Business Ideas and inspiration
This, with Built to last stories should be enough!
Just take the first step. Walt Disney could not find a job either. He created the Disney Corporation.
Some inspiring stories to push forward with:
Whole Foods Market
In 1978, twenty-five year old college dropout John Mackey and twenty-one year old Rene Lawson Hardy, saved and borrowed money from family and friends to open the doors of a small natural foods store in Austin, Texas. Within a year of opening the store, the couple was evicted from their home for using their apartment storage for the store. Homeless and with no place to go they decided to save costs by moving and living at their store full time. Since their store “Saferway” was zoned for commercial use only, there was no shower stall. According to the company’s website, the two instead bathed in the Hobart dishwasher, which had an attached water hose. Eventually Mackey and Hardy moved out of the store and into their own place, and within two years managed a merger with another natural foods store to open up the first Whole Foods Market in Austin, Tx on September 20, 1980. With the markets floor space at 10,500 square feet and with 19 employees, Whole Foods Market became the largest of its kind. In 1984, Whole Foods began expanding to other cities by building stores from the ground up and by acquiring other natural foods stores around the country. In 1992 the company went public, and in 2008 posted $6.5 billion in revenues and $3.2 billion in assets. From the humble beginnings in Austin, Tx in 1978, to being ranked 369 on the Fortune 500, Whole Foods Market is continually rising to the challenge of the market and providing a unique service to America.
Molson Coors
In 2005, Coors Brewing Company merged with Molson to become the fifth largest brewing company in the world. Though Coors has maintained success throughout the 20th and 21st centuries, the road was long and began with the humble story of a German born immigrant by the name of Adolf Coors. Coors became an orphan at the age of 15 and had to support his younger siblings by working at a local brewery in a small Prussian town, in what is now the modern day city of Wuppertal, Germany. Adolph continued to work in the brewing industry until he was 21, when war and unrest in his country caused him to seek opportunity in America. He then stowed away on a ship, and arrived in the United States in 1868 with no money and no job. From there Coors headed west to look for employment; he found one odd job after another, and supported himself until he would cross paths with another German immigrant in Golden, Co.
Based on Adolf Coors initial investment of $2000 in 1872, his company has grown to be one of the largest brewing companies in the world. Coors’ claim to their success in the brewing business is based on what they refer to as the perfect ingredient: water from the Rocky Mountains. Since day one, Coors Brewing Company has marketed the beer in this way. Today, Coors now has $6.2 billion in revenue and $13.5 billion in assets. Coors Brewing Company is another example of an immigrant success story, where persistence, timing, and smart investments can pay off in the long run.
Apple
Most remember the scene in Forest Gump when he explains that he never has to worry about money again because of his investment in the fruit company called “Apple.” Well the truth is that for many investors this was the case. Like many tech companies, Apple started in the garage of a young man by the name of Steve Wozniack. Wozniack was an electronics hacker, and he and his long time friend Steve Jobs had this idea to create a personal computer. In 1976, the two approached a local electronics store to see if they would be interested in buying a personal computer that Wozniack had built. The owner of the store became interested and said he wanted 50 units. Wozniack and Jobs, both penniless at the time, went to a local computer parts supplier and ordered the parts on credit, based on their first purchase order. This was the start of Apple. Though the company has had its ups and downs in its 30-year history, Apple has proven to be the company that produces the industry standard time and time again. From the garage of Steve Wozniack to being ranked 103 on the Fortune 500, Apple continues to grow and prove to be a wise investment for those looking to expand their portfolios to include “fruit companies.”
Nordstrom
In 1887, a 16-year-old boy form Sweden left his home for the promise of America. He arrived in New York City with only five dollars to his name, and unable to speak a word of English. This boy’s name was John W. Nordstrom. His first years in America were surprisingly tough for the young immigrant; he labored in mines and logging camps just to make survive. Nordstrom however persisted, and took manual labor jobs that allowed him to continually move west towards the Pacific Ocean. After struggling for ten years, the 26-year-old Nordstrom picked up the daily newspaper to find that gold had been discovered in Alaska. As the legend goes, he made plans the very next morning to head north to discover his fortune.
After two years of hard labor, difficult terrain, and relentless competition, Nordstrom experienced moderate success, and was able to save nearly $13,000. He then moved to Seattle, Wa to invest his small fortune. In 1901, Nordstrom opened his first shoe store, just 14 years (he was 30) after coming to America. Throughout the 20th Century Nordstrom grew from the one shoe store in downtown Seattle to what is now a multi-billion dollar retail empire.
Dell
Dell was at one time the largest seller of personal computers and servers in the world. Presently Dell is ranked 34 on the Fortune 500, and in 2008 boasted revenues of $61 Billion with assets toping $27.5 billion. The path to the success that Dell now enjoys began with an idea and a $1,000 investment. While attending the University of Texas in 1984, Michael Dell founded the company as PCs Limited. Initial operations of Dell’s company ran from Dell’s dorm room, until he decided to drop out of college to run his company full time. In 1985, the company produced the first computer of its own design, and by 1988 had an initial public offering that valued the company at nearly $80 million.
Electronic Data Systems
In 1962, former presidential candidate Ross Perot founded EDS with $1000. Perot chose the name Electronic Data Systems from potential names he scribed on the back of a pledge envelope during a church service. Perot had been a salesman for IBM before starting EDS, and he was rejected 77 times before EDS acquired its first client. From processing computer tapes and data from their first client to running the IT arm of hundreds of companies a year after its creation, EDS quickly became the country’s leader in providing IT services to American companies.
By the time EDS went public in October 1968, the market value of EDS would be listed at $378 million. Soon thereafter, EDS expanded its operations globally. Today, EDS is ranked 115 on the Fortune 500, and boast revenues of $22.1 billion and has assets topping $19.2 billion. Perot’s experience was perhaps one of the quickest ascensions to wealth on this list.
Mattel
Shortly after World War II, newly-married Ruth and Elliot Handler decided to start a business out of the garage of their Southern California home. Though Mattel is best known as a toy maker, the brand initially produced and sold picture frames. Shortly after opening for business, Handler began making dollhouse furniture with the scraps left over from the picture frames. The couple would soon find out that the toy business was much more lucrative than picture framing. The Handlers had little business experience and even less capital, but the demographics of a baby boom, plus a virtual toy less marketplace afforded the couple a unique opportunity to carve out a niche. Mattel would have their first hit toy in 1947 with the “Uke-A-Doodle,” a miniature plastic ukulele, that proved to be an immediate success that drew large orders.
By 1955 Mattel had grown enough to become a sponsor of the new television program, “The Micky Mouse Club.” Soon after, Mattel released their iconic toy: Barbie. In 1963 the company went public. From the humble beginnings in the garage to the New York Stock Exchange, Mattel is now ranked 413 on the list of Fortune 500 companies. In 2008, Mattel reached $6 Billion in revenues and reported 4.8 billion in assets.
Wrigley
In the spring of 1891, the 29-year-old William Wrigley Jr. moved from Philadelphia to Chicago with only $32 to his name. Soon after arriving in Chicago, Wrigley began selling soap. As an incentive to the customers, if they purchased his soap, he would give them a free can of baking powder. Soon baking powder proved to be more popular than the soap he was selling, so he switched his business. A year later, in 1892, Wrigley used chewing gum as an incentive for buying his baking powder. Again, chewing gum proved to be more popular than baking powder, and so he switched business again. The first brand of chewing gum Wrigley produced was Juicy Fruit in 1893. Through his personal hard work as a salesman and his ability to advertise, Juicy Fruit would soon become the number 1 selling chewing gum in the country.
Wrigley went public in 1919, and since then has seen ups and downs in the market. Wrigley has remained a staple, and perhaps the most visible brand, in the chewing gum business throughout now into the 21st century. A globally distributed brand, Wrigley is one of the the largest gum company in the world, and one of the most successful businesses – in any industry- in the world. In 2008, Wrigley posted revenues of $5.4 billion with a recorded over $5.2 billion in assets.
Starbucks
In 1971, three academics each invested $1350 of their own money into the first Starbucks located in downtown Seattle. English teacher Jerry Baldwin, history teacher Zev Siegel, and writer Gordon Bowker opened the store called Starbucks Coffee, Tea, and Spice. Shortly after opening, and to continue their operations, the three borrowed another $5000 from the local bank. The three partners wanted to pattern their business after Peet’s Coffee and Tea, in Berkley, Ca, which sold dark roast coffee beans and taught customers how to grind the beans and make freshly brewed coffee at home. It wasn’t until the early 1980’s when Howard Shultz entered the picture that Starbucks began focusing not on selling coffee beans, but on making coffee, tea, and espresso drinks for customers inside the store. Though there was much hesitation from the founding partners, this proved to be the business model Starbucks would follow.
Starbucks went public in 1992, and proved to be one of the most successful IPOs that year. With the infusion of public capitol, Starbucks began to strategically expand all over the US, at one point, at the rate of opening one new store per day. Though Starbucks has seen experienced a decline in popularity in the last several years, the brand’s exponential growth is impressive. In 2008, Starbucks was ranked 277 on the Fortune 500. In the same year Starbucks posted revenues of $9.4 billion and recorded assets of $5.3 billion.
eBay Media
Contrary to popular belief, eBay was not created to find Pez Dispensers for the founder’s wife. This was revealed in Adam Cohen’s 2002 book, The Perfect Store, and confirmed later by eBay. The story was fabricated by a public relations manager in 1997 to interest the media and create a public buzz. Regardless of the legitimacy of the story, media interest and public buzz was created, helping to propel the brand into the minds of consumers (and in this case, would-be merchants and barterers as well). In reality, the first item to ever sell on eBay (then AuctionWeb) was a broken laser pointer, by the French born Iranian immigrant and eBay founder, Pierre Omidyar. The transaction closed in September of 1995, not long after Omidyar finished the code for the website in the living room of his Silicon Valley home.
By June 1996, Omidyar’s website had generated around $10,000 in revenue and Omidyar hired his first employee. Soon after this Omidyar left his day job as a computer programmer. By the end of 1996 the total value of items sold on ebay reached $7.2 million and had over 41,000 registered users. With over 250,000 individual transactions reached in 1996, by 1997 eBay began facilitating over 200,000 transactions a month. This caught the attention of a venture capital group who then invested $5 million in the company. From an idea in an average computer programmers living room in 1995 to being ranked 326 on the list of the Fortune 500 in 2008, eBay is the quintessential American success story
1. Henry Ford
It’s tough to think of a man who carried the torch of business further than Henry Ford. Ford became famous for pioneering the assembly line and in the process, becoming the first man to successfully mass produce automobiles. Amazingly, Ford jump started the Ford Motor company with virtually none of his own money. As ‘Venture Capital Sources’ explains, Ford “raised a nominal sum of money from friends for initial working capital purposes. He then proceeded to cleverly negotiate deals with his suppliers that let him purchase parts on credit. This in turn motivated him to sell his cars quickly – at a profit – so as to repay his suppliers. After years of diligently reinvesting those profits back into the business, Ford Motor was an industrial giant – and its creator was forever immortalized as a business legend.
2. John Rockefeller
John Rockefeller is the business titan behind Standard Oil. After scratching and scrimping to buy his first oil refinery in 1862, he was already a dominant force in the industry by the 1870′s. From there, he almost single-handedly revolutionized the mass market for oil. By offering discounts to the railroads that carried his oil cross-country, Rockefeller was able to, in turn, sell it to customers for low prices that were previously unheard of. This helped establish Rockefeller’s legacy as one of America’s earliest business heroes, and he is still celebrated for his “ability to refine crude oil to produce kerosene and other products better, cheaper, and in greater quantity than anyone thought possible.”
3. Andrew Carnegie
Often referred to as the “king of steel”, Andrew Carnegie did for steel what John Rockefeller did for oil. His work in founding and operating U.S. Steel has earned him the reputation as thesecond wealthiest man in history. But long before that, Carnegie set to work as a lowly telegrapher in the 1850′s. By the 1860′s, his investments in railroads, bridges, and oil derricks (combined with a lucrative side job as a bond salesman. propelled him to build U.S. Steel into an enduring empire.
4. Thomas Edison
While Thomas Edison is best known for inventing the modern electric lightbulb in 1878, he was one of the fathers of the modern electrical grid (Nikola Tesla was the other). The impact of this innovation has been staggering. Prior to the electrical grid, the only available lighting was sunlight during the day and gas-powered lamps at night. In 1882, however, Edison took the world by storm, introducing one of the first commercial electric grids in the world. As the Objective Standard observes, “within fifty years of Edison introducing the electric grid, gas light was all but forgotten, and electricity emerged as the power source for the masses.” Like Andrew Carnegie, Edison got his start as a telegraph operator, gradually working his way up to more rewarding and personally satisfying projects.
5. Warren Buffett
Warren Buffett is one of only two living men who can truthfully boast a larger fortune than Bill Gates. (In fact, the two are now teaming up on the largest charitable giving project in history.. He generated his larger-than-life $60 billion net worth by becoming one of Wall Street’s sharpest and most successful investors. His secret, as William Grieder writes in his book “The Soul of Capitalism” is that Buffet “stays close to his capital.” That is, he will not invest unless he personally meets with the top executives and completely buys into their business strategy. This simple yet proven philosophy has served Buffet well, propelling him to previously unimaginable heights of wealth creation.
6. Sam Walton
Sam Walton was the mastermind behind Wal-Mart. After opening his first store in 1962, Walton vowed to remake the retail industry in the vision of his radical cost-cutting philosophy. By 1966, his fledgling chain was up to 20 stores and growing fast. The real secret to Wal-Mart’s phenomenal growth, as TIME Magazine notes, is that Walton “may have been the first true information-aged CEO.” TIME goes on to observe that Walton was the first to hire a computer whiz to overhaul the company’s logistics and inventory systems, leading to unprecedented efficiency that enabled Wal-Mart to out compete virtually every department store in existence.
7.Oprah
Winfrey
What chances of success would you give a poor woman born in backwoods Mississippi to a single teenage mother, raised in inner-city Milwaukee, raped at nine years of age, then, at the age of 14, giving birth to a son who died shortly thereafter?
Grim chances, we think. Unless that woman happens to be Oprah Winfrey. Oprah landed her first radio job in high school. She soon transferred to daytime talk TV, where, after success powering up ratings for a Chicago TV show, she started her own production company. That production company, Harpo, launched an empire. The Oprah Winfrey show is the highest-rated talk show in TV history, and has won her several Emmy Awards. She’s also an amazing philanthropist who donates a cut of her $1.3 billion net worth to a variety of causes benefitting women, children and families.
8. Lewis Ranieri
Lewie Ranieri rose up from a lowly mail room job at ex-Wall Street titan Salomon Brothers all the way to the boardroom. Upon being asked to run the newly created mortgage bond department (a move he saw as a slap in the face., Ranieri proceeded to make said department not only the most profitable one at Salomon, but for a time, the most profitable on all of Wall Street. His unique insight was that consumer mortgages could be bundled together in pools of homogeneous risk (say, 30 year mortgages with $110,000 outstanding at 12% interest. that investors of all kinds would feel comfortable buying into.
As the book “Liar’s Poker” tells it, Ranieri generated billions of dollars for Salomon and is often credited with jump-starting the entire mortgage securities market.
9. Michael Milken
Michael Milken was perhaps the first “corporate raider” in history. He made his name during the financial boom of the 1980′s by creating a market for junk bonds (the bonds of large yet under-performing corporations. Milken’s insight led him to buy junk bonds when they were cheap, knowing full well that the government would bail out these large corporations and allow him to reap huge profits when they did. According to Michael Lewis’ landmark text “Liar’s Poker”, Milken paid himself an annual salary of $550 million during his peak earning years. When all was said and done, Milken was estimated to have a net worth of over $1 billion – and a permanent legacy on Wall Street.
10. Bill Gates
No profile of the world’s prodigious wealth creators would be complete without Bill Gates. After dropping out of the nation’s top-ranked university (Harvard. because he “just couldn’t bring himself to go to class”, Gates ambitiously founded Microsoft with partner Paul Allen. The company originally set out to sell computer programming languages, but soon veered very far (and very profitably. off of that path. Instead, Microsoft created the now-ubiquitous Windows operating system that powers 90% of the world’s personal computers. Gates officially retired from Microsoft in 2008, exiting with a net worth of $58 billion and 3rd place on Forbes’ 100 Wealthiest People list.
11. Steve Jobs
Much like Bill Gates, Steve Jobs left college on nothing more than the overwhelming feeling that he was not going to find his true calling there. In a now-famous commencement address (see below., Jobs explains that he “decided to drop out and trust that it would all work out okay.” Luckily for him and the rest of the computer-using world, it did. Jobs teamed up with engineering wiz Steve Wozniak to create the world’s first personal computer, leading to a wave of innovation that culminated in the Apple line of products. After being kicked out of the company he started, Jobs founded animated movie giant Pixar. He would later return Apple and spearhead a Renaissance led by the creation of the iPod. An unauthorized biography of Job’s life and business career labeled Jobs as “the biggest second act in the history of business”, with the first being Bill Gates.
12. Steve Wozniak
While Steve Jobs will probably always be the face of Apple Computer, Steve Wozniak was possibly even more critical to its success. In fact, the case can be made that the entire rise of personal computing hinged on Wozniak’s (or “Woz”, is he is also known. decision to follow his passion for engineering and literally invent the computer as we now know it. It wasn’t all rosy, though. To finance this expedition into the technological unknown, both Woz and Jobs had to sell some of their most prized personal possessions. For Woz, it was his HP Scientific Calculator; for Jobs, his Wolkswagen wan. Together, the two raised the $1,300 they needed to create the earliest Apple prototypes in Job’s tiny garage. The rest, as they say, is history. While Wozniak is no longer affiliated with Apple, there is no denying Wozniak’s crucial role in building the empire the company now is.
13. William Hewlett and David Packard
Hewlett-Packard is another storybook, “it all started in a garage” tale that sounds, at first blush, to be impossible. After starting the company in 1939 with a mere $538 (you read that right, five hundred and thirty eight dollars., the hardworking pair patiently build their fledgling startup into the personal computing behemoth it is today. By 1959, the company had gone public, eventually narrowing their focus from a broad range of electronic products onto semiconductors. Today, HP is a household name with $107 billion in 2007 revenue.
14. Sergey Brin/Larry Page
Brin and Page, like so many tech entrepreneurs before them, felt the unshakable urge to leave college for bigger and better things. For these two aspiring Stanford PhD’s, that thing was Google. This hailed the beginning of a major technological shift on the Internet. In his eye-opening book “The Search”, Wired.com editor John Battelle explains the story of how “Google rewrote the rules of business and transformed our culture.” Of course, life wasn’t so easy for the pair before their billion-dollar IPO in 2004. In fact, Google might have never progressed past the point of an ambitious dorm room project if not for a $100,000 check from Sun co-founder Andy Bechtolsheim. Today, the trailblazing success of Google has enabled Brin and Page to reach billionaire status by their 30′s.
15. Jerry Yang and David Filo
Today, Yahoo! is one of the world’s top search engines, with $7 billion in 2007 revenue and operating income of $730 million. But it wasn’t long ago that the ultra-popular web portal was nothing more than side project between a couple of college students. According to Jessica Livingston’s book “Founders at Work”, tamford University’s Jerry Yang and David Filo originally created their search technology for their own personal use. There was no easy way to find information on their school’s network, so the pair created a crawler that would track down what they needed and make it easily searchable. (just do what needs to be done ) It all snowballed from there, as Yahoo! traded a mind-blowing $118 per share just prior to the 2000′s tech stock crash.
Today, Yahoo! is being fought over by Google and Microsoft, each of whom is eager to lavish $40 billion+ in a quest to buy or partner with them.
16. Niklas Zennström
This Swedish entreprenuer had no idea what a wild ride he was in for when he raised the curtain on his biggest creation. As the co-founder of KaZaA Media Desktop, Zennstrom found himself in the crosshairs of the recording and film industry after his program became the most popular way of trading multimedia files over the Internet. The scrutiny and lawsuit threats became so intense that Zennstrom left the United States and ultimately sold KaZaA to another company. But Zennstrom wasn’t done; just a year later, he was hard at work creating Skype, an Internet telephony service based on the same P2P technology used for KaZaA. It didn’t take long for Skype to catch on, prompting auction giant eBay to fork over a whopping $2.6 billion to snap up the young company.
17. Mark Zuckerberg
Continuing in the technology entrepreneur vein, we arrive at Mark Zuckerberg. The now 24 year old Harvard dropout (noticing a pattern here?. is the man behind Facebook, which, while not yet on Microsoft or Google’s level, is undoubtedly an empire. A Wired article entitled “How Mark Zuckerberg Turned Facebook Into the Web’s Hottest Platform” notes that Zuckerberg “.” In fact, Facebook is now such a force to be reckoned with that there are entire companies going into business and acquiring venture funding to create applications that work with the site.
18. David Beckham
Beckham is the highly touted soccer star who made headlines by leaving the Real Madrid for the bright lights of United States soccer. Like Tiger Woods, Beckham has continued the emerging trend of athletes capitalizing more on their image than their athletic ability. BeckhamWatch.com clocks his yearly salary at a cool $37.4 million, in addition to the following endorsements: Vodaphone ($1.8 million., Rage Software ($2.7 million., Japanese TV ($500,000., Police Sunglasses ($1.8 million., Pepsi ($3.6 million., Adidas ($5.4 million., Gillette ($7.5 million.
19. Alex Rodriguez
The top athletic empire on our list is undoubtedly Alex Rodriguez, the sensational shortstop who took Major League Baseball by storm as a 21 year old, slick gloved, home run hitting rookie. After several seasons of consistently ranking among baseball’s top performers, Rodriguez parlayed his power hitting pedigree into a $250 million, 10 year contract in 2000 with the Texas Rangers – a record for any athlete in any sport. But Alex wasn’t done cashing in. In 2007, he excersized an opt-out clause in his contract which enabled him to re-up with the New York Yankees for another record deal. This time, A-Rod signed a new record-breaking contract worth more than $300 million over 10 years. This doesn’t even count the money recieved from endorsements, which are unknown to the general public. Not a bad outcome for a guy who grew up without his father in a New Jersey suburb!
20. Tiger Woods
While A-Rod might have the largest playing contract in Sports History, Tiger Woods has probably outgrossed him with endorsements. The iconic golf superstar has become what ESPN called “golf’s $6 billion man“, as well as possibly the world’s first billion dollar athlete. Rick Burton, the University of Oregon’s resident marketing guru, opined in heavy agreement with ESPN’s assessment: “Tiger Woods is the perfect earner,” says Burton. “Think of him as the offspring of Arnold Palmer and Michael Jordan.”
Unlike many athletes, who are content with a huge one-time payoff for their endorsement services, Tiger took a different approach. In order to get his face on a cereal box or a shoe commercial, he demanded an equity stake in the business itself. This has enabled him to commercialize his image to a level previously unheard of.
21. Scott Boras
Today, Scott Boras is perhaps best known as the man who negotiated Alex Rodriguez’s two record-smashing baseball contracts. However, to baseball enthusiasts, Boras had already long-established his presence as the most aggressive and successful sports agent of all time. As the head of California-based Scott Boras Corporation, Boras has created an entire concierge of services around the players he represents, including athletic trainers, sports psychologists, ties to the most profitable sneaker and equipment endorsements and more. In his book “License to Deal”, Jerry Crasnick writes that Boras has probably negotiated over $1 billion worth of contracts and endorsement deals for the baseball players in his stable.
Amazingly, Boras created his entire empire from little more than a law degree and the intuition that he could be a successful agent. Since becoming successful, he has turned down even more lucrative deals to represent Hollywood actors and stars from other sports to devote full attention to his baseball playing clients.
22. Mark Cuban
The Dallas Mavericks owner has created an empire around both his mega riches and explosive, controversial personality. His outspoken blog has earned him several fines from NBA Commissioner David Stern and his business ventures have brought him fabulous success. It wasn’t always so rosy for Cuban, however. He grew up in a Jewish working class family (his father was an automobile upholsterer. in a Pittsburgh suburb, where the young boy’s first foray into business was selling trash bags to raise money for expensive basketball sneakers. From this small speed sprang a lifetime of business ambition, culminating in the founding and sale of an Internet company that led to his purchase of the Mavericks basketball team. Cuban is now set for life, a billionaire by age 49 who is also a founding owner of the HDNet cable network.
23. Eddie Van Halen
Another trailblazing performer with an immortal, cash-gorging empire is guitar virtuoso Eddie Van Halen. After immigrating Netherlands with little money and practically no grasp of the English language, Eddie found his passion in music by training with his brother, Alex, to become trained concert pianists – at age nine. By his teen years, Eddie had taken up the guitar, which, according to Alex, he could be found playing “from the minute he wakes up ’till the minute he goes to sleep.” All that practice time paid off in spades when Eddie and Alex formed the rock band Van Halen. The bombastic, guitar-heavy quartet would go on to redefine the genre and drop the world’s first RIAA Diamond-Certified album, amassing hundreds of millions of dollars in the process.
24. Madonna
Madonna is one of the wealthiest, empire-building celebrities to ever draw breath. The “Like a Virgin” superstar is often spoken of as “one of the greatest pop acts of all time” and “the Queen of Pop” by Rolling Stone magazine. The Recording Industry Association of America taps her as the top-selling female rock artist of the twentieth century and the second top-selling female artist in the U.S. with over 63 million records sold to date. According to the Guiness Book of World Records, Madonna boasts a net worth of over $400 million on the strength of 200+ million album sales around the world.
25. Ayn Rand
Ayn Rand may have the most humble origins of anyone so far mentioned. She grew up in tzarist Russia, just in time to see her father’s successful pharmacy confiscated by the invading Bolsheviks and her family made to flee the country. She began to despise the totalitarian environment she had always known, and boldly left for the United States at age 21, on a student visa. Her goal upon arrival was to make a name for herself as a Hollywood writer. After writing several plays, however, she realized that her true talents were found in fiction writing. Having penned such enduring best-sellers as “The Fountainhead” and “Atlas Shrugged”, as well as becoming a trusted friend and advisor to former Federal Reserve chairman Alan Greenspan, Rand is now recognized as one of the most influential fiction writers of all time.
One survey, by the Library of Congress, found that book readers ranked “Atlas Shrugged” as the second most influential book in their lives after the Bible.
“We don’t need no education” ~ Pink Floyd, “Another Brick in the Wall”
A college education is often touted as being a prerequisite to a good life and a high income. Unsurprisingly, college prospectuses promote the success of their alumni as a reason why you should choose to complete a degree at their particular campus. However, there are plenty of billionaires in the world who traded in their college degrees for a successful business life. In fact, the Forbes World’s Billionaires list 2011 actually identifies the most wealthy college dropouts on earth today. Proof if ever it was needed that slackers don’t always comes second, and that when it comes to business, the studious can’t always cut it.
10. Roman Abramovich
With $13.4 billion to his name, Roman Abramovich is joint 53rd on the list of the world’s richest people. Abramovich claims to have attended the Moscow State Law Academy, graduating in 2001, and has been linked with the Ukhta Industrial University and The Gubkin Russian State University of Oil and Gas in Moscow. Both of the latter universities deny that he attended, and it is rumored, but unsubstantiated, that he dropped out of the Russian capital’s law school. With sources conflicted about the precise course of events it seems somebody may be trying to change the record here – only in Mother Russia! Still, with an oil fortune, diverse investments and England’s Chelsea Football Club in his possession, all the hearsay surrounding his education is unlikely to bother the Moscow business magnate.
9. Mark Zuckerberg
Still only 26, Mark Zuckerberg became the youngest self-made billionaire in the world and, with $13.5 billion in his pocket, the 52nd richest person on the planet. As immortalized in the Hollywood movie The Social Network, he dropped out of Harvard, where he studied psychology and computer science, to head west to California, overseeing the rise of the social media phenomenon that is Facebook. Even though Facebook was originally targeted at a college market, it was by dropping out and seeking venture capital that Zuckerberg gained such huge success.
8. Steve Ballmer
The 46th richest man in the world is following in the footsteps of the 2nd (of whom, more later). The current CEO of Microsoft, Steve Ballmer did complete a college degree (in mathematics and economics) before working for Proctor & Gamble but dropped out of the Stanford University Graduate School of Business to join Microsoft as its 30th employee. We think that qualifies him as a failing student of sorts, so he makes the grade for this list. That said, the savvy timing of his employment meant that his salary included a percentage share in the company which he has since parlayed into $14.5 billion of personal wealth, placing him 46th in the world in terms of net worth. So, if you’re an OTT ball of energy with a certain amount of business nous, it seems you can afford to drop out…
7. Michael Dell
It is clear that Michael Dell valued education only as a route to business success. At the age of just 8, he applied to take a high school equivalency test so that he could enter business sooner. What’s more, while attending high school he invested money from part time jobs in the stock market and successfully targeted newlyweds for newspaper subscriptions while working for theHouston Post, such that he made $18,000 that year – more than his teacher’s salaries. As a pre-med at the University of Texas at Austin, he founded the company that would become Dell. Unsurprisingly, he never completed his studies, but now has a personal wealth of $14.6 billion, making him the world’s 44th richest person. ‘Nuff said.
6. Azim Premji
Azim Premji managed to skyrocket the Indian IT company Wipro Ltd. from a worth of $2.5 million to one that is now valued at $1.4 billion. His 78% stake in Wipro along with other investments have generated him a personal worth of $16.8 billion, making him 36th on the world rich list. He took over the family business, which later became Wipro, after his father died in 1966. This unexpected tragedy meant he had to leave his course in electrical engineering at Stanford University. Azim Premji is nothing if not persistent, however, and he completed the degree 30 years later.
5. Sheldon Adelson
Precocious tycoon Sheldon Adelson owned his first business at the age of 12, making a career selling newspapers on street corners, and moved on through finance and charter tours to found COMDEX, a computer trade show that was first held in 1979. He briefly attended City College of New York, but dropped out before completing his studies. It seems to have been a good idea, though, as his acquisitions of Las Vegas casinos and hotels has brought him a net worth of $23.3 billion, making him the 16th richest person in the world.
4. Mukesh Ambani
Entering the top ten richest people on Earth now – so you know dropping out can’t always be a bad thing! – meet Mukesh Ambani, ranked 9th in the world, with a net worth of $27 billion. He joined his father’s business, Reliance Industries, in 1981 and now owns a 48% stake in the company. Reliance industries is India’s largest private sector company and has diversified interests in everything from communications to petrochemicals. Ambani enrolled at Stanford in 1979 but dropped out of his business masters in order to focus on his father’s business, a focus that has clearly reaped dividends. And while he had earlier gained a degree from from the University of Bombay, a dropout is a dropout, be they a billionaire or no…
3. Eike Batista
The son of a Brazilian mining executive, Eike Batista spent much of his childhood in Germany and studied engineering in Aachen University. However, rather than completing his degree, he started a gold mining company in the Amazon in 1980 – a move that took the shine off his educational record but would soon fill his pockets. In 2000, he sold his share of the company for a cool $1 billion; but he didn’t rest on his laurels, instead investing these funds into further mining ventures and oil and gas exploration. His business savvy and ability to take advantage of market trends have allowed him to amass $30 billion in personal wealth, making him the 8th wealthiest individual alive and giving him the number one spot in Brazil.
2. Lawrence Ellison
The death of his adoptive mother prompted Larry Ellison to drop out of his second year at University of Illinois (20). He then spent a single term at University of Chicago before dropping out again and moving to California in 1964. These two attempts at college (he gave up at something) certainly were not signs of a lack of determination though. In 1977 (he was 33) he founded the company that would become Oracle, a software firm specializing in data systems. His abandonment of academia to move to California put him at the heart of software and computer innovation, a move that has led to him amassing a fortune of $39.5 billion as of 2011, making him the 5th richest person in the world.
1. Bill Gates
The richest college dropout in the world is also one of the most well known. At number two in the world’s richest rankings and with a net worth of $56 billion, Bill Gates is a household name. He was the world’s richest person from 1995 to 2007 and again in 2009, unsurprising when you consider how ubiquitous Microsoft products are in homes and businesses across the world. Gates enrolled in Harvard as a pre-law major in 1973, but kept up the computer programming he had begun in 8th grade. It was these extracurricular activities that made him his fortune after the release of microcomputer design the Altair 8800 computer prompted him to set up a software company with Paul Allen. In 1975, he took a leave of absence from his studies at Harvard, only to return for an honorary degree in 2007
McDonalds
Sample Material
The following material is copyright © 1996, Byron Preiss Visual Publications, Inc. and Forbes Inc. All Rights Reserved. Published by John Wiley & Sons, Inc. No use may be made of this material without the express written consent of the copyright holder.
Ray Kroc, McDonald's, And The Fast-Food Industry
In 1954, a fifty-two-year-old milk-shake machine salesman saw a hamburger stand in San Bernardino, California, and envisioned a massive new industry: fast food. In what should have been his golden years, Raymond Kroc, the founder and builder of McDonald's Corporation, proved himself an industrial pioneer no less capable than Henry Ford. He revolutionized the American restaurant industry by imposing discipline on the production of hamburgers, french fries, and milk shakes. By developing a sophisticated operating and delivery system, he insured that the french fries customers bought in Topeka would be the same as the ones purchased in New York City. Such consistency made McDonald's the brand name that defined American fast food.
By 1960, there were more than 200 McDonald's outlets across the country, a rapid expansion fueled by low franchising fees. Ray Kroc had created one of the most compelling brands of all time. But he was barely turning a profit. Ultimately, it was his decision to use real estate as a financial lever that made McDonald's a viable operation. In 1956, Kroc set up the Franchise Realty Corporation, buying up tracts of land and acting as a landlord to eager franchisees. With this step, McDonald's began to generate real income, and the company took off. Kroc then introduced national advertising programs to support the rapidly proliferating franchises, and when it appeared that growth in the company's home territory was slowing in the early 1970s, he started an energetic and successful push to make McDonald's a global presence. Throughout the company's spectacular growth, Kroc maintained a delicate balancing act, imposing rigorous system-wide standards while encouraging an entrepreneurial spirit that welcomed ideas from all levels. Many of these ideas contributed to the company's astonishing success.
In amassing a $500-million fortune, the king of the hamburger transformed the nation's cultural landscape and forged an industry that is among America's greatest exports. The widely imitated success of McDonald's offers an excellent example for today's managers and executives searching for greater production efficiencies. By putting the humble hamburger on the assembly line, Kroc showed the world how to apply sophisticated process management to the most prosaic endeavors. To succeed the McDonald's way, companies must define the basic premise of the service they offer, break the labor into constituent parts, and then continually reassemble and fine tune the many steps until the system works without a hitch. Today, companies engaged in delivering pizzas, processing insurance claims, or selling toys benefit from the kinds of systems that Ray Kroc pioneered. To the degree that such operations maintain quality control, and cherish customer satisfaction, profits may flow.
Discovering The Future In San Bernardino
As a milk-shake machine salesman, Raymond Kroc routinely paid visits to clients. But when the fifty-two-year-old salesman traveled from his home near Chicago to southern California to meet two of his biggest clients, the result was anything but routine.
Maurice and Richard McDonald had left New Hampshire in 1930, seeking to make their fortune in Hollywood. Unable to strike it big in Tinseltown, the brothers wound up as proprietors of a drive-in restaurant in San Bernardino, a dusty outpost fifty-five miles east of Los Angeles.
While most restaurants bought one or two Prince Castle Multimixers, which could mix five shakes at once, the McDonalds had purchased eight. And Kroc was curious to see what kind of operation needed the capacity to churn forty milk shakes at one time. So he trekked to San Bernardino, and what he saw there changed his life. Kroc stood in the shadows of the stand's two radiant golden arches, which lit up the sky at dusk, and saw lines of people snaking outside the octagonal restaurant. Through the building's all-glass walls, he watched the male crew, clad in white paper hats and white uniforms, hustle about the squeaky-clean restaurant, dishing out burgers, fries and shakes to the working-class families that drove up. "Something was definitely happening here, I told myself," Kroc later wrote in his autobiography,Grinding It Out. "This had to be the most amazing merchandising operation I'd ever seen."
Unlike so many food-service operations Kroc had come across, this joint hummed like a finely a tuned engine. As Forbes put it: "In short, the brothers brought efficiency to a slap-dash business." They offered a nine-item menu -- burgers, french fries, shakes, and pies -- eliminated seating, and used paper and plastic utensils instead of glass and china. They had also devised the rudiments of a hamburger assembly line so they could deliver orders in less than sixty seconds. And the prices were remarkably low: fifteen-cent burgers and ten-cent fries. Kroc instantly knew he had seen the future. "When I saw it working that day in 1954, I felt like some latter-day Newton who'd just had an Idaho potato caromed off his skull," Kroc said. "That night in my motel room I did a lot of heavy thinking about what I'd seen during the day. Visions of McDonald's restaurants dotting crossroads all over the country paraded through my brain."
Kroc had seen his destiny. In 1906, Kroc's father had taken four-year-old Raymond to see a phrenologist -- a practitioner of a nineteenth century "medicine" that divined insights into a person's character and capabilities from the skull's shape and size. After groping and probing the bumps on the youngster's head, the phrenologist pronounced that the child would work in the food-service industry.
Kroc had an intuitive feel for the restaurant business. He also possessed a more practical working knowledge of the industry, having spent the past thirty years selling paper products and milk-shake machines to restaurants all over the nation. In his journeys, Kroc saw an astonishing variety of operations -- coffee shops, mom-and-pop dinettes, diners, burger stands, and ice-cream chains like Tastee-Freez -- and became something of an expert on the low end of the American restaurant scene. Kroc concluded that too many of his clients were hamstrung by haphazard, unscientific management. And to their great chagrin, Kroc took to offering unsolicited advice on how they could improve their businesses. "I considered myself a connoisseur of kitchens," he said. "I prided myself on being able to tell which operations would appeal to the public and which would fail."
Kroc felt sure the McDonald brothers' operation could succeed wildly if it expanded. So the next day, he offered them a proposition. "Why don't you open a series of units like this?" he asked. The brothers demurred. They had already sold franchises in Phoenix and Sacramento for very little money, and had reaped no great benefits. At root, they were indifferent businessmen, satisfied with the $100,000 they earned annually and unwilling to invest the energy to build a chain. But Kroc was a veteran salesman with more that thirty years of experience. Using every ounce of persuasion he could muster, he finally convinced the brothers to cut a deal: Kroc would sell McDonald's franchises for the low price of $950. In exchange, he would keep 1.4 percent of all sales and funnel 0.5 percent back to the brothers. Because franchisees kicked back such a meager percentage of total sales -- just 1.9 percent -- the corporate parent made very little money.
This arrangement was far more favorable to the McDonalds' than to Kroc, for that small slice of revenues would have to account for Kroc's overhead and marketing costs -- and profits. But it was the act of a desperate man. While Kroc made $12,000 a year from Multimixer sales, the business was marked for extinction due to heavy competition from Hamilton Beach-brand mixers. Too old to start again from scratch, the middle-aged salesman believed the comfortable existence he and his wife, Ethel, led in suburban Arlington Heights, Illinois, would vanish if this venture failed. "If I lost out on McDonald's, I'd have no place to go," he said.
Branding A Service And An Operating System
With the deal in hand, Kroc set about fulfilling his vision of McDonald's restaurants blooming from coast to coast. He started by building the chain's first link -- an experimental model in Des Plaines, Illinois, outside Chicago, that featured the same low prices, limited menu, and rapid service as the San Bernardino stand. Opening on April 15, 1955, the store rang up a respectable $366.12 in sales, and quickly became profitable. Kroc watched over the store with the vigilance of a new mother, personally overseeing the kitchen and scraping gum off the parking lot with putty knife.
For Kroc, duplicating the McDonald brothers' single store was just the beginning. To build a chain, Kroc knew that he had to impose discipline on the loosely run restaurant industry. And that meant refining standardized operating procedures into easily replicable processes. Forty years earlier, Henry Ford had realized that the mass production of automobiles required the marriage of precision parts to an efficient assembly process. Kroc's insight was to apply the same rigor to the construction of sandwiches. Espousing the idea that "there is a science to making and serving a hamburger," Kroc endowed his beef patties with exacting specifications -- fat content: below 19 percent; weight: 1.6 ounces; diameter: 3.875 inches; onions: 1/4 ounce. Kroc even built a laboratory in suburban Chicago to devise a method for making the perfect fried potato in the late 1950s.
The upstart company became an obsession for Kroc. "I believe in God, family, and McDonald's -- and in the office, that order is reversed," he liked to say. But it seemed McDonald's always came first. Kroc's sales experience taught him that business was a Darwinian proposition, in which those least fit and adaptable would go the way of the dinosaur. Apparently, Kroc's marriage was not strong enough to survive the challenges of starting a new business. Ethel didn't share her husband's visceral feel for the restaurant business, and angered by Ray's late-life gamble, she resented the way the new company had taken over her husband's life. "This was a veritable Wagnerian opera of strife," Kroc wrote. "It closed the door between us." The thirty-nine-year marriage would finally end in divorce in 1961.
In seeking to build a chain, Kroc knew that McDonald's did not have the field to itself. When he opened for business in 1955, A&W, Dairy Queen, Tastee-Freez, and Big Boy were all modestly established chains, and the first Burger King (known then as InstaBurger King) had just opened in Miami. Consequently Kroc took great pains to differentiate McDonald's from these players -- for competitive and intellectual reasons. The crucial difference between Kroc and his rivals was one of world view. He saw franchisees as business partners, not as mere customers. In his travels selling the Multimixer, he had observed the way franchisers milked franchisees for profits without concern for their long-term viability. Kroc vowed not to fall into that lucrative but ultimately unproductive trap. "My belief was that I had to help the individual operator succeed in every way I could. His success would insure my success. But I couldn't do that and, at the same time, treat him as a customer," he said.
Instead of simply supplying franchisees with milk-shake formula and ice cream, Kroc wanted to sell his new partners an operating system. In other words, he branded a service. And this was the revolutionary means McDonald's would use to create a chain in which a store in Delaware and a store in Nevada could serve burgers of the exact same size and quality, each containing the same number of pickle slices and topped with the same-size dollops of mustard and ketchup, each arrayed on similar tray alongside potatoes deep-fried for the exact same length of time. As Kroc recalled, "Perfection is very difficult to achieve, and perfection was what I wanted in McDonald's. Everything else was secondary for me." But the exacting demands served a strategic goal. "Our aim, of course, was to insure repeat business based on the system's reputation rather than on the quality of a single store or operator," Kroc said.
Among Kroc's first partners were fellow members of the Rolling Green Country Club who had seen Kroc's busy flagship store, which was a great advertisement for success. By 1958, Kroc had sold seventy-nine franchises, some of them to Rolling Green golfing buddies. Many customers, their curiosity piqued by a pleasant dining experience, knocked on Kroc's door. Still other prospective operators answered Kroc's newspaper ads. One of them was twenty-three-year-old Fred Turner, whom Kroc hired as a dollar-an-hour burger flipper in 1955. Turner shared his boss's fascination for the mechanics of burger-making, and quickly became a favorite of Kroc, who had only a daughter. "I have a son -- his name is Fred Turner," wrote Kroc. Turner became Kroc's top assistant and joined two other key employees in the central office: June Martino, who had been Kroc's secretary from his Multimixer days; and Harry Sonneborn, a former Tastee-Freez finance executive who offered to come work for McDonald's for the low salary of $100 a week in 1955.
Real Estate As A Financial Engine
Although McDonald's franchises sprouted up across the Midwest and West like wildflowers after a spring rain, the company's success appeared to be short lived. While the original deal he had struck with the McDonald brothers endeared Kroc to early franchisees, it also set his fledgling enterprise on a direct course to insolvency. Through 1960, when the chain's restaurants racked up $75 million in sales, McDonald's earnings were a mere $159,000. "In short, Kroc's concept for building McDonald's was financially bankrupt," wrote McDonald's historian John Love. And Kroc's dream house of cards began to collapse under its own weight. Unable to give valued employees like Martino and Sonneborn raises, Kroc paid them by granting them 30 percent of the company. He further diluted his equity by ceding 22 percent of McDonald's stock to two insurance companies to get $1.5-million loan in 1961.
Even this loan, obtained at remarkably onerous terms, only temporarily slaked the firm's thirst for capital: Kroc needed to raise a huge chunk of money -- $2.7 million -- to buy out the McDonald brothers. His relationship with them was a continuing source of irritation. They did not meet his precise standards at the McDonald's franchises they had sold in California. Worse in Kroc's eyes, they took the liberty of selling a McDonald's franchise to a competitor in Cook County, Illinois, Kroc's home territory. Such actions intensified Kroc's desire to manage the growing enterprise on his own. However much he came to rue his connection with the McDonald brothers, Kroc realized the value of product identification created by the more than 200 outlets bearing their name. "I needed the name," Kroc lamented. "How far could I go on Kroc burgers?" Desperate for ultimate control of the McDonald's name, in 1961 he mortgaged the company's future again. A New York money manager arranged a $2.7-million loan from several college endowment and pension funds, the interest payments on which were calculated as a percentage of McDonald's sales.
Deep in hock and with no profit growth in sight, Kroc faced a classic dilemma. He couldn't afford to expand. And he couldn't afford to tread water. Fortunately, Harry Sonneborn came up with a solution. He thought McDonald's could make money by leasing or buying potential store sites and then subleasing them to franchisees initially at a 20 percent markup, and then at a 40 percent markup. Under this plan, McDonald's would scout out sites and sign twenty-year leases at fixed rates. Franchisees would then pay McDonald's either a minimum rate or a percentage of sales, whichever was greater. As sales and prices inevitably rose over the years, the company would collect more and more rent as its costs remained virtually constant.
Embracing Sonneborn's idea, in 1956 Kroc set up a subsidiary, the Franchise Realty Corporation, to execute the new strategy. In the years thereafter, he flew around the country in a small airplane, scouting suburban neighborhoods dotted with tract housing, schools, and churches -- which he regarded as fertile ground for the planting of new "Golden Arches." In this pre-strip-mall era, real estate along well-traveled byways was both cheap and plentiful. And in a short period of time, the real estate operation became a high-margin contributor to McDonald's bottom line. As Kroc noted: "This was the beginning of real income for McDonald's."
The real estate strategy played perfectly into Kroc's larger goal of control. Rather than sell blanket geographic franchises, which would grant the holder the right to build as many or as few stores as he chose in a particular area, Kroc sold only individual franchises, for a low fee of $950. This insured that operators unwillingly to play by his rules could open no more than one outlet. As a landlord, Kroc could compose legal documents guaranteeing further control. And by writing leases that would force tenants to conform to corporate policy, he could more easily insure that the look, feel, and taste of McDonald's would be identical in Bangor, Maine, and Butte, Montana.
Leaving the company's stabilized finances in the capable hands of Harry Sonneborn, Kroc set about expanding and professionalizing the growing industrial empire. Under his novel conception, each franchisee and operator was like a plant manager. Knowing that the hallmark of any sophisticated industrial complex is professional management, Kroc in 1961 launched a training program -- later called Hamburger University -- at a new store at Elk Grove Village, Illinois. There, the faculty trained franchisees and operators in the scientific methods of running a successful McDonald's and drilled them in the Kroc gospel of Quality, Service, Cleanliness, and Value. "I put the hamburger on the assembly line," Kroc liked to say. Hamburger U also contained a research and development laboratory to develop new cooking, freezing, storing, and serving mechanisms.
While Kroc dictated the size and shape of burgers, he gave franchisees wide latitude in other areas. He knew that McDonald's had to simultaneously unleash the entrepreneurial energies of hundreds of operators while maintaining the standards and regulations crucial to the efficient operation of a far-flung industrial enterprise. As McDonald's chronicler John Love wrote: "Ray Kroc's genius was building a system that requires all of its members to follow corporate-like rules but at the same time rewards them for expressing their individual creativity."
Going Public Through Advertising And A Stock Offering
Nowhere was the dichotomy between central control and operating autonomy more evident than in advertising. At Christmas in the late 1950s, Turner and other managers would tour the Chicago Loop in the "Santa Wagon," an ice-cream truck converted into a rolling likeness of a McDonald's drive-in. But despite this penchant for old-fashioned hucksterism, McDonald's had no company-wide advertising strategy. Instead, when Minneapolis operator Jim Zein saw his sales explode in 1959 after running radio ads, Kroc encouraged operators to take to the air-waves with their own campaigns. Following this directive, two Washington, D.C., franchisees, John Gibson and Oscar Goldstein, decided to target kids by sponsoring a local children's show, Bozo's Circus. When the station canceled the show in 1963, the franchisees hired the headliner, a twenty-five-year-old television announcer named Willard Scott, to create a new clown persona for local ads. Thus was born one of advertising's most enduring icons: Ronald McDonald.
Successful advertising helped spur even greater growth. And in 1965, with 710 McDonald's spread throughout forty-four states, $171 million in sales, and a relatively tidy balance sheet, McDonald's finally blossomed. The company went public on April 15, ten years to the day after Kroc opened the Des Plaines store, selling 300,000 shares priced at $22.50 each. Many of the shares were offered by Kroc, who reaped $3 million on the sale, as well as by Sonneborn and June Martino. As investors jumped on the McDonald's bandwagon, the stock jumped to $30 on its first day of trading and soared to $49 soon after.
Kroc deployed the cash to expand and fend off rapidly proliferating rivals, for the company's success has spawned a slew of imitators seeking to cash in on the growing industrialization of fast food. In 1965, there were already 1,000 Kentucky Fried Chickens, 325 Burger Chefs, and 100 Burger Kings in operation. Each chain, fortified by cash infusions, expanded rapidly in the late 1960s, so much so that by 1970, fast food had grown to a $6.2-billion business garnering 17.8 percent of all money spent in restaurants.
In such an environment, standing still was tantamount to shrinking. "A laurel rested upon quickly wilts" was a favorite Kroc-ism. So aside from opening new restaurants at a breakneck pace, McDonald's added a new weapon to its arsenal: national advertising. Having labored mightily to create uniform standards throughout the system, Kroc expended capital to forge a uniform image. In 1967, McDonald's spent $2.3 million, or about 1 percent of its sales, on its first national advertising campaign, which was an unheard amount for a fast-food chain. "What small businessman wouldn't cheerfully give up 1 percent of his gross to get our kind of commercials and things like sponsorship of The Sound of Music on network television to promote his store?" Kroc asked rhetorically. Expanding the Ronald McDonald campaign created by the Washington franchises, the company outfitted the clown with a gaggle of kid-friendly characters such as Hamburglar, Mayor McCheese, and Grimace, a large purple creature who craved shakes and french fries. "We're not in the hamburger business; we're in show business," Kroc liked to say.
Kroc backed up the advertising blitzkrieg with several new products, many of which were created by franchisees. Pittsburgh operator Jim Delligatti, seeking to bolster sales, in 1967 began testing a new double-decker hamburger that he dubbed the Big Mac. McDonald's introduced the sandwich throughout the chain in less than a year, and it has since become the firm's enduring signature product. Other new menu items, ranging from the Filet-o-Fish to the Egg McMuffin, also sprouted from the fertile imaginations of McDonald's operators and were similarly welcomed by Hamburger Central, as the headquarters came to be known.
Becoming A Global Institution
Through rapid growth and extensive advertising, McDonald's in the early 1970s became the nation's largest fast-food chain and an easily recognizable feature of the American cultural landscape. And the supreme ruler of McDonaldland, Ray Kroc, became a figure of national stature. In 1972, when more than 2,200 McDonald's outlets racked up $1 billion in sales, Kroc received the Horatio Alger award from Norman Vincent Peale. As the value of his stock holdings rose to about $500 million, the septuagenarian acquired certain trappings of wealth: a house in Beverly Hills, a mansion in Florida whose doorbell chimed "You Deserve A Break Today," and the San Diego Padres baseball team. But Kroc remained at heart a simple man, who spoke proudly of "the peasant bones of my Bohemian ancestors." Unlike so many other newly rich captains of industry, he developed no taste for great art or society events. Instead, he continued to find beauty in the simple bun. "It requires a certain kind of mind to see beauty in a hamburger bun," Kroc rhapsodized. "Yet, is it any more unusual to find grace in the texture and softly curved silhouette of a bun than to reflect lovingly on the hackles of a favorite fishing fly?"
Just as the Ford Motor Company aroused the scrutiny of muckraking journalists and reforming politicians, Ray Kroc's high-profile industrial juggernaut attracted attention from many quarters. As McDonald's fare became a staple of the American diet, it aroused the snobbery of the food industry elite. New York Magazine's Mimi Sheraton proclaimed: "McDonald's food is irredeemably horrible, with no saving graces whatever." Nor did the nutritionists take kindly to McDonald's offerings. As Dr. Jean Mayer, a Harvard professor, wrote: "The typical McDonald's meal -- hamburgers, french fries, and a malted -- doesn't give you much nutrition. It's typical of the diet that raises the cholesterol count and leads to heart disease."
Politicians took note, too. In 1974, when the company's market value surpassed that of lumbering U.S. Steel, Senator Lloyd Bentsen complained: "Something is wrong with our economy when the stock market is long on hamburgers and short on steel." But the future Secretary of the Treasury ignored the fact that burgers had become an industrial product nearly as significant as rolled steel, for the McDonald's industrial complex was a prodigious consumer of raw materials. It bought about 1 percent of all beef wholesaled in the United States and a huge quantity of potatoes besides. Each store was an opportunity-generating machine -- providing one out of fifteen young Americans with a point of entry into the workplace. To broadcast its booming output, McDonald's made a practice of posting its latest chain-wide total sales figures on the Golden Arches. And the mounting billions were monitored in the highest offices in the land. President Richard Nixon, upon meeting Kroc in the early 1970s, asked him: "What is it now, eight or nine billion?" Kroc replied: "Mr. President, it's twelve billion."
Many analysts viewed McDonald's rampant growth as unsustainable. But Kroc believed the company needed to continue to expand in order to survive. "I don't believe in saturation," he said. "We're thinking and talking worldwide." Kroc envisioned a world in which 12,000 sets of Golden Arches would stand as outposts of a mighty commercial empire. Sure, there was one store for every 90,000 citizens of the United States in 1972. But there were three billion people outside America's borders who had never wrapped their mouths around a Big Mac. So just as Henry Ford sought foreign markets for the Model T, Ray Kroc embarked upon an ambitious campaign. McDonald's started by invading former Axis powers Japan and Germany in 1971. And in 1977, it introduced the fast-food sandwich to the land of Sandwich, opening the company's 3,000th store in London. "With all the fervor of the Pilgrims returned, McDonald's set out to introduce Europe to the joys of the real American hamburger," Forbes noted.
Establishing beachheads in European capitals was just the beginning. Over the course of the decade, the thousand stores that the company opened overseas fueled its 27 percent annual growth rate. Golden Arches sprouted from the soil in virtually every continent -- in South America, in Europe, and in Asia. The chain became so universally recognized as a symbol of American enterprise and influence that, when Marxist guerrillas blew up a McDonald's in San Salvador in 1979, they proclaimed the terrorist act a lethal blow against "imperialist America."
Although Kroc stepped down as chief executive in 1968, giving way to Fred Turner, he remained a vital symbol of the company's roots, and an enduring influence over day-to-day operations. The founder reviewed first-day results from each new store, and kept watch over the company-owned McDonald's outlet from his office in southern California. "Despite McDonald's success, and his personal wealth of $340 million, he always worries," Forbes wrote in 1975. "When Kroc travels, he insists that his chauffeur take him to at least six McDonald's for surprise inspections."
Though he killed the competition, the competition didn't kill Ray Kroc. He passed away from old age in January 1984, at the age of eighty-one, just the ten months before McDonald's sold its 50-billionth hamburger.
Ray Kroc didn't live to see his company's ultimate triumph. The Dow Jones Industrial Average, the best daily barometer of the nation's economy, consists of the nation's thirty most important companies. In 1985, when the value of McDonald's $4.16-billion real estate portfolio surpassed that of Sears, the New York Stock Exchange added McDonald's to the Dow. With this stroke, Wall Street validated Ray Kroc's contention that beef patties could be placed on the assembly line. The once-humble hamburger finally took its rightful place among planes, trains, and automobiles as a titan of American industry.
Adapting To Foreign Climates
One key to McDonald's continued growth is international expansion. With operations in more than 65 countries, McDonald's now opens about one-third of its new restaurants outside of the United States. In the early 1990s, Fred Turner predicted that international sales would eventually surpass U.S. sales.
While foreign markets can sometimes offer new obstacles for the American company, like hostile government bureaucracies and unreliable local suppliers, McDonald's faces an even greater overall challenge. In each country, from Belgium to Brunei, the company is forced to walk the tightrope of selling its uniquely American product, while simultaneously catering to local tastes.
Although McDonald's always insisted on planting its rigid operating system in foreign soil, when it came to other aspects of the restaurants' operation, the company was more flexible. For example, to make the chain's name more easily pronounceable for Japanese consumers, it was changed to Makudonaldo, and its mascot became Donald MacDonald. Hamburger Central also allowed local operators to devise unique promotional campaigns. "Our name may be American, but we're all Irish," ran one promotional campaign for outlets in Dublin.
Today, even the menus at McDonald's restaurants in foreign locations clearly reflect differences that do not exist at the company's American outlets. While the stores offer fare like hamburgers, french fries and milk shakes, there have been some additions: for example, when McDonald's restaurants opened in Germany in the early 1970s, they started serving beer; in the Philippines they offer McSpaghetti noodles, while Norwegian franchises offer a salmon fillet sandwich, the MacLak.
