Byers, Paula K., and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography. 2nd ed. Detroit: Gale Research, 1998. Current Biography Yearbook. “1979.” New York: H.W. Wilson Co., 1979. Dictionary of Twentieth Century Culture, vol. 1. Detroit: Gale Research, 1994. Fineman, Howard. “Why Ted Gave It Away.” Newsweek, 29 September 1997.
Sources of Information
The International Who’s Who. 60th ed. London: Europa Publications, 1996.
Contact at: Turner Broadcasting 1 CNN Ctr. PO Box 105366 Atlanta, GA 30348
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
7 7 1
Donald John Tyson (1930-) Tyson Foods, Inc.
Overview Don Tyson took over the family business in 1966 and turned Tyson Foods, Inc. into the largest chicken company in the United States. Known as “Mr. Chicken” in and around the poultry industry, Tyson is counted as one of the richest people in America, with a net worth of around $1 billion.
Personal Life Donald John Tyson was born April 21, 1930, in Olathe, Kansas, and was raised surrounded by chickens. His father, John W. Tyson, developed an interest in raising chickens in the 1930s while driving his truck through Springdale, Arkansas. The elder Tyson paired off with some local chicken farmers and began hauling produce for farmers; that later expanded into hauling chickens. It wasn’t long before his father started raising his own animals. One of his dad’s innovations was the travelling chicken truck, allowing the transport of live fowl from Arkansas to Chicago in trucks equipped with feeding and water troughs. The young Tyson left the farm in the early 1950s for the University of Arkansas, but school couldn’t hold his interest, and he soon left to return home. It seemed that Tyson was more interested in chickens than books. He married Mildred Ernst on August 24, 1952, and had three children, John, Cheryl, and Carla, all who work in the family business. He and his wife have been separated for more than 20 years. Tyson is a Democrat, a rarity among big chicken growers and processors, and has a close relationship with
7 7 2
D o n a l d
Don Tyson.
J o h n
T y s o n
(AP Photo/Danny Johnston.)
President Bill Clinton and First Lady Hillary. He was a large contributor to Clinton’s presidential campaign. Tyson Foods has a political action committee, Typac, which reportedly contributed $99,800 to candidates for Senate and House seats in the 1993-94 Federal year. Tyson and other company executives also contributed to the unsuccessful Mississippi congressional campaign of Henry Espy, the brother of Clinton Agricultural Secretary Mike Espy. Because of his political ties, he has been accused of undue influence over Bill Clinton, when Clinton was an Arkansas governor and as president. The most controversial aspect of Tyson’s political activity involved Secretary Espy, who resigned from his post effective December 31, 1994. There were several allegations swirling
Tyson, however, dismisses these allegations and defends his right to be involved in politics. “The system in the United States has been super good to my family and myself and my company,” he said in Nation’s Restaurant News in January of 1995. Tyson said the company encourages its people to get involved at any level of pol-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
about, such as claims that Espy improperly accepted plane rides, meals, and tickets to a Dallas Cowboys football game from Tyson. Also, Tyson allegedly received favorable treatment from the U.S. Department of Agriculture. One favored status repeatedly cited was Espy’s crackdown on unsanitary slaughterhouse practices. Somehow only the meat industry was the target of that probe; none of the poultry producers were investigated.
7 7 3
D o n a l d
J o h n
T y s o n
Chronology: Donald John Tyson 1930: Born. 1951: Became Tyson Foods plant manager. 1956: Named president of Tyson Foods. 1965: Tyson started selling rock cornish hens. 1967: Parents killed in car/train crash. 1989: Purchased Holly Farms. 1991: Named one of America’s top ten fishermen. 1992: Bought Arctic Alaska Fisheries of Seattle, Washington. 1995: Tyson supplied 82 of the Top 100 fast-food chains. 1995: Retired from day-to-day operations.
itics, whether it is the local high school or city council or local civic clubs. He strongly believes that, “We have a responsibility to that community and to the society, because they’ve been good to us. You have to give something back. You never should take all the time.” He concluded that, “Because of that, you evolve into politics. If we don’t express our opinions, then we have no right to say anything about it.” Tyson spends much of his time enjoying his favorite pastimes: fishing, visiting his country house near London, or working on a proposed new billfish museum in Florida. In 1991 he was named one of America’s top ten fisherman by Power and Motor Yacht magazine. He caught a 1,100 pound black marlin, and enjoys travelling around the world catching fish. Tyson has donated large sums of money to a variety of charities and has helped fund the Farm Aid musical concerts that raised money for agricultural workers. He also once rebuilt a poor congregation’s church that had burned down.
Career Details Tyson, it seems, was destined to be in the chicken business. He learned much of the business from his father, who controlled every aspect of his chicken business, which included purchasing grain mills, processing plants, and transportation facilities. His father also sold Ralston
7 7 4
B u s i n e s s
Purina feed, catering to individual farmers. Not one to stand in the shadows, Tyson began putting his fingerprint on the company in 1965, when he persuaded his father to introduce the rock cornish hen. These tiny birds were a novelty at the time, and distributors were willing to pay a rate of 50 cents per bird. This was a critical agreement, and the impact to the company’s bottom line was enormous, as it allowed Tyson to calculate margins without having to worry about fluctuating grain prices. It seemed that Don Tyson was well on his way to learning the family business. Unfortunately, tragic circumstances put him at the helm of this budding enterprise earlier than expected. At the age of 35, Don Tyson was forced to take control of the company when his father and stepmother were killed in a car-train crash. “A replica of John Tyson’s office in the corporate headquarters contains a clock stopped at the time of his death,” according to the New York Times. Tyson and his half brother, Randall, inherited the company, which at that time, controlled less than 2 percent of the nation’s poultry market. That computed to earnings of $507,000 on sales of $52 million. Commenting on his parents death in Nation’s Restaurant News, in January of 1995, he said: “To lose both of them in one day was a real transition for me. It was January, it was cold, and we were losing money. It wasn’t a very good month.” Tyson’s interest in chicken is not limited to just one process. Like other poultry businesses, Tyson sells raw and packaged chicken and has been a leader in that area. But he has also made tremendous inroads in prepared chicken (the kind that is cooked, breaded, and battered). These time-savers have been a big hit with busy families. “We’re selling time along with quality and convenience,” he told the New York Times. “We produce it and assemble it.” This strategy helped Tyson to become less dependent on grain prices because the packaged or processed chicken requires other steps that impact the price of the chicken. Moreover, Tyson is careful not to waste chicken, and even sells chicken feet, which is used in soup, to China. While there have been some winning strategies, there have been some flops as well. In the 1960s, when Tyson planned to open a chain of fast-food chicken restaurants across the country. All 30 were dismal failures. Another idea that did not catch on was its Gizzard Burger, which contained leftover ground chicken gizzards supplemented with various beef and beef flavoring. “They did everything but sell,” Tyson recalled. While the Gizzard Burger may not have worked for the company, Tyson has enjoyed many other successes. Food service was one of the first areas in which Tyson expanded after opening its first processing plant in 1958. He helped McDonald’s develop the Chicken McNugget in the early 1980s, and was able to create his own frozen version for home use. Tyson also helped bring the first chicken sandwiches and chicken nuggets to other burger chains. In 1995 Tyson controlled 70 percent of the ex-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
D o n a l d
port market to Japan and expanded its fast food accounts to include Kentucky Fried Chicken and Wal-Mart. That year Tyson supplied 82 of the Top 100 fast food chains. What we do is anticipate a need and then try to fill that need,” Don Tyson said. “We make over 3,000 products today with chicken, with variations of breading and batter and taste and spice levels. We make whatever our customer wants.” Indeed, in 1995 Tyson Foods sold 6,000 products in 57 countries, and its sales of $5.2 billion brought it to the 110th rank on Fortune magazine’s list of the 500 biggest companies. In addition, Tyson built a new research and development plant for about $9 million, 100 times the amount he spent on his original chicken plant. “My dad let me have $75,000 to build our first chicken plant, and I couldn’t do it. I had to borrow another $15,000 from friends for the $90,000 plant,” Tyson told Nation’s Restaurant News. The original plant is still running in Springdale, Arkansas. Much of Tyson’s growth has been through acquisition as well as diversification. By 1994 Tyson Foods had made more than 20 corporate purchases, catapulting it to one of the nation’s largest hog producers and leading seafood processors. Tyson also started a beef processing division specializing in chicken-fried steak. Tyson’s biggest acquisition to date was the 1989 purchase of Holly Farms, which, at the time, was the nation’s second-largest chicken producer behind Tyson. The company acquired Holly Farms for $1.5 billion, and it has been one of the company’s best deals. In 1992 Tyson bought Arctic Alaska Fisheries of Seattle, Washington, the largest at-sea fishing processing fleet, as the company began to diversify into fish, beef, pork. Don Tyson tried in 1994 to acquire WLR Foods of Virginia, a huge turkey producer, but shareholders of that company were against the marriage. At work, Tyson was known to wear the same attire worn by other Tyson employees: a khaki jumpsuit with his name stitched on the pocket. His management philosophy was somewhat unique and called his workers people and not employees. Anyone heard using the “E” word in his presence was fined a quarter. In the mid1990s Tyson instituted literacy programs to assist illiterate workers and paid tuition to about 200 Tyson people going to college in 1994.
J o h n
T y s o n
edly paid much too much to acquire the company. The pork business turned out to be much more difficult to run than Tyson Foods had previously thought, and the beef business was not fairing much better. With business taking a turn for the worse, Tyson decided to exit Tyson Foods, handing the reigns over to his hand-picked successor, Leland Tollett. Tyson stepped down as chief executive officer in 1992 and on his 65th birthday in 1995, relinquished the day-to-day operations of the company. It seemed apparent that Tyson’s center-of-the-plate protein strategy, a plan to dominate major meats and poultry consumed by Americans, was a bust. Once Tollet was in place, he immediately began to sell the pig slaughtering plant. A year later, Tollet moved to rid the company of all of its other beef and pork plants. Looking back over the years, Tyson says he regrets none of his expansion ventures. “If it makes money, we expand it,” he said. “If it doesn’t, we cut its throat. The 11th Commandment is that you need to make a profit. If you’re not making money, you need to change.” Although he is no longer involved in the daily operations, he still calls the office daily, and he most certainly has final say over all important business decisions. In 1996 he controlled 90 percent of the company’s voting shares.
Sources of Information Contact at: Tyson Foods, Inc. PO Box 2020 Springdale, AK 72765-2020 Business Phone: (501)290–4000
Bibliography Clark, Kim. “Tough Times for the Chicken King.” Fortune, 28 October 1996. Hayes, Thomas. “Mr. Chicken Goes to Washington.” New York Times, 17 January 1993. McGraw, Dan, and John Simons. “The Birdman of Arkansas: Don Tyson Revolutionised the Nation’s Chicken Business; Now He’s Hatching a Global Food Empire.” U.S. News & World Report, 18 January 1994. Newsmakers 1995 Cumulation. Detroit: Gale Research, 1995. Ruggles, Ron. “Don Tyson: Chairman, Tyson Foods Inc., Springdale, Arkansas.” Restaurant News, January 1995.
Social and Economic Impact As time progressed, Tyson began to lose his edge and failed to follow many of his own rules. The Arctic purchase proved to be a problem, as Tyson had report-
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
“Tyson, Top Chicken Man in United States, Wants to Become America’s Protein Man.”Quick Frozen Foods International, January 1995. Who’s Who in America. New Providence, NJ: Marquis Who’s Who, 1996.
S t u d e n t s
7 7 5
Jay Van Andel (1924-) Amway Corporation
Overview Jay Van Andel, together with his lifelong friend Rich DeVos, founded Amway Corporation, a direct-selling organization that preaches the American dream of free enterprise. Van Andel and DeVos developed an international network of distributors and built Amway into a multibillion-dollar corporation. Along the way they amassed personal fortunes estimated at $4.5 billion each in the mid-1990s. They have been staunch supporters of the Republican Party and became known for their conservative political beliefs.
Personal Life Jan Van Andel was born on June 3, 1924, in Grand Rapids, Michigan, where his father ran an automobile agency. His parents were Dutch immigrants. He attended local schools before going to nearby Calvin College for a year, then he joined the U.S. Army Air Corps in 1943. He spent another year at Calvin College after the war. Van Andel met Rich DeVos, who was two years younger, when both were teenagers in 1940. Van Andel had access to a car through his father’s dealership, and he drove DeVos to school every day. That summer they drove two used trucks to Montana for Van Andel’s father, and the trip cemented their lifelong friendship. In 1946 Van Andel started a business called Wolverine Air Service, when he and another partner bought a small Piper Cub airplane as college students. In 1947 Van Andel’s partner sold his interest to DeVos; it was the beginning of a lifelong business partnership for Van Andel
7 7 6
J a y
V a n
A n d e l
and DeVos. They built their air service, which included a flying school, into a successful business with 12 aircraft and 15 instructors. To fill in the slack time between flights, the two set up a hamburger stand at the airfield and took turns cooking and carhopping the food. They soon tired of both the hamburger and air charter business and sold out in 1948. With the proceeds from the sale of their business, Van Andel and DeVos bought an old schooner and planned to cruise to the West Indies and South America. Not particularly experienced at sailing, they watched their boat sink near Cuba in 1949. While in the Caribbean, they conceived the idea of importing goods to the United States. When they returned to Grand Rapids, they formed the Ja-Ri Corporation to distribute various goods. They hooked up with Carl Rehnborg, a cousin of Van Andel’s and founder of Nutrilite Products. The Chicago-based Nutrilite marketed a nutritional supplement and was looking for distributors. At first Ja-Ri sold Nutrilite products through jobbers, wholesalers, and supermarket buyers. Then Van Andel and DeVos decided to try a new approach, which was direct sales to customers in their homes and offices. They established a network of distributors who sold Nutrilite in their own territories. By the mid-1950s, Ja-Ri’s network counted some 5,000 independent salespeople. It was the forerunner and model for Amway’s successful sales formula. Over the years, Van Andel and DeVos have maintained close personal as well as business relationships. Both sons of Dutch immigrants, they both had four children, all of whom eventually served on committees overseeing the operations of Amway Corporation. They both married young women from Grand Rapids’ Dutch community and moved into adjacent houses. They were both prominent members of the same local church, and both became leading members of and contributors to the Republican Party. The media has referred to them as the “Dutch Twins.”
Career Details After distributing Nutrilite products for about 10 years, Van Andel and DeVos began to look for new products to distribute. Management problems at Nutrilite caused Ja-Ri to end its association with the company in 1959. Early in 1959, Van Andel and DeVos formed the American Way Association as an umbrella organization for their distributors. They began distributing a variety of household products, including a liquid cleaner and a laundry compound. As these proved successful, Van Andel and DeVos formed the Amway Sales Corporation in November 1959 to obtain and warehouse products, sell them to affiliated distributors, and provide marketing and sales support.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Jay Van Andel.
(AP Photo/John Duricka.)
One of the company’s first products was called Frisk. It was a biodegradable soap that was purchased from a struggling Detroit chemist. With their proven sales methods and extensive network of distributors, Van Andel and DeVos sold so much soap that within two years they opened their own soap manufacturing plant outside of Grand Rapids. In 1964 the company was streamlined and reorganized with various sales organizations being merged into Amway Corporation. Van Andel became chairman and DeVos handled the duties of president, which included recruiting and motivating salespeople. Amway grew rapidly in the 1960s, manufacturing products for its distributors to sell and entering into licensing agreements with other manufacturers. Cookware and cosmetics were added to the product line, and by the 1970s Amway was manufacturing about 150 different household products. The company expanded internationally in the 1970s, opening subsidiaries in Japan, Europe, and Australia. A Canadian subsidiary had been established early on in 1962. Sales peaked in 1981 at $1.2 billion. Amway was truly international, with more than 300,000 distributors worldwide and 4,000 employees at the company’s offices and manufacturing facilities. During the 1980s, sales began to slip, and the company experienced problems with some of its larger distributors. The success of Amway’s distribution network had been built primarily on how many new distributors could be recruited by existing distributors. After all, each distributor was limited as to how
S t u d e n t s
7 7 7
J a y
V a n
A n d e l
Chronology: Jay Van Andel 1924: Born. 1949: Established Ja-Ri Corporation with Rich DeVos. 1959: Formed American Way Association, then Amway Sales Corporation. 1962: Formed Amway of Canada Ltd. 1964: Various sales organizations merged into Amway Corporation. 1972: Established Free Enterprise Institute. 1979: Federal Trade Commission concluded that Amway did not practice pyramiding. 1981: Amway sales peaked at $1.2 billion.
Amway began to receive negative publicity in the early 1980s when a former distributor, Philip Kerns, published a damaging exposé called Fake It Till You Make It. The book caused both The Phil Donahue Show and 60 Minutes to run unflattering pieces on Amway. Another book critical of Amway’s sales methods, Amway: The Cult of Free Enterprise, by Stephen Butterfield, was published in 1985. Sales plunged as much as 30 percent during this period. In the 1990s, Amway’s international expansion proved to be a lucrative investment. Retail sales for 1991 reached $3.1 billion and grew to $5.3 billion in 1994, an 18 percent increase over 1993. Approximately 70 percent of the company’s sales were from overseas operations, as its distributorships proved especially popular in Asia. Two public offerings in 1993 and 1994 established strong market values for Amway Asia Pacific and Amway Japan. Shares sold to the public raised more than $1.6 billion for Hong Kong-based Amway Asia Pacific and about $5.1 billion for Amway Japan. Company officials expected overseas sales to account for an everincreasing share of overall sales. In 1995 corporate sales rose to $6.3 billion.
1983: Amway paid $25 million fine to settle charges brought by the Canadian government. 1994: Ranked among top 10 wealthiest Americans by Forbes. 1995: Amway sales totaled $6.3 billion.
much he or she could sell individually. What motivated Amway distributors was the profits they could realize by taking a percentage of the sales of every new distributor they could recruit. Some distributors, known in company circles as “Black Hats,” developed their own networks and made as much as $200,000 or $300,000 annually. Some of the larger distributors were found to be abusing the system by forcing their recruits to purchase excessive amounts of Amway goods and selling them non-Amway motivational and self-improvement books and tapes. In 1985 the company hired William Nicholson, former appointments secretary to President Gerald Ford, to clean up the sales force. He introduced more traditional sales training, downplaying the evangelism and cultism that had characterized Amway’s approach in the past. Another problem that plagued Amway in the 1980s was a dispute with the Canadian government, which charged Amway with defrauding Canada by understating the value of goods it had imported into Canada. In 1983 Amway paid a $25 million fine to Canada to settle the case, although Canada claimed the company owed it another $105 million in unpaid duties. Amway eventually paid some $58 million to Canada to settle all of the charges.
7 7 8
B u s i n e s s
Social and Economic Impact Amway’s social impact was not so much in the household products it sold, rather in its championing of the American dream of free enterprise for its distributors. DeVos and Van Andel organized a unique distribution system and promoted dreams of vast wealth for those who sold the company’s products. Two of the most successful distributors, Bill Britt of Chapel Hill, North Carolina, and Dexter Yager of Charlotte, North Carolina, ran networks of more than 100,000 distributors in the early 1990s and were believed to net more than $10 million a year. For other distributors, especially those who fed their orders to other distributors, the dream could quickly become a nightmare. In 1991 Forbes estimated that the average Amway distributor sold about $1,700 worth of goods a year. Nearly half of the 1.8 million distributors who registered with Amway worldwide would drop out within a year. Forbes estimated that the average distributor in the United States would net about $780 a year but would consume more than $1,000 worth of Amway goods. Distributors were also pressured to purchase selfhelp and motivational books and tapes. Amway’s sales meetings were led by the charismatic Rich DeVos and had an evangelical character. He has been quoted as saying, “Amway is more than a company, it’s a movement to help people help themselves.” The object of the company’s motivational meetings was to make Amway distributors feel bound by a set of shared beliefs and make their goals become identical with the company’s goals. Forbes described Amway rallies as a mix between a rock concert and a religious revival meeting.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J a y
DeVos and Van Andel, both conservative Republicans, exerted tremendous influence on national politics in the 1980s. They were among the most generous supporters of Ronald Reagan in his presidential campaigns of 1980 and 1984. Van Andel was named head of the U.S. Chamber of Commerce, a private-sector organization, and remained good friends with Grand Rapids native former president Gerald Ford. Amway rallies often included campaign messages for conservative Republican candidates.
Bibliography Butterfield, Stephen. Amway: The Cult of Free Enterprise. Boston: South End Press, 1985. Grant, Linda. “How Amway’s Two Founders Cleaned Up: Strong Overseas Sales Helped Richard DeVos and Jay Van Andel Add Billions to Their Fortunes.” Forbes, 31 October 1994, 77. Ingham, John N., and Lynne B. Feldman. Contemporary American Business Leaders. Westport, CT: Greenwood Press, 1990, 124. Klebnikov, Paul. “The Power of Positive Inspiration.” Forbes, 9 December 1991, 244.
Who’s Who in America. 1998 ed. Wilmette, IL.: Marquis Who’s Who, 1997.
Contact at: Amway Corporation 7575 Fulton St. E. Ada, MI 49355-0001 Business Phone: (616)787-6000
L e a d e r
A n d e l
“Over $3,000,000,000: The Forbes Four Hundred.” Forbes, 14 October 1996, 116.
Sources of Information
B u s i n e s s
V a n
P r o f i l e s
f o r
S t u d e n t s
7 7 9
Cornelius Vanderbilt (1794-1877) Entrepreneur
Overview Beginning at the age of 16 with one sailing vessel worth $100, Cornelius Vanderbilt eventually assembled a coast-to-coast transportation empire that included not only ships but also trains. In his heyday, he was the richest man in the entire country. When he died at the age of 82, he was the largest employer in the United States and had amassed a personal fortune of over $100 million. (This was during an era when $100,000 was enough to finance a lifetime of comfort.) As a result of the efforts of this remarkable self-made man, the Vanderbilt name became synonymous with unimaginable wealth and power.
Personal Life Cornelius Vanderbilt was born on May 27, 1794, at Port Richmond on Staten Island, New York. Although his father was from a long line of Dutch farmers, he also had a side business in commercial boating. Young Cornelius developed a great love for the water and quit school at the age of 11 to work for his father. Five years later, he persuaded his mother to pay him $100 for plowing and sowing a rocky, eight-acre field so that he could buy his own boat. This he accomplished by promising some friends that he would take them sailing if they helped him with the farm work. Vanderbilt’s sailboat was not just a pleasure craft, however. He soon opened a transport and freight service between Staten Island and New York City. Although he had a rough, coarse manner, he developed a reputation
7 8 0
C o r n e l i u s
V a n d e r b i l t
for honesty and for working hard at a reasonable price. By the end of his first year in operation, he was able to repay his mother in full and give her an additional $1000. In fact, Vanderbilt’s business prospered so rapidly that by the age of 18 he was the owner of two vessels and captain of a third. In 1813 Vanderbilt married Sophia Johnson, and the next year they moved to New York City. There he became a familiar sight on the docks with his lusty personality, salty vocabulary, and burning desire to compete and win. Early in his career, Vanderbilt developed his strategy of offering bargain rates that either drove his rivals out of business or forced them to pay him to withdraw. This allowed him to expand his business, which eventually included not only commercial vessels but also luxury passenger liners. By 1850 Vanderbilt, or “the Commodore” as he was known, was the first name in shipping and passenger service. He then applied what he had learned to the task of acquiring and building railroads. Vanderbilt had four sons (one of whom died in the Civil War) and nine daughters. A year after the 1868 death of his first wife, Sophia, he married Frances Crawford, a young Southern belle from Mobile, Alabama. Before their marriage, Vanderbilt had shown no interest whatsoever in charitable projects or other causes. But with Frances acting as his advisor, he began to display a more philanthropic bent. In 1873, for instance, he contributed $1 million to Nashville’s Central University, renamed Vanderbilt University in his honor. Vanderbilt’s lifestyle was one of hard work and aggressive competition right up until his death on January 4, 1877, at the age of 82. Cornelius once admitted, “I have been insane on the subject of moneymaking all my life.” A Vanderbilt Mansion website includes a brief description of him that notes “he despised all routine office work, kept his figures in a vest-pocket book, ate sparingly; never speculated in stocks, never refused to see a caller, rose early, read Pilgrim’s Progress every year, and, for diversion, played whist and drove his trotters whenever he could.”
Cornelius Vanderbilt.
(The Library of Congress.)
and “cottages” in the country or at the seashore. They dressed in expensive suits with top hats and attended the opera, often escorting ladies who wore diamond tiaras. They also collected art, gave to worthy causes, and married women with European titles. And because of their millions, Vanderbilt’s children and grandchildren were able to gain admission to high society, a privilege denied the Commodore because of his humble background and rough demeanor.
Career Details
Cornelius Vanderbilt’s grandsons, most notably Frederick William (1856-1938) and William K. II (18491920), multiplied their inheritances into vast business and real estate holdings. They also spent money in ways that their grandfather would have considered frivolous. They owned mansions along New York City’s Fifth Avenue
On both water and land, Cornelius Vanderbilt constructed great American systems of transportation. From his first sailing vessel to his expansive railroad holdings, he was always looking toward the future, a practice that put him one step ahead of the competition. The War of 1812 created his first significant opportunity. At that point, 18-year-old Vanderbilt had been in the freight business about two years and had done quite well ferrying goods between Staten Island and New York City. He then landed a contract with the federal government to supply the various forts around the region, thus expanding the scope of his operations to include the Hudson River and along the eastern seaboard from New England to Charleston, South Carolina. The profits from this venture allowed him to build a schooner that plied the waters of Long Island Sound and two more ships for han-
B u s i n e s s
S t u d e n t s
Vanderbilt amassed a fortune of more than $100 million during his lifetime. Upon his death, most of it was passed on to his eldest son, William Henry (1821-1885), with the exception of $11 million given to each of four grandsons and another $11 million that was split among his nine daughters. William Henry died a mere eight years after his father with a net worth that was twice the amount he had inherited. He left large shares to his two oldest sons, both of whom were managers of the New York Central Railroad.
L e a d e r
P r o f i l e s
f o r
7 8 1
C o r n e l i u s
V a n d e r b i l t
Chronology: Cornelius Vanderbilt 1794: Born. 1810: Sailed his own commercial vessel between Staten Island and New York City. 1812: Expanded his ship transportation business to the Hudson River and the Atlantic coast. 1818: Began operating a ferry service between New Brunswick, New Jersey, and New York City. 1829: Established a steamboat service on the Hudson River. 1850: Established a shipping route to the West Coast through Nicaragua. 1862: Began to purchase controlling interest in railroad companies. 1870: Established a railroad line from New York City to Chicago. 1873: Built Grand Central Terminal in New York City. 1873: Donated $1 million to Central University, which is renamed Vanderbilt University in his honor. 1877: Died.
dling the coastal trade. By 1817, the young entrepreneur’s fortune amounted to $9,000, plus the value of his fleet. In 1818, however, having noted the advent of steamboats along the Hudson River, Vanderbilt sold all of his sailing vessels and went to work for Thomas Gibbons, who operated a ferry between New York City and New Brunswick, New Jersey. Over the next 11 years, at an annual salary of $1,000, Vanderbilt captained the ferry and made the line profitable with a tough, often ruthless, approach to the business that earned him the nickname “the Commodore.” He did so despite opposition from competitors Robert Fulton (the inventor of the steamboat) and Robert R. Livingston, who claimed a legal monopoly on Hudson River traffic. In addition, Vanderbilt’s wife, Sophie, managed the New Brunswick halfway house (located between New York and Philadelphia), where all travelers on the Gibbons line had to stay. By 1829 Vanderbilt had decided to go out on his own. Over the protests of his wife and Gibbons, who offered to double his salary and sell him half the line, Van-
7 8 2
B u s i n e s s
derbilt moved his family back to New York City. There he took around $30,000 that he had accumulated and entered the competitive service between New York City and the Hudson River town of Peekskill, where he had the first of several encounters with Daniel Drew. Vanderbilt won this battle by cutting fares to as low as 12 1/2 cents, which forced Drew to withdraw. He next challenged the Hudson River Association in the Albany trade. After he again cut rates, the competition paid him a handsome sum to move his operations elsewhere. Vanderbilt opened service to Long Island Sound, Providence, Boston, and points in Connecticut. His vessels were stable craft that offered the passenger not only comfort but often luxury. By the time he was 40, Vanderbilt’s wealth exceeded half a million dollars. But he was still looking for new worlds to conquer. He eventually found one after the end of the Mexican War in 1848, when hundreds of thousands of people began heading to California in search of gold. Most of them went by boat to Panama, crossed the isthmus by mule, then boarded steamers that traveled along the Pacific coast. At the time, this was the only way to avoid the long transcontinental trek by wagon. Vanderbilt proceeded to challenge the Pacific Steamship Company by offering similar service via Nicaragua, which saved 600 miles (thus eliminating two days’ travel time between New York and San Francisco) and cut the fare by half. This move netted him more than $1 million a year. After a bitter political fight in Nicaragua and a battle on Wall Street, Vanderbilt won control of the Accessory Transit Company, a formidable rival of the United States Mail Steamship Company that operated across Panama. Finally, in 1859 he agreed to dispense with the Nicaraguan line for $56,000 per month and the sale of his private yacht for $400,000. During the 1850s, Vanderbilt dabbled in the Atlantic carrying trade and managed to attain a strong position. But then he decided that the wave of the future was heading in another direction—the railroad. In 1862, at the age of 70, he acquired the New York and Harlem Railroad. After thwarting an attempt by stock manipulators to assert control, Vanderbilt made his son, William H., the vice president, and together they acquired the rundown Hudson River Railroad. Vanderbilt then spent large sums of money improving the lines’ efficiency before watering the stock and paying substantial dividends. During the first five years of the venture, he is said to have cleared $25 million, enabling him to buy a controlling interest in the New York Central Railroad in 1867. That same year, however, Vanderbilt ran into trouble when he attempted to gain control of the Erie Railroad, which was then in the hands of his old adversary Daniel Drew along with Jay Gould and James Fisk. As he had done in similar situations in the past, Vanderbilt bought all the stock offered for sale. But this time, Drew and his fellow investors released 100,000 shares of fraudulent stock on the market, which Vanderbilt continued to
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
C o r n e l i u s
buy. He lost more than $1 million before he finally gave up on his plan. Instead, he extended his lines to Chicago by acquiring the Lake Shore and Michigan Southern railroads, the Canadian Southern, and the Michigan Central. The last big project of Vanderbilt’s life was also related to his railroad empire. During the financial panic of 1873, when he was nearly 80, he built Grand Central Terminal in New York City.
Social and Economic Impact Cornelius Vanderbilt’s contributions to society must be looked at primarily in terms of his transportation of passengers and freight throughout the United States. A shrewd and highly competitive businessman who was also a visionary of note, he managed to lower prices and improve quality, first on the nation’s waterways and then on land. This he accomplished while outfoxing a series of formidable rivals. Although Americans no longer rely on his steamships, they still use the railroad lines and stations that he established well over 100 years ago. At the time of its founder’s death in 1877, the Vanderbilt empire employed more people than any other business in the United States. Thus, a substantial portion of the population owed its livelihood to the family whose very name came to stand for extraordinary wealth and power. Yet the Commodore himself was not particularly charitable, nor was he given to showy displays of any kind. In fact, during the later years of his life in particular, as the country suffered through growing pains that often resulted in economic chaos, he exerted a stabilizing influence on the nation’s finances.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
V a n d e r b i l t
Sources of Information Bibliography Andrews, Wayne. The Vanderbilt Legend: The Story of the Vanderbilt Family, 1794-1940. New York: Harcourt, Brace, 1941. Byers, Paula K. and Suzanne M. Bourgion, eds. Encyclopedia of World Biography, Volume 15. Detroit: Gale Research, 1998. “Cornelius Vanderbilt.” The Encyclopedia Americana, Volume 27. Danbury, CN: Grolier, 1997. “Cornelius Vanderbilt.” The National Cyclopedia of American Biography, Volume 6. New York: James T. White & Co., 1892. Reprint, Volumes 1-50. Ann Arbor, MI: University Microfilms, 1967-1971. Croffut, William A. The Vanderbilts and the Story of Their Fortune. North Stratford, NH: Ayer, 1975. Downs, Robert B., John T. Flanagan, and Harold W. Scott. “Cornelius Vanderbilt.” Memorable Americans, 1750-1950. Littleton, CO: Libraries Unlimited, 1983. Flynn, John Thomas. Men of Wealth: The Story of Twelve Significant Fortunes from the Renaissance to the Present Day. Freeport, NY: Books for Libraries Press, 1971. Hoyt, Edwin Palmer. The Vanderbilts and Their Fortunes. Garden City, NY: Doubleday, 1962. Hungerford, Edward. Men and Iron: The History of New York Central. New York: Ayer, 1938. Mims, Edwin. History of Vanderbilt University. Nashville: Vanderbilt University, 1946. National Park Service. “The Vanderbilt Mansion.” Hyde Park, NY: National Park Service, 1998. Available from http://www.nps.gov/vama/vamahome.html. WebScope. “The Vanderbilt Museum.” Valley Stream, NY: WebScope, 1997. Available from http://www.stelcom.com/vanderbilt.
S t u d e n t s
7 8 3
Gloria Vanderbilt (1924-)
Overview Widely known as bearer of the name that appeared on one of the most popular of the “designer” jeans that hit women’s upscale clothing stores in the mid-1970s, artist, designer, author, businesswoman, and socialite Gloria Vanderbilt was once described in Life magazine as “an up-to-date and very feminine version of the manyfaceted Renaissance man.” Despite the many tragedies that have beset Vanderbilt during her life, she has remained resilient, a role model to many women.
Personal Life Gloria Laura Morgan Vanderbilt was born February 20, 1924, in New York City. Her mother, Gloria Morgan, was the sister of lady Thelma Furness; her father, Reginald Claypoole Vanderbilt, was a sportsman, financier, and diplomat who died when his daughter was a year-and-a-half, but not before he had successfully squandered a $25 million inheritance left by his great grandfather, shipping magnate Commodore Cornelius Vanderbilt. At her father’s death, young Gloria inherited a trust fund of $4 million. Vanderbilt spent her earliest years in Paris, where she lived with her mother. In the midst of the Depression in 1934, when Gloria was 10, she became the focus of an ugly custody battle between her father’s aunt, sculptress Gertrude Vanderbilt Whitney, and her mother. Whitney accused Mrs. Vanderbilt of having an indecent character and of abandoning her daughter; she wanted her young niece removed from her mother’s unwhole-
7 8 4
G l o r i a
V a n d e r b i l t
some influence. The case, which involved over 7,000 pages of testimony from witnesses recounting the goingson among the Vanderbilt social circle, provided the press and the public a look at the hidden indiscretions of the New York upper class during a time when many people were starved for images of affluence and high society. While Gloria ultimately moved to the home of her aunt, mother and daughter would eventually reconcile, her mother’s free spiritedness serving as inspiration for her daughter’s eventual business enterprises. As a teen, Vanderbilt attended the Mary C. Wheeler School in Providence, Rhode Island, and then transferred to Farmington, Connecticut’s Miss Porter’s School—the same institution that Jacqueline Bouvier Kennedy would attend during her own high school years. During her school years Vanderbilt indulged in her interests in the arts that would characterize her adult life. She also started the lifelong habit of keeping a “diary of feelings.” Dropping out of school before graduation and refusing to formally debut into high society, 17 year-old Vanderbilt was married for the first time in 1941, perhaps as an act of rebellion. Nonetheless, she divorced her husband, an actor’s agent, scarcely three years later. A second marriage quickly followed the first as 21 yearold Vanderbilt eloped to Calexico, California in 1945 to marry 63 year-old orchestral conductor Leopold Stokowski, whom she divorced a short time later. She remarried again in 1951, this time to film director Sidney Lumet; the marriage would last six years. Between 1955 and 1958, during her marriage to Lumet, Vanderbilt, who had attended several exclusive preparatory schools while growing up, enrolled at New York City’s Neighborhood Playhouse School of the Theatre where she studied under director Sanford Meisner. Other relationships would follow throughout Vanderbilt’s life, keeping her a relatively familiar figure in the tabloids. Her 1963 marriage to author Wyatt Cooper lasted until Cooper’s death of a heart attack in January of 1978 and produced two sons: Anderson and Carter, who committed suicide 10 years later. Carter’s tragic death in 1988—he leapt from the railing of his mother’s 14th floor Manhattan apartment while she attempted to talk him out of taking his own life—caused Vanderbilt to endure intense hardship. In the early 1980s Vanderbilt also had a relationship with African American singer Bobby Short that caused her to be excluded from certain New York social circles.
Career Details
Gloria Vanderbilt.
(Archive Photos/Tom Gates.)
works of artist Marc Chagall. She exhibited them in onewoman shows at New York galleries as early as 1948. Her marriage to Lumet in the 1950s fueled yet another creative outlet-acting. She was first encouraged in 1954 after a producer impressed by Vanderbilt’s poise, beauty, and reserve during her performance in a charity ball pageant, cast her in a regional stage production. Her first role on Broadway occurred in 1955, in the William Saroyanpenned play The Time of Your Life. Other stage performances included Peter Pan, and Vanderbilt also acted in productions on television’s Kraft Theater and U.S. Steel Hour during the later years of the decade. In true “Renaissance Man” fashion, Vanderbilt’s talents also found an outlet in literature; she published a book of poetry in 1955. Containing 27 verses, the volume, titled Love Poems, had its roots in the “diary of feelings” she had kept as a young girl. She also authored the play Three by Two and Cinamee in 1961. Throughout her early career, Vanderbilt was keenly aware that her famous name might spur her creative works to prominence; she sometimes began projects anonymously and only attached her name to them after critics had deemed them successful on their own merits.
An early exposure to the visual arts in and around New York City, as well as the encouragement of her aunt, founder of New York’s Whitney Museum of American Art, sparked Vanderbilt’s creativity. During her marriage to Stokowski she began creating collages and acrylic paintings that art critics found to be reminiscent of the
The author of books about etiquette and decorating, including You’re Never Fully Dressed Without a Smile and her Book of Collage, Vanderbilt’s famous name and event-filled life would also prompt her to write several autobiographies. In 1985 she published the first, Once upon a Time: A True Story, which described her privi-
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
7 8 5
G l o r i a
V a n d e r b i l t
Chronology: Gloria Vanderbilt 1924: Born. 1934: Subject of notorious custody battle between mother and paternal aunt. 1955: Made debut as actress on Broadway in The Time of Your Life. 1975: Released own “designer-label” jeans to women’s ready-to-wear market. 1985: Published first volume of autobiography, Once Upon a Time: A True Story. 1988: Introduced women’s fragrance line, “Glorious.” 1989: Published first novel, Never Say Good- Bye. 1996: Published third memoir, A Mother’s Story.
leged childhood. Two years later Black Knight, White Knight appeared. Her memoir A Mother’s Story, published in 1996, details the emotional hardships endured by Vanderbilt as she attempted to combat the tragedy of her 23 year-old son Carter’s death. “At first you think you will never, ever recover—you want to die,” she told an interviewer for People. “But you realize you have responsibilities to people.” Vanderbilt’s books are characterized by their lack of response to the gossip that has been published about the designer/socialite during the long period the media has turned its attention to her. As Vanderbilt once noted, “I tried never to read any of the things written about me. I tried to keep my own person, my own vision.” In addition to autobiographies, the multi-talented Vanderbilt has also published several novels: Never Say Goodbye, in 1989, and The Memory Book of Starr Faithfull, a quasinonfiction chronicle of the life and 1931 suicide of a rich heiress that was released in 1994. By the late 1960s Vanderbilt’s interest in the visual arts had expanded from canvas to textiles, and she began designing clothing using fabrics that she patterned herself. In 1969 she won the Neiman Marcus Fashion Award, and was inducted into the Fashion Hall of Fame the following year. In 1970 she also began working as a textile designer with New York’s Riegel Textile Corp., the same year that the Gloria Vanderbilt Book of Collage, featuring examples of her own graphic art, reached bookstore shelves.
7 8 6
B u s i n e s s
Commonly included on lists of “best-dressed” celebrities for many years, Vanderbilt began marketing her name as a fashion product in the mid-1970s in the “designer jeans” industry. Formerly available mostly in traditional men’s cut styles through such makers as Levi Strauss and Wrangler, traditional blue jeans were restyled to fit women’s bodies and emblazoned with the logo or name of a famous individual. Vanderbilt was among the first—and the first woman—to join the denim fray; between 1977 and 1985 her famous surname, with its connotations of wealth and privilege, appeared on the derrieres of millions of women. The swan logo that Vanderbilt used on her products derived from her days as an aspiring actress; her favorite role had been in Molnar’s play, The Swan. Always interested in fashionable attire and tasteful interior decoration, Vanderbilt soon branched out into other areas, including shoes, scarves, table and bed linens, and china, through her company, Gloria Concepts. In 1988 Vanderbilt joined the “designer” fragrance market with her signature “Glorious.” By the late 1980s, however, the fickle womenswear market that had carried Vanderbilt to fame and fortune finally ebbed, and she sold the name and licenses for the brand name “Gloria Vanderbilt” to Gitano, who transferred it to a group of private investors in 1993. The downturn in her business, combined with the tragic suicide of her son, Carter, proved that wealth was no insulation against adversity. Even Vanderbilt’s wealth—a cushion of financial security for many decades—would seriously erode during the early 1990s, a result of her reportedly lavish lifestyle and problems with the Internal Revenue Service. Her tax problems stemmed from a business-related catastrophe: her attorney and her psychiatrist had formed a company called Design Management Partners that Vanderbilt claimed was designed to defraud her of her $2 million home furnishings line after the partnership purchased Gloria Concepts, the company holding the licenses to use her name and designs on home decorating products. A collision between two individuals with ethical relationships with a single client is illegal and a violation of the ethical code of both attorneys and physicians; after extensive litigation, both men lost their licenses, although Vanderbilt never recovered the bulk of the money she had lost. Showing her resilience, she sold her townhouse to pay her business-related back taxes, and then turned adversity into something positive. While searching for a more modest place to call home, she turned full-time to the writing she had done throughout her life as an accessory to her other activities.
Social and Economic Impact Vanderbilt’s savvy business sense—her understanding of consumers’ willingness to identify with the upper classes by owning and flaunting products with the names
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
G l o r i a
of famous or notably well-heeled individuals on them— opened up the floodgates in the high-end U.S. fashion market. The first woman to successfully design and market high-priced jeans, Vanderbilt’s business success serves as a role model to many women. While Vanderbilt has worked to establish her own name in the marketplace, she has also tried to improve the lot of the less fortunate. Through her 1975 book Woman to Woman, as well as through her autobiographies, Vanderbilt has candidly explored her philosophy of personal growth and her efforts at attaining happiness and fulfillment in an effort to assist and encourage other women to strive toward the same goals. “I see myself as a phoenix that rises again and again,” Vanderbilt told a People Weekly writer in the mid-1990s, looking back on the rise and fall of her fashion kingdom.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
V a n d e r b i l t
Sources of Information Contact at: c/o Alfred A. Knopf, Inc. 201 East 50th St. New York City, NY 10022 Business Phone:
Bibliography “Gloria’s Sad Story.”Womens’ Wear Daily, 15 March 1996. “Gloria’s Shining Star.” Harper’s Bazaar, October 1994. Life, October 7, 1968. “Living with Loss: A Horrified Witness to Her Son’s Tragic Suicide.” People, May 6, 1996. “Sic transit Gloria.” New York, 15 February 1993. Vanderbilt, Gloria. A Mother’s Story. New York: Knopf, 1996.
S t u d e n t s
7 8 7
Lillian Vernon (1927-) Lillian Vernon Corporation
Overview The chairman and CEO of the specialty catalog firm Lillian Vernon Corporation, Lillian Vernon transformed a solo home business into a large company that annually processes some 5 million orders, employs 3,500 people, and posts sales of $238 million. She was one of the first to enter the specialty mail-order market and has managed to appeal to a loyal mass market that has responded to products that Lillian Vernon uses herself. As she has said, “I know my customer because I am my customer.”
Personal Life Lillian Vernon was born Lillian Menasche in Leipzig, Germany, in 1927. Her father, Herman, was a Jewish industrialist. When she was five years old, she fled with her parents and her brother to escape the Nazis, first to the Netherlands, then in 1937, to the United States. Her brother was eventually killed in battle during the war. The family settled in New York City, where her father started a zipper manufacturing business and later sold leather goods. Lillian perfected her English by listening to films while working as a movie usher. In 1949, Vernon married Samuel Hochberg, who ran a small women’s clothing store. In 1951, while she was pregnant with the first of her two sons, Vernon began to worry that her husband’s $75-a-week salary would not be able to sustain their growing family. She began to consider how she could supplement their income. As she recounted in Forbes, “It was very unfashionable for women to work in those days. So I thought mail order was a won-
7 8 8
L i l l i a n
V e r n o n
Lillian Vernon displays some of the merchandise available from her mail-order catalog. (AP Photo/Richard Harbus.)
derful thing I could do out of the house, stay home, change diapers, do the whole thing.” From this modest beginning, the Vernon Specialties Company was born. She named her business after the New York City suburb of Mount Vernon, where she lived. When she and her husband divorced in 1969, Vernon retained control of the mail-order business, while her husband took over their manufacturing business. She married her second husband, Robert Katz, a manufacturer of Lucite, in 1970. For the next 20 years, she was known as Lillian Vernon Katz, but finally changed her name legally to Lillian Vernon in 1990. A self-described workaholic, Vernon has been characterized as a tough
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
negotiator with high expectations for her products and her employees. Her son, David Hochberg, has offered justification for her managerial style by saying, “Her business is such a major part of her life. How can anybody else have that same deep commitment?” About her own style, Vernon explained, “Toughness is good. Yet it is considered good only in men. When a women is tough, men can’t stand it. I like being tough. Tough . . . and smart.” Vernon has been inducted into the Direct Marketing Association Hall of Fame and has received the Ellis Island Medal of Honor and the Big Brothers/Big Sisters National Hero Award. She serves on the boards of sev-
S t u d e n t s
7 8 9
L i l l i a n
V e r n o n
ness with a woman. According to Vernon, some companies would not sell to her and people would not extend credit to her because she was a woman. In a March 1996 issue of Current Biography she said, “It is better now. And if I’ve helped to make it better, so be it.”
Chronology: Lillian Vernon 1927: Born. 1932: Left Germany for the Netherlands. 1937: Emigrated to the United States. 1949: Married Samuel Hochberg. 1951: Launched the Vernon Specialties Company. 1956: Mailed first catalog. 1965: Renamed business the Lillian Vernon Corporation. 1987: Lillian Vernon Corp. went public. 1994: Products offered on television shopping network and by CD-ROM. 1996: Published autobiography An Eye For Winners.
eral nonprofit organizations, including Lincoln Center for the Performing Arts and City Meals-on-Wheels. She serves as chairperson of the White House National Business Women’s Council.
Career Details Vernon launched her home business in 1951 by creating an ad at her kitchen table for gold-monogrammed handbags and belts, relying on her father as a supplier. Using money she had received as wedding gifts, she spent $495 for a single five-inch classified ad in Seventeen magazine with the copy: “Be first to sport that personalized look on your bag and belt.” Within three months, Vernon had received $32,000 worth of orders. Vernon had, as one business writer put it, “made her name in other people’s initials.” She soon added combs, blazer buttons, and cuff links to her monogrammed line, purchasing large ads in several fashion magazines. As she observed, “No one can start a mail-order business today the way I did in 1951, but if I had to start over now, I’d definitely begin with monogrammed merchandise again.” By 1954, her business had outgrown her home, so she rented buildings in downtown Mount Vernon. Vernon kept up her business largely in secret because of the sentiment against working mothers. Despite her success, she had to contend with individuals reluctant to do busi-
7 9 0
B u s i n e s s
Dissatisfied with available merchandise, Vernon began to produce her own charm bracelets and bobby pin holders. By the end of the 1950s her manufacturing plant was accepting contracts for products from a number of the leading cosmetic companies. In 1956, Vernon mailed her first catalog, advertising dozens of inexpensive gifts, knickknacks, and household organizers. An instant hit, the Lillian Vernon Corporation published 26 editions of seven different catalogs with a total circulation of over 179 million by 1995. In 1965, she renamed her business the Lillian Vernon Corporation and assumed the titles of chairman and chief executive. She attributes the growth of her business, which posted sales of $1 million by 1970, to the increasing number of women in the work force. With more discretionary income but less time for shopping, mail-order buying boomed, and the Lillian Vernon Corporation took full advantage of this trend. To sustain her sales, Vernon has proven to be skilled in anticipating market interest. As one observer commented, “She’d select an item and I’d say, ‘Oh, my God, who would buy that?’ And the next thing you know it’s a best-seller. What she touches generally turns to gold.” Vernon researches, designs, and actually manufactures products that her customers want. In 1987, the Lillian Vernon Corporation went public to raise cash to open a national distribution center in Virginia Beach, Virginia, to keep up with the volume of orders. Company sales had reached $112 million. By 1994, her products were offered for sale on a television shopping network and on CD-ROM, and in 1995 Vernon opened her seventh outlet store. By that time sales had grown to $238 million with 4.9 million orders from a customer list of 18 million. “I’m a woman who has gone far beyond her wildest dreams,” Vernon gushed.
Social and Economic Impact Lillian Vernon has been an influential role model for women in business. Beginning in an era when working women were criticized, she has persisted by running a complex and profitable corporation. She has also been a pioneer in the explosive mail-order industry that has changed the ways in which many Americans shop. Her success is attributable to her knack for recognizing what her market wants and filling that need with products, relying on intuition to tell her what will sell. She has recognized that the most attractive thing she markets is time, offering working people the convenience of shopping by mail at any time. Vernon hit upon the successful combination of products that people want and mail-order accessibility.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
L i l l i a n
Vernon has also played a role in changing attitudes about women in business. She believes in the importance of hiring and promoting women managers. Rejecting the label of feminist, Vernon has countered, “I believe in [helping women] at the grass-roots level rather than joining NOW [the National Organization for Women]. You hire an hourly worker and then strive to make her a supervisor.” In addition to her direct efforts on behalf of her employees, Vernon’s successful company has served as an important model of a female-founded and femalerun enterprise.
V e r n o n
Bibliography Coleman, Lisa. “‘I Went Out and Did It.’” Forbes, 17 August 1992. Current Biography, March 1996. Finney, Martha I. “The Treasure of Her Company.” Nation’s Business, February 1987. Mason, Julie Cohen. “Lillian Vernon Focuses on Customers.” Management Review, May 1993. Stevens, B. “Growing a Business.” Home-Office Computing, September 1989. Vernon, Lillian. An Eye For Winners: How I Built One of America’s Greatest Direct-Mail Businesses. New York: HarperCollins, 1996.
Sources of Information
Wilkinson, Stephan. “The Maestro of Merchandise.” Working Woman, June 1986.
Contact at: Lillian Vernon Corporation 543 Main Street New Rochelle, NY 10801 Business Phone: (914)576-6400 URL: http://lillianvernon.com
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
7 9 1
Gianni Versace (1946-1997) The House of Versace
Overview Gianni Versace was considered by many as one of the most influential and vibrant fashion designers in the world by mixing low-end and high-end culture. He made splashy, sexy, sometimes outrageous clothes that were favored by rock stars and others among the young, rich, and famous. He was the first Italian fashion designer to disclose living a homosexual lifestyle and, as a result, often was the target of ridicule and contempt. Versace weathered it all and, at the time of his death, was at his peak and had turned his clothing lines into a billion-dollar fashion empire.
Personal Life Gianni Versace was born on December 2, 1946, in Reggio Calabria, Italy, the son of an appliance salesman and a dressmaker. From a young age, Versace loved playing in his mother’s workroom, where he made puppets from scraps of cloth. At the age of nine, Versace designed his first dress from these same scraps. Versace was always close to his sister Donatella, a self-described “rock-’n’-roll girl.” The pair often sneaked out to discos, where 11-yearold Donatella would model Versace’s leather mini-skirts. She continued to serve as his muse throughout his career. Versace was vacationing in Miami Beach with his partner of 14 years, Antonio D’Amico, when he was murdered on the steps of his home by serial killer Andrew Cunanan.
Career Details Never formally trained in fashion design, Versace studied architectural drafting at the Reggio Calabria tech-
7 9 2
G i a n n i
V e r s a c e
Gianni Versace stands between his sister, Donatella, and British singer Robbie Williams at a Versace menswear show in Milan, Italy. (Reuters/ANSA/Archive Photos.)
nical school while working for his mother as a part-time buyer. He began creating designs for a local clothes maker at the age of 22, which attracted the attention of a manufacturer who offered the young man a job in the Italian fashion capital of Milan. In 1972, he began designing ready-to-wear fashions for three prestigious Milan clothing firms: Complice, Genny, and Callaghan. Versace struck out on his own in 1976, when he started designing his first women’s wear collection. This collection debuted at a Milan fashion show in 1978 and the sexy, brightly colored clothes appealed almost immediately to those who sought youthful luxury. Versace explained his approach to menswear in Rolling Stone by saying, “The success I’ve had . . . is because people no longer want to look as if they all belong to the same club—that whole Ralph Lauren philosophy. The man I design for is against anything that makes him look stiff. . . . My clothes are very negligent, very nonchalant. A tie for me is a symbol of everything that is boring and old-fashioned.” Versace’s designs for women were sometimes simply outrageously sexy, such as his famous 1982 metal mesh dress that put the designer on the cover of Women’s Wear Daily. Ten years later, his fall 1992 collection featured leather bondage dresses. Richard Martin, director of the Costume Institute at the Metropolitan Museum of Art in New York, told Time, “Versace is so important because he put sexuality first. Designers have always looked to the street; he looked to the streetwalker. He was transfiguring the prostitute as [the painter] Toulouse-Lautrec did in the
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
late 1880s.” Versace did design more conservative garments as well as these shocking designs; the latter made headlines, while the former accounted for half of his sales. Writing for Business Week, John Rossant commented that “no other major fashion house in the world is so closely identified with the lifestyle of its marquee-name designer.” Versace mixed business with pleasure, giving outrageous parties for his celebrity friends and clients, among whom were Elton John, Madonna, George Michael, Courtney Love, Sylvester Stallone, Sting, and Princess Diana. His four splendid homes (in New York City, Milan, Lake Como, and especially his $6.2 million estate named Casa Casuarina in Miami Beach) frequently were featured in glossy photo spreads in magazines such as Interior Design and Metropolitan Home. Versace’s fashion shows, often costing as much as $500,000, were highly theatrical events in which music was very important. At the opening of his flagship fashion boutique in New York City in 1996, Elton John and Jon Bon Jovi served as the house band. Versace loved orchestrating all of these exotic events; Forbes quoted him as saying, “I am a completely happy man. . . . I live in an ivory control tower.” Versace also was known to be hard working and home loving; he began work at six in the morning and preferred to dine at home. His friend Janie Samet told Time that the designer said, “things are always better at home.” Versace was gunned down near his estate in Miami Beach on July 15, 1997 by serial killer Andrew Cunanan. Although Versace’s image and creative genius were a vi-
S t u d e n t s
7 9 3
G i a n n i
V e r s a c e
treated for cancer of the inner ear in 1994 and 1995, the company continued to turn out its collections without deviating from the designer’s vision.
Chronology: Gianni Versace 1946: Born. 1968: Began designing fashions for a local clothes maker. 1976: Founded The House of Versace. 1978: Debuted his first collection of women’s wear. 1984: Won third consecutive Golden Eye Awards as the best designer of women’s wear for fall-winter. 1983: Received the Cutty Sark Award. 1992: Won the International Award from the Council of Fashion Designers of America. 1995: Chosen for a VH1 Fashion and Music Award. 1996: Opened flagship fashion boutique in New York City. 1997: Was murdered in Miami Beach, Florida.
tal part of his company, it was predicted that the company would survive the loss of its creator. Over 2,000 mourners gathered at his funeral at the Duomo in Milan, along with celebrities Elton John, Naomi Campbell, Princess Diana, Carolyn Bessette Kennedy, and Sting. Versace was remembered as one of the most cheerful, creative, and gifted designers the fashion industry had ever known.
The designer also played a part in increasing the celebrity of “supermodels.” Prompted by his sister Donatella, Versace used magazine models for fashion shows; previously it had been common to use thinner runway models. In doing so, he helped to launch the careers of such supermodels as Cindy Crawford, Naomi Campbell, Linda Evangelista, and Christy Turlington. Versace was a popular, critical, and (despite his extravagant spending habits) financial success. Having worked for some 20 years in the industry, he had created a billion-dollar fashion empire. After beginning with women’s ready-to-wear, Versace expanded into menswear, jeans, and housewares. His clothing lines included Versace, Versace Atelier, Istante, Versus, Versace Jeans Couture, and V2. The designer also created theater, ballet, and opera costumes. At the time of his death in 1997, the family was planning to make an initial public offering of stock so that it could finance further growth. The House of Versace was becoming a “global” brand and hoped to double its sales by the year 2000. These advances put Versace in close range of his Italian rival Giorgio Armani, who made $1.2 billion in sales in 1996.
Sources of Information
Social and Economic Impact Versace was the head of a family-owned and run fashion business, The House of Versace. His older brother Santo served as the CEO; his sister Donatella served as the company’s vice president and was involved in advertising and promotion, as well as designing for the Versus line. Versace’s brother-in-law Paul Beck, an American and former runway model, headed the House of Versace’s menswear line. As a result, the company was able to make quick decisions and turn out “flash items.” These garments almost instantly answered a demand by the marketplace and were designed, manufactured, and delivered in weeks rather than the months it often took other designers. Also key to this technique was the fact that the company controlled 10 of its major suppliers. Another corporate strength was the team of able assistants that Versace created. When he was being
7 9 4
Although he catered to the whims of the rich and famous, with items such as $20,000 evening gowns and $395 bath towel sets, Versace did not approach fashion with an elitist attitude. Vogue editor Hamish Bowles told Time that the designer “moved fashion into the public domain in the most strident way.” Not only did he introduce elements of plastic and denim into his designs, he also made fashion a more celebrated part of pop culture. He was a recognized leader within the fashion industry and was also extremely influential in the entertainment world, as was evidenced by his receiving a VH1 Fashion and Music award in 1995.
B u s i n e s s
Contact at: The House of Versace Via Manzoni 38 Milan 20121 Italy URL: http://www.versace.it
Bibliography Bellafante, Ginia. “La Dolce Vita.” Time, 28 July 1997. Levine, Joshua. “The Ivory Control Tower.” Forbes, 23 November 1992. Mower, Sarah. “Versace Classico.” Harper’s Bazaar, April 1995. Petkanas, Christopher. “Gianni Come Lately.” Rolling Stone, 18 April 1991. Phillips, Andrew. “Murder in Miami.” Maclean’s, 28 July 1997, 22-27. Rossant, John, and Gail DeGeorge. “After Versace.” Business Week, 28 July 1997.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Linda Wachner Overview One of only a handful of women to head a Fortune 500 industrial company, Linda Wachner rose from being a salesperson to owning one of retail’s largest clothing conglomerates. Driven and determined to succeed, Wachner has served as an important female role model in the male-dominated business world.
(1946-) Warnaco, Inc./Authentic Fitness Corp.
Personal Life Linda Joy Wachner was born February 3, 1949, in New York City, a late-life daughter of older parents who already had a grown daughter. Her father was a fur buyer. Wachner was introspective and spent much of her time alone going to museums and playing the piano. Afflicted with curvature of the spine, Wachner at the age of 11 spent a year immobilized in a body cast as the first step in a surgical procedure to correct the curvature. Confined to her bed, Wachner wondered if she would ever walk again. Refusing to feel sorry for herself, she considered her future career. She decided that someday she would own her own company and cross the Triborough Bridge in New York in a Cadillac limousine. Since her father and uncle were employed in the garment business, she selected the garment industry as the area to pursue her dream. After graduating from high school at the age of 16, Wachner attended the University of Buffalo, graduating in 1966 with a bachelor’s degree in business ad-
7 9 5
L i n d a
W a c h n e r
day. She may begin the day with a breakfast meeting in New York, but end the day with dinner in Los Angeles. In her rare moments of leisure, Wachner indulges in activities she was denied as a child—skiing, golf, and tennis. In 1986 she was named Woman of the Year by Ms magazine. She is a trustee for Carnegie Hall, the Aspen Institute, and Channel Thirteen/WNET, and serves on the board of overseers at Memorial Sloan-Kettering Cancer Center.
Career Details
Linda Wachner.
(AP/Wide World Photos, Inc.)
ministration. During summer vacations and holiday breaks, Wachner worked as a salesperson in department stores. She told Working Woman that through her sales jobs she “got a better understanding of what customers want than most people who go up the corporate ladder. They understand the consumer only by reading market research.” In 1973 she married Seymour Appelbaum, an executive in the clothing industry. Wachner was 24 when she married the 55-year-old Appelbaum. He died 10 years later in 1983. Beginning as market representative and buyer, Wachner steadily rose in the apparel business. In 1975 she was promoted to vice president at Warner’s (Warnaco’s lingerie division), the first female vice president in the company’s 100-year history. Eleven years later, she recalled with pleasure, “I came back and bought the company.” Viewed as a demanding and driven supervisor, Wachner described her management style as “Tough but fair. I’m committed to giving the best value to our investors. I want everybody to see the sunset the way I do, because I think it’s terrific. And yes, I push to make sure they see it. But at the end of the day, I have to hope that we operate a well-run company.” She has acknowledged to Working Woman that she is “an absolute control freak, though I don’t like the word freak.” She runs her company from bases in Connecticut, New York City, and Los Angeles, working 18 to 20 hours each
7 9 6
B u s i n e s s
After graduating from college, Wachner immediately landed a $90-per-week position as assistant market representative with Associated Merchandising Corporation, a buying office for department and specialty stores. In 1967, Wachner was hired as an assistant buyer for Foley’s, a major Houston department store. Word of young Wachner reached David Unich at Macy’s in New York who needed a bra and girdle buyer, and he offered her a job. Wachner moved from Macy’s to Warner’s, a lingerie division of Warnaco in 1974 during a slump in the market for brassieres. As Wachner told Working Woman, “Women didn’t burn their bras as a social protest. It was a fashion protest. They wanted to feel and look like women and wanted bras that let them do just that.” Warnaco introduced soft, free form bras, displayed on hangers so customers could see and feel them, a practice that is now widespread throughout the undergarment industry. From Warner’s Wachner moved to Caron International, a yarn and crafts producer. In 1979 Wachner was hired to rejuvenate the U.S. division of Max Factor. Wachner trimmed unnecessary staff, cut unproductive product lines, and introduced two successful fragrances. In her first year she stopped Max Factor’s losses and in her second year produced a $5 million profit. In 1982 she was promoted to president and chief operating officer at the age of 36. Having survived two corporate takeovers while at Max Factor, Wachner attempted to buy her successful company for herself. The bid failed, and Wachner promptly resigned from Max Factor. She turned her attention toward a leveraged buyout of Revlon, Inc.’s cosmetic division. Again her bid failed. Finally, in 1986 having recruited investors, she engineered a $550 million hostile takeover of Warnaco, Inc. and became chief executive officer of the Connecticut clothing firm. Wachner set out with the goal of “making Warnaco the foremost apparel conglomerate in the world.” To do this, she abandoned unprofitable products and focused on marketing the company’s brand name and designer fashions. Wachner reorganized Warnaco’s 16 units into 7 divisions and instituted incentives for her manage-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
L i n d a
ment personnel. Within the first year after the buyout Wachner had shrunk Warnaco’s debt by $75 million. Wachner boosted operating earnings more than 35 percent, to in excess of $65 million annually. In 1990 Wachner and a investor group bought the $350 million Authentic Fitness, the company that licenses Speedo swimwear in the United States, from Warnaco. As Authentic’s CEO, she is one of only a handful of executives to command two large public corporations. With over $3.6 million a year in salary and bonus, Wachner is one of the top-paid chief executive. As she told Ms, “I risked everything I had to buy [Warnaco]. I put my money down the line. The Warnaco experience has been the proudest of my life.”
W a c h n e r
Chronology: Linda Wachner 1946: Born. 1966: Received degree in business administration from the University of Buffalo. 1966: Hired as assistant market representative of Associated Merchandising Corp. 1967: Hired as a buyer for Foley’s Federated Department Store.
Social and Economic Impact Linda Wachner rose to the helm of Warnaco, a Fortune 500 company, in a period of increasing opportunities for women in the traditionally male corporate world. Still, she represents one of few women who have attained a position in the highest levels of management at a major company. Her cash-management style is admired by many, as she has demonstrated a keen understanding of business finance. More symbolically, Wachner also launched a high-stakes leveraged buyout and succeeded. She is the only woman to have done that, ranking her among such leveragedbuyout artists as Ron Perelman, Henry Kravis, and Carl Icahn. To become a member of this exclusive club, she has had to make sacrifices. Her aggressive, brusque manner has drawn complaints from men and women who dislike her unladylike manners. But Wachner, in essence, has only adopted the same business-like style that has allowed to so many men to reach great heights in the corporate world. It is that same style that has allowed her to shatter the glass ceiling that blocked her passage to the top. Defending herself in Ms, Wachner said: “To get a company turned around before it bleeds to death, you have to have a certain posture in the way you go about things. I’m tough, but I’m fair.” As such she has been an inspiration to women everywhere by disproving that gender prevents women from achieving success in the boardroom. Wachner is tough and aggressive and has insisted that she be judged against the highest competition, whether male or female. “I don’t like to waste time,” she once told Chief Executives magazine. “I’m driven by the need to produce results immediately. However, I do want employees to feel they have a safe haven at both Warnaco and Authentic Fitness . . . I have been difficult at times with people, but I do it to get a result. That’s what stockholders pay me for.”
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
1968: Hired as a buyer for R.H. Macy’s lingerie department. 1975: Appointed vice president of Warner’s. 1977: Appointed vice president of corporate marketing, Caron International. 1979: Hired as president and CEO for Max Factor & Co. 1984: Became managing director at Adler & Shaykin. 1986: Took over Warnaco, Inc.
Her company Warnaco is one of the largest in the apparel business. Few American consumers have not been exposed to Warnaco’s product line, and Wachner has proven to be adept at understanding the needs and desires of her customers. She demonstrates how understanding her customers, learned through her days as a department store salesperson can mean the difference in achieving success in a multimillion-dollar conglomerate such as Warnaco.
Sources of Information Contact at: Warnaco, Inc./Authentic Fitness Corp. 90 Park Avenue New York, NY 10016 Business Phone: (212)661–1300
Bibliography Dobrzynski, Judith H. “Linda Wachner: 1986 The First Woman To Buy and Head a Fortune 1000 Company.” Working Woman, November-December 1996, 106-109.
S t u d e n t s
7 9 7
L i n d a
W a c h n e r
Donlon, J.P. “Queen of Cash Flow.” Chief Executive, JanuaryFebruary 1994, 38-42. Ingham, John N., and Lynne B. Feldman. Contemporary American Business Leaders, New York: Greenwood Press, 1990.
7 9 8
B u s i n e s s
Newsmakers, issue 3. Detroit: Gale Research, 1988. Who’s Who in America, 52nd ed. New Providence, NJ: Marquis, 1997.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Ted Waitt Overview As CEO and cofounder of Gateway, Theodore W. Waitt heads one of the most successful computer manufacturers and sellers in the world, with annual revenues topping $5 billion. Gateway is the second-largest computer mail-order house in the world, and has a growing presence in conventional store retailing. Waitt is well known for his “work should be fun” philosophy and his fanciful marketing as he is for his business acumen.
(1963-) Gateway, Inc.
Personal Life Waitt was born in 1963 and grew up in Iowa. He attended the University of Iowa but dropped out in 1984 at the age of 22 to sell computers at Radio Shack. There he became friends with Mike Hammond, who, along with Waitt, would eventually create Gateway 2000. Waitt is married and has two children. Waitt’s style is casual. He wears denim and boots instead of suits, has a ponytail, and listens to the blues or cowboy music. This puts him at odds with the rest of the computer industry, which is known as being conservative in both attitude and dress. But it is reflective of his Midwestern roots and the four-generation family cattle business he elected not to follow. Although he pursued computers rather than ranching, Waitt’s cattle background is evidenced in the company’s marketing as well as his dress. Gateway shipping boxes all have distinctive cow spots, as do many of the walls of Gateway offices. Cow cookies are served at annual shareholder meetings, and the corporate web site offers a number of Holstein
7 9 9
T e d
W a i t t
Ted Waitt.
(AP Photo/Richard Drew.)
facts. In a Gateway television ad, Waitt once portrayed a janitor. One departure from the rural theme, however, is the luxurious house he bought in July 1997. Waitt paid $14.4 million for a 16,000-square-foot mansion with a pool and tennis courts outside San Diego.
Career Details Waitt and Hammond started Gateway 2000 in 1985 with a $10,000 bank loan secured by money held by Waitt’s grandmother. The idea was to sell computers directly over the phone and through mail order, thus cutting out the middlemen and keeping costs to a minimum. The company was originally housed in a barn on the Waitt family farm in Sioux City, Iowa. In the beginning, they sold computer hardware peripherals and software to people who owned Texas Instruments personal computers, initially placing ads in computer-oriented publications. In the first four months, Gateway sales topped $100,000. Waitt’s older brother, Norman, joined Gateway in 1986; he was brought on board to handle the company finances. The next year, Waitt realized there was a market for completely configured personal computers, and the company began to meet that higher-end demand. The results were meteoric, even in the fast-growth, high-profit computer business. Company revenues in 1987 were $1.5 million, and in 1988, they were $12 million. By 1996, Gateway’s sales topped $5 billion, just shy of the $5.3 billion earned that year by Dell, the company that pio-
8 0 0
B u s i n e s s
neered the concept of direct sales of computers and Gateway’s long-standing rival. By 1997 Gateway sales had jumped to $6.3 billion, though still behind Dell. Gateway went public in 1993 at $15 a share. Waitt’s 50 percent ownership placed his stake at $870 million, securing him a place on the Forbes 400 list of wealthy people. That year, the company also had one of the highest profit margins in the computer industry. When the company’s stock doubled in 1997, Waitt’s net worth, based on his 71.1 million shares of Gateway stock, grew to almost $3 billion. During those years, Gateway corporate headquarters were moved from Iowa to North Sioux City, South Dakota, and plants were built in Ireland and Malaysia. In 1997, a $28 million site was opened in Hampton, Virginia, employing over 1,000 people. The company also shortened its name to Gateway, Inc. as part of an image makeover as it vied market leadership. Through the office in Dublin, Ireland, Gateway sells to France, Germany, and the United Kingdom. The company also does business in Japan via resellers. Locating the company in these places has enabled Waitt to offer good work for slightly lower wages and overhead, increasing the company’s profits. By 1991, Waitt’s brother, Norman, had left the business, though he still retained his significant holdings in Gateway stock. Waitt’s original partner, Hammond, has remained with the company, overseeing factory outlets. Gateway’s success has not gone unnoticed by its competitors, and there has been at least one attempt at a buyout. Compaq, a top PC manufacturer, attempted a $7 billion merger with Gateway in 1997, but the deal fell through. That same year, Gateway moved from the volatile, technology-heavy NASDAQ exchange to the New York Stock Exchange, offering stockholders a more stable trading environment. On that day, in keeping with his image, Waitt lead a Holstein cow around the trading floor and began the day’s business by ringing a cow bell. As Gateway’s leader, Waitt embraced a corporate philosophy that the work environment should be a place where employees can grow but can also have fun. Company work stations are ergonomically designed; casual clothes are the rule rather than the exception, and popular music is played in the work areas. Employees participate in brainstorming sessions to come up with new working procedures or ideas, encouraging a team approach rather than a competitive atmosphere. However, some analysts believed that Gateway’s relaxed image limited its sales potential, especially in the important corporate market, which Gateway was aggressively courting. In response to such criticism, the company undertook an effort in the late 1990s to impart a more serious corporate identity. While the Holstein spots and often irreverent company ads have gained Gateway instant recognition within the crowded, highly competitive computer industry, Gateway risked not being taken as seriously as its more staid rivals.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
T e d
In a controversial move, Waitt moved the corporate headquarters to San Diego, where he believed he could attract more highly skilled workers than he could in North Dakota. Waitt and his management team also began a campaign to expand the company’s retail presence through its computer stores, targeting high-end users and small businesses. Waitt said these moves were part of a strategy to boost corporate sales to $25 billion by 2001.
W a i t t
Chronology: Ted Waitt
Social and Economic Impact
1963: Born.
Gateway is one of only a few companies selling computers primarily via direct marketing. This approach does away with middlemen and mark-ups; it also allows users to customize their orders, which are assembled on demand rather than in advance. Though it lags behind rivals like IBM, Dell, and Compaq, Gateway under Waitt’s leadership has carved out a major presence in the computer manufacturing and retailing business, creating in the process one of the most recognizable brand images in the business. Waitt’s minority ownership in Gateway, at 44 percent of its stock, has also made him one of the wealthiest men in the United States. In addition to his $850,000 annual salary in 1998, the year he turned 35, Waitt’s share of the company was worth more than $3 billion.
1984: Took sales position at Radio Shack. 1985: Cofounded Gateway 2000. 1993: Gateway went public. 1997: Opened east coast Gateway plant, Hampton, VA. 1998: Announced headquarters move to San Diego.
Bibliography Crockett, Roger O. “Gateway Loses the Folksy Shtick.” Business Week, 6 July 1998. Noer, Michael. “New Kid on the Block.” Forbes, 14 February 1994. “Pay Day.” Electronic Business Today, September 1997, 42.
Sources of Information
Parker, Akweli. “Is Gateway Growing Up?” Virginia-Pilot, 25 May 1997. Who’s Who in America. New Providence, NJ: Marquis, 1997.
Contact at: Gateway, Inc. 610 Gateway Blvd. North Sioux City, SD 57049 Business Phone: (605)232–2000 URL: http://www.gateway.com
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
8 0 1
Charles Walgreen (1873-1939) Walgreens
Overview Charles Walgreen,Sr., often referred to as the father of the modern drug store, founded a chain of drug stores that would outsell all other drug store chains regardless of size. He built an empire which, up until 1998, was overseen by a Walgreen descendent.
Personal Life On a farm near Galesburg, Illinois, Charles Rudolph Walgreen was born October 9, 1873 to Charles Walgreen and Ellen (Olson) Walgreen. Both his parents were natives of Sweden. His father later moved his family to Dixon, Illinois. After working as a bookkeeper for a time, he went to work in a Dixon shoe factory for $4 a week. An industrial accident cost him part of a finger on his left hand, and the doctor who treated him persuaded him to become a druggist’s apprentice. Walgreen remained there until, at the age of 20, he then borrowed $20 from his sister, Clementine, and moved to the big city of Chicago. While there, he worked in drugstores and studied pharmacy in his free time. These were financially difficult times for Walgreen. At one point he only had five cents to his name. Instead of frugally counting the pennies, he instead went out and bought a 2-cent newspaper and threw the remainder in the Chicago River in hopes that it would bring him good luck. In 1897 he became a registered pharmacist. When the war with Spain broke out in 1898, Walgreen signed up in the Illinois National Guard and was shipped off to Cuba. According to Walgreen’s Online,
8 0 2
C h a r l e s
W a l g r e e n
“Malaria, yellow fever and typhoid were rampant there at the time, and he fell victim to their effects. The doctor, at one point, took his pulse and told the orderly, ‘This solider is as good as dead’.” At that point, he was listed as a casualty, and the news reported his death, albeit premature. In 1902 Walgreen married Myrtle R. Norton of Normal, Illinois. They had two children, Charlotte Ruth and Charles R. Walgreen, Jr., who became a registered pharmacist in Michigan in 1928. In 1935, Walgreen withdrew his wife’s niece from the University of Chicago, publicly charging that she was being indoctrinated with un-American teachings. A full scale investigation of the university by a committee of the Illinois legislature found the allegations to be without merit. Ultimately, Walgreen gave the university $550,000 in 1937 for the establishment of the Charles R. Walgreen Foundation for the Study of American Institutions. An aviation enthusiast, Walgreen also donated the Dixon Municipal Airport to his home town. He was an active Mason and loyal Republican. Walgreen, Jr. succeeded his father as president, when the senior Walgreen died of cancer in Chicago on December 11, 1939. Walgreen was buried in Dixon.
Chronology: Charles Walgreen 1873: Born. 1893: Began serious study of pharmacy. 1901: Purchased Mr. Blood’s store for $6,000. 1909: Purchased key drugstore in Chicago. 1916: Merged seven stores into the Walgreen Company. 1929: Walgreen chain had grown to 397 stores. 1933: Paid stock dividends for the first time. 1934: Operated more than 500 stores throughout the United States. 1939: Retired as company president. 1939: Died.
Career Details After serving in the Spanish-American War, Walgreen returned to Chicago, and worked at a small neighborhood drugstore owned by Isaac W. Blood. In June 1901, he purchased Blood’s store for $6,000 with the help of $2,000 he borrowed from his father. In 1909, when another of his former employers retired, Walgreen acquired his store and organized C.R. Walgreen and Company. This store was critical to his success, as it was one of the busiest and most important drugstores on Chicago’s south side.
Social and Economic Impact
Occasionally, he added additional stores whose management he turned over to young men he had trained. According to the Walgreen history, “There wasn’t much to distinguish his store from any other drugstore in Chicago — at least not at first. Most passerbys probably didn’t even notice that the store had changed hands, unless they looked up at the small, gold-lettered sign over the doorway: C.R. Walgreen, R. Ph. . By 1916 there were seven stores, and by 1927, the number had grown to 110. The rapid expansion has often been attributed to Walgreen’s policy of reinvesting a large part of the earnings back into the business.
Walgreen believed that the traditional drug store chains had become outdated, and that consumers wanted more. He popularized the lunch counter in connection with the soda fountain. The familiar malted milk as a fountain item was reportedly first introduced in one of his stores in the early 1920s. The fountain came about when he leased an adjacent empty building, cut an arc through it and installed a fountain against the far wall. He made his own brand of ice cream. This was a big hit in the hot summer months but, Walgreen wondered, what to do when the cold winter months set in. He decided to sell hot soup and sandwiches, which kept the room active and profitable year-round. The fountain was the main attraction for customers, as were the milkshakes. “Customers stood three and four deep around the soda fountain to buy the double-rich chocolate malted milk, which was thickened with home-made ice cream and flavored by bittersweet chocolate, according to Walgreens’ history.”
Walgreen also attempted to distinguish his stores from other drugstores of the day. He installed eye-catching displays and attractively merchandised windows — a direct departure from the drab, lifeless stores people had become accustomed to. Another first, was to make his own line of drug products, which enabled him to ensure the highest quality at a low price.
Most significant is that his company pioneered the development of much of the modern equipment now in use. Walgreen’s clean, well-lit stores, were a contrast to the typical dark, dingy store of the turn of the century. Walgreen opened the first of what has often been referred to as the “super-drug stores” in 1934 in Tampa, Florida. It has been described as the “first of the modern, open
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
8 0 3
C h a r l e s
W a l g r e e n
stores, with the merchandise taken out of the traditional showcases and placed on open display counters where customers could see, touch it, and buy it.” Walgreen set a goal to make better products than anybody else and to sell them cheaper. As he built his chain, Walgreen became a household word in Chicago during the 1920s. Even through the Depression, Walgreen managed to keep his empire afloat. Surprisingly, in 1933 he boosted his advertising budget to $1 million, and for a time the stock paid a dividend. That same year, Walgreens helped celebrate Chicago’s spectacular Century of Progress by opening four stores on the fairgrounds. These stores experimented with advanced fixture design, new lighting techniques and colors—ideas that helped modernize drugstore layout and design. Walgreen brought his son into the business early on, to ensure that the legacy would continue. In 1929, Walgreen Jr. was assisting in the procurement of branch warehouses and manufacturing plants throughout the country, and from 1930 to 1932, he was assistant to the director of purchasing and in charge of all sundries buying. In this position he developed many new lines of merchandise.
Walgreen was an innovator in merchandising, adding many lines of goods to his stores in addition to the stock of pharmaceuticals. His legacy endures in the growing drugstore chain that has flourished under each succeeding generation.
Sources of Information
Social and Economic Impact When Walgreen Jr., at the age of 33, succeeded his father in 1939, there were 494 stores in 215 cities in 37 states, with about 12,000 employees. Earnings grew from $439,110 in 1924 to $2.9 million in 1939, and the net worth grew from $85,700 in 1916 to $24.2 million in 1939. He joined the company in 1925 at the age of 19 as a drug apprentice. Under Walgreen Jr., the chain crossed the U.S. border and ventured into Mexico and Puerto Rico. By 1946 sales had grown to $141 million with 17,500 employees. Walgreens was the first to fully embrace the self-service concept in the 1950s and 1960s, and among the first retailers to computerize and automate its warehouses. His son, Charles R. Walgreen III, who joined the company in 1952 as a stock boy, took the helm in 1971, when he was elected president and chief executive officer (CEO). He retired at age 62 in January of 1998. The grandson of the founding Walgreen was succeeded by L. Daniel Jorndt, a non member of the Walgreen family. The grandson continues as chairman as the board, overseeing all board meetings.
8 0 4
Through succeeding generations, Walgreen’s vision has continued to expand. Walgreens is ranked as one of the nation’s most successful corporations and one of its most admired. In September of 1997 the company announced its 22nd consecutive year of record sales and earnings. Walgreens has been listed among Fortune’s “Most Admired Corporations in America” for the past four years and is one of only 35 companies listed in all four editions of The 100 Best Stocks to Own in America by Gene Walden. During the grandson’s tenure, Walgreens grew from 618 stores and $800 million in sales in 1971 to become the largest drugstore chain in the United States, with 2,268 stores and $12 billion in sales in 1996. For 20 consecutive years, Walgreens has increased its sales and earning each quarter. Walgreens stores are located in 34 states and Puerto Rico, with the largest concentration in Florida, Illinois, and Texas.
B u s i n e s s
Contact at: Walgreens 200 Wilmot Rd. Deerfield, IL 60015 Business Phone: (847)940-2500 URL: http://www.walgreens.com
Bibliography “Charles R. Walgreen III Will Retire as Chief Executive Officer of Walgreens.” Walgreens Online. Available from http://www.walgreens.com, 1997. Dictionary of American Biography, New York: Charles Scribner’s Sons, 1958. Griffin, Marie. “Industry ‘Legends’ Deserve Recognition.” Drug Store News, 9 October 1995. Hoovers Online. Available from http://www.hoovers.com, 1998. Ingham, John N. Biographical Dictionary of American Business Leaders, Westport, CT: Greenwood Press, 1983. Van Doren, Charles, ed. “Webster’s American Biographies. Springfield, MA: G. & C. Merriam Co., 1979. Walgreens Online. Available from http://www.walgreens.com, 1997.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
DeWitt Wallace Overview Dewitt Wallace has reportedly been considered, “the most famous unknown man of his time.” As the creator of The Reader’s Digest, one of the most successful popular magazines in the world, he deserves to be included in the company of such publishing giants as Joseph Pulitzer and William Randolph Hearst. In its 76year history, Reader’s Digest has charted America’s interests and values through most of the twentieth century, guided by Wallace’s uncanny wisdom of what his audience wanted to read.
(1889-1981) Reader’s Digest Association, Inc.
Personal Life Born in St. Paul, Minnesota, on November 12, 1889, DeWitt Wallace was the son of a Presbyterian minister who taught Greek and modern languages at Macalester College, where he later became president. As a boy, Wallace raised chickens, tended a vegetable garden, and operated an electrical repair service. Piety and learning were stressed in his home, but Wallace was more interested in sports, eventually becoming good enough in baseball to play for a semi-professional team one summer. Wallace attended Macalester College for two years before transferring to the University of California at Berkeley, dropping out of college in 1912 to return to St. Paul. He worked in the book department of Webb Publishing Company, a firm that published agricultural textbooks. In 1916, realizing that few farmers were aware of the vast number of informational pamphlets available for free from state and federal government offices, he col-
8 0 5
D e W i t t
W a l l a c e
DeWitt Wallace, right, and his wife Lila are presented with the Theodore Roosevelt Association Medal for “Distinguished Service for the Year 1954” by the president of the association, Oscar Strauss. (AP/Wide World Photos, Inc.)
lected an annotated list and sold 100,000 copies to banks and stores throughout several Northwestern states.
8 0 6
During World War I, Wallace enlisted in the U.S. Army. He was wounded by shrapnel in the Meuse-Argonne offensive and spent his convalescence at an army hospital. While recovering, he practiced on condensing magazine articles. He also contemplated a magazine that would consist of a digest of condensed articles taken from general magazines. The basic plan for what would become Reader’s Digest was hatched.
They met again when both were in New York City after the war and were married in 1921. When they returned from their honeymoon, they discovered that enough subscriptions had been sold to launch Reader’s Digest. With the magazine’s success, Wallace and his wife moved their headquarters from New York City to a $1.5 million edifice on an 80-acre estate outside Chappaqua, New York. They also built “High Winds,” a castle-like home in Mt. Kisco, New York, to express Mrs. Wallace’s interest in interior design, art collecting, and gardening.
Wallace met his future wife, Lila Acheson, when he was in school in California. She was a classmate’s sister.
Wallace was extremely private and publicity shy. He was described as “Generally ill at ease with strangers, he
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
D e W i t t
is always shy, soft-voiced, and speaks haltingly.” Tall, lean, and slightly stooped, Wallace dressed “in the tweedy elegance of the English professor with the private income.” Compared to his wife’s confidence and optimism, Wallace was “a worrier, torn by inner doubts and subject to spells of melancholy.” Despite his private manner, Wallace was remarkably adept at anticipating what his readers enjoyed, and his sense determined the content of Reader’s Digest. As one of his editors remarked, “If Wally likes it, automatically 12 million other people will like it.” Millionaires many times over, the Wallaces maintained a major art collection and established the philanthropic Reader’s Digest Foundation, which has donated $40 million to schools, religious organizations, and medical research. Wallace died in 1981 from pneumonia following surgery to remove an abdominal obstruction. When he died, The Reader’s Digest, which had started with only 5,000 copies of the first issue, had a circulation of 18 million in the United States and 12 million abroad, reaching 100 million people in 163 countries.
W a l l a c e
Chronology: DeWitt Wallace 1889: Born. 1917: Joined the U.S. Army. 1920: Submitted sample edition of the Reader’s Digest unsuccessfully to publishers. 1921: Married Lila Bell Acheson. 1922: Published first edition of Reader’s Digest. 1938: Published first international edition of Reader’s Digest in England. 1950: Published Reader’s Digest Condensed Books. 1957: Began to place advertising in Reader’s Digest. 1972: Received with Lila Wallace the U.S. Medal of Freedom.
Career Details After his discharge from the Army in 1919, Wallace returned to St. Paul and for six months studied magazine articles in the public library by copying out excerpts. He prepared a prototype edition of the Reader’s Digest with 31 articles from such magazines as Atlantic Monthly, Saturday Evening Post, National Geographic, and Ladies Home Journal. As he advertised, “Each article of enduring value and interest, in condensed and permanent form.” However, none of the dozen publishers to whom he sent the sample were interested. He decided instead to publish the magazine himself. Wallace mailed out several hundred circulars advertising his project, and when Wallace and his wife returned from their honeymoon, they discovered that 1,300 subscribers had paid $3 a year for the magazine.
1981: Died.
1950s included the Reader’s Digest Condensed Book Club, a television show, a record and film division, an educational edition and a Braille edition. The Reader’s Digest became and remained a publishing phenomenon and American institution. Its popularity is attributable to the great variety of subjects covered, including something for everyone: science, social service, education, government, politics, industry, sports, travel, nature, and biography, among other topics. Regular features included such popular features as “Life in These United States,” “It Pays to Increase Your Word Power,” “Humor in Uniform,” and “The Most Unforgettable Character I’ve Met.” Editorially, Reader’s Digest reflected Wallace’s anti-Communist, conservative views and a consistent sentimental picture of American life. According to the New York Times, “In Wallace’s magazine, one hears an incredibly American voice saying, in short simple sentences, that one can improve one’s life, improve one’s health, and, in fact, improve the world, if only one has adequate information . . . . It always implies that there is no problem without a human solution.”
The first issue appeared in February, 1922, produced by the couple in a basement room in Greenwich Village. They copied out parts of selected articles from magazines in the New York Public Library. By 1929 the Reader’s Digest had a circulation of over 200,000 and a gross income of over $600,000. Profits were strong enough to allow the Wallaces to relocate to new quarters in Pleasantville, New York, and to begin contracting with leading magazines for exclusive reprint rights. In 1933 Reader’s Digest began publishing articles of its own based on ideas mainly suggested by the Wallaces and written by freelance and staff writers. The magazine published a British edition in 1938. Later Spanish and Portuguese editions made Reader’s Digest the most widely distributed periodical in South America. Rising costs made it necessary in 1957 to add advertising for the first time to prevent raising the price of the magazine. Expansion during the
With more than 100 million readers worldwide, Reader’s Digest is the most popular magazine of all time.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Social and Economic Impact
8 0 7
D e W i t t
W a l l a c e
Dewitt Wallace took a good idea, supported by an uncanny sense of his audience, and helped to inform the world. In the era before television, Reader’s Digest played an important role in instructing, inspiring, and connecting a vast worldwide audience. Reader’s Digest also represented an important American cultural export. According to Time, “In the long run, Wallace’s greatest contribution to the nation may be found in the cumulative effect of his overseas editions . . . . The Digest articles—depicting the innate decency, kindness, and simple virtues of ordinary Americans, the triumphs of a George Carver or a Helen Keller— have probably done more than all the Government propagandists combined to allay the fears, prejudices and misconceptions of the United States in other lands.” The unique professional and personal partnership between Dewitt Wallace and his wife Lila was expressed not just in editorial decisions that formed the magazine but as one of the most generous philanthropists in business. The Reader’s Digest Foundation has made a significant contribution in education, social services, and medical research.
8 0 8
B u s i n e s s
Sources of Information Contact at: Reader’s Digest Association, Inc. Reader’s Digest Rd. Pleasantville, NY 10570 Business Phone: (914)238-1000 URL: http://www.readersdigest.com
Bibliography Advertising Age, 6 October 1991. Columbia Journalism Review, March-April 1994. Heidenry, John. Theirs Was the Kingdom: Lila and DeWitt Wallace and the Story of the Reader’s Digest. New York: Norton, 1993. Nation, 27 September 1993. New York Times, 1 April 1981. Time, 10 December 1951.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Lila Wallace Overview The cofounder of The Reader’s Digest, Lila Acheson Wallace, along with her husband DeWitt Wallace, was a publishing phenomenon who was able to turn a magazine with an initial circulation of 5,000 into an American cultural institution with a readership of 100 million in 163 countries worldwide. Mrs. Wallace was also one of the most generous philanthropists in the fields of art, music, healthcare, and education.
(1889-1984) Reader’s Digest Association, Inc.
Personal Life Born in Virden, Manitoba, December 25, 1889, Lila Bell Acheson, was like her husband, DeWitt Wallace, the child of a Presbyterian minister. The third of five children, she was of Scotch-Irish descent. At the time of her birth, her father was studying theology at the University of Manitoba. After entering the ministry, he moved with his family to the United States and became an American citizen. Lila grew up in the small Midwestern towns of Marshall, Minnesota; and Lewistown, Illinois, where her father preached. Her favorite girlhood recreations were horseback riding and hunting, which she had learned from her father. She majored in English at Ward Belmont College in Nashville, Tennessee, and the University of Oregon in Eugene, from which she graduated in 1917. She overcame her father’s opposition to her going out to work and taught school for two years in Eatonville, Washington, while helping to manage a YWCA summer home on the Puget Sound. During World War I, she was hired by the YWCA full-time to organize recreational centers for women workers at the Du Pont plant in New
8 0 9
L i l a
W a l l a c e
mediate Investigation.” They were married a few months later. When they returned from their honeymoon, they found that there were sufficient subscriptions for the proposed Reader’s Digest to justify producing their first issue in February 1922. As Reader’s Digest grew successful and expanded beyond the Wallaces’ Greenwich Village basement office, they opened new headquarters in Pleasantville, New York, under Mrs. Wallace’s design. As the Los Angeles Times commented, “She has made it one of the industrial showplaces of the nation and visitors from all over the world take the hour’s train trip from New York for a tour of the buildings and landscaped grounds.” She also decorated “High Winds,” the Wallaces’ castle-like home in Mt. Kisco, New York. As their personal fortune increased, Lila Wallace devoted much of her time and an estimated $60 million to philanthropic activities. Her benefactions included the restoration of Boscobel, an eighteenth-century mansion on the Hudson River and Monet’s house and garden at Giverny. She became a powerful influence at the Metropolitan Museum of Art, where she supervised the restoration of the Great Hall and the protection of the Abu Simbel temples from flooding by the new Aswan Dam. Her other benefactors included the Juilliard School, the Metropolitan Opera, the New York Zoological Society, the University of Oregon, the Sloan-Kettering Institute for Cancer Research, and numerous Presbyterian charities. In 1972 Mr. and Mrs. Wallace were awarded the United States Medal of Freedom. Mrs. Wallace was petite at five feet, three inches, and 120 pounds, and provided the perfect complement to her tall and shy husband, who was a worrier and afflicted with self-doubt and bouts of melancholy. Mrs. Wallace, however, was an optimist. When Dewitt Wallace died in 1981, Lila Wallace became the sole owner of Reader’s Digest. Because the couple had no children, Mrs. Wallace determined that the company be administered by a trust to ensure that it would remain in private ownership after her death in 1984.
Lila Wallace.
(AP/Wide World Photos, Inc.)
Career Details Jersey. She next became the head of a new social service department of the Presbyterian Board of Home Missions, speaking and fund-raising all over the country and establishing a network of day-care centers in Mississippi, New England, and New York for the Inter-Church World Movement. Lila Wallace met her future husband while he was a classmate of one of her brothers at the University of California, Berkeley. She rejected his instantaneous proposal of marriage. While DeWitt Wallace was working in St. Paul as a book salesman and trying to sell his idea for Reader’s Digest, he learned that Lila Acheson was still unmarried and sent her a telegram: “Conditions Among Women Workers in St. Paul Ghastly. Urge Im-
8 1 0
B u s i n e s s
Reader’s Digest originated from DeWitt Wallace’s conception of reprinting condensed articles from popular magazines. After his discharge from the Army in 1919, Wallace returned to St. Paul and for six months studied magazine articles in the public library and copying out excerpts. He prepared a prototype edition of the Reader’s Digest with 31 articles from such magazines as Atlantic Monthly, Saturday Evening Post, National Geographic, and Ladies Home Journal. As he advertised, each article that appeared was of “enduring value and interest” and appeared in “condensed and permanent form.” However, none of the dozen publishers to whom he sent the sample were interested. Dewitt’s biggest supporter was his young wife, who helped him mail out thousands of so-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
L i l a
licitations for subscriptions when he decided to publish the magazine himself. After their initial issue of 5,000 copies in 1922, circulation rose by 1929 to 200,000, and by 1939 to 2.5 million. The magazine published a British edition in 1938. Later Spanish and Portuguese editions made Reader’s Digest the most widely distributed periodical in South America. Rising costs made it necessary in 1957 to add advertising for the first time to prevent raising the price of the magazine. Expansion during the 1950s included the Reader’s Digest Condensed Book Club, a television show, a record and film division, an educational edition and a Braille edition. The popularity of the Reader’s Digest is attributable to the great variety of subjects covered in science, social service, education, government, politics, industry, sports, travel, nature, biography, among other topics. There was something for everyone in every issue. Regular features included such popular entries as “Life in These United States,” “It Pays to Increase Your Word Power,” “Humor in Uniform,” and “The Most Unforgettable Character I’ve Met.” Mrs. Wallace supervised the magazine’s covers and occasionally suggested articles. Her most important role, however, as co-editor and co-owner of Reader’s Digest was in managing her husband and helping to facilitate the smooth running of the magazine’s operation. One of the distinctive innovations of Mrs. Wallace was her decorating of the Reader’s Digest offices with original oil paintings and daily cut flowers from her gardens. She was determined to overcome any gap between business and beauty. Lila Acheson Wallace became the only woman member of the board of directors of a major railroad in 1954 when she was named as a director of the New York Central Railroad. As the president of the railroad explained, he “wanted an intelligent women who could make top decisions—not only about the housekeeping of a railroad, but corporate decisions where a woman’s viewpoint and intuitive sense would make a valuable contribution.”
W a l l a c e
Chronology: Lila Wallace 1889: Born. 1911: First met DeWitt Wallace. 1917: Graduated from the University of Oregon. 1917: Taught school in Eatonville, WA. 1921: Married DeWitt Wallace. 1922: Published first edition of Reader’s Digest. 1938: Published first international edition of Reader’s Digest in England. 1954: Named to board of directors, New York Central Railroad. 1957: Began to place advertising in Reader’s Digest. 1972: Received along with her husband DeWitt Wallace the U.S. Medal of Freedom. 1984: Died.
Lila Acheson Wallace’s legacy is also great because of her philanthropic generosity. Few other benefactors have made such positive contributions to so many areas of contemporary life. As former Defense Secretary Melvin R. Laird stated after her death, “Publishing, music, art, opera and the performing arts have lost a grand woman. Her contribution to all will be a living memorial to her for many, many decades.”
Social and Economic Impact As the cofounder and co-editor of the Reader’s Digest Lila Acheson Wallace helped to turn a good idea into a publishing phenomenon and American institution, as the most read magazine in the world. In its various international editions reaching 163 countries and 100 million readers, no other American publication has been as influential in exporting American culture and values. Both DeWitt and Lila Wallace understood what their audience wanted to read, and Reader’s Digest reflected popular taste for more than 75 years through the majority of the twentieth century. The Wallaces deserve to be considered on the same level as such influential publishing giants as Joseph Pulitzer and William Randolph Hearst, who helped define American journalism and publishing.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Sources of Information Contact at: Reader’s Digest Association, Inc. Pleasantville, NY 10570 Business Phone: (914)238-1000 URL: http://www.readersdigest.com
Bibliography Heidenry, John. Theirs Was the Kingdom: Lila and DeWitt Wallace and the Story of the Reader’s Digest. New York: Norton, 1993. “Lila Wallace, Who Bestowed Reader’s Digest Wealth, Dies.”New York Times, 9 May 1984. Los Angeles Times, 26 September 1955. Nation, 27 September 1993. Time, 10 December 1951.
S t u d e n t s
8 1 1
Sam Walton (1918-1992) Wal-Mart Stores, Inc.
Overview Sam Walton redefined the shopping experience for residents living in rural areas throughout the United States by opening a chain of Wal-Mart discount stores in towns previously served only by hardware and five & dime stores. His strategy of monopolizing the discount shopping market in rural areas made his stores the largest retail chain in the United States.
Personal Life Sam Moore Walton was born in Kingfisher, Oklahoma, on March 29, 1918, as the oldest of two boys of Thomas and Nancy Walton. His father, a farm-mortgage banker, moved his family to his native state of Missouri, where they lived in a succession of rural communities for three years and then settled in the medium-sized university town of Colombia. His father believed in saving money, so when the bottom fell out of the economy, his family suffered less during the Great Depression than many of their neighbors. The younger Walton was a standout at Hickman High School in Columbia. He made a name for himself as a quarterback on the school football team, captain of the basketball team, class president, and student council president. His high school year book of 1936 described him as having distinguished himself in “leadership, service, and ability.” Walton financed his education at the University of Missouri with money earned from a paper route. He graduated with a degree in economics in 1940. Walton was unsure of what he would do with his life after leaving col-
8 1 2
S a m
W a l t o n
lege. At one point, he told the Washington Post, “I thought I wanted to be President of the United States.” Instead, he took his first retailing job at a J.C. Penney store in Des Moines, Iowa, where he was a sales trainee. He recalled the day that James Cash Penney, the company’s founder, paid a visit to that store: “He taught me how to tie a package with very little twine and very little paper and still make it look nice.” But that job was short-lived, as Walton was drafted in early 1942 as a communications officer in the Army Intelligence Corps, an assignment that enabled him to remain stateside for the duration of World War II. While in the service, he married Helen Robson on February 14, 1943. The couple had four children. Walton rose to become one of the wealthiest men in the world, but chose to live in Bentonville, Arkansas with his family. He enjoyed riding around in his pickup truck, eating breakfast with friends at the local Ramada Inn, and attending potluck suppers at the Presbyterian church. Even when he was diagnosed with incurable bone cancer, he continued to lead an active life, rising every day before dawn. He would spend about 80 percent of his time visiting stores and the other 20 percent at meetings at the corporate headquarters. Those sessions customarily began with the singing of “The Star-Spangled Banner.” Among the honors Walton received were the Gold Winner in Financial World’s CEO rating, 1986; National Retail Merchants Association’s gold medal for the most distinguished retailing performance of the year, 1988; Financial World’s CEO of the Decade, 1989; U.S. News & World Report’s Excellence Award in Business, 1990; and Advertising Age’s Adman of the Year Award, 1991. The Presidential Medal of Freedom from President George Bush in 1992 was the award that Walton deemed “the highlight of my entire career.” Even though he was in a wheelchair, Walton led his sales associates in a rousing Wal-Mart cheer. He died on March 29, 1992 of bone cancer at the age of 74, three weeks after receiving the medal from Bush.
Career Details The retail industry seemed a natural place for Walton to make his mark, but he had no interest in being in someone’s employ. In 1945, with a borrowed $25,000, he and his brother, James, opened a five-and-dime store, called Ben Franklin, in Newport, Arkansas. Walton was forced to move five years later when his landlord refused to renew the store’s lease, and he travelled across the state to Bentonville, which is now headquarters to the Wal-Mart empire.
Samuel Walton.
(AP/Wide World Photos, Inc.)
miles from Bentonville. The two brothers thought large stores could be successful in small towns. “There was a lot more business in those towns than people ever thought,” Walton explained. From the beginning, the Wal-Mart concept was to join a friendly, general-store atmosphere with high-quality name-brand merchandise at low prices. The idea caught on, but slowly. The stores were pretty basic and many resembed barns, with merchandise overflowing from plastic bins or metal racks. Along with a top management team, Walton visited a half-dozen to a dozen Wal-Mart stores every week. At one store, he might solicit suggestions on how yard goods could sell faster flatfolded than on bolts. Or he might give advice on increasing deliveries of automotive supplies. At all of his stores, he gave reassuring speeches that kept employees striving for improvement and higher sales.
Walton started having doubts about the future of dime stores and started paying close attention to chains like K Mart and Zayre. Those retailing giants avoided rural areas, preferring to place their stores in suburban or urban locations. Walton decided that it was time to start his own chain. In 1962, he and brother James opened the first Wal-Mart outlet in Rogers, Arkansas, about five
By 1970, the year Walton took the company public, there were about 25 Wal-Mart stores. By 1972, the chain had more than doubled to 64 stores with sales of $125 million. The rate of growth was phenomenal. In 1981 alone 161 Wal-Mart stores were opened. By 1983, the chain had become the eighth largest retailer in the United States, with 642 stores in 19 states and annual sales of $4.2 billion. That same year, Forbes magazine estimated Walton’s net worth to be $2.1 billion, making him the second richest person in the United States, behind oil magnate Gordon P. Getty. At that time, Walton decided to explore another path and opened stores in such medium-sized cities as Little Rock, Arkansas, Springfield, Missouri, and Shreveport, Louisiana. He also
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
8 1 3
S a m
W a l t o n
ter serve his customers. He was always walking around competitor’s stores to educate himself. He was not above getting down on his hands and knees to look under display cabinets. “Anyone willing to work hard, study the business, and apply the best principles can do well,” Walton said in the New York Times.
Chronology: Sam Walton 1918: Born. 1940: Hired at J.C. Penney. 1945: Opened first Ben Franklin store. 1962: Opened first Wal-Mart store. 1970: Took the Wal-Mart public. 1983: Founded Sam’s Wholesale Club. 1985: Estimated richest man in the United States. 1992: Published autobiography Sam Walton: Made in America, My Story. 1992: Died.
opened stores in the suburbs of several large cities, including Kansas City, Missouri and Dallas, Texas. The strategy seemed to work. By 1987 Wal-Mart had 1,108 stores, located from Colorado to Virginia, with sales of over $20 billion. By 1989 there were 1,326 stores, with sales of almost $26 billion. Walton continued to try innovative ways to attract new customers. In April of 1983 Walton launched the first Sam’s Wholesale Club, which was aimed at smallbusiness owners and others who wanted to buy bulk merchandise. The warehouses employed only a few laborers. The goods were priced just eight to 10 percent over cost. By 1991 there were more than 200 Sam’s clubs in the United States. In December 1987 he introduced another new retailing concept with the opening of the first Hypermart USA store in Garland, Texas. Encompassing some 220,000 square feet of retail space, about four times the size of the standard Wal-Mart store, these “malls without walls” devote about the same amount of space to food and non-food products. Wal-Mart Supercenters, another Walton innovation, have both a supermarket and a regular Wal-Mart under the same roof.
Social and Economic Impact Wal-Mart is a success story that redefined how retailers viewed growth markets. Walton had showed the world that consumers, no matter where they lived, preferred the variety and discount pricing that his chain offered. Walton was constantly searching for ways to bet-
8 1 4
B u s i n e s s
In addition, the company was firmly committed to a “Buy American” program. Walton built his firm into the fastest growing and most influential force in the retail industry with stores averaging an annual growth rate of more than 35 percent for more than a decade — a rate more than three times that of the retail industry in general. An investor who spent $1,650 for 100 shares of stock in 1979 would have had $700,000 worth of stock in 1987. A conservative employer, Walton admitted that in the early days of the Wal-Mart operation, his employees were making minimum wage. It was his wife who convinced him to offer his employees various incentive bonuses, including discounts on stock and profit-sharing plans. As a result, some Wal-Mart associates have retired hundreds of thousands of dollars richer. The economic impact on Bentonville, home to the Wal-Mart corporation, has been tremendous. Walton and his wife have built tennis courts, a recreation hall for senior citizens, a day care center, a library, an athletic center, and a health club in Bentonville. Walton, or “Mr. Sam,” as some called him, was unpretentious. He did not believe in company perks like limousines. Executives at a chain acquired by Wal-Mart lost their coveted parking spots near the front door for their leased Cadillacs, which were also eliminated by the thrifty Walton. But despite all of the success, Walton and his chain of discount stores are not without their detractors. Chief among them are the small town merchants who, ultimately, were driven out of business by the Wal-Mart stores. They knew they could not compete with the low prices and extensive variety of merchandise. Jack D. Seibald, a retail analyst at Salomon Brothers once said that Wal-Mart “moves into town and in the first year they’re doing $10 million. That money has to come from somewhere, and generally it’s out of the small businessman’s cash register.” Regardless, Walton revolutionized the concept of discount stores in America and reshaped consumer shopping patterns across the United States. Walton tells his story in a book, Made In America, that he wrote with the assistance of Fortune magazine editor John Huey. Without a doubt, Walton was the epitome of modern retailing, adapting to contemporary demographic trends. He built his empire not in the large urban areas of the North, East, and West — the politically and economically dominant regions of the first two-thirds of the twentieth century — but in the South and Midwest, the former depressed and neglected regions of the nation. He pioneered retailing where others did not want to go, and because of his willingness to go to uncharted areas, he reaped astounding financial benefits, propelling this hum-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S a m
ble man to one of the world’s richest and most respected businessmen of his time. Sam Walton’s legacy continues. Five years after his death, Wal-Mart had grown to over 2,300 stores with annual revenues of $104.8 billion.
W a l t o n
Bibliography Byers, Paula K., and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1998. Contemporary Authors. Detroit: Gale Research, 1994. Contemporary Newsmakers. Detroit: Gale Research, 1986. Current Biography Yearbook. New York: H.W. Wilson Co., 1992.
Sources of Information
Newsmakers. Detroit:Gale Research, 1993.
Contact at: Wal-Mart Stores, Inc. 702 SW 8th St. Bentonville, AK 72716 Business Phone: (501)273-4000 URL: http://www.wal-mart.com
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
8 1 5
An Wang (1920-1990) Wang Laboratories, Inc.
Overview An Wang was a technological visionary whose computer-related inventions formed the basis for his company, Wang Laboratories, and made him a billionaire by the mid1980s. His inventions included the magnetic memory core for computers (an industry standard for two decades before being replaced by the microchip during the 1970s), the desktop calculator, and the first word processor.
Personal Life An Wang was born February 7, 1920, in Shanghai, China. His father, Yin Lu Wang, taught English at an elementary school outside Shanghai, while his mother Zen Wan (Chien) Wang was a homemaker. The second of five children in a middle-class family, he grew up at a time when China was experiencing profound social upheaval as well as serious problems with Japan. Wang was a very bright child who entered school in the third grade when he was only six years old. (He attended the same institution where his father was a teacher.) He immediately displayed a particular aptitude for mathematics and began studying the English language a year later. Yet he lacked confidence in his abilities until he scored the highest of all the other students in his class on the competitive exam to enter junior high. He entered Shanghai Provincial High School, one of the best in China, when he was 13. After completing high school, Wang attended Chiao Tung University in Shanghai, where he majored in electrical engineering with a specialty in communications.
8 1 6
A n
W a n g
An Wang, left, receives a plaque honoring him as an inductee to the National Inventors Hall of Fame. The award is being presented by Sidney William, Jr., preseident of the Hall of Fame. (AP Photo/Tom Reed.)
Upon his graduation in 1940, he spent a year as a teaching assistant before volunteering to help design and build radio transmitters for the Chinese government, which was then at war with Japan. (In December 1941, when the Japanese bombed Pearl Harbor and prompted the United States to enter World War II, China and the United States became allies.) After World War II ended in 1945, Wang accepted a chance to go to the United States for a twoyear advanced engineering apprenticeship program.
and in 1948 received a Ph.D. in nonlinear mechanics. He married Lorraine Chiu the following year, and together they had three children, a son and two daughters.
Career Details
When the apprenticeship fell through, however, Wang enrolled at Harvard University and earned his master’s degree in physics in one year. He continued his studies there
After earning his Ph.D., Wang worked as a research assistant at the Harvard Computational Laboratory under the direction of Dr. Howard Aiken, whose team of scientists had created one of the first computers. Known as
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
8 1 7
A n
W a n g
ket. And at a price of only $6,500, it was much cheaper than a mainframe computer. Its uniqueness garnered Wang another patent and attracted many eager buyers. By 1967 Wang Laboratories was posting sales of more than $1 million and employed about 400 people.
Chronology: An Wang 1920: Born. 1945: Moved to the United States. 1948: Earned Ph.D. from Harvard University. 1951: Invented and patented magnetic memory core. 1951: Established Wang Laboratories. 1955: Became naturalized U.S. citizen. 1956: Sold magnetic memory core patent to IBM for $400,000. 1965: Invented the LOCI (logarithmic calculating instrument), a desktop calculator. 1971: Invented first word processor. 1976: Introduced the WPS, an improved word processing system. 1987: Wang Laboratories posted a $71 million loss. 1990: Died.
the Mark I, it was so huge that it filled an entire room. Wang was asked to find a new way to record and read magnetically stored information without mechanical motion. While this problem had puzzled Aiken’s scientists for years, Wang quickly came up with a solution. His invention, the magnetic memory core, was used for storing data for the next 20 years. During the early 1950s, Harvard began cutting back on computer research. Wang therefore decided to patent his memory core invention. With just $600 in savings, he founded Wang Laboratories in June 1951. At first, he was the company’s only employee. He sold memory cores, designed commercial applications for them, and worked on special projects with other companies. In 1956, however, Wang sold his memory core patent to International Business Machines (IBM) for $400,000. The money then allowed him to expand his business. The next challenge Wang set for himself was to improve the productivity of office workers through the use of electronic equipment. His first breakthrough came in 1965 with the invention of a desktop calculator. At the time, scientists and engineers either used slide rules or large mainframe computers for their mathematical calculations. Wang’s desktop calculator, however, was faster and more advanced than anything else on the mar-
8 1 8
B u s i n e s s
In 1971 Wang introduced the first word processor, a typewriter with an electronic memory. It made typing jobs much easier by allowing the typist to proofread and correct a document before printing a final copy. These early word processors allowed users to review only a few lines of text at a time, but they still greatly improved office productivity. During the 1970s, as calculators became smaller and cheaper to produce, Wang began shifting his emphasis to word processors and other office automation equipment. In 1976, he introduced an improved word processing system, the WPS. It displayed the entire text of a document on a large screen and provided users with a series of menus to edit and correct the document. The WPS was well received and helped complete the transformation of Wang Laboratories from a calculator company into a word processor company. Wang was able to compete successfully against much larger companies until the end of the 1970s. But during the 1980s, Wang Laboratories entered a period of decline. While it continued to offer new office automation products that linked word and data processing, by 1987 it was no longer profitable. Wang himself died of cancer in 1990. Two years later, Wang Laboratories filed for bankruptcy, and in 1997 it was acquired by Eastman Kodak.
Social and Economic Impact An Wang was a technological visionary whose inventions greatly improved the productivity of a wide range of workers, from scientists and engineers to typists and secretaries. His desktop calculator and word processor forever changed the way people performed basic office functions. For a while, it seemed that Wang was able to anticipate exactly what was needed in the marketplace and come up with just the right product to serve that need. Wang’s inventions and 40 patents also figured prominently in the evolution of computer science. His first patent for the magnetic memory core was a crucial step in the development of the modern computer. Wang built his company into the largest minorityowned business in the United States. By the mid-1980s his estimated personal worth stood at $1.6 billion. A firm believer in giving back to the community, Wang was well known for his charitable contributions in the Boston area. At a cost of $15 million, for example, he constructed a factory in the city’s Chinatown district that provided about 300 jobs. His donations also included $4 million to restore Boston’s performing arts theater, which was
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
A n
renamed the Wang Center for the Performing Arts. In addition, he gave $6 million to create the Wang Institute of Graduate Studies for software engineers and China scholars. Wang earmarked another $4 million for Harvard University and $1 million for Wellesley College. In 1986, he received the Congressional Medal of Freedom for his many accomplishments.
W a n g
Bibliography “An Wang” (obituary). New York Times, 25 March 1990. Biography Today: Scientists and Inventors. Detroit: Omnigraphics, 1998. Current Biography Yearbook: 1987. New York: H.W. Wilson Co., 1988. Encyclopedia of World Biography Palatine, IL.: Jack Heraty & Associates, 1987-88. Newsmakers: 1990 Cumulation. Detroit: Gale Research, 1990.
Sources of Information
Notable Asian Americans. Detroit: Gale Research, 1995. Wang, An, with Eugene Linden. Lessons: An Autobiography. Reading, MA.: Addison-Wesley, 1986.
Contact at: Wang Laboratories, Inc. 600 Technology Prk. Dr. Billerica, MA 01821 Business Phone: (978)967-5000 URL: http://www.wang.com
B u s i n e s s
L e a d e r
Who’s Who in Technology. Detroit: Gale Research, 1989. World of Invention. Detroit: Gale Research, 1994.
P r o f i l e s
f o r
S t u d e n t s
8 1 9
Charles B. Wang (1944-) Computer Associates
Overview As the Chief Executive Officer of Computer Associates (CA), Charles B. Wang is one of the leaders in the computer software industry. Wang (pronounced “Wong”), however, does not believe that establishing a place in the public eye is the way to get ahead in the software industry. Therefore, CA focuses all of its attention on just two things: developing new technology and marketing those new products.
Personal Life Wang was born in Shanghai, China, on August 19, 1944. The country, then occupied by the Japanese in World War II, soon fell to the Communists under Mao Zedong, and when Wang was eight years old, his family fled their native land. They settled in Queens, New York, and his father—a well-educated lawyer who had served on the supreme court of China—began his career again with virtually nothing. The difficulties of those early years in the United States undoubtedly inspired Wang with the burning desire for success that fueled him in his later career. Wang’s father instilled in his three sons a high value for education, especially that of a technical nature due to the act that language would not pose the problem that it would in the study of history or literature. So Charles Wang went to Brooklyn Technical High School, and in 1967 earned a bachelor’s degree in mathematics from Queens College in New York. After leaving college, Wang began working as a programming trainee at the Riverside Research Institute of
8 2 0
C h a r l e s
Columbia University. He later moved to a job at Standard Data Corporation in New York, and became vice president of sales, in which capacity he inaugurated a software division for the company. During this time, his boss was offered a franchise for a Swiss software company by the name of Computer Associates International Ltd. The boss turned down the opportunity, but Wang took it instead, and at the age of 32, Wang began his true career as an entrepreneur. Besides his business interests, Wang is fond of cooking, and has published a Chinese cookbook with the title Wok Like a Man. He is married to Nancy Li, his second wife, who is chief technology officer of his company.
B .
W a n g
Chronology: Charles B. Wang 1944: Born. 1952: Emigrated to the United States. 1967: Earned bachelor’s degree in mathematics. 1976: Opened Computer Associates International franchise.
Career Details
1977: Computer Associates marketed its first product.
Wang began working with three associates, one of them a friend from college named Russell Artzt, as a distributor of CAI’s CA-SORT data management software in 1976. He also founded his own company as a CAI subsidiary. Wang worked as the “marketing department,” while the other three filled in the other functions of the fledgling enterprise. By 1977, Computer Associates was selling the first of its own products, CA-DYNAM/D, which was used for disk space management. In 1980, Wang and Artzt were able to purchase the Swiss parent company, and Wang hired his older brother Anthony— who had followed their father into the legal profession— as his company’s legal counsel. The company expanded greatly in Europe, and began to buy up rivals such as UCCELL Corporation, a $780 million purchase in 1987. Wang has spoken of making the work place fun. One day when the air conditioning at his company offices failed on a hot day, he personally pushed a cart through the building, passing out ice cream cones and sandwiches to his employees. Wang is characterized as impulsive and enthusiastic, in contrast to the cooler heads with which he surrounds himself. He believes in rewarding his employees, and has built an outstanding corporate facility (which includes a health club, free breakfast, and day care for children) in Islandia, New York. To maintain employee flexibility, he has taken the highly unusual step of encouraging people to periodically change positions within the company, for instance allowing a technical expert to work in the marketing department for a while. Yet Wang is also a no-nonsense manager. He is far from extravagant in his lifestyle, or with his company’s finances. He is also well known for the severe limitations he places on employee use of company e-mail, which he has suggested is good for little more than office politics. Therefore, every day from 10:00 a.m. to 12:00 noon and again from 2:00 p.m. to 4:00 p.m. the e-mail system at CA is shut down.
1977: Computer Associates opened its first data center. 1980: Purchased Computer Associates International parent company. 1987: Purchased rival UCCEL. 1989: Computer Associates became the world’s first software company to reach $1 billion in sales. 1995: Purchased Cheyenne Software.
bonuses, according to Computer Reseller News. However, his total compensation for 1996, according to the same source, was $11 million—making him the highest-paid executive in the computer industry. Wang works closely with Sanjay Kumar, his chief operating officer. Kumar’s total compensation package in 1996 was more than $7 million. Charles Wang did not build his business by imitating others. For starters, his Islandia, New York, company is far from the computer industry’s nerve center in California’s Silicon Valley. He has foregone glamour in favor of establishing a solid niche for his more than 500 software products, which are generally used in network management for large companies. Business Week magazine characterized the function of CA software as “plumbing products”—equipment that helps to maintain large computer infrastructures, as proper plumbing helps a large city to survive. As a result, this has put CA software in great demand.
Wang’s extremely high salary is also noteworthy: in 1997, he was making more than $6 million in base pay and
There are many legends of the difficulties Wang and his associates at CA had to undergo in the early days of their business, when they operated with virtually no available capital. Wang himself bartered his consulting services for rent, and made most of the furniture for the first company office. He once drove all the way to Boston from upstate New York to collect a bill that he needed in order to be able to pay his employees.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
8 2 1
C h a r l e s
B .
W a n g
Although it was eventually overtaken by Microsoft and Oracle, in 1989 CA was the largest software company in the world and the first independent software manufacturer to pass $1 billion in annual sales. By the mid1990s, what had begun as a humble and undercapitalized enterprise had 7,000 employees making or selling 300 products in 27 countries. The company’s annual revenues totaled more than $4 billion by 1997. Whereas much of CA’s growth in the 1980s and early 1990s can be attributed to buyouts—earning Wang the reputation of a “corporate scavenger”—in the mid1990s he sought to sustain and augment that growth by increased product development. When he announced his intention to buy Cheyenne Software in October of 1995 at $1.2 billion, his biggest purchase yet, Wang was already turning his attention toward development of his products to meet new challenges. Particularly promising was Unicenter TNG (“The Next Generation”), which offered unique graphical capabilities for network management and the multimedia database program Jasmine. In spite of his own technical learning, in giving advice to young Asian Americans, Wang has said that he wished he had studied English in college: “You [can] have the greatest idea in history . . . However, if you do not know how to communicate your idea clearly, it dies with you.” He has also observed that because they tend to gravitate toward technical careers, Asian Americans miss out on other opportunities in business.
counter to models taught in business schools. At CA, there are reportedly no rules, no positional perks, no fixed roles and no memos. “It’s just good people,” according to Wang. Instead of shunning nepotism, Wang actively recruits family and friends of current employees, people he already knows and trusts. The bottom line for him is that performance and achievement should be richly rewarded. Wang believes that star performers should receive star salaries, regardless of their age. All employees have access to the health club, free breakfast and the corporation’s child day care center. Wang keeps his employees challenged by changing their jobs frequently, which can prevent burnout and stagnation, according to Wang, and he personally administers the annual reorganization.
Sources of Information Contact at: Computer Associates 1 Computer Associates Plz. Islandia, NY 11788 Business Phone: (516) 342-5224
Bibliography Baatz, E. B. “Mail Dominated Culture.” CIO , 15 June 1996. Cortese, Amy. “Sexy? No. Profitable? You Bet.” Business Week, 11 November 1996. Foster, Christine. “Couples.” Forbes, 2 December 1996. Hausman, Eric. “10 Years and Counting.” Computer Reseller News, 12 May 1997.
Social and Economic Impact
8 2 2
Karlgaard, Rich. “Charles Wang.” Forbes, 11 April 1994.
Charles Wang built a $4 billion dollar empire with no venture capital by taking risks and working hard. He demonstrated that the establishment’s way isn’t always the best way. His software company is located on Long Island, New York, 3,000 miles from Silicon Valley. He focused not just on product development, but also on aggressive marketing and market positioning. Over the years, he has acquired more than 50 software companies.
Who’s Who in America 1998. New Providence, NJ: Marquis, 1997.
Wang’s unorthodox employment skills have reaped him rewards as well. Wang’s management style runs
Zia, Helen and Susan B. Gall, eds. Notable Asian Americans. Detroit: Gale Research, 1995.
B u s i n e s s
McCartney, Laton. “Will Computer Associates’ Manners Improve?” Upside, June 1996. Moltzen, Edward F. “CA Chief Bolsters Total ‘96 Earnings.” Computer Reseller News, 22 July 1996. “The Software Scavenger.” Economist, 15 June 1996.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Vera Wang Overview American designer Vera Wang has become perhaps the best known name in bridal fashion. Since the early 1990s, her sleek, sexy, yet tasteful concoctions have been chosen by brides-to-be to showcase and enhance their beauty on their wedding day.
(1949?-) Vera Wang Bridal House, Ltd.
Personal Life Wang was born in the late 1940s (sources variously cite 1948, ‘49, and ‘50 as her birthyear) in Manhattan, the daughter of Cheng Ching Wang, chair of a pharmaceutical company. Wang’s mother, also of Chinese heritage, once worked as a translator at the United Nations and was the daughter of one of China’s last feudal warlords. During World War II, Wang’s parents both fled China, but were not yet married; her mother followed her future husband to the United States, an act that Wang has described as daring and rebellious for its time. Wang grew up in relatively affluent surroundings. She took ballet lessons at New York City’s School of American Ballet, and also skated competitively for many years. At the age of 17, she appeared on the cover of Paris Match, the French equivalent of People, in a story about her French skating partner, Patrick Pera. Despite the skating talent, Wang dreamed of going to art school, but her parents considered this a very impractical education. Instead she enrolled at New York’s Sarah Lawrence College, where she earned a degree in art history that included a year at the Sorbonne in Paris. She later took graduate courses at Columbia University.
8 2 3
V e r a
W a n g
to Wang’s decision to quit her job at Ralph Lauren. She eventually adopted two daughters, Cecilia and Josephine, and lives in a palatial 22-room apartment on Park Avenue in Manhattan. Becker is the head of a golf-equipment manufacturing company. They also enjoy a house in Southampton and a country house in upstate New York that is actually a converted 200-year-old Dutch-style barn.
Career Details After graduating from Sarah Lawrence, Wang was hired at Vogue magazine. It was a prestigious career debut, and marked Wang as a talented and creative newcomer to fashion. She was made editor in 1972, one of the youngest in the magazine’s history, and primarily served as “sittings” editor, or the one in charge of the editorial fashion spreads that are the essence of the magazine. Still, the emphasis remained on editorial, not design, and Wang was eager to move on after 16 years of experience. In 1987, she quit Vogue to become creative director for American designer Ralph Lauren. She also held the title of design director for accessories. Wang loved working on the other side—the first time she saw one of their handbags worn by someone on the street in New York, she was extremely excited, but her colleagues told her that she would get used to seeing her work nonchalantly walking past. “They were wrong,” she told the New York Times. Wang stayed at Ralph Lauren for two years, and learned a great deal about the design end of the fashion industry. She has described Lauren, the man, as her mentor.
Vera Wang.
(Reproduced by permission of Vera Wang.)
Wang met her future husband, Arthur Becker, in 1980 at a tennis game in Forest Hills, New York. They were married nine years later, and Wang resisted pressure to do so during much of that courtship. Her mother wondered why she focused on her career and not on beginning a family. Perhaps fitting for a designer of bridal gowns (a business she launched after she married), Wang was conscious of the commitment marriage entailed. “I was very aware of the responsibility, not just to try it out and see if it fit or not,” Wang told Alex Witchel in the New York Times. She was 40 when she wed, and she and Becker hoped to have children right away, but encountered difficulties conceiving. They then began fertility treatments, an arduous, time-consuming process that led
8 2 4
B u s i n e s s
When she planned her 1989 wedding to Becker, Wang delved into the world of bridal fashion, and was dismayed at what she found. She realized that there was a large segment of young American women who wanted a more stylish version of the lace-and-tulle numbers that were standard fare in the bridal salons. With financing from her father, Wang launched the bridal line bearing her name in 1990 with a showroom located at the famed Carlyle Hotel on Madison Avenue. They were a hit from the start, but the high costs of design and the overhead weighed the balance sheet down, and—as she’d expected—Wang’s business did not show a profit for its first few years. There were other difficulties during her first decade, Wang told the New York Times. “After working for Ralph [Lauren], the same fabric houses I dealt with didn’t know me once I was trying to start a business from thin air,” she recalled. Still, Wang’s vision translated into success where it mattered most—on the bride-to-be. Her company has two divisions: the ready-to-wear bridal, with dresses ranging in price from $2,500 to $5,000, and then a couture bridal line called Vera Wang Made to Order, with custom gowns at $10,000 and up.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
V e r a
W a n g
Social and Economic Impact By the mid-1990s Vera Wang was a recognized “designer” name to many American women for her stylish yet classic bridal creations. Capitalizing on the success of this Wang launched a couture line of evening wear in 1994 to be sold in upscale department stores like Saks Fifth Avenue. These designs have been worn by Academy Award attendees such as actresses Sharon Stone and Holly Hunter, effectively providing high-profile publicity for all of Wang’s designs. Wang also created competition outfits for figure skater Nancy Kerrigan for several years, including the gold costume worn during Kerrigan’s much-watched appearance at the 1994 Winter Olympics. Yet it is Wang’s bridal gowns that have made the most impact on the market. Few designers like to create such gowns, since they’re generally expected to be one color, somewhat frothy, and have fairly traditionalrequirements that leave little room for creativity. Wang has filled a niche that helps stylish young women look sophisticated—yet still princess-like—on their wedding day. She has even introduced touches of color here and there. Wang’s star has risen, wrote Witchel of the New York Times, because of her daring in “challenging the status quo, introducing fashion (black velvet trim) and— gasp—sex to this creaky trade of institutional virginity.” Vera Wang gowns have been worn by some of the most famous brides of the 1990s, such as pop singer Mariah Carey for her extravagant nuptials to Sony Music executive Tommy Mottola. This particular dress boasted a 27-foot train. “Women are real works of art,” Wang told the New York Times, “and I try to remember that that’s what makes it worthwhile, that it’s not just about making money and seeing how big the distribution can be . . . I wanted to be exclusive by taste, not money. Small and caring. I look at every dress in the store. I had a whole glove line made up that didn’t exist. And I was thinking wouldn’t it be nice to take off your shoes, have a Diet Coke and not be bride No. 5,076 for the month of June.” Wang has received awards from Asian-American civic groups and is active in the Asia Society in New
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Chronology: Vera Wang c. 1949: Born. 1972: Hired at Vogue. 1987: Becomes design director for accessories at Ralph Lauren. 1989: Marries Arthur Becker. 1990: Launches bridal line. 1994: Gains additional renown for designing competition outfits for Olympic skater Nancy Kerrigan.
York City. The Girl Scout Council of Greater New York honored her in 1994, and she was elected that same year to the Council of Fashion Designers of America.
Sources of Information Contact at: Vera Wang Bridal House, Ltd. 225 W. 39th St. New York, NY 10018
Bibliography The Asian American Almanac. Detroit: Gale Research, 1995. Notable Asian Americans. Detroit: Gale Research, 1995. “Vera Wang and Arthur Becker.” People, 13 February 1995. Witchel, Alex. “Vera Wang.” New York Times, 19 June 1994.
S t u d e n t s
8 2 5
Aaron Montgomery Ward (1843-1913) Montgomery Ward Holding Corp.
Overview Aaron Montgomery Ward was an experienced salesman and store manager when he and his brother-in-law established the first mail-order firm to carry a wide variety of goods in 1872. Ward’s catalog, known as “The Wish Book,” brought a wide selection of goods to America’s farmers and rural residents of the Midwest, who had complained of the poor choices and high prices offered by their local general stores and merchants. Montgomery Ward and Company was the leading mail-order house in the United States until 1900, when it was surpassed by Sears, Roebuck and Company in annual sales. The company later expanded and opened branch stores in the 1920s, and it eventually discontinued its catalog operation.
Personal Life Aaron Montgomery Ward was born on February 17, 1843, in Chatham, New Jersey. His great-grandfather was an officer in the Revolutionary War. His parents, Sylvester and Julia (Green) Ward, moved to Niles, Michigan, where Aaron attended public schools until he was 14. Then he was apprenticed in a barrel factory and later went to work in a brickyard. Ward’s first experience in retailing came when he was about 19 and went to work at a general store in St. Joseph, Michigan. After a few years he was made general manager of the store. In 1865 he went to Chicago to be a clerk at what later became the Marshall Field department store. After a couple of years there, he went to work for the wholesale dry goods house of Willis, Gregg
8 2 6
A a r o n
M o n t g o m e r y
W a r d
and Brown. When that firm failed, he became a traveling salesman for the St. Louis-based dry goods wholesaler, Walter M. Smith and Company. Ward married Elizabeth J. Cobb of Kalamazoo, Michigan, in 1872. Although the couple never had any children of their own, they adopted a daughter Marjorie. Upon Ward’s death in 1913, his estate passed to his wife, who later distributed it to various charities. The principal beneficiary was Northwestern University, which established medical and dental schools in his honor.
Career Details Ward began to think of starting his own mail-order business when he was a traveling salesman. He became well acquainted with the rural way of life in the Midwest and the needs of farmers and other residents. Their biggest complaint, he discovered, was the high prices they paid for goods at the local general stores. In addition, the selection of merchandise offered by the stores was meager at best. To accumulate enough capital to start his own business, Ward moved back to Chicago and went to work for C.W. Partridge, a dry goods firm. He was about to start his own business when the Great Chicago Fire of 1871 wiped out his savings. By the following year, he had managed to save about $1,600 of his own money and convinced his brother-in-law, George R. Thorne, to put up an additional $800 to launch a business. Montgomery Ward and Company opened for business in 1872 from the loft of a livery at Clark and Kenzie Streets in Chicago. The company’s first “catalog” was a single sheet listing goods for sale and explaining how to order them. By 1874 the catalog had grown to an eightpage booklet, and Ward introduced its famous guarantee. Although the wording of the guarantee has changed over the years, it essentially permitted customers to return any merchandise if they were not completely satisfied. The 1874 catalog stressed that goods were sent “subject to examination,” which meant the customer had a chance to examine the goods before agreeing to purchase them. Ward’s guarantee helped overcome any reluctance associated with ordering merchandise sight unseen from a company located far away in Chicago. Montgomery Ward sold its merchandise for cash and did not offer credit, which helped to keep its prices lower than those of local general stores. Ward also was able to keep prices down by carefully selecting merchandise that could be purchased in bulk at a lower price. One of the keys to Ward’s early success was the arrangement he reached with the recently formed farmers organization known as the National Grange, which saved farmers money through cooperative purchasing and elimination of the middle man. Montgomery Ward soon could call itself “The Original Grange Supply
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Aaron Ward.
(The Library of Congress.)
House.” Cultivating the account, Ward gave Grange members a ten-day grace period in which to make payment. He also used testimonials from Grange officials in his ads and catalogs and displayed the company’s goods at Grange meetings. Ward actively promoted his new business, not only by mailing out catalogs, but also by advertising in periodicals such as the Farmer’s Review and the Women’s Farm Journal. He also mailed out almanacs that included merchandise advertisements, and in the 1890s sent out barnstorming railroad cars to display the firm’s merchandise. The company wanted to project a friendly image, and customers were always welcome to visit the Chicago headquarters. During the Columbian Exposition of 1892 about 285,000 visitors toured the Ward facility. Ward’s company and catalog grew rapidly in the 1870s and 1880s. Almost every item in the catalog was illustrated with a woodcut by the early 1880s. The 1883 catalog stated that the company had half-a-million dollars worth of merchandise in stock, and the next year’s catalog listed 10,000 items for sale in 240 pages. That year the company also began to construct its own building, which was completed in 1887 and provided 120,000 square feet of space for the rapidly growing business. Annual sales reached $1 million in 1888. Montgomery Ward and other mail-order businesses received a boost in 1895 with the introduction of Rural Free Delivery by the U.S. Post Office. Ward’s main competitor was the recently established Sears, Roebuck and
S t u d e n t s
8 2 7
A a r o n
M o n t g o m e r y
W a r d
million catalogs a year. Ward had also established a vehicle factory, a clothing factory, and an agricultural implement factory.
Chronology: Aaron Montgomery Ward 1843: Born. 1865: Began working as a clerk at Marshall Field department store in Chicago. 1871: Great Chicago Fire virtually wiped out Ward’s savings. 1872: Established Montgomery Ward and Company in Chicago (with brother-in-law George Thorne) and issued first mail-order catalog. 1873: Company became official supply house of the National Grange, a farmers cooperative. 1887: Company moved into its own building with 120,000 square feet of space. 1888: Annual sales reached $1 million. 1900: Ward Tower was completed in Chicago. 1900: Sears, Roebuck and Company’s annual sales surpassed those of Montgomery Ward for the first time.
Social and Economic Impact As a pioneer in mail-order selling, Aaron Montgomery Ward’s influence has been felt in the direct marketing industry throughout the twentieth century. In the earlier part of the century, mail-order sales fell as the automobile made it easier for people to shop at stores. In the latter part, that trend reversed as catalog sales began to account for an ever-increasing share of retail sales. Shopping by mail proved time and energy efficient, making it a good fit for a society where a growing number of women were joining the workforce and time had become a valuable commodity. Montgomery Ward’s mail-order business greatly improved the quality of life in rural America in the latter part of the nineteenth century. The company’s huge catalogs made a vast assortment of merchandise available to a wide range of people who would have had a much more limited selection otherwise. Through bulk purchases, Ward was able to offer those goods at reasonable prices, much lower than were being offered by local general stores throughout rural America.
1901: Ward retired, but retained title of president. 1913: Ward died; company had sales of $40 million and 6,000 employees.
Company, which began to overtake Montgomery Ward as the leading mail-order house. Montgomery Ward began to receive national attention in 1900 with the construction of the Ward Tower in Chicago. In 1900 Sears surpassed Montgomery Ward in annual sales for the first time, and remained ahead until Ward discontinued its catalog operation later in the century. Ward himself spent less time on the company’s daily operations in the 1890s. In 1901 he retired, although he retained the title of president. He spent much of the last decade of his life working to preserve the natural waterfront parks of Chicago, and his efforts led to the establishment of Grant Park. At the time of Ward’s death in 1913, Montgomery Ward had annual sales of $40 million and 6,000 employees. It was mailing out about 1.5
8 2 8
B u s i n e s s
Sources of Information Contact at: Montgomery Ward Holding Corp. Montgomery Ward Plaza Chicago, IL 60671-0042 Business Phone: (312)467-2000 URL: http://www.mward.com
Bibliography Emmet, Boris, and John E. Jeuck. Catalogues and Counters: A History of Sears, Roebuck and Company. Chicago: University of Chicago Press, 1950. Encyclopedia of World Biography. New York: McGraw-Hill, 1998. Ingham, John N. Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood Press, 1983. Sobel, Robert, and David B. Sicilia. The Entrepreneurs: An American Adventure. Boston: Houghton Mifflin Co., 1986. Van Doren, Charles, ed. Webster’s American Biographies. Springfield, MA: G. & C. Merriam Co., 1979. Who Was Who in America. Vol. 4, 1961-1968, Who’s Who in American History. Chicago: Marquis Who’s Who, 1968.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Andy Warhol Overview Artist, filmmaker, and writer Andy Warhol was one of the heroes of counterculture society during the late 1960s and 1970s. His influence soared far beyond the confines of museums and art galleries. Warhol’s work appropriated the images of American popular culture for the purposes of high art, creating portraits that celebrated a superficial and sometimes violent society. He was obsessed with personal fame and wealth and was a fixture on the New York celebrity scene for almost three decades.
(1928-1987) Artist
At his death in 1987, Andy Warhol was a multimillionaire who had used the techniques of mass production to create an enormous output of art and photography. People who had no interest in art recognized him instantly, and virtually no one in the American artistic community was indifferent to his work. A London Times reporter noted: “If an artist is to be judged by his impact on the popular consciousness, then Warhol was the Michelangelo of his age.” He is perhaps best remembered for his oft-quoted quip, “In the future everyone will be famous for 15 minutes.”
Personal Life The details of Warhol’s personal history are somewhat shrouded in mystery and myth. Most of his biographers agree that he was born on August 6, 1928, although some sources say 1927, 1930, or 1931. Warhol himself once said, “I never give my background, and anyway, I make it all up differently every time I’m asked.”
8 2 9
A n d y
W a r h o l
Andy Warhol spends an evening at a restaurant with friends.
His father, Ondrej Warhola, arrived in the United States from Czechoslovakia in 1912, and in 1921 he sent for Warhol’s mother, Julia (Zavacky) Warhola. Ondrej Warhola did construction work at first, then later toiled as a coal miner. Andy Warhol was a high-strung child who suffered from St. Vitus’ Dance, a nervous disorder characterized by a lack of coordination and spastic movements of the arms, legs, and facial muscles. His physical frailty and extremely pale complexion made him a target of abuse and cruel teasing from his peers. When he was 14 years old, his father died. Despite the financial hardship this caused, Warhol was able to come up with the tuition money to attend the Carnegie Institute of Technology (now Carnegie-Mellon University), where he majored in pictorial design. It was while he was still a student that he made his first mark in the world of art with a shocking painting titled, “The Broad Gave Me My Face, But I Can Pick My Own Nose.”
Career Details Following his graduation from college in 1949, Warhol moved to New York City to pursue a career in commercial art. He had only been creating advertising displays for three months when he decided to take some of his drawings to Glamour magazine. Impressed with his work, Glamour commissioned him to make some
8 3 0
B u s i n e s s
(The Library of Congress.)
drawings of shoes for an article entitled “Success Is a Job in New York.” In the publication credits, the magazine mistakenly dropped the “a” from Warhola, and thus Andy Warhola became Andy Warhol. By the mid-1950s Warhol was one of the best-paid commercial artists in New York, with clients such as Tiffany’s, I. Miller shoes, Vogue, and Bonwit Teller. By 1960 Warhol was financially secure and ready to give up his career in commercial art for something new. So he jumped into—and in many ways helped create—the Pop Art movement. Pop Art was a revolt against the Abstract Expressionist style, which uses blended images intended to stretch the imagination. Pop Art, on the other hand, offers instantly recognizable images of far less serious subjects. Warhol painted comic book characters such as Dick Tracy, Popeye, and Superman. He also painted everyday objects of various kinds, including Coca-Cola bottles, Campbell soup cans, and money. In addition, he did memorable portraits of actress Marilyn Monroe and singer Elvis Presley. After opening exhibitions in 1962 in Los Angeles and New York featuring his now famous “Campbell Soup Cans,” Warhol became the dominant symbol of Pop Art culture. In the early 1960s Warhol opened a studio known as the Factory where he and his assistants perfected silkscreening techniques that enabled him to produce identical prints in mass quantities. He also created numerous experimental movies at the Factory. So-called “under-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
A n d y
W a r h o l
ground” films such as Sleep and Eat were deliberately boring and ordinary, and sometimes ran for up to 24 hours. His movie Empire, for instance, which was released in 1965, featured New York City’s Empire State Building viewed from the same unmoving camera angle over an eight-hour period. The Factory soon became a center of pop culture, attracting a wide variety of people from both the art and performing worlds. Warhol used some of these people in his movies and liked to refer to them as his “superstars.” Drug use was common among those who frequented the Factory, but Warhol himself rarely participated. Warhol released numerous movies during the late 1960s and 1970s. In 1968 he dealt with the taboo subject of homosexuality in his film Lonesome Cowboys. He also produced two films that are considered early examples of modern pornographic filmmaking, Flesh (1968) and Trash (1970). In 1974 he generated some commercial interest with his movies Andy Warhol’s Frankenstein and Andy Warhol’s Dracula. In total, he was involved in more than 60 film projects between 1963 and 1974. Warhol was also part of the rock music scene thanks to his involvement with a rock band known as the Velvet Underground, formed by Lou Reed and John Cale. He introduced model and actress Nico to the band members, and she ended up singing on their debut album. Warhol traveled the country with the Velvet Underground and later developed and produced a spectacular multimedia light show called “The Exploding Plastic Inevitable” that featured the band. Toward the end of the 1960s, Warhol dabbled in publishing as co-founder of Interview magazine. It enjoyed a good deal of success during the 1970s. By then, however, Warhol had turned over the reins to someone else, eager to move on to his next project. He was also associated in some way with nine books during his career. One of the most popular was The Philosophy of Andy Warhol: From A to B and Back Again, which was published in 1975. In 1968 Warhol’s life almost came to a violent end when Valerie Solanis, a member of his entourage, shot him in the chest and abdomen at point-blank range. The artist survived, but only after spending two months in the hospital. Solanis turned herself in to authorities and was placed in a mental hospital. Later, she was sentenced to three years in prison.
Chronology: Andy Warhol 1928: Born. 1949: Entered field of commercial art. 1956: Drawings featured in shows at the Bodley Gallery and the Museum of Modern Art. 1957: Shoe advertisement won the Art Directors’ Club Medal. 1960: Joined the Pop Art movement. 1962: Opened exhibitions in Los Angeles and New York featuring paintings of Campbell soup cans. 1963: Films Sleep and Eat were released. 1968: Film Flesh was released. 1974: Films Andy Warhol’s Dracula and Andy Warhol’s Frankenstein were released. 1975: The Philosophy of Andy Warhol: From A to B and Back Again published. 1987: Died.
traffic on Fifth Avenue was disrupted by spectators and photographers trying to get a glimpse of them. No other twentieth-century artist—not even Picasso—could have drawn this sort of crowd, and it is difficult to think of any other public personality who could have done so, either.”
Social and Economic Impact
During the 1970s, Warhol continued with his painting, focusing mostly on portraits of famous people and personal friends. Meanwhile, he remained at the center of pop culture and the art community throughout the last decade of his life. Ironically, however, it was death that brought him his greatest fame. Warhol succumbed unexpectedly to heart failure on February 22, 1987, after undergoing routine gall bladder surgery. His funeral, held in New York City, was a major event. According to a New Yorker correspondent, “There were so many celebrities among the more than 2,000 mourners that
While the long-term relevance of Warhol’s work may be subject to dispute, his impact on the pop culture of his time is not. He offered the public something they had never experienced before, creating seemingly emotionless works based on the most mundane things in life. Even when he depicted emotionally charged or tragic events, such as his “Disaster” scenes of automobile accidents, electric chairs, and race riots, he somehow rendered them without a hint of passion. At first, some observers dismissed them as tacky and heartless. Later interpretations acknowledged the “Disaster” works as critical statements about the offhanded inhumanity prevalent in a society where people commonly witness tragedy without feeling or emotion.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
8 3 1
A n d y
W a r h o l
Andy Warhol captured the attention of an entire generation. Some worshipped his every painting, picture, movie, and appearance. Others called him vulgar, strange, or just inconsequential. During the late 1960s and through the 1970s, Warhol was the dominant symbol of the American counterculture. In an article published in Esquire magazine, Julie Baumgold, a woman who knew Warhol, offered the following reflections on him and his era: “[It] was a time of leather plants and dresses that swung or hung stiffly and parties with plastic chairs and red lights . . . . Then, too, there were large plastic Baggies of pills and people with painted faces and raccoon eyes, jabbing needles through their jeans, moving in slow motion through curtains of beads . . . . And through it all there was Andy Warhol, slumped on a sofa, the absent soul, watching, always watching, taping, always taping.” Since his death, there has been a tremendous amount of interest in the meaning of Warhol’s life and work. Was he simply the “absent soul” who surrounded himself with the excesses of his time? Or was his very immersion in the modern culture somehow his strongest indictment
8 3 2
B u s i n e s s
against it? Answers to those questions continue to provoke debate.
Sources of Information Bibliography Baumgold, Julie. “Andy, Candy, and Me.” Esquire, May 1996. Contemporary Authors. Vol. 121. Detroit: Gale Research, 1987. Current Biography Yearbook: 1968. New York: H. W. Wilson Co., 1968. Encyclopedia of World Biography. Detroit: Gale Research, 1998. Garraty, John A. and Jerome L. Sternstein, eds. Encyclopedia of American Biography. New York: HarperCollins, 1996. Hackett, Pat, ed. The Andy Warhol Diaries. New York: Warner Books, 1989. New Yorker, 27 April 1987. Pandiscio, Richard. “Andy and Candy.” Interview, April 1996. Powell, Alison. “Crazy About Andy.” Interview, April 1996.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Jack Warner Overview Pioneering motion picture executive and producer, Jack L. Warner, along with his three brothers, created Warner Brothers Pictures and turned it into one of the largest film studios in the United States. When Warner Brothers released The Jazz Singer in 1927 as the first “talking picture,” they revolutionized the industry and initiated the movie’s modern era. Bluff, aggressive, and at times crude and difficult, Warner epitomized the classic movie mogul during Hollywood’s studio era.
(1892-1978) Warner Brothers Pictures, Inc.
Personal Life Jack L. Warner was born in London, Ontario, on August 2, 1892, the ninth and the youngest boy of the 12 Warner children. His Polish parents, Benjamin and Pearl Eichelbaum, emigrated from Poland in 1890. They lived in Canada for a time before moving in 1894 to Youngstown, Ohio, where Warner’s father worked as a butcher. Jack, whose original surname was Jacob, and his three brothers, Harry, Albert, and Sam, were expected to help at an early age with the family’s finances. Harry worked as a cobbler’s apprentice, then as a meat packer; Albert and Sam held a succession of odd jobs before they began exhibiting movies, obtaining a projector by pawning Sam’s prized birthday gift from his father, a gold watch and chain. A poor student, Jack Warner longed to be a stage performer. He took his middle name—Leonard—from a minstrel performer he admired. Warner’s love of the limelight would continue throughout his career. Jack, at
8 3 3
J a c k
W a r n e r
Jack Warner poses with Bette Davis, left, and Joan Crawford. The two actresses co-starred in “What Ever Happened to Baby Jane?,” a motion picture released by Warner Brothers. (AP/Wide World Photos, Inc.)
the age of 12 had earned money as a singer in minstrel shows and operettas. In their fledgling movie business, Sam handled the projector, Harry and Albert supervised the advertising and tickets, and Jack sang and danced before and after the picture. From their humble start, the Warner brothers would steadily mount their assault on the young motion picture business, incorporating their holdings as Warner Brothers Pictures, Inc. in 1923. In their California studio, Jack was for many years the company’s vice-president and executive producer under his brother Harry, before becoming president and board chairman. During World War II,
8 3 4
B u s i n e s s
Warner served as a lieutenant colonel in the Army Air Force where he organized the first motion picture unit. Warner married Irma Solomon in 1914 and they had one son, Jack L. Warner, Jr. They divorced, and Warner remarried actress Ann Page in 1936. Warner accepted her daughter from a previous marriage, Joy, as his own and adopted a two-year -old girl they named Barbara. In 1954 Warner won the Irving Thalberg Memorial Award for consistent excellence in movie productions. Two years later, the Warners relinquished their financial control of the studio to a banking firm, although Jack remained president and largest stockholder until he sold his inter-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J a c k
W a r n e r
est in the studio in 1966 to Seven Arts Productions. Jack L. Warner died in Los Angeles on August 2, 1978, survived by his wife Ann.
Career Details The Warner brothers’ family movie business started in Youngstown, Ohio, but was moved to Newcastle, Pennsylvania where they opened their first theater. In 1903, they converted an empty store with a seating capacity of 99, one seat short of 100 to prevent the theater from being subject to local and state fire regulations. During these early years of the movie business, distribution was a problem, and theater owners could not depend on deliveries. To remedy this situation, Harry Warner decided to form a collaboration with exhibitors and theater owners to exchange films. This eventually became the Duquesne Amusement Supply Company, the first such organization in the country. It was short lived since film producers did everything possible to discourage the arrangement as a threat to their profits. The Warners finally sold the film supply company in 1912. The experience convinced the brothers that if they were to be sure of having movies to show, they must make them themselves. In New York they began to make what the trade called “Warner Features” at the old Vitagraph studios. Their first blockbuster occurred when they bought the rights to the 1917 book by Ambassador James W. Gerard, My Four Years in Germany. The resulting film grossed almost a million dollars, and the profits allowed the Warners to shift their operations to California, joining Jack who had earlier established a studio in Santa Paula, California. Now the brothers built a large studio on Sunset Boulevard in Hollywood, and incorporated their business as the Warner Brothers Pictures, Inc. In 1923, however, they were still selling their pictures through independent distributors who advanced them money to make their films. They set out to obtain control of a nationwide distributing system.
Chronology: Jack Warner 1892: Born. 1903: The Warner brothers first movie theater opened. 1918: Warners’ studio in Hollywood opened. 1923: Warner Brothers Pictures incorporated. 1927: The Jazz Singer premiered. 1956: Warners relinquish financial control of their studio. 1958: Presented with the Irving Thalberg award for excellence in film production. 1964: My Fair Lady won best picture of the year award. 1966: Personal interest in studio sold. 1978: Died.
of the silent film was at an end. By 1928 Warner Brothers was a $16 million corporation and within two years they were worth $230 million. In 1929 Warner Brothers acquired the Stanley Company with some 250 theater outlets nationwide, which insured audiences for Warner Brothers’ movies.
In 1925 they borrowed enough money to buy the Vitagraph Company, which had a nationwide distribution system. Success was still precarious, however, and Warner Brothers was close to bankruptcy when the brothers decided to experiment with sound films. The idea originated when Sam Warner persuaded Harry to listen to a device that the Bell Laboratories had invented that united speech with film action, which other studios had turned down. In 1926 they released Don Juan, starring John Barrymore with a completely synchronized musical score, although Barrymore’s voice and that of the rest of the cast were not recorded. Its success encouraged Warner Brothers to make other sound films while improving the sound tracks. In 1927 The Jazz Singer became the first true “talking picture.” The effect of film speech was electrifying to its first audience, and the era
The Warners’ joy over their success was diminished considerably by the death of Sam Warner the day before the opening of The Jazz Singer. The brothers sailed to Europe for a rest, and while they were away staff members decided that material originally meant for a short film, deserved development as a full-length one. Lights of New York cost $40,000 to make and grossed more than $2 million as the first all-talking motion picture ever made. With a headstart over their competitors in sound, Warner Brothers became one of the dominant film studios during Hollywood’s Golden Era. Warner Brothers’ contract players included such stars as George Arliss, Leslie Howard, Paul Muni, James Cagney, Bette Davis, Humphrey Bogart, and Joan Crawford. Jack Warner as production chief oversaw such classic films as Little Caesar (1930), A Midsummer Night’s Dream(1935), The Adventures of Robin Hood(1938), Casablanca(1942), The Corn is Green(1945), Mildred Pierce(1945), A Streetcar Named Desire(1952), Rebel Without a Cause(1955), and My Fair Lady(1964). Although it produced films in all the genres, Warner Brothers’ specialty became social issue issues films. During World War II, Warner Brothers
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
8 3 5
J a c k
W a r n e r
became the first studio to direct its resources toward the war effort.
cal innovation of sound recording, Warner Brothers’ created film’s modern era.
One of the keys to Warner Brothers’ success was Jack Warner’s intimate and scrupulous attention to detail and his constant economizing. He looked upon the movie industry as any other kind of factory production. Every economy was employed, including repeated use of material, preassembled sets, and a minimum of wasted time and space. Warner personally supervised the selection of story material, the assignment and supervision of producers and directors, and the discovery and assignment of acting talent.
As studio production chief, Jack L. Warner contributed significantly to the production of many film masterpieces and helped define the studio system for the production of films that were directly related to their creation. His dominating personality and tight control also helped to set in motion the reaction against the studio system and the wrestling away of ultimate control over films to individual directors and actors, which has had both positive and negative impacts on the industry. In today’s Hollywood it is difficult to imagine the power of a studio executive like Jack Warner, who was one of the last of his breed of visionary businessmen who help create the influential mass entertainment industry.
In the late 1940s Warner Brothers became the first of the Hollywood studios to go into television production. In 1956, the Warners relinquished financial control of their company, though Jack Warner remained as president and largest single shareholder. Many critics saw this move as an underhanded attempt to oust his brother as company president. In 1966 when Warner finally sold his interest in the studio, he received $25 million after taxes. Warner lived the life of the stereotypical Hollywood movie mogul in great splendor in his Hollywood mansion. Difficult to work with and often rude, Warner had a reputation for arbitrary firings and feuds with his brothers and son. Like other movie titans such as Louis B. Mayer and Darryl F. Zanuck, Jack L. Warner defined the role of the movie executive during the studio era when individual personalities could dominate every aspect of the making and marketing of movies and their stars.
Jack L. Warner has contributed in significant ways to both Hollywood legend and its unprecedented success as our culture’s dominant artistic medium. Driven, aggressive, and often crude in his dealing with others, Warner fit the mold of the difficult and temperamental movie executive.
Sources of Information Contact at: Warner Brothers Pictures, Inc. 75 Rockefeller Center Plz. New York, NY 10019 Business Phone: (212) 484-8000 URL: http://www.timewarner.com
Bibliography Behlmer, Rudy.Inside Warner Bros. (1935-1951). New York: Viking, 1985.
Social and Economic Impact As the cofounder of Warner Brothers Pictures Jack Warner helped shape the direction of American entertainment through the infancy of the film industry and into its Golden Age, creating some of America’s most important and significant cultural exports. Images of our society have been so dramatically affected by film portrayals that it is difficult to imagine areas of modern life untouched by film’s influence. By exploiting the techni-
8 3 6
B u s i n e s s
Spellng, Cass Warner. Hollywood Be Thy Name: The Warner Brothers Story. Rollin, California: Prima, 1994. Thomas, Bob .Clown Prince of Hollywood: The Antic Life and Times of Jack L. Warner. New York: McGraw-Hill, 1990. Warner, Jack L. My First Hundred Years in Hollywood. New York: Random House, 1965. New Yorker, 23 February 1998. Video Age International, May 1994.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Sam Warner Overview Samuel Louis Warner founded one of the largest motion picture and entertainment companies in the United States and had a major influence on the course of the U.S. entertainment industry. One of his most celebrated innovations was his 1927 release of the first movie with sound, The Jazz Singer, in spite of skepticism from his peers. Though he died the same year at age 40, Warner’s business lives on as part of the present-day media conglomerate Time Warner Inc.
(1887-1927) Warner Brothers Pictures, Inc.
Personal Life Samuel Louis Warner was born August 10, 1887, in Baltimore, Maryland. However, he grew up and attended public schools in Ohio. His parents, Benjamin and Pearl, were hard-working Jewish immigrants from Krasnashiltz, Poland, an area then controlled by czarist Russia. The family name “Warner” is believed to be an anglicization of “Varna.” Warner’s two older brothers were born in Poland before the family emigrated in the mid1880s. The elder Warners expected Samuel and his brothers, Harry, Albert, and Jack, and his sister, Rose, to work hard to help support the family, which eventually settled in Ohio. In 1903, Warner began his first job at a Sandusky, Ohio, amusement park. Warner grew fascinated with the park’s movie theater. It was there he saw his first movie, The Great Train Robbery. Warner was hooked and 20 years later, in 1923, he and his brothers established their own movie company—Warner Brothers Pictures, Incor-
8 3 7
S a m
W a r n e r
their film rental rates and delivered damaged or incorrect film prints. Warner and his brothers did, however, continue to distribute films until 1912, when they sold their business to the General Film Company to become motion picture producers. After moving to New York City in 1912, Warner and his brothers began showing what they called “Warner Features” at the Vitagraph studios. During this period, Sam, the second youngest, assumed a leading role in the fledgling business. He was credited with making the family business a more serious contender in the emerging entertainment industry. In 1917, the brothers had their first million-dollar grossing hit movie, My Four Years in Germany , which was based on James W. Gerard’s book about World War I. This film established the Warner brothers as filmmakers who made important pictures about current events. That year, Warner and his brothers moved their production business to California and in 1923 renamed it to Warner Brothers Pictures, Incorporated.
Sam Warner.
(UPI/Corbis-Bettmann.)
porated. In 1925, Warner married Lina Basquette and they had one child, a daughter, Lita.
Career Details Warner’s first experience with movies, other than being an enthusiastic fan, was being a traveling movie exhibitor. Warner pawned a gold watch—a special birthday gift from his father—to buy a film projector. With his brother Albert, Warner toured Ohio’s small towns to show just one movie—The Great Train Robbery. Warner and his brother, with what could be called their movie theater on wheels, traveled for a long six months before finally opening their own permanent movie theater—the Cascade Motion Picture Theatre—in Newcastle, Pennsylvania. Soon all of Warner’s siblings joined the motion picture business. Warner ran the projector, Harry and Albert organized the advertising, Jack sang before the movie to warm up the audience, and danced after the movie to give the rest of the family a chance to rewind the film, and Rose ran the ticket window and accompanied Jack on piano. In 1904, after selling the theater for $40,000, all four brothers established the Duquesne Amusement and Supply Company. This new company, located in Pittsburgh, distributed and exchanged motion pictures—much like how video stores today rent out copies of films on tape. Over the next six years, the Warner brothers struggled with their new business because film producers raised
8 3 8
B u s i n e s s
However, over the next two years, Warner Brothers Pictures faced two challenges. First, they were still selling their films through independent distributors. These independent distributors never advanced enough money to Warner to make his films. This meant that the firm was strapped for cash when making its movies. Second, the 1920s grand movie palaces—like the single, oneshow movie theaters of the 1970s—were losing their popularity, forcing many to close. Yet, in 1925, Warner and his brothers were saved from bankruptcy when investor Waddill Catchings, who believed in movies and in the Warners, helped them raise $500,000. With this money, Warner, who had a growing curiousity in the idea of making films with sound, pushed his brothers to buy the rights to Western Electric’s vitagraph, an invention Warner believed could add sound to movies. Others in the industry didn’t think it would work. In 1927, Warner formed, in partnership with Warner Brothers Pictures, the Vitaphone Corporation. This early technology employed a separate sound disc that needed to be synchronized with the film. Later enhancements would place a sound track directly on film. The brothers released a few minor films and demonstrations with the new Vitaphone technology before the historic release of The Jazz Singer, which would become the first commercially significant movie with sound. They hoped to not only transform the end product of the movie studio by adding sound, but also to capture a lucrative monopoly on the technology needed to produce movies with sound. In the latter effort they failed, as the sound-disc technology was cumbersome and less appealing than later innovations. Nonetheless, The Jazz Singer proved to be a huge success and launched Warner Bros. toward industry dominance. However, Sam Warner didn’t live to see the success of his company’s greatest early achievement—a
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S a m
W a r n e r
“talkie” or sound movie—in its first public showing. He died suddenly from cerebral hemmorrhage in the fall of 1927 at the age of 40. His untimely death occurred just one day before the commercial debut of The Jazz Singer.
Chronology:
Social and Economic Impact
Sam Warner
Although Sam Warner’s early death meant he never saw the extent of his company’s achievements, he set the innovative course the company followed to reach national prominence. His own work is best remembered for pioneering films with sound, but the company he left behind was perhaps a more significant accomplishment. Warner Bros. grew quickly to become first a top motion picture production house, releasing 100 films a year by 1930, and movie theater operator. Later, it became an important media conglomerate with a successful audio recording unit, a major television studio and network, and multimedia publishing concerns. After his death, Sam’s brothers guided the business until the 1960s, when it was sold. It subsequently changed hands a few times, and in 1990 the successor company, Warner Communications Inc., merged with Time Inc. to form Time Warner Inc., the world’s largest entertainment company.
Sources of Information
1887: Born. 1903: Opened Cascade Motion Picture theater. 1904: Founded Duquesne Amusement & Supply Co. 1910: Produced first movie Perils of the Plains. 1917: Released My Four Years in Germany and made $1 million. 1923: Founded Warner Brothers Pictures, Inc. with his siblings. 1925: Married Lina Basquette. 1927: Purchased Vitagraph rights for “talking” picture. 1927: Released The Jazz Singer. 1927: Died at the age of 40.
Sadoul, Georges. Dictionary of Film Makers. Los Angeles: University of California Press, 1972.
Bibliography Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood Press, 1983.
Sperling, Cass Warner, and Cork Millner. Hollywood Be Thy Name: The Warner Brothers Story. Rocklin, CA: Prima Publishing, 1994.
The National Cyclopaedia of American Biography. New York: James T. White & Co., 1931.
“Warner Brothers.” Biography. Available from http://www.biography.com.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
8 3 9
Thomas J. Watson (1874-1956) International Business Machines Corporation, (IBM)
Overview American business executive Thomas J. Watson assumed management of the International Business Machines Corporation (IBM) in 1924 and built it into one of the world’s largest and most respected corporations. As a manufacturer of business machines and computers, IBM under Watson’s innovative and inspired supervision led a revolution in the business world that heralded the information age. By the end of 1955, Watson’s last full year as IBM’s chief executive officer, he had guided his company from debt to having total assets of $630 million and from fewer than 4,000 employees to 41,000. IBM was poised to dominate the emerging computer market, and by the 1960s and 1970s it controlled 80 percent of the U.S. market. Due to Watson’s effective leadership, IBM had become a model for corporate planning, research, and customer and employee loyalty.
Personal Life Thomas John Watson was born February 17, 1874, in Campbell, New York. He was descended from a Scottish-Irish family who had moved to upstate New York in the 1840s. Watson’s father, Thomas, was a lumber dealer. Young Tom Watson was educated at Addison (New York) Academy. His father urged him to study law when he graduated and offered to pay his college expenses, but Watson was anxious to pay his own way and to begin his business career. Watson took a yearlong course at the Elmira (New York) School of Commerce and, at the age of 17, found a job as a bookkeeper in Clarence Risley’s market in Painted Post, New York.
8 4 0
T h o m a s
J .
W a t s o n
Soon bored, he took a job as a peddler selling organs and sewing machines. From such a modest start, Watson would eventually emerge as one of America’s greatest and most influential business executives. He married Jeanette Mary Kittridge of Dayton, Ohio in 1913, and they had two sons and two daughters. Two of their sons, Thomas J. Watson, Jr. and Arthur K. Watson, followed their father to work at IBM. Thomas J. Watson, Jr. became president of the company in 1952 and was chairman from 1961 to 1971. A Presbyterian and a Democrat, Watson was a strong supporter of Franklin Roosevelt and Harry Truman. Dignified and conservative in his dress and manner, Watson neither smoked nor drank, nor did he take vacations, working 16-hour days and spending most of his evenings at the functions of his many employees’ clubs. Watson’s personality and manner defined the IBM corporate identity that extended to its severely conservative dress code and the ever-present stimulating signs that graced IBM offices such as “Aim High and Think in Big Figures,” “Serve and Sell,” and IBM’s trademark, a Watson creation: “Think.” Although Watson has been called “Salesman Number 1,” his manner was the opposite of the typical salesman. While talking to Watson, who was bashful and soft spoken, most people forgot their sales resistance and succumbed to his quiet charm and integrity. Watson’s principal interest outside of business was as a patron of the arts. He began acquiring paintings when he was only 24, and was an outspoken advocate of the mutual benefit in joining the world of art with business. At the 1939 New York World’s Fair he exhibited paintings by artists from 75 countries and a collection by American artists that IBM had acquired. For many years he served as a trustee at Columbia University and as the president of the International Chamber of Commerce. An adviser to several U.S. presidents, Watson, who never graduated from college, was the recipient of 32 honorary degrees. For offering IBM’s considerable research and production capacity for the war effort during World War II, Watson was given the U.S. Medal of Merit. He also received numerous decorations from several foreign countries, including the Merit Cross of the German Eagle, which Watson returned to Hitler in 1940, stating that the policies of the Nazis were contrary to the causes for which he worked.
Thomas J. Watson.
(The Library of Congress.)
later would use at IBM. Despite his early lack of success, he received encouragement from his superiors, and, within two years, Watson had become the top salesman in the Buffalo office. He moved steadily up the company ladder to become general sales manager and was given a position in NCR’s Dayton home office in 1903. Watson’s aggressive assault on NCR’s competition, the creation of a company to undercut competitor’s prices on second-hand cash registers, was illegal, although it is unclear whether Watson was aware of this. Watson, along with NCR’s president and 28 others, was indicted and convicted for the scheme. An appeals court later ordered a new trial, but it was never held. In 1913, in a dispute over an antitrust legal issue, Watson was fired from NCR, though he was presented with a $50,000 parting gift.
In 1895 Watson joined the fast-growing National Cash Register (NCR) Company as a salesman. At first the company manager was uninterested in hiring him, but Watson persisted, making numerous trips to the company’s Buffalo office. After several months he was finally offered a position. The United States was in the midst of a depression, and Watson sometimes went many weeks without a single sale. He sustained himself by quoting the tried-and-true slogans and homilies that he
Watson was selected to head the Computing-Tabulating-Recording Company of Elmira, New York, a small holding company that controlled four small firms that produced punch-card tabulators, time clocks, and other business machines. As company president, Watson acted to secure loans to finance expansion. The move helped the company’s gross sales increase from $2 million in 1914 to more than $33 million by 1949. Personnel increased from 235 to 12,000 during the same period. Watson was committed to research and development, and much of the borrowed funds went into engineering laboratories that produced new machines such as the key punch, card sorters, tabulators, and eventually the computer. In 1924 the firm merged with International Business Machines Corporation and took its name. The business he had taken
B u s i n e s s
S t u d e n t s
Career Details
L e a d e r
P r o f i l e s
f o r
8 4 1
T h o m a s
J .
W a t s o n
Chronology: Thomas J. Watson 1874: Born. 1891: Began business career as bookkeeper and peddler. 1898: Joined the National Cash Register Company as a salesman. 1914: Became president of the Computer-TabulatingRecording Company. 1924: International Business Machines Corporation established with Watson as president. 1946: IBM released its first electronic calculator. 1949: Became chairman and chief executive of IBM. 1952: IBM rolled out its first large-scale electronic data processing system. 1953: IBM introduced its first commercial computers. 1952: Thomas J. Watson, Jr. became president of IBM. 1956: Died.
over had by then more than doubled in terms of plant size, number of employees, and volumes of sales. As the head of IBM, Watson helped those figures double yet again about every five years during his reign. In the 1930s, a new engineering laboratory was built in Endicott, New York, and IBM entered the electrical typewriter business with the purchase of Electromatic Typewriters, Inc. of Rochester, New York. As the holder of more than 1,400 patents as of 1941, IBM held a virtual monopoly in the field of business machines. IBM would maintain its dominance through the inspired leadership of Watson. Having been a salesman, Watson devoted considerable effort in training his sales force, insisting that IBM salesmen should know how to install, operate, and repair all the equipment that they sold. Working out the three basic steps in the selling technique: the approach, the demonstration, and the closing, Watson insisted that his salesmen stress that IBM sold not machines but service. Extremely concerned about IBM’s corporate image, Watson was rigid in his hiring and personnel practices. Before World War II, employees at IBM were exclusively male and white Anglo-Saxon Protestants. Jews, Catholics, blacks, and women were unac-
8 4 2
B u s i n e s s
ceptable. All employees were expected to have a copy of Men, Minutes and Money, a collection of Watson’s speeches and essays. Employees were expected to be freshly shaved, wearing daily shined shoes, and to follow their chairman’s dress style—dark suits, quiet ties, and white shirts—whether in the main New York office or in the Endicott factory. The IBM image virtually defined the corporate concept of the “organization man.” Yet the benefits of conforming to IBM’s image were many. Forbes declared in a 1948 article that Watson had created “the nearest to ideal working conditions.” Watson paid higher rates than his competition did. There were few firings, and benefits included health and life insurance, an rarity at the time. The company also maintained at Endicott a country club for all employees. IBM workers were made to feel that they were members of a special group who were encouraged in their innovations and originality and were expected to carry a THINK notebook to record their inspirations. The benefits of Watson’s emphasis on understanding the market and encouraging innovation are best demonstrated in IBM’s entry into the electronics field. After World War II, IBM held off producing electronic computers, continuing to produce only its electromechanical machines in the early 1950s. Sperry Rand’s development of UNIVAC in 1948, the first electronic computer, however, prompted IBM to accelerate its own electronic development. Though IBM had brought out its first electronic calculator in 1946, it was not until 1952 that IBM produced its first large-scale electronic data processing system. By 1956, the year of Thomas J. Watson’s death, IBM had leaped far ahead of its competitors due to its superior software packages and worldwide marketing operation. IBM won the battle for dominance in the early years of the electronic revolution because of its considerable commitment to research and because its sales force knew what businesses needed for information processing and accounting. IBM therefore designed its machines to fit the needs of its customers, a successful strategy that Watson had spent his lifetime promoting. By 1955, Watson’s last full year as IBM’s chief executive, the company’s total assets were $630 million with a domestic work force of 41,000, with branch offices in 189 cities, and plants in six cities. The IBM World Trade Corporation had 19,000 employees, 11 plants, and 208 branch offices in 82 countries. Watson had seen his struggling company grow into a world giant that would continue to dominate the business machine market and the rapidly developing computer industry under the direction of his son.
Social and Economic Impact During his tenure as head of IBM, Watson created one of the world’s largest and most influential corporations. Dominating its markets, IBM supplied the business machines upon which American business depended by
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
T h o m a s
creating new products to meet customers’ needs. Through the development of data processing equipment and a successful computer line, IBM changed the very nature of modern business itself. Through his years at IBM’s helm, Watson managed to make IBM the gold standard for product reliability and innovation. He also forged the dominating principles of the corporate culture with its emphasis on company loyalty and team spirit, accomplishing the difficult task of simultaneously encouraging employee uniformity and innovation and individuality. It may well be that Watson, described in a Saturday Evening Post article as a striking example of “one-man rule in business,” was one of the last of the breed of dominating personalities whose identity became inseparable from that of his company. The machines and devices that IBM pioneered changed modern culture in essential ways. From the calculator to the computer, IBM has been in the forefront of the information and electronic explosion in the second half of the twentieth century, a future that Thomas J. Watson anticipated and helped to create.
J .
W a t s o n
Bibliography Belden, Thomas Graham, and Marva Robins. The Lengthening Shadow: The Life of Thomas J. Watson. Boston: Little, Brown, 1962. Engelbourg, Saul. International Business Machines: A Business History. New York: Armo Press, 1976. Foy, Nancy. The Sun Never Sets on IBM. New York: Morrow, 1975. Malik, Rex. And Tomorrow . . . the World?: Inside IBM. London: Millington, 1975. Rodgers, William. Think: A Biography of the Watsons and IBM. New York: Stein and Day, 1969. “Salesman No. 1.” Forbes, 15 May 1948. Saturday Evening Post, 24 May 1941. Simmons, W.W. Inside IBM: The Watson Years: A Personal Memoir. Bryn Mawr, PA: Dorrance, 1988. Watson, Thomas J., Jr. A Business and Its Beliefs: The Ideas that Helped Build IBM. New York: McGraw-Hill, 1963. Watson, Thomas J., Jr. Father, Son & Co.: My Life at IBM and Beyond. New York: Bantam, 1990.
Sources of Information Contact at: International Business Machines Corporation, (IBM) One Old Orchard Rd. Armonk, NY 10504 Business Phone: (904)765-1900 URL: http://www.ibm.com
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
8 4 3
Jack Welch (1935-) General Electric Company
Overview A 1996 survey conducted by Financial Executive revealed that the CEO most admired by chief financial officers of major corporations was Jack Welch of General Electric (GE). That is a remarkable turnaround for a man who, during corporate cutbacks, earned the nickname “Neutron Jack” for eliminating 100,000 jobs at GE and radically reorganizing the blue-chip company. But his keen leadership has earned him admiration and respect among his peers as the man they would most want to work for. He has maintained consistent earnings, solid financial performance, and strong commitment to shareholder value. This is a testimony to his unique strengths in guiding GE, one of the world’s largest corporations, toward the twenty-first century.
Personal Life John Francis Welch, Jr. was born November 19, 1935, in Peabody, Massachusetts. He grew up in the small city of Salem, Massachusetts, in a solidly working class Roman Catholic neighborhood. His father, John Sr., was a conductor for the Boston & Maine Railroad who was away from home a great deal. Welch has credited his mother, Grace, with playing the most important role in his life. As he has said in an interview in Fortune, “Don’t get me started on my mother; she’s my whole game.” She cheered her son on in sports and fostered his self-confidence, helping him to overcome a serious stammer that she insisted was not a speech impediment but the result of Welch’s hyperactive brain that was working faster than his mouth.
8 4 4
J a c k
W e l c h
An only child, Welch’s extended family was his neighborhood: “Kids that didn’t have anything,” Welch remembered. “You were lucky if you had food on the table.” The center of Welch’s youth was a makeshift park created from an excavated gravel pit. In the “pit” Welch played basketball, baseball, and hockey in tough competitions. As Welch recalls, “We were jocks of sorts. I mean, we played ball countless hours, played street hockey all night. That was everything. Sports were everything.” It was there that Welch learned how to compete, to hate losing, and to negotiate for playing space among the bigger kids. A friend of Welch’s at the time explained that the lessons learned helped ensure later success: “‘Hey, we can do anything. Nothing can be as tough as going to the Pit.’” Welch attended Salem High School, excelling at sports. His class voted him the “most talkative and noisiest boy.” In his school’s literary magazine Welch recorded his “repressed desire: to make a million.” Failing to win a Navy ROTC scholarship, which would have paid for a private college, Welch instead attended the University of Massachusetts. His mother wanted him to become a doctor or a priest. He wanted to be a great hockey player, but he was not fast enough, and instead took up engineering because, as he recalls, “we only had one person in our whole family that was at all educated beyond high school. He was called an engineer, and he worked at a power plant. So I went to engineering school.” Although he was able to graduate with honors, Welch remembers his college years as a time more devoted to parties and having a good time than for studying. He went on to get his Ph.D. in chemical engineering at the University of Illinois in 1960. Out of three job offers, Welch chose General Electric’s engineered materials plant at Pittsfield, Massachusetts. As Welch remembers, “it was like going home in a way. That may sound ridiculous, but in those days that was kind of important.” Welch steadily climbed the GE corporate ladder to become in 1981, at age 46, the youngest chairman and CEO in the company’s history.
Jack Welch.
(Reuters/Peter Morgan/Archive Photos.)
held since 1981, but repeatedly stating intentions to remain until the year 2000.
Career Details
Welch married Carolyn Osburn in 1959, whom he divorced in 1987. He married Jane Beasley in 1989. He has four children, Katherine, John, Anne, and Mark. An avid sportsman, Welch is a devoted golfer and the lessons he has learned in sports competition have transferred to his business approach, which thrives on challenges and a commitment “to fight like hell before I lose.” A demanding and relentless supervisor, Welch has succeeded in creating an extremely competitive structure at GE in pursuit of what he has described in an interview for Fortune as the “boundaryless” workplace in which the traditional lines separating workers and departments are blurred in order to expedite the delivery of services and products. Welch’s relentless pace was slowed in 1995 when he was diagnosed with heart disease and underwent successful triple bypass surgery. Yet Welch seems reluctant to step down as head of GE, a position he has
When Welch came to work for GE, he was about as far from the center of power in the giant company as he could be. He worked in the chemical development area of the organization, charged with developing new chemical businesses. Welch also contradicted the image of the corporate team player. As one of his colleagues recalled, Welch was “the least typical GE guy. Definitely a maverick in his style.” Yet Welch’s skills as a scientist were quickly complemented by a business insight that enabled him to understand not just a product’s design, but the sales techniques and production steps required for that product to find a market niche. The small-scale and independence of his early experience with GE suited his style, ability, and helped to determine his future idea of the giant GE empire. As he revealed in an Industry Week interview, “My only business experience came from being an entrepreneur in a small business outside the mainstream of GE: a family grocery store, if you will—the plastics business. My technician and I were partners [working] on the same thing. We had two people, then four people, then eight people, then 12 people, and now we’re a $5 billion business! But it started that way. So that’s my vision of how people should communicate. Everyone’s involved.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
8 4 5
J a c k
W e l c h
Chronology: Jack Welch 1935: Born. 1957: Received engineering degree from the University of Massachusetts. 1960: Received his Ph.D. from the University of Illinois. 1960: Began career with General Electric. 1968: Promoted as general manager of GE’s worldwide plastics division. 1973: Assigned vice president and chief executive of GE’s components and materials group. 1977: Made senior vice president, consumer goods and services division. 1979: Promoted GE vice chairman and executive officer. 1981: Named GE’s youngest chairman and chief executive officer. 1986: GE acquired RCA and the National Broadcasting Company.
Everyone knows. Everyone’s got a piece of the action. The organization’s flat. All these things are from when I was 26 years old.” Within three years of Welch’s appointment as general manager of GE’s worldwide plastics division in 1968, he had turned the fledgling division into a $400 million-a-year business. Promotions followed rapidly. He was named vice president in 1972 and in 1977 was appointed to head GE’s consumers goods and services division. He became a vice chairman in 1979 and was appointed to replace Reginald Jones as GE’s chairman in 1981, becoming the youngest CEO in GE’s history. Welch found himself managing, instead of a “family grocery store,” an industrial giant of diverse businesses that made everything from light bulbs to nuclear weapons. In the 1970s, GE had led American business in hiring huge staffs of strategic planners and, although GE enjoyed sales of $25 billion and profits which Welch helped triple in eight years, he feared that the company’s size and bureaucracy would cost GE flexibility in the modern marketplace. Welch embarked on a radical restructuring, dividing GE into winning divisions that were number one or two in their markets and losing divisions, mostly the company’s older, slower-growing
8 4 6
B u s i n e s s
manufacturing concerns, and began to sell them off. Welch closed 73 plants and facilities, sold 232 businesses and product lines, and laid off more than 132,000 workers, more than a quarter of GE’s labor force. Although GE pioneered generous severance packages and retraining for fired workers, Welch was nicknamed “Neutron Jack,” an allusion to the nuclear weapon that killed people rather than buildings. Welch has continued to defend the move as essential in establishing GE’s productivity and flexibility in the rapid-changing future marketplace. By cutting bureaucratic layers and achieving a flatter organization, Welch has shown how even a corporate giant like GE could imitate the aggressive innovation of Welch’s early experience of turning the company into what has been labeled in a Industry Week article a “$60 billion family grocery business.” To reach that goal, Welch cut the work force and reorganized GE’s divisions in such a way that management was encouraging rather than inhibiting product development. Success took some time. By 1984 sales were still only about $28 billion and annual growth rate in labor productivity a meager 1.9 percent. However, by the end of Welch’s first decade at the helm GE recorded sales of $58.4 billion and an annual growth rate of over 8 percent, a third better than inflation. Welch did not just cut GE’s assets but bought $25 billion worth of new companies, including RCA, the New York investment bank Kidder Peabody, and Hungary’s Tungsram lighting company. The 1986 $6.4 billion acquisition of RCA, which included its National Broadcasting Company (NBC), at that time was considered the largest merger in business history outside of the oil industry. The acquisition also broadened GE’s base within the services and technology industries, the two growth areas that Welch anticipated would dominate the future business landscape. Welch had proven that he could not only trim his company down but boost its sales dramatically as well. Welch’s success has allowed him to be routinely listed among America’s preeminent business gurus. It has been estimated that during his tenure as the head of GE Welch has added $52 billion in market value to his company. In the late 1990s, GE was the world’s most valuable company in terms of stock market capitalization. As a research analyst reported to Kiplinger’s Personal Finance Magazine, “The companies that have the technological skills and the manufacturing expertise are the ones that are going to come out ahead. That is probably the most impressive are of GE—its ability to constantly drive down the cost structure and improve productivity. And for that, Welch is the key.”
Social and Economic Impact Welch has succeeded in radically transforming his giant and venerable corporation, founded by Thomas A. Edison, allowing it to continue its technological innova-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
J a c k
tions that have invented and manufactured products that we use in almost every aspect of modern life. For example, almost all of the plastic in personal computers is manufactured by GE’s plastics division. Like IBM, GE has been synonymous with affecting the course of modern electrical and electronic innovations. As a self-styled corporate outsider and maverick, Welch has shown how modern business can be recreated in a leaner, more flexible structure to encourage productivity and change. As one of the world’s largest corporations, GE plays a major role in the U.S. and the world’s economy. As GE showed through the 1980s, modern corporate retooling can be painful. In GE’s case more than 130,000 jobs were cut. But Welch had the courage to go through with painful, short-term cuts for long-term productivity and growth that could add even more jobs and a higher standard of living. GE was recast in Welch’s image of a leaner and more flexible giant that could respond quickly to changes in the marketplace. The lessons learned at GE have proven to be key for all other modern businesses. As Welch explained in an Industry Week interview, “The hero is the one with the ideas. So my job is to find great ideas, exaggerate them, and spread them like hell around the business with the speed of light.” Welch has made sure that the heroes with those new ideas, whether for new products or increased productivity, can emerge and his company can act on their inspiration. Welch has shown how a modern corporate giant like GE can still achieve an informality and sense that everyone is involved in the common goal, an atmosphere that more and more will be needed as large multinational corporations enter the twentyfirst century. As Welch has taught American business, “A
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
W e l c h
successful leader can shock an organization and lead its recovery. An unsuccessful leader will shock an organization and paralyze it. So organizations constantly need to be regenerated. There’s a constant flow of ideas, excitement, and energy that has to be put into an organization. And it has to keep getting better. The bar has to keep going up.”
Sources of Information Contact at: General Electric Company 3135 Easton Tpke. Fairfield, CT 06431 Business Phone: (203)373-2211 URL: http://www.ge.com
Bibliography Day, Charles R., and Polly LaBarre. “GE: Just Your Averaged Everyday $60 billion Family Grocery Store. Industry Week, 2 May 1994. Financial Executive, May-June 1996. LaBarre, Polly. “The Light’s Still On At This ‘Family Grocer.’” Industry Week, 20 November 1995. Loeb, Marshall. “Jack Welch Lets Fly On Budgets, Bonuses, and Buddy Boards.” Fortune, 29 May 1995. Michaels, James W. “Jack The Elephant Tamer.” Forbes, 10 October 1994. Morris, Betsy. “The Wealth Builders.” Fortune, 11 December 1995. Newsmakers. Detroit: Gale Research, 1993.
S t u d e n t s
8 4 7
Helmut Werner (1936-) Metallgesellschaft AG
Overview Named by Business Week in 1996 as one of the 25 most successful managers, Helmut Werner helped revise the German luxury car company and prepared the way for the blockbuster merger between Mercedes’ parent company, Daimler Benz AG, Germany’s biggest industrial company, and Chrysler Corp in May 1998. The new DaimlerChrysler company, with sales of $130 billion and 421,000 employees will become one of the largest automakers in the world. Werner, as Chairman of Mercedes-Benz from 1993 to 1997 did not survive a power struggle with Jurgen Schrempp, Daimler Benz’s chairman, and eventually resigned from the company. He is still an important player in Mercedes’s revitalization and one of the industry’s top executives.
Personal Life Helmut Werner was born in Cologne, Germany, on September 2, 1936. He graduated from the Abiture Beethoven-gymnasium in 1956 and earned a business degree from the University of Cologne in 1961. He is married to Erika Werner, and the couple have two children, Jens and Britta. An avid skier, Werner annually celebrates the Christmas holidays with his family on the ski slopes. He has called his former position as chairman of Mercedes-Benz “the best job in the world.” He currently sits on the board of directors of the JP Morgan Germany Advisory Council.
8 4 8
H e l m u t
W e r n e r
Career Details Prior to his arrival at Mercedes-Benz, Werner began his career with Englebert & Co. in 1961; he became the company’s sales manager in 1969. In 1970, Werner became the general product manager of Uniroyal Europe in Liege, Belgium, becoming the company’s managing director in 1978. He was a member of the executive board of Continental Gummi-Werke AG of Hannover, Germany, in 1979, and served as the company’s chairman from 1982 to 1987. Werner joined the executive board of Daimler Benz in 1987, and was named CEO and chairman of Mercedes-Benz AG in 1993. When Werner took over the reigns of Mercedes, he succeeded Werner Neifer, who had died after 50 years of service to the automobile industry. Neifer was a legendary figure in the European automobile industry, with a reputation as a conscientious leader who listened to workers’s complaints and solved them. He was also instrumental in the production of the successful 190 Mercedes series and its S class. However, when Werner succeeded Neifer, the venerable company was struggling. It was losing sales to its arch rival BMW and to Japanese luxury brands such as Lexus. Critics charged that Mercedes was out of touch with its customers and was overly burdened by the highest costs in the automobile industry. Losses in 1993 totaled almost $713 million. Identifying key priorities of product efficiency and globalization, Werner acted decisively to reduce spending, built factories outside of Germany, and introduced a new product line, including the Smart minicar, a joint venture with the Swiss firm SMH Swatch, the M-class, a $35,000 sports utility line, and the A-class, a $20,000 subcompact. Werner’s changes resulted in increased sales and profits. In 1995, Mercedes achieved a net profit of $1.5 billion, and the Mercedes division accounted for more than 70 percent of Daimler-Benz’s group sales and nearly all of its net profits. Werner had succeeded in turning Mercedes from a money-losing manufacturer of overpriced cars to a more flexible company offering sleek, desirable, more affordable models. Werner slashed costs and aggressively pushed into new markets, such as small cars and sport-utility vehicles, that extended Mercedes’ portion of the world automobile market.
Helmut Werner.
(AP Photo/Dave Martin.)
remain autonomous. In 1996, Schrempp decided to force the issue, convincing his board to support his reorganization plans. Werner, supposedly, turned down the job of vice-chairman of Daimler, and Schrempp was ordered by his supervisory board to come up with a plan that Werner would support. A final attempt to reach a compromise failed, and Werner resigned his position in January 1997. In a statement he is quoted as saying that he saw “no ability to contribute his industrial experience within the framework of the concern’s new structure.” Shortly before Werner left Mercedes-Benz he was names as one of the 25 top managers in the world by Business Week. After leaving Mercedes-Benz, Werner served as the Chairman of the Supervisory Board of the Expo 2000 and as a member of the supervisory boards of Alcatel Alsthom, IBM Deutschland GmbH, Gerling-Konzern Versicherungs-Beteilgungs AG, and BASF AG. In 1997, he was named a principal in Penske Capital Partners, L.L.C., a company formed to acquire businesses in the transportation industry. In 1998, he became the chairman of Metallgesellschaft, an industrial and trading group.
Werner lost a bid to succeed Edzard Reuter as CEO of Daimler Benz in 1995 to Jurgen Schrempp, which initiated a power struggle between Mercedes Benz and its parent company that wanted more control. Daimler had suffered from over-diversification into such areas as home appliances, financial services, satellites, and most of Germany’s defense and aviation industries. Schrempp moved quickly to replace the company’s unwieldy management structure. He wanted to eliminate the holding company established by Reuter to build a diversified technology company and bring Mercedes, which Werner ran independently, back into Daimler and Schrempp’s direct control. Werner argued against the move, stressing that Mercedes was at a critical point in its turnaround and should
Werner was one of a number of leading business executives during the 1990s who helped revitalize their businesses by savvy management skills, cost cutting, and an informed sense of the market. Through Werner’s
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Social and Economic Impact
8 4 9
H e l m u t
W e r n e r
Chronology: Helmut Werner 1936: Born. 1956: Graduated from the University of Cologne, Germany. 1961: Joined Engelbert & Co. 1969: Promoted to sales manager. 1970: Hired as general product manager for Uniroyal Europe.
All have profited from the cache of the MercedesBenz brand name and its reputation for quality and performance. Werner oversaw the creation of a Mercedes factory in Alabama, a recognition of the importance of the American market. A dominant automaker in Europe, Mercedes-Benz has entered the U.S. market aggressively under Werner’s leadership, a move that should accelerate with the Chrysler acquisition. In addition to his role in Germany’s corporate world, Werner has served as an advisor on various committees for the European Economic Union. One of his most important roles has been his very public endorsement of the Euro, the single European currency. Convinced that forging a sole currency is crucial to Europe’s competitiveness in world markets, Werner has claimed that the European Union is doing a poor job in convincing citizens and businesses of its necessity to economic prosperity. “if we launched a product like that,” the former Mercedes-Benz executive has remarked, “it would flop.”
1978: Promoted to managing director. 1979: Named to the executive board of Continental Gummi-Werke AG. 1987: Named board member of Daimler Benz AG, responsible for Mercedes-Benz. 1993: Took over as CEO of Mercedes. 1997: Resigned. 1998: Named chairman of Metallgesellschaft.
Sources of Information Contact at: Metallgesellschaft AG 73-77 Bockenheimer Landstrasse Frankfurt Am Main, 60271 Germany Business Phone: (069)71199-0
Bibliography “Daimler Reverts” Economist, 25 January 1997. Financial Times London, 20 January 1994.
leadership Mercedes-Benz has grown to become one of the auto industry’s strongest companies and made possible the blockbuster merger that joined Daimler Benz, its parent company, with Chrysler in one of the largest business deals in history. Werner transformed the image of Mercedes-Benz from a luxury car maker for an affluent few to a wider market by introducing new products, including minicars, sports-utility vehicles, and less costly brands.
8 5 0
B u s i n e s s
Kurylko, Diana T. “Mercedes-Benz chief stresses new markets, new product lines.”Automotive News, 27 November 1995. Kurylko, Diana T. “Werner Neiher, ‘Mr. Mercedes,’ Dies of Cancer.” Automotive News, 20 September 1993. Templeman, John “Mercedes Can’t Shift Into Cruise Control Yet.” Business Week, 17 April 1995. U.S. News & World Report, 18 May 1998. Woodruff, David. “Dustup at Daimler.” Business Week, 3 February 1997.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Leslie Wexner Overview Leslie Wexner opened The Limited, a chain of women’s apparel stores, in 1963. Since then, his chain has been described by Forbes magazine as “the fastest growing, most profitable specialty retailer in the country,” and Wexner was described as “the greatest merchandising talent in America.” Wexner presently oversees a $9.2 billion business with over 28 million square feet of retail space in more than 5,600 outlets, making The Limited Inc. one of the largest and most dominant companies in specialty retailing. All this began from a single store in Columbus, Ohio, after his father had rejected his son’s suggestion that the family’s clothing store should specialize in women’s sportswear. His father told him, “You’ll never be a merchant.”
(1937-) The Limited Inc.
Personal Life Leslie Wexner was born in Dayton, Ohio, on September 9, 1937, the son of Henry Wexner, who had emigrated from Russia when he was 13 years old. When Leslie was born, his father was working as a manager of a chain of budget clothing stores. Leslie’s mother was employed as a buyer for a department store. Wexner credits his father with teaching him the importance of hard work and attention to details, and his mother with helping him to believe that anything is possible. During his childhood, Wexner’s father often took job transfers, which moved the family from city to city; therefore Wexner was unable to put down roots until 1951 when his parents opened a women’s clothing store in Columbus, Ohio. They named the store “Leslie’s” after their
8 5 1
L e s l i e
W e x n e r
Leslie H. Wexner.
(AP Photo/Timothy E. Black.)
son. As a child Wexner did poorly in school and he was reminded at least twice by his school principal—that he was not working up to his potential. His classmates remember him as someone who rarely socialized. Wexner did not intend to follow his parents into the clothing business. He wanted, instead, to become an architect. After graduating with honors from Ohio State University in 1959, Wexner began law school, but he dropped out after two years and began to work in his parent’s store. Wexner thought his parents should reduce their full line of women’s clothing to specialize in sportswear, the store’s best-selling item. As Wexner recalled, “I thought it would improve the business if we only sold sportswear, because it was the only profitable thing. If you made money in chocolate ice cream, why sell other flavors?” Determined to start his own outlet, Wexner convinced his aunt to loan him $5,000 to open a shop in Columbus in 1963. He named the store The Limited because he limited his merchandise to women’s sportswear. This was the beginning of Wexner’s remarkable career in retailing. According to his colleagues, Wexner is an intense and demanding boss who expects his employees to share his drive. Cheryl Turpin, president of Lane Bryant, said in a 1993 interview with Stores, “He has incredibly high standards and insists on excellence. He perceives no limits to what people can do and doesn’t give up on his standards or vary in his implementation of them. At the same time, though, he is always straightforward and honest, and very supportive.” Wexner told an interviewer for the New York Times Magazine in 1986, “If you want to tor-
8 5 2
B u s i n e s s
ture me, take my work away.” Devoted exclusively to his business and a long-time bachelor, Wexner married Abigail S. Koppel, a New York attorney, in 1993. They have two children and divide their time among residences in New Albany, Ohio; Palm Beach, Florida; Aspen, Colorado; and New York City, New York. A collector of contemporary art, Wexner serves as a trustee to the Whitney Museum of American Art in New York and the Columbus Art Museum in Ohio. One of his hobbies is interior decoration, which he expresses by redecorating the homes of his friends. Wexner is also a committed philanthropist. In an interview with The Washington Post, he explained that a turning point in his life occurred while he was walking down a mountain in Vail, Colorado, following a snowstorm. He became struck by the thought that “what is important is how you feel about yourself now,” and he resolved to use his wealth to make a difference during his lifetime by supporting educational, cultural, and civic programs. He has established at least 11 trusts or foundations to funnel his philanthropy. The Wexner Foundation has donated millions of dollars for such projects as a graduate study program at Harvard University, the Wexner Center for the Visual Arts at Ohio State University, and the Wexner Research Center at Children’s Hospital in Columbus. Wexner personally donated $1 million to the United Way in 1989 and has given at least $25,000 yearly since 1983. Wexner has proven to be as good as his word as one of industry’s most generous philanthropists.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
L e s l i e
W e x n e r
Career Details Wexner was confident that his decision to open his first store specializing in women’s sportswear was a good one. As he recalled in an interview in Stores, “Although I didn’t understand fashion, I understood that (sportswear) was what all my female friends wore.” In the early days after opening the first store, Wexner worked daily from 7:00 a.m. to midnight. He washed the store’s windows himself and did his own bookkeeping. With such effort and a winning formula, the store was a success and in its first year, The Limited’s sales were $160,000. In 1965, Milton Petrie, chairman of the Petrie Stores, a large chain of women’s specialty shops, was so impressed by Wexner’s operation that he offered to buy 49.5 percent of the company and offered Wexner a top job in his company. But Wexner turned him down, wanting to run his own business. Although no deal was struck with Petrie, Wexner credits him with helping him overcome his “shopkeeper’s mentality” and to think like an entrepreneur, in terms of building a multi-store business. Soon his parents closed their store and joined their son in his operation. By 1969, when The Limited went public, Wexner had six stores. Despite Wexner’s former marketing professor’s opposition to the move, Wexner was eager for the capital for his company to grow and to expand beyond Ohio. By 1976 he had 100 stores, and by 1979 there were 300 Limited stores nationwide. At first, Wexner struggled to find a coherent and attractive image for his stores. Wexner learned the importance of attractive store design from Alfred A. Taubman, a real estate developer who specialized in shopping malls. By the 1980s Wexner’s stores were recognized as the industry leader in store presentation. While he expanded The Limited, Wexner began purchasing other chains. In 1982 he bought the 222-store Lane Bryant chain, which grew to 360 stores by 1985. He also bought and expanded a small chain of lingerie stores, Victoria’s Secret. In 1985 he acquired the nearly bankrupt 764-store Lerner chain. He also started a chain of stores for younger buyers, The Limited Express, which grew to 186 stores by the mid-1980s. Other acquisitions included Henri Bendel and Abercrombie & Fitch. Wexner joined with Britain’s Next Plc. to open Bath & Body Works to compete with the Body Shop. The acquisitions and new companies have given Wexner entry to a wide area of the apparel and retail market. Sales in 1983 exceeded $1 billion, rising to $2 billion in 1985, $3 billion in 1986, and $3.5 billion in 1987. Profits were equally staggering, making Wexner an extremely wealthy man. As of 1997, The Limited, Inc. reported net sales of $9.2 billion. A significant factor in Wexner’s success has been his ability to spot trends both in his merchandise and in his company’s organizational structure. By anticipating the needs of his customers, Wexner has been able to keep ahead of his competition. As Howard Gross, president of The Limited Store, explained in an interview for Stores,
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Chronology: Leslie Wexner 1937: Born. 1959: Graduated from Ohio State University. 1961: Began working in his parents’ clothing store. 1963: Opened the first The Limited store in Columbus, Ohio. 1969: Went public with The Limited, Inc. 1976: Opened the 100th The Limited store. 1979: Opened the 300th The Limited store. 1982: Acquired Lane Bryant and Victoria’s Secret retail chains. 1985: Acquired Lerner retail stores. 1993: Married Abigail S. Koppel.
“Leslie senses what consumer lifestyles are and what consumer desires will be years ahead—he just senses it.” Wexner determined early on that he was not simply selling clothing, but desires and self-image. This is revealed in Wexner’s revamping of the Lane Bryant line of clothing for larger women. Traditionally, larger sizes had lacked style and were made from loud fabrics not used for smaller sizes. Wexner rejected this, declaring that “Big women are just like every other woman . . . they want to look like their smaller friends.” By stressing fashionable clothes, sales at Lane Bryant stores increased by 20 percent annually in the first few years that Wexner took over. With Victoria’s Secret, Wexner realized that many women who dressed in conservative business attire would still indulge in more feminine and sexy lingerie. Making over the Victoria’s Secret stores with lush Victorian furnishings underscored their products by stressing sexy indulgence. When Victoria’s Secret customers began asking if they could purchase the classical music they heard in the shops, Wexner began selling classical CD’s in Victoria’s Secret’s 580 stores and through its catalogs. Five out of ten classical albums that have gone platinum (having sold a million or more) are sold by Victoria’s Secret. Again, Wexner’s marketing genius is evident. Wexner has also kept abreast of major corporate organization trends. Throughout its early years, The Limited expanded rapidly with a tightly centralized structure. In 1987, Wexner began to worry that his company’s large organizational structure was impeding its flexibility.
S t u d e n t s
8 5 3
L e s l i e
W e x n e r
Profit margins were beginning to slip under the weight of his company’s size, and Wexner began to decentralize his company along divisional lines, giving more authority to lower-level managers. Wexner had anticipated corporate wisdom that smaller is generally better. Sales and profits returned to former levels. To encourage team spirit and initiative, 90 percent of The Limited employees are shareholders. His willingness to involve his employees in the profits of his company has made over 50 of his employees millionaires. As Wexner explained, “It’s not that I saw the future, I just like the idea of fairness of the people working in the enterprise being able to invest in it. But looking back, it was a pretty good idea, because it has not only been fair . . . but also it has been tremendous as an enabling factor in the success of the business. It creates a harmony of interest among the people in the distribution centers, financial people, store managers, salespeople, all across the business.”
Social and Economic Impact From his start with one Limited store, Wexner has built a retailing empire that has greatly influenced the fashion industry. Ever mindful of the needs of his customers, Wexner has shown the corporate world how success can be attained by paying attention to market factors and by understanding what drives buyers to express their needs by purchasing products. He has also been instrumental in making style and up-to-date fashion within the reach of most people. Recognizing initially the appeal of smart-looking sportswear that defined The Limited, Wexner has helped create stylish, affordable casual clothing that now dominates the fashion market.
8 5 4
B u s i n e s s
Wexner has also influenced corporate management structure. He led the trend among larger companies in the 1980s and 1990s in decentralizing organizational structure and encouraging individual initiative to enhance productivity and innovation. In this sense, The Limited has become a model for other retailers for maintaining momentum and profits. Wexner is one of corporate America’s largest and most influential philanthropists who has given back a large percentage of his fortune to make a difference in education, health care, and cultural programs. Communities, particular around The Limited’s base in Columbus, Ohio, have been considerably improved by Wexner’s charitable efforts.
Sources of Information Contact at: The Limited Inc. 3 Limited Pky. Columbus, OH 43230 Business Phone: (604)479-7000 URL: http://www.limited.com
Bibliography “Can the Limited Fix Itself.” Forbes, 17 October 1994. “Leslie Herbert Wexner.” Forbes, 18 October 1993. “Leslie Wexner’s Classical Act.” Forbes, 20 December 1993. New York, 5 August 1985. New York Times Magazine, 8 June 1986. Stores, January 1993. Washington Post, 26 December 1989.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Eli Whitney Overview Eli Whitney is best remembered as the inventor of the first commercially viable cotton gin. Perhaps more importantly, his new method of making muskets, using an assembly line and interchangeable parts, initiated the American mass-production system. Although Whitney never profited from the invention of the cotton gin, he was financially successful in the manufacturing of firearms.
(1765-1825) Inventor
Personal Life Eli Whitney was born on December 8, 1765, in Westboro, Massachusetts. He showed an early interest in, and talent for, mechanical work. He worked on his father’s farm, but preferred to spend his time in his father’s workshop. By the age of 15, he was earning money making and selling nails. He taught school to pay his college tuition, and along with the extra money he earned making and fixing machinery, he was able to attend Yale University. He graduated in 1792.
Career Details Whitney wanted to become a lawyer. To that end, he moved to Savannah, Georgia, where he intended to teach while studying law. When he arrived in Georgia, he met another Yale graduate, Phineas Miller, who managed the plantation owned by Catherine Littlefield Greene, the widow of the American Revolutionary War
8 5 5
E l i
W h i t n e y
Whitney took manufacturers who infringed on his patented gin to court. His first case came to trial in 1797 and Whitney lost, putting him out of business. It was 10 years before Whitney achieved success in the courtroom, but he suffered another major setback when Congress refused to renew his patent for the cotton gin, which expired in 1807. It then became clear that Whitney would never control the manufacturing and sale of his invention. Frustrated with the court battles and living in financial uncertainty, Whitney turned his attention to manufacturing firearms. When he began this endeavor, he had no workers, no capital, and knew nothing about making muskets. Even though he had no experience, he was able to earn a contract from the United States government based on his reputation. On June 14, 1798, he signed a contract that obligated him to deliver 4,000 guns just over a year later, by the end of September 1799. The contract also stipulated that Whitney would deliver another 6,000 firearms in 1800. To jumpstart this undertaking, Whitney received a $5,000 advance from the government.
Eli Whitney.
(The Library of Congress.)
general Nathanael Greene. With the help of Miller, Whitney obtained a position to tutor the children on the plantation. Soon, Greene had Whitney working on several mechanical problems that hampered the operation of a large plantation. At the top of the list was the need for a more efficient method of cleaning green-seed cotton. Once cotton was picked, the seeds had to be separated from the fiber. Whitney set himself to the problem and within 10 days had produced a design for a gin. By April 1793, he had perfected his cotton gin. The slaves used a simple comblike device to manually remove the seeds. Whitney built a gin that mechanized that same process. In May 1793, Whitney left Savannah and returned to New England. He went into partnership with Phineas Miller to manufacture and sell his cotton gins. He filed an application for a patent on June 20, 1793. Unfortunately, by the time Whitney received a patent on March 14, 1794, word of his design, which was simple and easy to reproduce, had become well known and imitations had already flooded the market. Initially, Whitney and Miller had made plans to operate the gins themselves, thus cornering the huge cotton market. Such an accomplishment would have proved extremely profitable, considering the size and importance of the cotton industry at the time. However, the partners lacked the money to finance such a large endeavor. Also, so many pirated machines had reached the market that Whitney not only failed to dominate the cotton gin industry, he was never even able to make a profit from his invention.
8 5 6
B u s i n e s s
At that time, a contract for 10,000 muskets in two years was unheard of. By comparison, two national armories only manufactured 1,000 muskets over the previous three years. Whitney failed miserably at meeting the terms of the contract. It took him three years to deliver just 500 firearms. He was not able to fulfill his obligation until January 1809, almost nine years behind schedule. By this time, the government had advanced Whitney over $131,000. While his ability to actually manufacture the muskets in a timely manner was not successful, Whitney’s manufacturing methods were revolutionary. He pioneered the use of interchangeable parts assembled on a production line. Because Whitney’s ability to produce muskets was severely hampered by epidemics, supply problems, and his own inexperience, he frequently had to request extensions from the government. In an effort to plead his cause and convince officials to give him more time to work through the difficulties, Whitney reportedly took all the parts for 10 muskets to the officials, dumped the parts in front of them, and challenged them to assemble the firearms. The officials successfully built the guns and were instantly convinced that Whitney deserved the time extensions. Whitney also helped develop the machine tool industry by developing many of the machines he needed to produce his firearms. Upon his death on January 8, 1825, in New Haven, Connecticut, Whitney’s firearms business, the Whitney Arms Company, was passed onto his son, Eli Whitney, Jr. The family sold the business in 1888 to Winchester.
Social and Economic Impact Some historians consider it unfair to give all credit to Whitney for inventing the cotton gin. Varying designs of cotton gins had been designed and were in use in dif-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
E l i
ferent parts of the world, although none had proved extremely effective. Some models had been imported to the United States and tried in Louisiana as early as 1725. Joseph Eve (1760-1835) developed a gin for use in the West Indies. However, almost all cotton was still being cleaned by hand, and the work was slow and tedious. It took a slave a full day’s work to clean one pound of cotton. The Whitney gin could clean an incredible 50 pounds of cotton in one day. Even though Whitney’s cotton gin was not the first, it was the best. Because the design was simple and easy to duplicate, its use spread rapidly. For this same reason, Whitney was unable to control its distribution by the many who chose to pirate the machine design.
W h i t n e y
Chronology: Eli Whitney 1765: Born. 1792: Graduated from Yale. 1793: Created the cotton gin.
Economic implications were apparent for plantation owners. The cotton gin could do the work of 50 slaves. One of the most time consuming, labor intensive jobs of a large plantation was totally revolutionized. Whitney’s cotton gin changed the way of life in the South.
1794: Received patent for the cotton gin.
Whitney’s more financially successful endeavor was arms manufacturing, another industry he has been credited with revolutionizing. At the time that he began building muskets, each musket was made individually by hand by a skilled craftsman. The result was that each gun was unique. When it needed repair, each new part had to be crafted by hand to fit that specific gun. This was a time-consuming and costly project. Using Whitney’s uniform parts, a common part could be used in any gun needing repair.
1974: Inducted into the National Inventors Hall of Fame.
By making interchangeable parts, Whitney set the ground for mass production. It should be noted that Whitney’s method of interchangeability was not perfect, and still required hand tooling and filing. Only later, with the invention of a willing machine that provided better uniformity and consistency, would mass production become the way of business. Whitney also often gets credit for introducing the assembly line, a concept that was made possible by interchangeable parts. Previously, each gun was made from start to finish by one craftsman. Whitney separated the labor among several workers, each responsible for a different part of the gun. Though Whitney’s ideas were all improved upon after his death, his contributions to business are immeasurable.
Benes, James J. “An Industry Evolves: Lathes to Computers.” American Machinist, August 1996.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
1797: Gained contract with U.S. Government to build muskets. 1825: Died.
Sources of Information Bibliography Biography Index. New York: H.W. Wilson Co., 1995. Byers, Paula K., and Suzanne Bourgoin. Encyclopedia of World Biography. Detroit: Gale Research, 1998. DISCovering Biography. Detroit: Gale Research, 1997. Garraty, John A., and Jerome L. Sternstein, eds. Encyclopedia of American Biography. New York: HarperCollins, 1996. Ingham, John. Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood Press, 1983. Schwarzenwalder, Robert. “Searching the Industrial Standards.” Database, April-May 1997.
S t u d e n t s
8 5 7
Charles Kemmons Wilson (1913-) Holiday Inns of America
Overview Employing keen perception and a knack for innovation, Charles Kemmons Wilson transformed himself from a Memphis entrepreneur to a global tycoon. Able to anticipate consumer needs, Wilson formulated a concept for temporary accommodations that resulted in the Holiday Inns of America, a chain that revolutionized the hotel business by setting the standards for hotels as we now know them.
Personal Life Wilson was born in Osceola, Arkansas, on January 5, 1913. He was the only child of Kemmons Wilson, an insurance agent, and Ruby Lloyd (Hall) Wilson. Wilson’s father died when he was only nine months old. Wilson married Dorothy Elizabeth Lee in 1941. They had five children: Spence, Robert, Kemmons, Jr., Betty, and Carole. In his leisure time, Wilson enjoys tennis and traveling. In 1996, he wrote his autobiography, Half Luck and Half Brains: The Kemmons Wilson Holiday Inn Story. Wilson demonstrated a knack for business at an early age, even though he never completed his education. After his father died, he moved with his mother to Memphis, Tennessee, where she worked as a bookkeeper and dental assistant. He took his first job at the age of seven, selling the Saturday Evening Post door to door. He soon had 12 other boys working beneath him. When he was 14, Wilson was hit by a car while working as a drugstore delivery boy. The accident frac-
8 5 8
C h a r l e s
K e m m o n s
W i l s o n
Chairman Kemmons Wilson, left, and the president of Holiday Inns of America, Wallace Johnson, point to the company’s stock listed at the New York Stock Exchange on September 30, 1963. (UPI/Corbis-Bettmann.)
tured his right leg and kept him in a body cast for 11 months. This forced him to miss school for nearly a year. He quit school altogether when, two months before his high school graduation, his mother was hospitalized. He then went to work to support them both.
popcorn machine and arranged with the manager of a local movie theater to install it in the theater lobby. Wilson was soon earning $30 a week while paying the manager $2.50 for electricity and space. However, the manager quickly realized the popcorn profits were larger than his own salary, so he terminated the agreement and bought the machine from Wilson.
Wilson’s first venture, a popcorn concession, opened the door to other opportunities. He bought a secondhand
Wilson invested that money into the purchase of pinball machines. By 1933, he had made enough money to build a house for his mother. Then, using that real estate as collateral, he was granted a $3,000 bank loan and further expanded his business.
B u s i n e s s
S t u d e n t s
Career Details
L e a d e r
P r o f i l e s
f o r
8 5 9
C h a r l e s
K e m m o n s
W i l s o n
Chronology: Charles Kemmons Wilson 1913: Born. 1941: Married wife Dorothy. 1943: Joined Air Force Command during World War II. 1946: Founded Kemmons Wilson Inc. 1948: Founded Kemmons Realty Company. 1951: Got idea for Holiday Inn hotel during automobile trip. 1952: Built first Holiday Inn. 1954: Incorporated Holiday Inn. 1972: Took Holiday Inn chain global. 1979: Suffered heart attack and retired from Holiday Inn. 1996: Wrote autobiography.
He bought more pinball machines along with jukeboxes and cigarette dispensers. He then acquired a Wurlitzer jukebox distributorship, and his business continued to grow. Soon he built and operated seven movie theaters, and even became part owner of a small airplane. When World War II started, Wilson sold all his property and invested in war bonds. In 1943, after joining the Air Transport Command, he built nine two-unit houses which he leased to servicemen. After the war, he acquired an Orange Crush distributorship. He lost money in that enterprise, but his real estate ventures were very lucrative. He founded Kemmons Wilson Inc. in 1946 and Kemmons Realty Company in 1948. As president of those companies, Wilson built and sold thousands of homes and apartment units. During the postwar boom, he also acquired more movie theaters and ran a successful building supply business. In 1951, Wilson made a trip that would prove to have a profound impact on the hotel industry. On a crosscountry automobile trip to Washington, D.C., with his wife and five children, Wilson found hotel lodgings to be uncomfortable and overpriced. Few of the cramped facilities they stayed in had restaurants that were even adequate, and fewer had air-conditioning. On top of all that, he was charged extra for his children, even though the family all slept in the same room, with the children
8 6 0
B u s i n e s s
sleeping on bedrolls. “My six-dollar room became a $16, or my eight-dollar room became $18,” Wilson recalled for an interviewer in 1996. “I told my wife, Dorothy, that wasn’t fair. I didn’t take many vacations, but as I took this one, I realized how many families there were taking vacations and how they needed a nice place they could stay.” By the time he got back to his home in Memphis— already envisioning an increase in tourism due to the construction of an interstate highway system and the increase in dependence on automobiles—he decided to take it upon himself to build a motel chain. He was determined that his chain would eliminate the shortcomings he found and satisfy all of a traveler’s needs as he saw them. Taking the name from the title of a 1942 Hollywood movie, Wilson decided to call his chain the Holiday Inn. In 1952, he borrowed money to build his first hotel, a 120-room facility that he placed on one of the main roads leading into Memphis. At the end of the following year, he built three more hotels. By this time they were called Holiday Inn Hotel Courts. And each featured the Wilson standards that would soon become so familiar across America and throughout the world: the distinctive, bright, cheerful colors; air-conditioned rooms with telephones and free television; a restaurant serving good food at reasonable prices; a swimming pool; dog kennel; baby-sitting service; and free parking. And there was no extra charge for children sharing the same room as their parents. Wilson soon understood the potential for a national chain. Together with Wallace E. Johnson, another building entrepreneur from Memphis, he created the Holiday Inns of America chain. The chain was incorporated in 1954, with Wilson named as the chairman and Johnson as president. The first franchise opened that same year. Soon after, as the Holiday Inns of America continued to expand, the company went public, and shares were offered to prospective stockholders at $9.75. An original share increased in value to $800 in 15 years. William B. Walton, a Memphis lawyer who became partners with Wilson and Johnson, estimated that between 1963 and 1973 the Holiday Inn chain was opening a new facility somewhere in the world every 2.5 days. Holiday Inns Inc. also branched itself into related subsidiaries, including a travel agency, a hotel supply company and the Continental Trailways bus line. In the 1960s, it also acquired Delta Steamship Lines, a Memphis meat-packing firm, and a bus terminal restaurant management corporation. In 1977, Holiday Inn went into the hotel/casino business and, in 1979, it purchased Harrah’s, a major Nevada casino operation with locations in Las Vegas and Atlantic City, New Jersey. As the company continued to grow, Holiday Inns became a subsidiary of Holiday Corp, and in 1989, it was sold to Bass Plc, best known as a brewery, of the United Kingdom. After suffering a heart attack in 1979, Wilson retired from his Holiday Inn enterprise. But not long after, he
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
C h a r l e s
bought land in Orlando and built his first Wilson World hotel, which has since become a small chain that caters to traveling businesspeople. After selling the Holiday Inn chain, Wilson remained active by running more than 60 businesses from his Memphis headquarters. Besides the Wilson World hotel chain, these include a printing plant, a nursing home, a lumber yard, a candy factory (producing chocolate-covered corn kernels call “W&W”) and various real estate ventures.
K e m m o n s
W i l s o n
was pulling in an income of $100,000 a year as chairman. At the time, his net worth was estimated to be more than $100 million. By 1972, Holiday Inns had become a global operation—the world’s largest and fastest-growing hotel chain with about 1,500 inns in all 50 states and in 25 foreign countries. While growth later slowed, Wilson’s creation remained one of the leaders in the hotel industry through the late 1990s.
Sources of Information
Social and Economic Impact During its period of phenomenal growth, Wilson’s Holiday Inn chain developed a customer-friendly reputation. Travelers could come to expect comfort, cleanliness, quality service and good food at moderate prices. Holiday Inns soon became a familiar site on the edges of American cities, with their similar and distinctive features and a unique sign that made the franchises easily recognizable from the road. It became company policy that all license applicants would be screened very carefully for their character, management ability, and financial responsibility. Wilson established very explicit license agreements for service standards and accommodations.
Contact at: Holiday Inns of America 1629 Winchester Memphis, TN 38116 Business Phone:
Bibliography Hollis, Kerissa. “Holiday Inns: An Idea that Became the World’s Largest Hotel System.” Memphis Business Journal, 27 January 1997. Ingham, John N. Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood Press, 1983. “Kemmons Wilson.” Nashville, TN: Kemmons Wilson Companies, 1997. Available from http://www.kwilson.com/kw/index.html.
Wilson also took a progressive business approach toward Holiday Inn employees, offering stock options and benefits. Management, Wilson believed, should take care of its employees.
Williford, Steve. “Chain King: Kemmons Wilson’s Success Story.” Memphis Business Journal, 9 September 1996.
By 1970, Wilson, whose family owned about 7.6 percent of all outstanding shares of the company stock,
Wilson, Kemmons, and Robert Kent. Half Luck and Half Brains: The Kemmons Wilson Holiday Inn Story. Hambleton Hill, 1996.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Wilson, Kemmons. “What Accounts For Success?” USA Today Magazine 126, no. 2628 (September 1997).
8 6 1
Oprah Winfrey (1954-) Harpo Inc.
Overview Oprah Winfrey revolutionized the talk show market with her unique and natural style and rose to become the host of the most watched daytime show on television. She is the first African-American to own her own TV studio. This multi-talented Winfrey is also a millionaire businesswoman, owner of a movie production company, and a talented actress.
Personal Life Oprah Gail Winfrey was born January 29, 1954, on a farm in Kosciusko, Mississippi. She was supposed to be Orpah, from the Bible, but for some unknown reason, she has been known as Oprah almost from birth. Her unmarried parents, Vernon Winfrey and Vernita Lee, separated soon after she was born, leaving her to be raised by a maternal grandmother. “She certainly wasn’t an educated woman, but she taught me the shape of letters, and she taught me my Bible stories,” Winfrey recalled in Life magazine. By the time she was six, she had moved to Milwaukee to live with her mother. Her childhood was most difficult, as she was sexually abused by a teenage cousin and then by other male relatives and friends. “I was, and am, severely damaged by the experience [of abuse]. All the years that I convinced myself I was healed, I wasn’t,” she told Redbook. “I still carried the shame, and I unconsciously blamed myself for those men’s acts.” She had a contentious relationship with her mother, with little understanding between the two. She was a
8 6 2
O p r a h
W i n f r e y
Oprah Winfrey holds a microphone out for a guest to speak and gestures to another to listen silently as she stands in the audience during her show. (AP/Wide World Photos, Inc.)
delinquent teenager often acting out and crying out for attention. Once she faked a robbery in her house, smashed glasses, feigned amnesia, and stole her mother’s purse, all because she wanted newer, more stylish glasses. It seemed Winfrey was heading down a road of destruction until her mother sent Winfrey to live with her father in Nashville at age 14. Winfrey said her father saved her life. He was very strict and provided her with guidance, structure, rules, and books. He required his daughter to complete weekly book reports, and she went without dinner until she learned five new vocabulary words each day. She joined the school’s drama club and became a prizewinning orator, winning a $1,000 college scholarship after delivering a short speech entitled “The Negro, the Constitution, and the United States” to 10,000 Elks Club members in Philadelphia. She was the first black woman to win Nashville’s Miss Fire Prevention title. In 1971 she was named Miss Black Tennessee. In 1976 she graduated from Tennessee State University. In 1986 she received a special award from the Chicago Academy for the Arts for unique contributions to the city’s artistic community and was named Woman of Achievement by the National Organization of Women. The Oprah Winfrey Show won several Emmys for Best Talk Show, and Winfrey was honored as Best Talk Show Host. Winfrey has made generous contributions to charitable organizations and institutions such as Morehouse College, the Harold Washington Library, the United Negro College Fund, and Tennessee State University.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
In addition to her numerous daytime Emmys, Winfrey has received other awards. In 1993 Winfrey won the Horatio Alger award “given to those who overcome adversity to become leaders in their fields,” according to Jet magazine. She was inducted into the Television Hall of Fame in 1994 and received the George Foster Peabody Individual Achievement Award, one of broadcasting’s most coveted awards, following the 1995-96 season. Further, she received the IRTS Gold Medal Award, was named one of America’s 25 Most Influential People of 1996 by Time magazine, and was included on Marjabelle Young Stewart’s 1996 list of most polite celebrities. In 1997 Winfrey received TV Guide’s Television performer of the Year Award and was named favorite Female Television Performer at the 1997 People’s Choice Awards. Winfrey is very political as well. In 1991 the tragic story of a four-year-old Chicago girl’s molestation and murder prompted Winfrey, a former abuse victim, to propose federal child protection legislation designed to keep nationwide records on convicted abusers. She did this with the help of former Illinois Governor James Thompson. In addition, Winfrey pursued a ruling that would guarantee strict sentencing of individuals convicted of child abuse. The result was a bill signed by President Clinton that allows child care providers to check the background of prospective employees. Winfrey resides in a condominium on Chicago’s Gold Coast and owns a 162-acre farm in Indiana. She
S t u d e n t s
8 6 3
O p r a h
W i n f r e y
Chronology: Oprah Winfrey 1954: Born. 1971: Became part-time radio newscaster on Nashville’s WVOL. 1984: Became anchor of A.M. Chicago. 1985: Made acting debut in The Color Purple. 1986: Debuted Oprah Winfrey Show nationally. 1986: Formed Harpo Inc. production company. 1988: Took over ownership of her show. 1989: Co-produced and starred in the Harpo production of The Women of Brewster Place. 1990: Ranked third on Forbes list of richest entertainers. 1992: Named highest-paid entertainer in the United States.
volunteers time with a variety of nonprofit organizations, churches, shelters and youth programs.
Career Details While in college, Winfrey already knew what she would do—pursue a career in broadcasting. As a freshman in college, she was twice offered a job by the Nashville CBS affiliate. Initially, Winfrey refused both overtures, but on the advice of a speech teacher, who reminded her that job offers from CBS were “the reason people go to college,” she decided to give the station a try. Because of that first step, she became the African American female co-anchor of the evening news. She was only 19 years old and still a sophomore in college. With that early experience, Winfrey would have no problem landing a job upon graduation. When she left Tennessee State, she headed to Baltimore to become a reporter and co-anchor of ABC affiliate WJZ-TV. The station sent her to New York for a beauty makeover, which Winfrey believes was her assistant news director’s attempt to “make her Puerto Rican.” She also attributes the make-over to an incident when she was told her “hair’s too thick, nose is too wide, and chin’s too big.” Nonetheless, Winfrey continued to excel. Around 1977,
8 6 4
B u s i n e s s
she became a co-host on the Baltimore Is Talking show, and after seven years on the show, the general manager of WLS-TV, ABC’s Chicago affiliate, saw Winfrey in an audition tape sent in by her producer. At the time her ratings in Baltimore were better than Phil Donahue’s, who for years dominated the talk show circuit. Winfrey and her crew were hired. Winfrey seemed to have some magical touch, with the ability to turn humdrum programs into interesting shows with solid ratings. In January 1984, she became anchor of the ailing A.M. Chicago, a morning talk show, which was consistently last in the ratings. She did a complete overhaul of the show and changed the focus to current and controversial topics. The effect was immediate: one month later the show was even with Donahue’s program. Three months later it had inched ahead. In September 1985, it was renamed the Oprah Winfrey Show, and was expanded to one hour. In a matter of months, Winfrey’s show was syndicated to television stations in more than 120 American cities. Subsequently, Donahue moved to New York. “When I first got the job, I was just happy to be on TV.,” Winfrey told Jet magazine. “But as the years evolved, I grew and wanted to say something without the show, not just be a television announcer or a television performer, but I wanted to say something meaningful to the American public and culture.” Just a year after the show was renamed, it made its national debut, and within five months it was rated the third most popular show in syndication—after the game shows Wheel of Fortune and Jeopardy. Moreover, it was the number one talk show, reaching upwards of 10 million people daily in 192 cities. The popular television show was a starting point for Winfrey, a spring board into broader areas of communication. It also became a means for Winfrey to get noticed and, once seen, unveil her many talents. In 1985 Quincy Jones saw Winfrey on her show, doing what she does very well, and immediately thought that she would make a good actress in a movie he was co-producing with the legendary Stephen Spielberg. The Color Purple, based on Alice Walker’s novel and starring Whoopi Goldberg, featured Winfrey as Sofia, a proud, assertive woman. Critics praised her performance, and she was nominated for an Academy Award. Interestingly, Winfrey had never had any formal acting lessons and little exposure to the theatre. But this seemed to be the beginning of another career, and she continued on to perform in other movies. This exposure piqued Winfrey’s interest in television and cinematic productions, prompting her to form her own production company, Harpo Inc., in August 1986. Harpo has produced several television productions based on stories written by black authors. She once told Ms. magazine that “I’m starting a minority training program . . . specifically to bring more people of color into the film and television industry as producers.”
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
O p r a h
In 1997 Winfrey told her TV viewers, “The opportunity to have a voice and speak to the world everyday is a gift. And I thank you for allowing me this gift.” So far, Winfrey has committed to stay with the show through the 1999-2000 season. No syndicated talk show in television history has compared with the performance of her No. 1 rated, multiple Emmy Award winning show. But certainly Oprah has other ventures that she continues to pursue, and she has the financial means to do so. In 1996 and 1997, she was No. 3 on the Forbes list of the world’s highest-paid entertainers, after grossing a combined total of $201 million. She has purchased the rights to several books in hopes of turning them into television or movie productions. And her charitable pursuits continue to expand, extending to thousands across the country.
W i n f r e y
her involvement with A Better Chance, a Boston-based privately funded program that provides bright inner-city youth with the opportunity to attend college preparatory schools. She gives proceeds from her inspirational video “Oprah: Make the Connection” to A Better Chance. “My prayer to God every morning on my knees is that the power that is in the universe should use my life as a vessel, or a vehicle, for its work,” she told Redbook. “Prayer. That is the central thing for me.” “I feel positive about the future, but I do believe that we are in a time where there are forces of good and evil in TV making themselves known,” Winfrey told Good Housekeeping, “I’m always trying to figure out how to take the power I have and use it.”
Sources of Information
Social and Economic Impact Winfrey cultivated a reputation for championing in her programs and ventures causes that other leading media and entertainment companies ignore. She is most interested in productions that no one else will do because the topics are not sensational enough to capture the attention of the big production houses. Jeffrey Jacobs, Winfrey’s lawyer-manager and chief adviser, told Ms.: “Because of our economic status, and because of Oprah’s other talents, we’re going to bring things to the screen that no one else will be able to do. . . . She can develop or buy something that no one else will think is commercially viable because she thinks the message is important and people should see it . . . if we can make money, great. And if we don’t, well, there are other reasons to do projects besides making money.” Winfrey’s love of books has made her the most powerful book marketer in the United States. In September 1996, Winfrey started an on-air reading club, “Oprah’s Club,” influencing more people to purchase her book of the month than can any other communication medium. Featuring a book on her show has more than once catapulted it to the top of the best-sellers list. “Doing this book club has given me the courage to pursue the things I care about,” Winfrey told Life magazine.
Contact at: Harpo Inc. 110 N. Carpenter St. Chicago, IL 60607 Business Phone: (312)633-1000 URL: http://www.oprahshow.com
Bibliography Blyth, Myrna. “Advice from Oprah.” Ladies Home Journal, February 1995. Byers, Paula K., and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography. 2nd ed. Detroit: Gale Research, 1998. Johnson, Marilyn, and Dana Fineman. “Oprah Winfrey: A Life in Books.” Life, September 1997. Kanner, Miriam. “Oprah at 40: What She’s Learned the Hard Way.” Ladies Home Journal, February 1994. “Oprah Reveals on Her Show She Smoked Crack Cocaine during Her 20s.” Jet, 30 January 1995. “Oprah Winfrey Reveals the Real Reason Why She Stayed on Television.” Jet, 24 November 1997. Reynolds, Gretchen. “The Oprah Winfrey Plan: She Started Running, Lost 70 Pounds and Completed a Marathon. Here’s How.” Runner’s World, March 1995. Rogers, Jackie “Understanding Oprah.” Redbook, September 1993.
That courage has led to many philanthropic endeavors. She established Oprah’s Angel Network and has entered a partnership with Habitat for Humanity, which has 10,000 volunteers helping to build houses for impoverished Americans throughout the country. She is helping minority students get a better education through
Taraborrelli, J. Randy. “How Oprah Does It All.” Redbook, August 1996.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Smith, Liz. “Oprah Exhales.” Good Housekeeping, October 1995.
Taraborrelli, J. Randy. “The Change That Has Made Oprah So Happy.” Redbook, May 1997.
8 6 5
Kenneth Wolfe (1939-) Hershey Foods Corporation
Overview A company loyalist of the venerable American firm Hershey Foods Corp., Kenneth L. Wolfe dared to expand the chocolate maker into products and markets that have never been attempted. In a few years, Hershey’s revenues have dramatically increased, and the company has positioned itself to be a major player in the world confectionery market. Wolfe’s management skill and decisive style has been a key factor in Hershey’s revival.
Personal Life Kenneth Wolfe was born in 1939. A native of Lebanon, Pennsylvania, Wolfe grew up less than 10 miles from the Hershey, Pennsylvania, headquarters of the confectionery firm he would later head. He attended Yale University where he was a halfback on Yale’s last undefeated and untied football team in 1960. He received his B.A. degree in 1961. He went on to earn his M.B.A. in finance from the University of Pennsylvania in 1967. Wolfe is married. He was described as “reserved and understated” in a 1997 Forbes article. The article commented that Wolfe is “not a natural born-born huckster.” Wolfe has described himself as a numbers person: “I enjoy numbers. I’m not a vision person; I would be more of a detail person.” As for his management style, Wolfe explains, “I like the notion of teamwork. Sometimes there are small teams, sometimes there are larger teams. Obviously, if things do not go well, I’m solely responsible for that, and I understand that. I’m not the world’s toughest boss, though some people might disagree.”
8 6 6
K e n n e t h
W o l f e
Wolfe serves on various boards, including Hershey Foods, Hershey Trust Co., the Milton S. Hershey School, Pennsylvania State University Hershey Medical Center, Bausch & Lomb Inc., the Business Roundtable, the Caron Foundation, and Grocery Manufacturers of America Inc.
Chronology:
Career Details
Kenneth Wolfe
Before pursuing his M.B.A., Wolfe began his career with the Bankers Trust Corp in 1961. After graduating from the University of Pennsylvania, Wolfe joined the Hershey Foods Corps. in 1968. He held a variety of positions at the corporate level and in the chocolate company subsidiary. An assistant treasurer from 1968 to 1969, he became the budget director from 1969 to 1974. Wolfe was then promoted to director of operations and financial analysis in 1974, treasurer in 1976, vice president of financial administration for the Hershey Chocolate Co. in 1980, vice president and chief financial officer in 1981, senior vice president in 1984, and president and chief operating officer from 1985 to 1993. Wolfe was finally named chairman and CEO in January 1994. By this time he had been with the company for over 25 years. When Wolfe took over the company, Hershey was complacent with its nearly one-third share of the U.S. candy market, but, except for its pasta business with such brands as Ronzoni and San Giorgio, the company had a record of shunning diversification and ignoring overseas markets. Though Wolfe describes himself as being more comfortable with numbers than with visions, he outlined his plan in a 1994 Central Penn Business Journal article. When asked to compare his vision with his predecessor’s he responded, “We’re going to emphasize development in the North American market. . . . We’re going to look at selected international markets. I am interested in developing our core brands—we’re going to do this by hopefully selling more of our core products, introducing new products and making acquisitions along the way.” Wolfe’s all-encompassing plan was based on experience; he explained, for example, that the need for selected expansion of the company was based on past mixed results. Wolfe’s tenure at Hershey was proving to be valuable to him as a leader, and within a few years, he reached every goal that he set. Wolfe took on a $106 million tax charge to restructure and refocus Hershey’s operations. In the 1997 annual report to stockholders, Wolfe and chief operating officer Joseph Viviano reported a streamlining of the company’s interior structure. Wolfe had pared the structure of the company to three divisions: Business Units, Operations Shared Services, and Staff Shared Services.
1939: Born. 1961: Graduated from Yale University. 1961: Worked for Bankers Trust Corp. 1967: Earned M.B.A. from the University of Pennsylvania. 1968: Began career with Hershey Foods Corp. 1969: Promoted to budget director. 1974: Promoted to treasurer. 1980: Promoted to vice-president and chief financial officer. 1985: Promoted to president and chief operating officer. 1994: Named chairman and chief executive officer.
$100 million. Hershey also introduced the industry’s first reduced-fat baking chips in 1995. Announcing the appearance of the chips onto the market, Wolfe demonstrated an understanding of the consumer when he commented, “These chips are good enough to eat straight from the bag . . . and that’s important because many baking chips never make it into cookies!” In several interviews, Wolfe has emphasized the importance of responding to the demand for low-fat foods with good-tasting products. Wolfe has also dared to take Hershey into nonchocolate candies. Acquiring Twizzlers licorice and Amazin’ Fruit gummy candies, Wolfe also bought confectioner Henry Heide, the maker of Jujyfruits, and in 1996 Hershey came out with its first-ever hard candy, TasteTations. Hershey has purchased the confectionery operations from Huhtemaki of Finland, whose brands include Jolly Rancher, Good & Plenty, Whoppers, and Milk Duds.
In late 1995, Wolfe approved an 11 percent price hike—only the second in ten years—on Hershey’s standard candy bar line. To counter declining sales due to dietary concerns, Wolfe backed Sweet Escapes, a reducedfat chocolate bar that in its first year was expected to earn
In addition to bringing out new products, by 1997 Wolfe had successfully stimulated Hershey’s core brands as had promised from the beginning. The CEO attributed the improvement in the success of the core brands to the effective thematic advertising campaigns, including a movie tie-in and sports-related merchandising programs. Wolfe’s strategy for improving sales would have baffled company founder Milton S. Hershey, who never advertised during his lifetime.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
8 6 7
K e n n e t h
W o l f e
Wolfe has emphasized development in the North American market, but true to his word, has tentatively begun to explore international markets in Western Europe, where per-capita consumption of confectionery products is much higher, Eastern Europe, Russia, and Asia. Hershey now exports to about 60 countries around the world. In 1995, Wolfe reorganized the three operations in the United States, Canada, and Mexico into Hershey North America to consolidate strategy and trim operational costs. Wolfe’s strategy has produced positive results. Hershey’s revenues increased from $3.5 billion in 1993 to $4.3 in 1997. Earnings posted similar gains for the period, rising from $193 million in 1993 to $336 million in 1997. Wolfe, a self-described team player, has emphasized the importance of team work to the success of the Hershey organization. In an interview with Central Penn Journal in 1994, he was asked how he would characterize himself as a manager. Wolfe responded, “The job I enjoy most is when I have an opportunity to meet with all these people that work in this company and in some way to reward them or give them recognition. The other thing I like is to meet with the retired people who have contributed so much.” In May 1998, Wolfe received the Business Achievement Award from the West Shore Chamber of Commerce. In his acceptance speech, Wolfe exhibited his true belief in the team concept when he described the various employees that had come to him with ideas for improving various aspects of the company. Every few weeks Wolfe holds breakfast meetings in which he talks to various employees who are selected at random from departments throughout the company. During these meetings several employees had given him ideas or solved company problems, ranging from solutions for saving on light bulbs to finding a simple part to fix a chronic problem with a machine. In his speech, Wolfe told the audience that both the company’s balance sheet and its morale were benefiting from the input of various employees. As a result of the company’s success in 1996 and 1997, Wolfe was able to implement a new employee stock option plan that he felt would offer even more incentive for employees to participate in the company.
and expanding into new markets abroad. The effect was to make a strong company with an established brand name even stronger. Hershey has positioned itself for international competition and secured its future as an expanding multinational firm that caters to the tastes of a worldwide market for its products. Kenneth Wolfe was not lured to Hershey with a high salary, but rather grew into a leadership role after decades of service to the company. Wolfe’s decisive and aggressive leadership has revitalized the venerable Hershey by strengthening its core brands, while diversifying into areas that its founder, Milton Hershey, would have had difficulty predicting. Wolfe recognized that mass-market tastes changed, and that Hershey needed to change with the times. Although chocolate remains the company’s mainstay, Wolfe has developed less fattening products and other candies for the assorted tastes of its customers. He is an example of the benefit of moving through the ranks in a company, gaining experience and learning along the way. Knowing Hershey’s past successes and failures as he did allowed him to move in new directions while keeping old Hershey values. Wolfe’s own favorite candy bar is an example of his strategy. He loves the traditional Reese’s Peanut Butter cups, but during his leadership, Hershey’s has released the new Reese’s Crunch Cookie Cups and Reese’s ReeseSticks Wafer Bars.
Sources of Information Contact at: Hershey Foods Corporation 100 Crystal Ave. Dr. Hershey, PA 17033 Business Phone: (717)534–6799 URL: http://www.hersheys.com
Bibliography Hershey Foods Corporation. “Hershey Foods Corporate Profile 1997.” Hershey, PA, 1997. Available from http://www.hersheys.com/totally/history/profile/. Heuslein, William. “Timid No More.” Forbes, 13 January 1997. “Kenneth Wolfe, Joseph Viviano to Top Posts at Hershey.” Milling & Baking News, 12 October 1993. Kuhn, Ellen. “Sweet Times in the Hershey Candy Kingdom.” Food Processing, January 1995.
Social and Economic Impact Wolfe has demonstrated that he has been willing to push an established company that already controlled a third of the confectionery market in new directions. He revived Hershey Foods Corp. by radically reorganizing its management structure, introducing new product lines,
8 6 8
B u s i n e s s
Mollard, Beth. “Hershey Chief Outlines Firm’s Growth Strategy.” Central Penn Business Journal, 8 August 1994. Warner, Mary. “Hershey Food Chief Receives Award.” Patriot News, 28 May 1998. Who’s Who in America. Providence, NJ: Marquis Who’s Who, 1997.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
F. W. Woolworth Overview Frank Winfield Woolworth was a classic “self-made man” who rose from an impoverished background to establish F.W. Woolworth and Company, which at one time was the world’s largest merchandising operation. He built a chain of stores around a merchandising gimmick that was used by storeowners in the years following the Civil War to clear out unwanted merchandise for a nickel. The lowpriced goods displayed in his stores gave his customers the luxury of choosing from a wide array of merchandise.
(1852-1919) F.W. Woolworth and Co.
Personal Life Frank Winfield Woolworth was born on April 13, 1852, on a farm near Rodman in Jefferson County, New York. His parents, John Hubbell Woolworth and Fanny McBrier, had ancestors who came to America in 1660. He attended public school in Great Bend, New York, and later spent two short terms at a business school in Watertown, New York. He helped out on the family farm but disliked the heavy work. At the age of 19, Woolworth took a job as a clerk in the village grocery store. For two years he received no wages there, working only for the experience. When he was 21, he obtained work at a leading dry goods store in Watertown on a trial basis. He received no salary for the first three months as he swept floors, delivered packages, and arranged window displays. He was making $6 a week after two years there. In 1875 a “99-cent store” opened in Watertown, and a merchant there decided to try the idea in Port Huron,
8 6 9
F .
W .
W o o l w o r t h
caster, Pennsylvania, in the heart of Pennsylvania Dutch country. Keeping the five-cent goods on one side of the store, he added another section offering ten-cent goods. This store did well and Woolworth changed its named to Woolworth’s Five- and Ten-Cent Store. Woolworth called on his younger brother, Charles Sumner Woolworth, and his cousin, Seymour H. Knox, to join him in the business. They opened stores in Philadelphia, Harrisburg, and York, Pennsylvania; Newark, New Jersey; and New York City. Again, poor locations made these stores unproductive at first. Other stores in Buffalo, Erie, Scranton, and elsewhere were more successful. Two other men, F.M. Kirby and Earl P. Charlton, were brought into the business. After a few years Woolworth sold his interest in the Buffalo and Erie stores to his cousin Knox, who created the S.H. Knox chain of five and ten cent stores. The other partners also started their own chains, all the while remaining friendly and not trespassing on each other’s territory.
F.W. Woolworth. (AP Photo/Jefferson County Historical Society.)
Michigan. He took Woolworth along as a clerk and paid him a starting wage of $10 a week. When Woolworth proved to be a poor salesman, his salary was cut to $8.50 a week. He soon took ill, suffering a breakdown, and returned to Watertown. Back in Watertown, he met a waitress, Jennie Creighton, and married her in 1876. They had three daughters. One of Woolworth’s granddaughters was Barbara Hutton, a socialite who achieved notoriety for her many marriages.
Career Details Woolworth was back working for his first employer, Moore and Smith, in 1877. A year later he heard of a store in which there was a counter offering goods for sale for five cents. This was a common marketing tactic for stores that wanted to get rid of older or slightly damaged goods. Woolworth persuaded W.H. Moore to put a similar counter in the store, where it was a success. Woolworth then ordered $300 worth of “Yankee notions” with a loan from Moore and opened The Great Five Cent Store in Utica, New York, in 1879. These notions included thimbles, combs, buttonhooks, harmonicas, baby bibs, soap, napkins, pencils, and similar merchandise. Woolworth picked a poor location for his first store, and it soon closed. He then opened another store in Lan-
8 7 0
B u s i n e s s
In 1886 Woolworth moved to Brooklyn, New York, to be near wholesale suppliers. Taking advantage of the wide variety of goods available there, he assumed responsibility for purchasing merchandise for all of his stores. He added candy and was able to purchase it directly from the manufacturers. He also planned all of the window and counter displays for the chain. An admirer of the red color of A&P grocery stores, he designed the characteristic red store fronts for the Woolworth stores, adding the company name in gold letters. The Woolworth chain grew rapidly in the 1890s and first decade of the twentieth century. By 1895 there were 28 stores, and sales reached the $1 million mark. By 1900 there were 59 stores and sales were more than $5 million. The company continued to expand, and in 1912 there were 318 Woolworth stores in operation. That year F.W. Woolworth and Company was incorporated and absorbed the four chains of Knox, Kirby, Charlton, and C.S. Woolworth. With 596 stores and $65 million in capital, it was the world’s largest merchandising operation. Frank Woolworth was president of the new corporation, and the heads of the other chains became vice presidents. In 1913 the Woolworth Building was completed in New York City. Built at a cost of $13.5 million and paid for by Frank Woolworth personally, the 792-foot-tall skyscraper was then the world’s tallest building. By 1915 Woolworth was spending less time on business and more time in Europe. When he died in 1919, there were 1,057 Woolworth stores in the United States and Canada, plus another 175 stores in England. U.S. sales were $119 million, and Frank Woolworth’s personal fortune was estimated at $65 million.
Social and Economic Impact Woolworth’s business goal was to offer as many articles as possible for five or ten cents. Many of these ar-
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
F .
ticles had never before been sold for so little money. Woolworth stores began having goods manufactured for them, often taking a factory’s entire output. He brought the luxury of selecting a wide array of goods to people who normally would not have been able to afford them. For many small towns and cities, as well as the large metropolitan areas, Woolworth’s five-and-ten stores meant a new kind of retailing. Although his company would fade by the late twentieth century, eventually renamed the Venator Group Inc. and focusing on sporting goods chains, Woolworth’s success spawned many imitators and established principles that would later be employed by such companies as Kmart Corporation and Wal-Mart Stores, Inc.
W .
W o o l w o r t h
Chronology: F. W. Woolworth 1852: Born. 1879: Opened The Great Five Cent Store in Utica, New York. 1895: Sales topped $1 million from 28 stores. 1900: Sales reached $5 million from 59 stores.
Sources of Information Bibliography
1909: Opened “Three and Sixpence” stores in England.
Byers, Paula K., and Suzanne Bourgoin, eds. Encyclopedia of World Biography Detroit: Gale Research, 1998.
1912: Incorporated the company and absorbed four other chains.
Garraty, John A., and Jerome L. Sternstein, eds. Encyclopedia of American Biography. New York: HarperCollins, 1996.
1913: Completed The Woolworth Building in New York City.
Ingham, John N. Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood Press, 1983.
1919: Died.
Olsen, Frank H. Inventors Who Left Their Brands on America. New York: Bantam Books, 1991. Van Doren, Charles, ed. Webster’s American Biographies. Springfield, MA: G. & C. Merriam Co., 1979. Who Was Who in America, vol. 1. Chicago: A.N. Marquis, 1943.
Winkler, John K. Five and Ten: The Fabulous Life of F.W. Woolworth. Garden City, NY: Doubleday and Co., 1951. Reprint, North Stratford, NH: Ayer Company Publishers, 1977.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
8 7 1
Stephen Gary Wozniak (1950-) Apple Computer, Inc.
Overview The technical genius behind the Apple I and II microcomputers that launched Apple Computer, Inc., Stephen Wozniak revolutionized computer design. By creating machines that were easy to use and relatively low in price, he helped launch the era of the personal computer. With Apple cofounder Steven P. Jobs, Wozniak worked out of his garage to develop Apple’s breakthrough computers. Within 10 years he was running a company with 1,000 employees and annual sales of $500 million.
Personal Life Stephen Gary Wozniak was born on August 11, 1950, in San Jose, California. Wozniak was the eldest of three children. His father, Jerry, was an engineer at Lockheed. Wozniak’s interest in science and engineering came early. His father gave him a crystal radio kit when he was seven and an electronics kit a year later. Around fourth grade, Wozniak recalls reading Tom Swift books about “this young guy who was an engineer, and he owned his own company . . . It was just the most intriguing world, like the first TV shows you ever watched.” His father also helped with various science fair projects on electronics. By sixth grade he had designed a computer that played tic-tac-toe. Wozniak continued to design computers through high school and college without taking a course or even buying a book on how to do it. He just pieced things together with a group of like-minded friends. At the age of 14 Wozniak won an award for building a binary adding and subtracting machine, one of hundreds of small computers he designed before Apple.
8 7 2
S t e p h e n
G a r y
W o z n i a k
Steve Wozniak, right, standing next to John Scully, Apple’s president and chief operating officer, unveils the Apple IIc computer in 1984. (AP Photo/Sal Veder.)
Growing up in Sunnyvale in the Silicon Valley, the area between San Francisco and San Jose that is studded with electronics firms, Wozniak felt right at home. Something of a math and science prodigy, Wozniak was also a cutup and a practical joker. As his mother, Margaret recalls, “I knew my son would either be rich or wind up in jail.” Although he scored a perfect 800 on his math SAT, he lacked social skills and shunned parties, preferring technical magazines. In 1968, Wozniak attended the University of Colorado, having been rejected by Cal Tech. His second year was spent at De Anza College before he transferred to the University of California at Berkeley to study electrical engineering. Dropping out of
Berkeley after his junior year, Wozniak became a designer of calculator chips at Hewlett-Packard. He also began to attend meetings of the Homebrew Computer Club, a group of Silicon Valley high-tech enthusiasts that set him on the course of designing inexpensive personal computers.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Wozniak has been married three times. He met his first wife, Alice Robertson, over a Dial-a-Joke line that he had started and sometimes manned as “Stanley Zeber Zenskanitsky.” They were divorced in 1980. Wozniak’s second wife, Candi Clark, was an Apple financial analyst who made the 1976 Olympics as a kayaker. The couple had three children. In 1981, aboard Woz-
8 7 3
S t e p h e n
G a r y
W o z n i a k
Boy, and going through manuals on new computer programs. He also collects uncut sheets of $2 bills
Career Details
Chronology: Stephen Gary Wozniak 1950: Born. 1968: Attended the University of Colorado. 1970: Attended the University of California, Berkeley. 1971: Worked for Hewlett-Packard designing calculator chips. 1976: Cofounded Apple Computer, Inc. 1977: Apple II debuted. 1980: Apple Computer went public. 1981: Took leave of absence from Apple. 1986: Earned B.S. degree from Berkeley. 1992: Started teaching elementary school.
niak’s Beechcraft Bonanza on a flight to San Diego to purchase their wedding rings, the plane crashed on takeoff. Candi suffered a skull fracture and numerous broken bones in her face. Wozniak was afflicted with shortterm amnesia for five weeks. The accident, Apple’s growing bureaucracy, and management hassles precipitated Wozniak taking a leave of absence from the company. While away from Apple, Wozniak resumed studying for his computer science degree at Berkeley, which he received in 1987. Wozniak is currently married to Suzanne Mulkern, who also had three children from a former marriage. Mulkern, a lawyer, was a seventhgrade classmate of Wozniak. He has retained an office with Apple to work on design ideas, but has largely withdrawn from the company to concentrate on his family and many outside interests. Wozniak gave away about half his shares in Apple before it went public in 1980, including $40 million in stock to his first wife, $4 million to his parents, brother and sister, and $2 million to friends. However, Wozniak’s remaining 3.7 million shares were worth around $100 million. In 1982 and 1983 Wozniak organized the two U.S. Festivals of rock music and in 1987 the first U.S./U.S.S.R. stadium rock concert in Moscow. He has donated over $7 million to various charities, particularly in the San Jose area. A rock music enthusiast, Wozniak is devoted to his family and has said that he would rather be remembered as a good father than as an icon of the computer era. His leisure activities include attending Golden State Warrior games, playing Tetris on his Game-
8 7 4
B u s i n e s s
Wozniak met the younger Steven P. Jobs, another Homestead High alumnus, in 1968. In 1971, the pair started their first business venture: making “blue boxes” that allowed people to make free long-distance phone calls. They built the devices and sold them for $150 each to Wozniak’s fellow students. He and Jobs continued to build microcomputers for the Homebrew Computer Club, and in 1976 Jobs proposed starting a computer company. He was 22, and Wozniak was 26. Jobs, who had worked in an orchard, proposed the name Apple after several high-tech names were rejected. With Jobs concentrating on marketing and sales, Wozniak began to build the first Apple computer at night, working in his Hewlett-Packard office. The Apple I was assembled in Jobs’s family garage. Wozniak’s design stressed simplicity and ease of use. Microcomputers prior to Apple were mainly for electronic hobbyists, and Wozniak began to construct a machine that was affordable, useful, fun, and simple. Within a month of assembling the Apple I, they landed a $50,000 order. Wozniak’s later design of a flexible disc, a “floppy disc,” to replace the clumsy magnetic tape that all small computers then used for information storage was a revolutionary breakthrough that was incorporated into the Apple II that made the company’s fortune and transformed the personal computer business. The Apple II was the first small computer with a plastic case, the first with high-resolution color graphics, the first with so few chips for a complete system, and the first with a built-in speaker port for sound. Wozniak had designed a small but effective personal computer that could be used by ordinary people without complex training and commands that had been essential in microcomputers up to this time. Apple, therefore, had extended computer use to a much wider audience and pioneered the personal computer market. In subsequent refinements Apple marketed the IIe, III, and the IIc, as well as Lisa and Macintosh in the early 1980s. Wozniak’s technical genius was behind each of these projects. Wozniak, who continued to see himself as an engineer and programmer rather than as a business executive, became less and less involved in the running of Apple, though he has continued to offer design ideas, maintain an office, and earn a small salary from the company. In 1991, Wozniak embarked on a new career as a gradeschool teacher. Inspired by his son Jesse’s growing interest in computers, Wozniak began an ad-hoc class for him and his fifth-grade classmates in 1992. He later expanded Jesse’s class, started a new one of 20 fifthgraders, and taught a class for teachers at the local middle school. Wozniak intends to complete his teacher certification and maintain his teaching at the elementary
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
S t e p h e n
school level. Wozniak said, “I was born to teach—I have always had this gift with children.”
Social and Economic Impact Wozniak is one of the true pioneers of the computer age. By designing a simple-to-use and relatively inexpensive microcomputer, he helped to create the personal computer business that has transformed modern life. More of an inventive engineer than a businessman, Wozniak’s computer designs have become standard in the technological revolution that he helped to start. The multibilliondollar personal computer industry can trace its origins in part to Wozniak’s innovations. Wozniak helped initiate the continuing development of smaller, faster, and easier to use computers that could reach more and more users. The world following the appearance of the first Apple computer has changed remarkably, and Wozniak’s innovations have contributed greatly to those changes.
G a r y
W o z n i a k
that eventually computers will reach the physical limit of their hardware, which will allow programmers to create what he has called “something like a Ten Commandments of Software”: computers shall not crash, and error messages shall be understandable, for example. Wozniak foresees future computers becoming more like real people, moving away from menu-driven controls. Despite his withdrawal from active work at Apple, Wozniak remains on the cutting edge of computer design.
Sources of Information Contact at: Apple Computer, Inc. 1 Infinite Loop Cupertino, CA 95014 Business Phone: (408)996-1010 URL: http://www.apple.com
Bibliography
Wozniak has used the fortune he gained from his inventions to make a difference in his community and in the world. He has brought people together for rock music, accelerated the thaw in U.S.-Soviet relations by offering computer expertise and arranging exchanges, and served in his local community as a teacher of the next generation of computer wizards. Wozniak has predicted
Friesberger, Paul, and Michael Swaine. Fire in the Valley: The Making of the Personal Computer. Berkeley, CA: Osborne/McGraw-Hill, 1984.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Garr, Doug. Woz: The Prodigal Son of Silicon Valley. New York: Avon, 1984. Moritz, Michael. The Little Kingdom: The Private Story of Apple Computer. New York: William Morrow, 1984.
8 7 5
Frank Lloyd Wright (1869-1959) Architect
Overview Frank Lloyd Wright is considered one of the most influential and most important twentieth century American architects. His buildings—more than 400—possess the quality and feel of genius at work. His designs, his unique ideas about homes, seem eternally futuristic, enormously functional, and have influenced every sphere of twentieth century architecture.
Personal Life Frank Lloyd Wright was one of America’s most dramatic and eccentric geniuses. He was born on June 8, 1867, the eldest of three children born to William and Anna Lloyd Wright in the small town of Richland Center, Wisconsin, on the American prairie. Wright’s mother had immigrated from Wales with her family. Her father, who was a Unitarian minister, and brothers became skilled carpenters and built themselves houses in the Wisconsin River Valley. Wright’s relationship with his mother was very close throughout his life. When he was very young his mother, who was a school teacher, used the Froebel Kindergarten Method at home, which introduced children to pure geometric forms and their patterns on grids. Scholars have speculated that Wright’s later use of so much sophisticated geometric design in his work was an outgrowth of his early integrated exposure to geometric design as a learning tool. His father, William Carey Wright, was a Baptist minister and musician. When Wright was three years old, his family moved to Massachusetts, where his father worked
8 7 6
F r a n k
as a minister. Around 1880, the family moved back to Wisconsin. His father opened a music conservatory, and Wright went to school and worked on his uncle’s farm. When Wright was 18, his father divorced his wife, leaving him with his mother and two younger siblings. When his parents divorced, in 1885, Wright sought part-time employment in Madison, Wisconsin. He also had plans to study at the University of Wisconsin. Wright took a job with a Madison contractor as a draftsman’s apprentice, and took engineering and graphics courses for a year at the University. That was the end of his formal education. To further his architectural training, Wright left Madison in 1887 for Chicago, where he obtained employment as a draftsman with Joseph Silsbee, an architect. While in Chicago during the late 1880s, Wright was in the midst of a great architectural boom. Architects from all over the world had come to Chicago to rebuild the city after it had been destroyed by a devastating fire less than a decade before. Wright, having learned the architectural basics from Silsbee, landed a job with Dankmar Adler and Louis Sullivan, one of the most progressive architectural firms in the country. Wright developed a very close relationship with Sullivan, who was known for his “form follows function” ideology. By the time Wright was in his early 20s, he had worked on some of the most impressive buildings in Chicago. In 1889, Wright married Catherine Lee Clark Tobin. Frank and Catherine had six children, two of whom became architects. To support his wife and children in a manner in which he was accustomed, Wright took on extra work designing houses. Wright “bootlegged” designs from Sullivan’s firm, adding his own ideas—Sullivan subsequently severed his contract with Wright. In 1893, Wright started his own architectural business. In 1909 Wright abandoned his wife of 20 years and children, running off to Europe with Mamah Borthwick Cheney, the wife of a former client. The couple stayed away from the United States for a year, returning in 1911 to settle in Spring Green, Wisconsin, where he built his well-known residence Taliesin—“shining brow” in Welsh. In 1914, a servant at the Taliesin residence set fire to the house and murdered Mamah, two of her children and four other occupants as they tried to escape the flames. The house was almost completely destroyed. He rebuilt Taliesin and later, traveled to Tokyo, where he was commissioned to build the Imperial Hotel. In 1922, Wright married the sculptress Miriam Noel. In 1925, Taliesin burned down again. Wright’s career suffered because of continual scandal in his personal life. And his personal life was continually unraveling—Wright’s finances and emotions were depleted. His life was filled with lawsuits, bad publicity, bankruptcy, and bitterness. In 1928, Wright married his fourth wife, Olgivanna Milanoff, a Montenegrin aristocrat, who was at one time a student of G.I. Gurdjieff, a Russian-born esoteric thinker and mystic. This marriage lasted for the rest of his life. Wright began to lecture and teach. Although Wright’s designs continued to be built at a steady pace
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Frank Lloyd Wright.
L l o y d
W r i g h t
(The Library of Congress.)
for more than two decades, he was not to see fame reemerge in his life until the 1950s, when he was in his 80s—largely because he had survived into old age with good energy, and a burning passion about his beliefs in radical architecture. Wright also wrote several books about architecture. He was idolized in the 1950s as a daring, individualistic genius. The eccentricities for which he was once scorned had helped to make him popular. It had become clear before he died, that Frank Lloyd Wright had secured a position in the public imagination as a uniquely American icon; a brilliant, loner, “cowboy”-architect; a genius to architecture, as Albert Einstein was a genius to physics. Wright’s last major project was designing a building to house the impressive modern art collection of Solomon R. Guggenheim—the Guggenheim Museum— on Fifth Avenue, in New York City. Six months before his death on April 9, 1959, Wright has standing on the scaffolding of the museum dressed in his usual attire of a long scarf around his neck and a wide-brimmed hat.
Career Details After moving to Chicago and working with the architect, Joseph Silsbee, Wright began to undertake his own commissions and projects for private residential home design. In 1888, he joined the firm of Adler and Sullivan, where he primarily designed homes. Wright left
S t u d e n t s
8 7 7
F r a n k
L l o y d
W r i g h t
niture, and metal bound plate glass doors and windows. When he built he Unity Temple Church, 1905-1906, Wright used poured concrete for the building’s edifice.
Chronology: Frank Lloyd Wright 1867: Born. 1887: Became draftsman for architect Joseph Silsbee. 1888: Joined architectural firm Adler and Sullivan. 1893: Formed his own architectural firm. 1911: Built the famous home called Taliesin in Wisconsin. 1915: Designed the Imperial Hotel in Tokyo Japan. 1931: Started the Taliesin Fellowship. 1959: Designed the Guggenheim Museum in New York City. 1959: Died.
Sullivan in 1893 and established his own business. From 1893-1910, Wright built approximately 273 houses, many of which were the “Prairie-house style”—a combination of Japanese design elements and American influences. Wright believed that American architecture should reflect the environment in which it was built, the environment of the frontier, and of the abundance of land. Wright described his work as “organic architecture, that which proceeds, persists, creates, according to the nature of man and his circumstances as they both change. “He created homes with strong horizontal lines and shapes, the roofs were low pitched with large overhangs, and with flourishes that created a sense of the horizon and of spaciousness. The inside of his homes, influenced by Japanese designs, had large open spaces, huge central rooms, few closed corners, many large windows, and a geometric emphasis in the room’s decor. His houses were unadorned, nothing “fancy” or “fake” or unnecessary was present. His ceilings were built high—cathedral ceilings—and many of his houses were heated with radiant heat—coils built into the concrete slab floors which circulated warm water through the coils to radiate heat into the home evenly. And since automobiles had become easier to start, he stopped building garages and instead attached simple carports that would protect the car from heavy snow but retain the open feel of the total design. During this time, Wright built two of his best-known nondomestic structures. In 1904, he built the Larkin Administration Building which was the first office building in the United States to have air conditioning, metal fur-
8 7 8
B u s i n e s s
In 1910, a portfolio of Wright’s work was published in Berlin and subsequently influenced the younger generation of modern architects in Europe. In 1911, Wright built his private residence, Taliesin which had burned down and rebuilt twice. In 1915, Wright was commissioned to design the Imperial hotel in Tokyo, Japan, a task that took seven years. He included many design innovations that essentially protected the building from a devastating earthquake that struck the area in 1923. He gained great esteem in Japan for this accomplishment— building a tall hotel that was earthquake proof. During the 1920s, Wright developed a new construction method using pre-cast concrete blocks that were reinforced with metal. Several houses were built with this new method, of which the most notable is the Mallard house in Pasadena, California. Wright’s personal life was in a shambles during this decade and his professional life was greatly affected—commissions were not as numerous and many commissions that Wright did have were postponed or cancelled due to the Depression. During the early 1930s Wright devoted his time to writing and lecturing. In 1931, Wright set up the Taliesin Fellowship, and turned his residence into a studio-workshop for apprentices who would pay to study with him and work on Wright’s commissions. As the economy in the country stabilized, building resumed, and Wright designed two well known buildings: the Kaufman House, which was cantilevered over a waterfall at Bear Run, Pennsylvania, and an administration building for the S.C. Johnson and Son Company in Racine, Wisconsin. Wright also kept himself busy designing houses and communities that he thought were the perfect answer to modern society. For example, Broadacre City was a decentralized community with no distinction between town and country, and he designed homes that would reflect and ideal, democratic America—Usonia. In 1938, he built Taliesin West, a permanent desert camp made of stone, wood and canvas, near Phoenix Arizona. During the 1940s and 1950s, Wright continued to design and build innovative and impressive structures. During this time, his designs were perhaps more varied and radical than previous decades—college campuses, crescent-shaped houses, circular houses, and lastly, the unprecedented concrete, spiral-shaped, Guggenheim Museum. Although his work has been criticized as impractical and expensive, none of his structures have sustained damages due to faulty engineering.
Social and Economic Impact Frank Lloyd Wright’s designs of homes and buildings have inspired generations of architects, including
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
F r a n k
much of what is called “modern architecture.” His influence is international—many other countries have considered Frank Lloyd Wright’s designs as a major influence on their contemporary styles. More than 30 states in the United States possess Frank Lloyd Wright structures and most architectural critics agree that every state in the country has buildings that reflect Wright’s style. His many imitators constitute Wright’s greatest success, even if his more severe designs are changed and distorted, the general horizontal style of Wright’s prairie architecture created a distinct shape of architectural content that has influenced the way Americans see modern architecture. His brilliant designs of Taliesin West, his Arizona headquarters; the inexpensive Usonian homes; the great Kaufman House, built over a waterfall in Pennsylvania; his designs for the Imperial Hotel in Tokyo, and the Guggenheim Museum in New York City are all breathtaking examples of his great success as an architect and an artist.
L l o y d
W r i g h t
Sources of Information Bibliography Blake, Peter. Frank Lloyd Wright: Architecture and Space.Baltimore: Penguin Books, 1964. Brooks, H. Allen. The Prairie School: Frank Lloyd Wright and His Midwestern Contemporaries. Toronto: University of Toronto Press, 1971. Brooks, H. Allen, ed. The Writings of Wright. Cambridge: MIT Press, 1983. Byers, Paula K., and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography.Detroit: Gale Research, 1998. Current Biography Yearbook. New York: H. W. Wilson, 1959. Jencks, Charles. Modern Movements in Architecture. Garden City, NY: Anchor Press, 1973. Secrest, Meryle. “An Architect with Love for Nature and Lots of Fight.” Smithsonian. 11 February 1994. Wright, Frank Lloyd. An Autobiography. New York: Duell, Sloan, & Pearce, 1943.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
8 7 9
Orville Wright Wilbur Wright (1871-1948) (1867-1912) Aviation Pioneers
Overview Brothers Orville and Wilbur Wright changed the course of the nineteenth century and beyond with their revolutionary invention, the airplane. There is no area of political or social life that remains untouched by the airplane, a technological concept conceived and developed by two inventors with little formal training.
Personal Life Wilbur Wright is the oldest of the two brothers, born 16 April 1867, near Millvale, Indiana. Orville Wright followed on 19 August 1871 in Dayton, Ohio. There were three other siblings in the family, and Wilbur was born the third to parents Milton and Susan Catharine Koerner Wright. Their parents married in 1859 while she was a student and he was an instructor at Hartsville College in Indiana. Milton was also pastor of a local church, rising to become Bishop of the United Brethren Church. Interestingly in 1878, Bishop Wright brought home a toy helicopter for his children. Wilbur and Orville were intrigued by the novel item, which ignited an early interest in aviation. In their early years, the two boys helped their father edit an evangelical journal called the Religious Telescope. Later, they began a paper of their own, West side News, which was produced on a printing press they devised; Wilbur was the writer. The family moved often, as their father’s clerical duties required frequent relocation, causing the children to attend a variety of public schools. Wilbur and Orville, however, never
8 8 0
O r v i l l e
Orville Wright (left) and Wilbur Wright.
W r i g h t
a n d
W i l b u r
W r i g h t
(Corbis-Bettmann.)
attended college. Wilbur was more athletic, and enjoyed gymnastics. But at the age of 18, a hockey stick struck his face, causing him to undergo extensive medical and dental reconstruction. Wilbur, however, became a recluse after that and seldom ventured far from home. Of the two brothers, Wilbur was the more mature, meticulous partner in their ventures. He was the one who attended to detail, thought out the process and more often brought a project to completion. Orville, on the other hand, was the ideas man, full of enthusiasm and spontaneity. He was the eternal dreamer, always coming up with an idea or concept. He had a passion for reading and tinkering. Wilbur finished high school; Orville did not.
The turning point for the boys came in 1892, when the brothers bought two new safety bicycles, which had chain-driven gearing and wheels that were the same size, a noticeable difference from the existing awkward twowheelers. Within one year, they opened their own bicycle outlet and repair shop, and by 1896, they were selling their own Wright Special bicycle. Business was booming and, subsequently, Orville abandoned his journalism career for the shop.
B u s i n e s s
S t u d e n t s
L e a d e r
P r o f i l e s
f o r
Something else happened in 1896 that refocused their interests on faster moving objects. A tragic crash by a German glider pilot caught their attention, and renewed their interest in flying. Throughout the rest of their lives, the Wright Brothers worked to perfect their invention.
8 8 1
O r v i l l e
W r i g h t
a n d
W i l b u r
W r i g h t
Chronology:
perimental work on mechanical problems of interest to him, none of which proved to be of any significance. His chief public activity was service on the National Advisory Committee for Aeronautics, the predecessor for an agency of the National Aeronautic and Spacae Agency. He was a member from its inception by President Woodrow Wilson in 1915 until January 30 1948, when he died of an heart attack.
Orville Wright Wilbur Wright
Career Details
1867: Wilbur born. 1871: Orville born. 1893: Opened Wright Cycle Shop. 1901: Built wind tunnel. 1903: First flight lasted 12 seconds. 1906: Received a patent for their flying machine. 1908: Received government contract for airplanes. 1912: Wilbur died. 1915: Orville sold rights to firm. 1948: Orville died.
Recognized as a scientific pioneer, Orville received several honorary degrees: from Earlham College in Indiana and Royal Technical College of Munich in 1909, from Yale in 1919 and from Harvard in 1931, as well as a doctorate of Engineering from the University of Dayton in 1943. Wilbur received honorary degrees from Earlham College in 1909 and Oberlin College of Ohio in 1910. Both brothers were awarded a medal from the French Academy of Sciences in 1909. Orville received the Langley Medal from the Smithsonian Institution in 1910, the Elliot Cresson Medal from the Franklin Institute in 1914, a Cross of an Officer of the Legion of Honor in 1924, and the Distinguished Flying Cross in February of 1929. Orville was also the first recipient of the Daniel Guggenheim Medal in 1930. Orville was also a member of various aeronautical and technical societies, both in the United States and abroad. In 1940, he was issued an honorary pilot certificate #1 by the new Civil Aeronautics Authority. In 1944, at the age of 73, Orville took the pilot’s controls for the last time, flying Lockeheed’s fast new C-69 Constellation, nicknamed “Connie.” Until their deaths, the brothers were inseparable. They never married. Orville once said: “You can’t support a wife and a flying machine, too.” Wilbur died first, in Dayton on May 30, 1912 at the age of 44. It was a devastating blow for Orville, who never really recovered from his brother’s death. Three years later, Orville sold his rights to the firm, choosing instead to conduct ex-
8 8 2
B u s i n e s s
The Wright brothers knew absolutely nothing about flying. But they had a deep interest in it. They began to educate themselves systematically in the theory and the art of flying. They were unique in their approach. The rest of the world was enthralled with the combustion engine that had been adopted for use in the automobile, another breakthrough invention that continues to influence civilization to this day. The brothers ignored all of that and, after watching two birds in flight in 1899, concluded the pilot had to be able to control every movement of the vehicle under wind power, thus being able to move horizontally, vertically, and left to right. In fact, their greatest contribution to the science of aerodynamics was solving the three-axis control problem. By 1903 the brothers had solved that problem, and also had determined the amount of engine power needed to lift their most advanced biplane glider. The brothers flew double-winged kites and gliders in order to gain experience and to test data. Soon, though, the time had come to test the theories. After consulting with the U.S. Weather Bureau, they chose an area of sand dunes near the small town of Kitty Hawk, North Carolina, as the site for their experiments. In September 1900 they set up camp there and began the work that culminated three years later in success. By 1903 they were ready. Time magazine described the aircraft as “a great, wide box kite, with struts supporting vertical and horizontal rudders far out in the rear. The engine was at one side of the flyer’s seat, so that if the plane tumbled, it would not fall on him.” The local undertaker sat nearby. Orville was at the helm of the completed aircraft, Flyer 1. On December 17 it took off, flying 120 feet in 12 seconds. By the end of the day, however, on its fourth flight with Wilbur at the controls, the plane stayed in the air for 59 seconds and traveled 852 feet. Only five people witnessed this historic event. Michael Patrick of Popular Mechanics described the scene for the event: “Suddenly, the whole machine lifted from the rail. For 12 long seconds, the Flyer wobbled and snaked 10 feet above the dunes, landing 100 feet away. [John] Daniels had snapped the shutter, freezing in an instant what mankind had sought for millennia.” This historic moment, a world-changing event, went virtually unnoticed by the world, partly because the brothers wanted to secure a patent for their invention. The patent was granted in 1906, and two years later, they
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
O r v i l l e
approached the U.S. government with their invention. On February 8, 1908, the Army Signal Cops accepted the Wright’s bid to make a plane according to Army specifications for $25,000. In Europe, Wilbur had caught the attention of observers there. Finally, the aviation industry was adopting the Wright’s method of aerodynamic control. In the United States, Orville impressed the government with their contract plane, even though the event was marred by a crash a week later. Orville was injured and a passenger was killed.
Social and Economic Impact After years of studying, testing, failing, and starting all over again, it seemed the Wright brothers would finally reap the economic benefits of their invention. In 1909 the brothers formed the American Wright Company, with Wilbur taking the lead in setting up and directing the business as president. Orville was quite satisfied to serve as vice president so he could teach flying and improve aircraft designs. They also received the recognition they sorely deserved. That same year, Dayton threw a surprise parade and party in their honor on June 17th and 18th. In addition, the brothers received gold medals from the City of Dayton, the State of Ohio and the United States Congress. In Europe, they had been awarded gold medals from French and British aero clubs, among others. Timemagazine said “President William Howard Taft received them with fanfare at the White House. Shy, low-spoken Midwestern-bred men, the Wrights were embarrassed by the fuss.” According to the magazine, Wilbur, after sitting through a long-winded dinner in France, stood up and remarked, “The most talkative bird in the world is a parrot. But he is a poor flyer.” Despite the fame, patent infringement battles ensued, with the brothers taking legal action against several manufacturers, and there were other legal disputes as more and more manufacturers entered the growing aviation field. Whatever the legal merits of their case, the airplane was one of those inventions that belonged to humanity as a whole and could not be controlled through patents. The brothers did not object to others imitating their design, but they steadfastly opposed any who used if for profit without recompense to them. The principal focus of their anger was Glenn H. Curtiss, a manufacturer who adopted a European version of their technology. Ironically, the Wright Company merged with the Curtiss firm in 1929 to become Curtiss-Wright.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
W r i g h t
a n d
W i l b u r
W r i g h t
The defeating blow for Orville came when Wilbur died in 1912 of typhoid fever. Orville succeeded to the presidency of the company, but his heart was not in it. His interest was in research; not business. “He had sported a reddish mustache since high school. Once full, almost a handlebar, it was now clipped short, just bushy enough to cover a pair of very thin lips that turned up at one corner when he smiled. He was the enthusiast of the pair, ever on fire with new inventions, and the optimist as well, the one who always saw the brighter side,” was how author Tom Crouch described Orville, according to Edwards Park of the Smithsonian magazine. Wilbur’s death left Orville with little enthusiasm and, in 1915, he sold his interest in the company, and gave his last flying lesson. Orville served as a major in he Army Air Service as a technological adviser at Dayton. At age 47, he was no longer interested in flying. The legacy left by Orville and Wilbur is undisputed. “In classic American fashion — in a pattern that would give birth to such age-defining products as the Model T and the Apple personal computer — a breakthrough that would fundamentally alter society was the product of inspired tinkering by dedicated shade-tree mechanics,” Time magazine said. That sums up the life of the Wright brothers who literally turned flying into a reality. Until they came along, it was merely something to dream about. The airplane has changed civilized life in every respect. Travel times have been greatly reduced, places that were once unreachable by boat or horse, were now within reach, wars could now be fought in the air, medical supplies, food and other necessities can be delivered quickly, and the U.S. mail system became that much faster. Without doubt, the two brothers ushered in the age of flight, leaving their fingerprints throughout aviation history.
Sources of Information Bibliography Byers, Paula K., and Suzanne M. Bourgion, eds. Encyclopedia of World Biography, 2nd ed. Detroit: Gale Research, 1998. The Editors of Time. Great People of the 20th Century. Time Books: New York, New York, 1996. Park, Edwards. “Around the Mall and Beyond.” Smithsonian,October 1993. Patrick, Michael. “90 Years of Flight: In Celebration of the Anniversary of the Wright Brother’s Triumph,We Spotlight Aviation’s Defining Moments.” Popular Mechanics, December 1993.
S t u d e n t s
8 8 3
William Wrigley, Jr. (1861-1932) Wm. Wrigley Jr. Company
Overview With a flair for sales and marketing, William Wrigley Jr. developed Wrigley’s Spearmint into the best-selling chewing gum in America. The company’s Juicy Fruit brand also became well-known, and when Doublemint was introduced in 1914, it soon became the favorite. Wrigley expanded the company internationally, opening plants in other countries and advertising in more than 30 languages. One of Wrigley’s many interests was baseball, and he acquired controlling interest in the Chicago Cubs and built the fabled Wrigley Field. Following his death, the baseball club was run by his son, Phillip K. Wrigley. When Phillip and his wife both died in 1977, the family was forced to sell the club to pay inheritance taxes.
Personal Life William Wrigley Jr. was born on September 30, 1861, in Philadelphia, Pennsylvania. He was the oldest of William Wrigley and Mary A. Ladley’s nine children. An entrepreneurial strain ran through the family, as several generations before and after William Jr. were manufacturers. By all accounts Wrigley was a difficult student, and he was expelled from his Philadelphia grammar school class on several occasions. A restless child, he was strong minded and energetic, and often got into mischief. His father more than once had to go to the principal’s office to take his son home. One year he ran away to New York, spending the summer there doing odd jobs such as selling newspapers and working as a cook’s helper on ships docked in the harbor. At night he slept in doorways or
8 8 4
W i l l i a m
William Wrigley, Jr.
W r i g l e y ,
J r .
(Corbis-Bettmann.)
under delivery wagons with other young boys who lived on the streets. When the weather started turning cold, he went back to Philadelphia. He was soon expelled from school, this time for good, so his father put him to work in his soap factory hoping to straighten out his wayward son. He was given the most unpleasant job in the factory, stirring pots of boiling soap with a wooden paddle. The work made him physically strong, and he maintained this strength throughout his life by exercising regularly. When he was 13, Wrigley persuaded his father to let him be a traveling salesman for the soap factory. His territory included the rural towns of Pennsylvania, New York, and New England. To the surprise of his parents, he showed a real talent for salesmanship. He got along with all types of people, and once said that one of the keys to selling was to be “always polite, always patient, and never to argue.” Wrigley married Ada E. Foote in 1885, and they had two children. Their daughter, Dorothy, and a son, Philip Knight (P.K.) Wrigley. William Wrigley Jr. died in 1932 in Phoenix, Arizona, at the age of 70. P.K. took over the family business after his father’s death, and his son William III succeeded him in 1977.
ness for himself as a manufacturer’s representative. His uncle, William Scotchard, lent him $5,000 on the condition that his son become a partner in the business. The first product they sold was Wrigley’s father’s soap. They soon added baking powder to their line. Demonstrating his talent for marketing, Wrigley gave premiums such as free toiletries or cookbooks with all his products. In 1892 he contracted with Zeno Manufacturing Company to supply him with chewing gum, so that he could enclose a couple of sticks of gum with each can of baking powder. He soon found out that many customers were more interested in the gum than the baking powder, and he decided to focus exclusively on selling gum. A tireless salesman, he traveled around the country visiting candy jobbers and large merchants to persuade them to carry his product. In his first year in the gum business he spent 187 nights on the road in railroad sleeping cars.
Wrigley continued to work on and off for his father until 1891, when he moved to Chicago to go into busi-
As before, he offered premiums to store owners and others who would sell his gum. He started by offering free counter scales, then followed up with other premiums such as free cash registers, coffee makers, cheese cutters, and even display cases. Wrigley believed that even though premiums were expensive to his company, they would make store owners show his gum more prominently than that of his competitors. He scored a marketing coup when he arranged to have his gum displayed by the cash register in restaurants, where it quickly became a popular impulse purchase.
B u s i n e s s
S t u d e n t s
Career Details
L e a d e r
P r o f i l e s
f o r
8 8 5
W i l l i a m
W r i g l e y ,
J r .
Chronology: William Wrigley, Jr. 1861: Born. 1891: Established own business in Chicago as a manufacturer’s representative. 1892: Contracted with Zeno Manufacturing Company to produce chewing gum. 1893: Introduced Wrigley’s Spearmint and Juicy Fruit gums. 1910: Wrigley’s Spearmint was America’s top-selling chewing gum. 1911: Bought out Zeno Manufacturing and renamed it Wm. Wrigley Jr. Company.
In 1914 Wrigley introduced Doublemint chewing gum, and it quickly became the most popular gum in America. In 1915 Wrigley mailed four free sticks of gum to everyone listed in every telephone directory he could find. He repeated this marketing effort four years later, even though the number of people listed had grown to 7 million. In his lifetime, Wrigley spent more than $100 million on advertising, making him the largest singleproduct advertiser of his day. Wrigley was also an avid baseball fan, and he enjoyed watching the Chicago Cubs play. He bought stock in the Cubs in 1916 and in 1921 acquired a controlling interest. He built historic Wrigley Field for them to play in. The Wrigley family remained owners of the Cubs until 1977, when the club was sold to pay inheritance taxes. In 1921 Wrigley also acquired a minor league baseball team in Los Angeles, and later he bought another team in Reading, Pennsylvania. In 1919 he purchased Santa Catalina Island off the coast of southern California and transformed it into a resort. He was a shrewd investor. His other business interests included mines, hotels, railroads, and banks.
1914: Introduced Doublemint chewing gum. 1916: Began buying stock in the Chicago Cubs baseball team, eventually acquiring a majority interest. 1919: Purchased Santa Catalina Island off the coast of California. 1921: Acquired minor league baseball team in Los Angeles. 1924: Built the Wrigley Building in Chicago. 1928: Paid $1.9 million to settle lawsuit with L.P. Larson over the Spearmint trademark. 1932: Died.
Wrigley’s first two flavors of gum, introduced in 1892, were called Lotta Gum and Vassar. In 1893 he introduced Juicy Fruit and Spearmint. Through heavy advertising, he built the Spearmint brand into the No. 1 chewing gum in America. In 1907, a year of economic depression, he spent $284,000 on advertising, and sales of Spearmint reached $1 million the next year. By 1910 Wrigley’s Spearmint was America’s top selling chewing gum, and Juicy Fruit wasn’t far behind. Wrigley’s motto regarding advertising was “tell them quick and tell them often.” In 1911 Wrigley acquired the Zeno Manufacturing Company and consolidated it with the Wm. Wrigley Jr. Company. He expanded internationally, opening gum companies in Canada in 1910, Australia in 1915, and then in England in 1927. The company advertised in 30 languages, literally teaching the world how to chew gum.
8 8 6
B u s i n e s s
Social and Economic Impact When talking about chewing gum, Wrigley was fond of saying, “We are a five-cent business, and nobody in this company can afford to forget it.” Nevertheless, Wrigley’s “five-cent business” resulted in profits of $8.5 million in 1921 and $12.2 million in 1930. In 1997 Forbes estimated the Wrigley family fortune to be worth $2.2 billion. Sometimes called America’s greatest salesman, Wrigley showed how advertising and marketing could be used to develop strong brand recognition. While some of his early gum flavors have disappeared, Spearmint, Doublemint, and Juicy Fruit have remained strong brands throughout the twentieth century. With domestic consumption of chewing gum falling in the latter part of the century, the company found strength in overseas sales in some 111 countries, which nearly equaled U.S. sales. The company remains the world’s largest chewing gum manufacturer, and in the 1990s the Wrigley Company enjoyed record profits.
Sources of Information Contact at: Wm. Wrigley Jr. Company 410 N. Michigan Ave. Chicago, IL 60611 Business Phone: (312)644-2121 URL: http://www.wrigley.com
Bibliography Conlin, Michelle, et al. “Year of the Double: United States.” Forbes, 28 July 1997, 134.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
W i l l i a m
W r i g l e y ,
J r .
Darby, Edwin. The Fortune Builders. Garden City, NY: Doubleday, 1986.
Olsen, Frank H. Inventors Who Left Their Brands on America. New York: Bantam Books, 1991.
Fucini, Joseph J., and Suzy Fucini. Entrepreneurs: The Men and Women Behind Famous Brand Names. Boston: G.K. Hall and Co., 1985.
Van Doren, Charles, ed. Webster’s American Biographies. Springfield, MA: G. & C. Merriam Co., 1979.
Ingham, John N. Biographical Dictionary of American Business Leaders. Westport, CT: Greenwood Press, 1983.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Who Was Who in America, vol. 1. Chicago: A.N. Marquis Co., 1943.
S t u d e n t s
8 8 7
Samuel Wurtzel Alan L. Wurtzel (1907-1985) (1933-) Circuit City Stores Inc.
Overview Father and son Samuel S. Wurtzel and Alan L. Wurtzel propelled the Circuit City Stores into a conglomerate specializing in consumer electronics, digital video programming, music software, and automobile sales. Today it is the United States’ largest retailer of brand name consumer electronics and appliances. This remarkable growth started from the single store founded by Samuel S. Wurtzel in Richmond, Virginia, in 1949.
Personal Life Samuel S. Wurtzel was born in Sea Bright, New Jersey, March 2, 1907, the son of Jacob and Flora Wurtzel. He was an accounting student at the Pace School, at City College, and New York University. He married Ruth Mann in 1932. They had two sons, Alan and David. Samuel Wurtzel died in 1985. Alan L. Wurtzel, the older son, was born in Mount Vernon, New York, September 23, 1933. He received his undergraduate degree from Oberlin College in 1955. He did postgraduate work at the London School of Economics from 1955 to 1956. Alan earned his law degree from Yale University in 1959, graduating with honors. He was admitted to the Connecticut bar in 1959, the Washington, D.C., bar in 1960, and the Virginia bar in 1968. Wurtzel worked as a law clerk for Chief Judge David L. Bazelon of the U.S. Court of Appeals in Washington, D.C. From 1960 to 1966, he was an associate of a Washington law firm, and served from 1965 to 1966 as the legislative assistant to Senator Joseph Tydings. In
8 8 8
S a m u e l
W u r t z e l
a n d
A l a n
L .
W u r t z e l
1988, Wurtzel married Irene C. Rosenberg. His children from a previous marriage are Judith Halle, Daniel Henry, and Sharon Lee. Both men belonged to numerous local organizations. Sam was on the board of directors of both the Richmond Area Community Council and the Greater Richmond Community Foundation. Father and son were both involved in the local Jewish community, serving as members of the board of directors of the Jewish Community Center. Sam also served as the president of the Richmond Jewish Community Council. Alan Wurtzel has been involved in numerous boards and committees on the topic of education. He was a trustee of Oberlin College, the director of the Washington Educational Television Association, a member of the Virginia State Board of Education, and a member of the Commission on the Future of Public Education in Virginia.
Samuel Wurtzel worked for nine years, beginning in 1938, for Packing Products in New York City. In 1949, he was on vacation with his family in Richmond when a local barber informed him that the very first Southern TV station was going to air. Wurtzel began thinking about the possibilities of this fresh market for televisions. Later that year, he moved his family to Richmond, Virginia, where he opened a small television shop on West Broad Street as the Wards Company. The company’s name was an acronym derived from the first names of each member of the Wurtzel family, Alan, Ruth, David and Samuel. At first selling only televisions, the store gradually diversified its product line and began selling other small appliances. Wards became a public company in 1961. In 1966, Alan abandoned his private law practice and entered the business with his father. Throughout the 1960s and 1970s the small company expanded by buying other appliance stores. Alan correctly predicted that the stereo business would slow down and steered the company toward becoming a full-line electronics store. In 1975, the company made a daring move, spending half its worth to open an electronics and appliance superstore. Since that time, the company has become known for its large stores. Samuel Wurtzel served as president until 1970 and as chairman until 1984. Alan become vice president in 1968, and succeeding his father as president in 1970, chief executive officer in 1973, and chairman in 1984. Over the years, Wards, renamed Circuit City in 1984, was a pioneer in the electronics business. In the mid1970s, the company attracted customers to their superstore with a combination of product variety, low prices, and a high level of customer service. The formula was responsible for Circuit City’s explosive growth in the 1980s and 1990s. Circuit City stores operate as virtual supermarkets for televisions, stereos, and consumer
L e a d e r
Samuel Wurtzel Alan L. Wurtzel 1907: Samuel S. Wurtzel born. 1933: Alan L. Wurtzel born. 1938: Samuel S. Wurtzel worked for Packing Products Co. 1949: Opened television store in Richmond, Virginia, as Wards Company. 1955: Alan L. Wurtzel graduated from Oberlin College.
Career Details
B u s i n e s s
Chronology:
P r o f i l e s
f o r
1959: Alan L. Wurtzel graduated from Yale University law school. 1966: Alan L. Wurtzel joined Wards Company. 1970: Replaced his father as president. 1984: Replaced his father as chairman and company renamed Circuit City Stores, Inc. 1985: Samuel S. Wurtzel died. 1985: Alan L. Wurtzel stepped down as chairman for a position of vice chairman of Circuit City Stores, Inc.
household appliances. Alan’s successful marketing philosophy was to dominate a local market by establishing several stores near to each other. By doing this, the stores could maximize the cost of advertising and support each other with stock during sales and promotions. The company at first dominated Southern markets in the United States. In the 1980s, Alan tried to establish the company in New York. Though he knew he was entering a competitive market, where price slashing was rampant, he commented, “I am convinced there are a sizeable number of people who don’t want to haggle.” Uncharacteristically, Alan’s instincts were wrong, and the company failed its attempt to dominate a local market. Expensive advertising and competition drove him away. After 14 years, Alan left his position as chief executive officer in 1986, giving the position to Richard Sharp. Sharp had been involved with the company as a designer of its sales computer system. Alan remained involved in the company as the chairman for several more years.
S t u d e n t s
8 8 9
S a m u e l
W u r t z e l
a n d
A l a n
L .
Constantly mindful of its rising competitor Best Buy, Circuit City looked to gain entrance into new markets and industries. By the early 1990s, the company introduced CarMax, an automobile superstore. The company used the same principles that had been successful in the past for the Wurtzel family: friendly, no-haggling pricing, wide selection, and attention to customer service. This was a revolutionary concept in automobile retailing that changed the way cars are sold, and CarMax has since developed imitators. In 1994 Wurtzel stepped down as chairman and was succeeded by Richard Sharp, who was the first chairman outside the Wurtzel family since the business had opened 45 years earlier. Wurtzel became the company’s vice chairman.
Social and Economic Impact It was during Alan Wurtzel’s involvement with Circuit City that he began to realize the problems with the education system in the United States, and especially with the local education system. Wurtzel and his staff were frustrated with trying to hire young people who could “read, write, and interact” on a level that made them capable of working in Circuit City stores. A 1995 article in Buffalo News from Buffalo, New York, reported that according to Wurtzel, managers in the chain had to interview 20 young people before they found one with sufficient skills. Wurtzel felt that the education system was not training young people to keep up with the needs of the work force. In a 1991 article for the Virginia Forum, Wurtzel outlined a strategy for improving productivity and wages in Virginia. One of the problems that he identified was that “Virginia schools have not adequately prepared graduates, and certainly not dropouts, to hold the more challenging jobs of a fast-changing, high-productivity workplace.” Wurtzel emphasized the importance of education within his own company. New employees must train for at least two weeks before starting to work, and they continue to receive training as they continue to work in the company. Wurtzel’s concern led him to become involved in numerous educational endeavors. Wurtzel has continued to lobby for reform in education and has been able to influence educational policies in Virginia as a member of the state board of education and the Commission on the Future of Public Education in Virginia. He emphasized the importance of connecting education to work, suggesting students who do not go to college should be offered programs in which they are trained and supported in a variety of ways, including through apprenticeships. His other suggestions have included the establishment of increasingly high, measurable standards for Virginia schools and punishing schools that do not reach the grad-
8 9 0
B u s i n e s s
W u r t z e l
ually phased-in standards. Both Alan and his father had always been involved in issues that affected local business and their communities. The Wurtzels have helped revolutionize the consumer and appliance retail business. Pioneering the electronics superstore concept, Circuit City Stores, Inc. helped change the way consumers shop for televisions, stereos, and personal electronics equipment. By emphasizing customer service, Circuit City has been able to combine the concept of the electronics and appliance supermarket with the personal service of smaller stores. The formula of variety and low prices has proven to be an unbeatable combination that has fueled the company’s growth from a local Richmond, Virginia, appliance store to a nationwide chain. In such a volatile business as consumer electronics and appliances that Circuit City has persisted and flourished for half a century is testimony to the leadership and vision of the company’s founder Samuel S. Wurtzel and his son Alan L. Wurtzel.
Sources of Information Contact at: Circuit City Stores Inc. 9950 Mayland Dr. Richmond, VA 23233 Business Phone: (804)527-4000 URL: http://www.circuitcity.com
Bibliography Buzbee, Sally Streff. “‘Nation at Risk’ Still Falls Short.” Buffalo News, 6 April 1995. Circuit City Stores, Inc. “Financial Reports & Media Releases.” Richmond, VA, 1998. Available from http://www.circuitcity.com. “Circuit City Stores, Inc.” Washington Post, 27 April 1998. Dun & Bradstreet Reference Book of Corporate Managements. 1996 ed. Parsippany, NJ: Dun & Bradstreet, 1995. Gilligan, Gregory J. “Circuit City’s Sharp Advances.” Richmond Times-Dispatch, 15 June 1994. Hoover’s Handbook of American Business 1997. Austin, TX: Hoover’s Business Press, 1996. McDonald, Greg. “Debate on Education Focuses on National Testing Program.” Houston Chronicle, 10 September 1997. Who’s Who in America. Providence, NJ: Marquis Who’s Who, 1997. Who’s Who in Finance and Industry. Providence, NJ: Marquis Who’s Who, 1974. Wurtzel, Alan L. “Productivity In Virginia’s Workforce.” Virginia Forum, June 1991. Available from http://www.forum-media.org/va/. Wurtzel, Alan L. “Raising Achievement Requires Higher Standards and More Money.” Richmond Times-Dispatch, 10 May 1997.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
Darryl Zanuck Overview As the head of two major Hollywood studios during its golden age, Darryl F. Zanuck was the youngest, fiercest, and most flamboyant of the tycoons who helped shape the American film industry. “As a trail blazer,” Time magazine declared, “Zanuck has no Hollywood equal.” During his reign in Hollywood Zanuck played a pivotal role in the two major developments in motion picture technology, sound films in the 1920s and widescreen films in the 1950s. He was the last of the infamous Hollywood moguls who controlled every aspect of film production including discovering and hiring actors and directors, supervising scripts, and overseeing every detail of movie making.
(1902-1979) Twentieth Century-Fox, Inc.
Personal Life Darryl F. Zanuck was born September 5, 1902, in Wahoo, Nebraska, a small town of 2,000, west of Omaha. His mother, Louise, was the daughter of Henry Torpin, the owner of Wahoo’s only hotel. His father, Frank, of Swiss descent, was a former Iowa farm boy who worked as a night clerk in the Wahoo hotel. Alcohol and gambling drove Zanuck’s mother from his father to Los Angeles where she remarried. Zanuck alternated living with his mother and stepfather, with whom he did not get along, in California and with his grandparents in Nebraska until 1916. Having lied about his age, he was able to pass the army physical one day before his 14th birthday. During World War I, he served at the frontlines in France for almost a year. He was used primarily as a messenger or runner because of his small size.
8 9 1
D a r r y l
Z a n u c k
Darryl Zanuck and French actress, Juliette Greco, wait between the shooting of two scenes in his production “The Roost of Heaven”. (AP/Wide World Photos, Inc.) During the war, some of his letters were printed in the American Expeditionary Force newspaper, Stars and Stripes, which helped to determine his later career. He left the army in 1920 and went to New York. He began to write stories, making his first sale to a magazine after a year. He left for Hollywood where he worked odd jobs as a salesman, selling shirts and newspaper subscriptions; as a longshoreman; and as a shipyard worker. While selling hair tonic, he wrote a hundred-page testimonial for the tonic and convinced the maker to publish a book, Habit and Other Short Stories, consisting of the testimonial, a short story, and two scenarios. Movies were made out of the short story and scenarios, and Warner Brothers hired Zanuck as a writer. Zanuck had seen a German shepherd named Rinty in the film Where the North Begins and convinced Jack and Harry Warner that he could make the dog a star. Renamed Rin Tin Tin, the dog was featured in a successful series of films that Zanuck wrote. In 1927 Zanuck was appointed head of production at Warner Brothers and his Hollywood career as a studio executive had begun. Zanuck married actress Virginia Fox in 1924. They had three children, Darrylin, Susan, and Richard. An avid polo player during the 1930s, Zanuck took to carrying a sawed-off polo mallet that became his trademark. During World War II, Zanuck was commissioned as a lieutenant colonel in the U.S. Signal Corps to make training films and combat documentaries. He was promoted to colonel in 1942, and he accompanied the Allied command during the invasion of Africa to make a photographic record
8 9 2
B u s i n e s s
of the event. Zanuck became the first producer to receive the prestigious Irving G. Thalberg Memorial Award in 1937. He also received the Legion of Merit for his services during World War II. In 1956, Zanuck moved to Paris. He left his wife and family to start his own company, DFZ productions. He later reunited with his wife in 1974 on the occasion of their 50th anniversary. Following a heart attack in 1979, he died of pneumonia.
Career Details When Zanuck went to work at Warner Brothers in 1924, he learned to edit, direct, cast, and produce movies with such skill and speed that by 1927 he was given his own production unit and a share of the profits. It was Zanuck who urged the use of spoken dialogue in The Jazz Singer that caused a sensation and initiated the “talkies.” Zanuck also originated the series of gangster films, such as Little Caesar (1930) and The Public Enemy that became a Warner Brothers trademark. By 1929 Zanuck was Warner’s general production chief, and by 1931 he was chief executive in charge of all productions. He is credited with making stars of Tyrone Powers, James Cagney, Henry Fonda, Betty Grable, Edward G. Robinson, and Gregory Peck. A quarrel with Jack L. Warner about the necessity of salary cuts during the Depression caused Zanuck to leave Warner Brothers in 1933. He joined Joseph M.
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
D a r r y l
Schenck, then president of United Artists, in creating Twentieth Century Pictures, which eventually merged with Fox Films to become Twentieth Century-Fox. At the age of 33, Zanuck was in charge of every aspect of filmmaking as vice president of production. He held this position until 1956. During his years at Twentieth Century-Fox, Zanuck pioneered the use of authentic locations in foreign countries and produced films such as The Grapes of Wrath (1940) and How Green Was My Valley (1941), which many in the industry considered too radical for a major Hollywood studio. Under Zanuck’s leadership, Twentieth Century-Fox became known as the studio that was not afraid to address contemporary problems such as anti-Semitism in Gentleman’s Agreement (1947), insanity and mental institutions in The Snake Pit (1948), racial prejudice in No Way Out (1950), and the psychological pressures of war in Twelve O’Clock High (1949). At story conferences, Zanuck would help supply characterizations and structural changes that provided focus and momentum to the films. When television began to erode movie receipts in the 1950s, Zanuck introduced CinemaScope or the widescreen film to help restore the movies’ magic. As Zanuck declared, “The pictures we make from now on will be twice as big and twice as costly.” In 1956 Zanuck resigned as head of production to start his own independent company, one of his productions was the epic treatment of the Normandy landing in World War II, The Longest Day (1962). Meanwhile, Twentieth Century-Fox was on the brink of bankruptcy caused by the escalating costs in its production of Cleopatra (1963). The company’s board of directors ousted the incumbent president and elected Zanuck as his replacement. Zanuck named his son, Richard, as head of production. Under Richard Zanuck’s guidance Twentieth Century-Fox had a number of box office hits such as The Sound of Music (1965) and Planet of the Apes (1968). Darryl Zanuck, working in New York as chairman, missed the creative side of the studio and, perhaps out of jealousy over his son’s success, fired Richard and took control of the studio in 1970. The move backfired, however, and several major stockholders forced Zanuck to resign as chairman in 1971. He kept the honorary title of president emeritus.
Z a n u c k
Chronology: Darryl Zanuck 1902: Born. 1916: Joined army at the age of 14. 1924: Hired by Warner Brothers as a writer. 1927: Appointed Warner Brothers’ head of studio production. 1933: Co-founded The Twentieth Century Co. (later Twentieth Century-Fox). 1937: Received the Irving G. Thalberg Award. 1953: Introduced CinemaScope. 1956: Resigned as head of production at Twentieth Century-Fox. 1962: Elected as president of Twentieth Century-Fox. 1971: Forced to resign as chairman of Twentieth Century-Fox. 1979: Died.
As an innovator in sound and wide-screen technology, Zanuck was one of the pioneers in the modern film business that defined the industry’s standards. Throughout Zanuck’s long career he had the courage of his convictions. As his son Richard remarked, “He had guts. He was willing to take the responsibility and the blame. He would say yes or no. They would ask is it any good, and if he thought it was, that was enough to put it into production.” Although the modern film industry has now long since changed away from the control of a single individual, Zanuck’s career offers an important lesson in the power of initiative and intuition to create lasting entertainment and art.
Social and Economic Impact Zanuck was one of the last in a generation of Hollywood tycoons who ruled every aspect of their studios. His style was like that of men such as Louis B. Mayer, Jack L. Warner, and Adolph Zukor, who dominated the production of their films. Running his studio with an iron hand and dictating every aspect of a films production from scripts to casting, Zanuck put his individual stamp on a host of classic Hollywood films that have entertained audiences around the world and in many cases have helped to define America abroad.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
Sources of Information Contact at: Twentieth Century-Fox, Inc. 10201 W. Pico Blvd. Los Angeles, CA 90064 Business Phone: (310)369–1000
Bibliography Bernstein, Matthew. “Memo from Darryl F. Zanuck: The Golden Years at Twentieth-Century Fox.” Film Quarterly, Fall 1984.
S t u d e n t s
8 9 3
D a r r y l
8 9 4
Z a n u c k
Custen, George F. Century’s Fox: Darryl F. Zanuck and the Culture of Hollywood. New York: HarperCollins, 1997.
Harris, Marlys J. The Zanucks of Hollywood: The Dark Legacy of the American Dynasty. New York: Crown, 1989.
Gussow, Mel. Don’t Say Yes Until I Finishing Talking: A Biography of Darryl F. Zanuck. Garden City, NY: Doubleday, 1971.
Mosley, Leonard. Zanuck: The Rise and Fall of Hollywood’s Last Tycoon. Boston: Little, Brown, 1984.
Halliwell, Leslie. Halliwell’s Filmgoer’s Companion. New York: Scribner’s, 1988.
“One-Man Studio.” Time, 12 June 1950.
B u s i n e s s
L e a d e r
P r o f i l e s
f o r
S t u d e n t s
