Business Antedotes


CONFIDENCE


Steve Jobs , cofounder of Apple Computer, was 13 when he had a class project to do at Homestead High School in Los Altos, in what was to become California’s Silicon Valley. He had to build a frequency counter to measure the speed of electronic impulses. The device needed parts that were beyond his budget, and young Steve started to phone around. He made a collect call to Burroughs in Detroit. He also got through directly to Bill Hewlett in Palo Alto and asked him if the company had any spare parts lying around. The president of Hewlett-Packard was so impressed by the boy’s tone of brash self-confidence that he arranged for Jobs to work as an apprentice in one of his factories during the following summer vacation.




CARNATION SOFTWARE


John Brockman, who became a super agent for software authors and computer- book writers in the early 1980s, claims to have learned his business acumen from his father, who was in the flower business in Boston.


Brockman, Sr., was known as the “Carnation King of America.” representing the chief growers of the Boston area. What’s the difference between selling carnations and representing software authors? Not much, according to his son, “except that carnations smell better and don’t talk back.”




DEALS


So as not to spoil his son, John D. Rockefeller paid him one cent for finding each fence post that needed repairs on the family estate. That day the child made thirteen cents. Later on, he paid his son fifteen cents an hour for repairing those fences. Junior also collected five cents from his mother for every hour he practiced the violin.


This example seems to have spread among the puritanical rich. Gerald Bronfman, one of Sam Bronfman’s nephews, gave his daughters a weekly allowance of thirty- seven and a half cents. To make sure he didn’t overpay, he alternated between thirty-seven and thirty-eight cents each week.




MOM SPEAKS OUT


Lulu May Perot remained the closest advisor to H. Ross Perot, founder of Electronic Data Systems, (EDS) one of the greatest success stories of our time . She served on its board of directors and worked for her son as a bookkeeper. When Perot was struggling with the decision of rescuing some Americans from Vietnam in 1969 (as decribed in Ken Follet’s best-seller On Wings of Eagles), his business associates warned him that such a dangerous mission might make the price of EDS stock fall. But his mother counseled Perot to press ahead, saying, “Let them sell their shares.”




FATHER KNOWS BEST


Max Palevsky, founder of Scientific Data Systems, the first company to make small computers, enrolled at the University of Chicago to study philosophy. His father was disappointed. As one of those immigrants who came to America because he believed that the streets were paved with gold, he was not too happy hav-ing to work as a housepainter. Now his son wanted to study philosophy. “How can you make a dime from philosophy?” Max did not know, but went on to study logic in graduate school.


Later he got a job as a logician at Bendix, to teach computers how to think logically. After a stint with Packard-Bell, Max Palevsky raised $1 million worth of venture capital and started building small computers on his own. When it went public, the philosopher was suddenly worth $50 million. Interviewing him one day, financial writer “Adam Smith” asked him whether the money had made any difference. Palevsky thought for a minute, but could not think of any difference. He had the same house and the same friends. Then he realized that his money had helped in one respect: “It made my father happy. My father said, ‘I did the right thing. I was right after all.” ’ And when the son asked right about what, the father replied: “I was right what I thought before I came, about the streets, and the gold.”




S O B


“Family business—talk about Greek tragedies revisited,” Leon A. Danco of the Center for Family Business in Cleveland was quoted as saying in INC. maga-zine. “I swear, the typical founder of a family business would have no problems whatsoever if he could be immortal and celibate .” There is another organization to help sons and son-in-laws in conflict with the boss. Called Sons of Bosses, or S O B for short, it was founded by Gerry Slavin in 1969, and has chapters throughout the United States. Later, the national organization renamed itself to the more respectable but less exciting National Family Business Council, but some

chapters retain the more descriptive epithet.




Childhood lessons


Ralph Nader, the consumer advocate, summed up the problem with American consumers in an interview with INC. magazine: “Almost 99 percent of what comes in on a person every day comes in with the message, ‘Don’t create. Obey. Trust. Believe.’ When I was ten years old I came home from school. My parents were in the backyard, reading, and my father looked up at me. He said, ‘Ralph, what did you do today? Think or believe?’ I didn’t quite get it, you know. I went up to my room and was trying to figure it out. A little later I got it, with some help . It’s true.”




PAPER ROUTE



The earliest business experience outside the home for generations of American children has been the delivery of the local newspaper, and many later executives learned some useful lessons. Benjamin F. Fairless, president of U.S. Steel after World War II, remembered: “I started at the age of five, selling papers for the Cleveland Penny Press. Each afternoon I met the train and grabbed my precious bundle: 12 copies for regular customers and 6 or 7 extras that I peddled around town. The papers cost me half-a-cent apiece; I sold them for a penny. It was, I so often think, the best business I was ever in—no overhead, no taxes, and I netted 50 percent of my gross . All I lacked was volume.”




EUREKA


The idea of the cotton gin came by chance to Eli Whitney.


He had been trying to find an easier method of extracting the seeds out of cotton boils, when he noticed through the window that a fox was trying to raid his chicken coop. Although the fox could not get inside the coop, it managed to get most of the feathers from his prey through the mesh. Whitney then began experimenting with a claw or rake that could pull cotton fibers through a grid and leave the seeds behind. It worked.




A SHOWMAN


H. W . Johns, one of the founders of the asbestos giant Johns-Manville, which filed for bankruptcy in the wake of a wave of liability suits, already was in the roofing business in Brooklyn when he was 21 . In the middle of the last century, he had patented something he called “portable roofing”, a blend of rag felt and coal tar. Johns had tried all kinds of different materials, including flour and sawdust, to improve roofing, and it was this search that led him to read about the indestructible and fireproof qualities of asbestos fiber. The mineral had few commercial uses and was imported at a high price from Italy. But Johns had heard about some deposits on Staten Island, and he easily persuaded a farmer to give him a wagonload from what was considered a useless outcropping of rock.


Johns spent many a long night in his improvised “laboratory” to figure out a way of making asbestos shingles suitable for roofing. He was making progress when the Civil War intervened. Finally, in 1868, he began to market asbestos roofing. Asbestos cloth was so scarce that he rarely had more than a few yards on hand, and he sold it at a dollar a square inch. He employed great showmanship in demonstrating the unusual qualities of asbestos by donning a glove he had made of asbestos and dramatically pulling a handful of red-hot coals from the potbelly stove in his office.




PONG


Nolan Bushnell, the founder of Atari and other enterprises, is usually described as the quintessential Silicon Valley entrepreneur. His interest in electronics goes back to his days as a ham radio operator when he was 10 years old. While attending the University of Utah, he spent his time running the games at the Lagoon Amusement Park in Salt Lake City. He soon had an army of 100 kids under his management. Despite his obvious talent, Bushnell was so distracted that he graduated at th e bottom of his engineering class. His basic ambition at that time was to work for Walt Disney’s amusement empire . He failed to get a job with Disney, however, and that is how he ended up with Ampex in Redwood City.


It was the boredom of his job that drove Bushnell’s active mind to tinker. The video game craze began with his invention of Pong, an electronic version of table tennis, in the early 1970s. Bushnell installed a coin-operated game at Andy Capp’s Tavern in Sunnyvale. Not long afterward he received a call from the owner asking him to take away his machine, which seemed to have broken down . In fact, Bushnell simply had to empty the quarters so that the patrons could put more in. Knowing he had a winner, Bushnell quit his job with Ampex and founded Atari when he was 29. He took the name from the Japanese game go—it means “I’m going to attack you.




GODOT


The world’s first electronic game was built by a Viennese refugee in Canada.


 Josef Kates escaped from the Nazis in 1938. and spent most of the war years in a refugee internment camp in Quebec. It was from there that he won a scholarship to McGill University for placing first among all the high school students who wrote the exam . Later Kates became an engineer, and while working for the computer center at the University of Toronto, he built “Bertie the Brain,” which played tic-tac-toe with visitors to the 1951 Canadian National Exhibition . Kates made a number of serious inventions that could have made Canada a leader in computer engineering had he found government or private backing. But the university chose to buy a British-made computer instead.


Seeing his invention shelved, Kates designed-—as far back as 1953—the first ever computerized reservation system for Transcanada Airlines. Then Kates founded his own company Teleride, which coordinates mass transit in a number of cities both in Canada and the United States. Customers can telephone and get the precise time a bus is scheduled to arrive at their stop. This is made possible by electronic odometers that report the precise location of the bus every thirty seconds to a central computer. “The reason people don’t like the bus,” Kates discovered, “is not the bus . It’s the wait.”




QUALITY


According to Paul Luongo’s guide to America’s Best! the Rolls Royce of the kite business is a typical mom-and-pop operation. Bill and Betty Hartig founded their company, called Nantucket Kiteman and Lady, because of the way they made their first sale in New York’s Central Park. A well-dressed woman grabbed an orange kite from Betty’s hand, pressed a ten dollar bill into her hand, and took off “like the dickens.” The kite cost one dollar to make. As their cottage industry grew, Betty and Al quit their jobs in New York City and moved to Nantucket Island, Massachusetts, where a toy store offered them a home in ex-change for kites . They make about 5,000 kites according to their patented designs, which they market largely by mail order. The secret of their success is the quality. They have turned down mass orders. Each of the kites is had-sewn by Betty and test-flown by Al. One of their early kites, the Warlock, is now at the Smithsonian Institution in Washington, D.C.




BUSINESS GENIUS



Recently there were centenary celebrations for the automobile, the quintessential industrial product of the twentieth century . In fact, all the basic ideas needed to manufacture a mechanically propelled wagon were known before 1840: the auto-mobile is actually older than the railroad. In the 1830s and 1840s, steam stagecoaches made regular trips between certain cities in England, and, in the words of Burton Hendrick (The Age of Big Business):


                    Occasionally a much resounding power-driven carriage

                    would come careering through New York and Philadelphia,

scaring all the horses and precipitating the intervention of the authorities. . . .The French apparently led all nations in the manufacture of motor vehicles, and in the early 1890s their

                    products began to make occasional appearances on American

                    roads. The type of American who owned this imported machine

                    was the same that owned steam yachts and a box at the opera.

                    Hardly any new development has aroused greater hostility. It not

                    only frightened horses, and so disturbed the popular traffic of the

                    time, but its speed, its glamor, its arrogance, and the haughty be-

                    havior of its proprietor, had apparently transformed it into a new

                    badge of social cleavage. It thus immediately took its place as a

                    new gew-gaw of the rich; that it had any other purpose to serve

                    had occurred to few people.


The person who found a general purpose for the automobile more than anybody else was Henry Ford. Born in Michigan, in 1863, the son of an English farmer and a Dutch mother, Ford was mainly interested in mechanical devices on his parents’ farm . He liked getting in the crops, because of the McCormick harvesters, and he became enthralled with the machinery in the dairy. Already as a boy he had developed a destructive curiosity to take everything apart. Young Henry horrified one of his rich playmates when he reduced his brand-new watch into pieces; he amazed him by putting it back together again. As the industrialist remembered those days: “Every clock in the house shuddered when it saw me coming.”


Henry Ford’s business genius also manifested itself early. At 16 he ran away from the farm to get a job in a machine shop. He immediately noticed an anomaly: no two machines in the shop were alike. From his weekly savings he bought a $3 watch and took it apart. He calculated that if thousands of watches could be made, all exactly the same, they would only cost thirty-seven cents a piece. ‘Then everybody could have one, was his conclusion. Later he formulated it as his philosophy for manufacturing automobiles: “Anything that isn’t good for everybody is no good at all.” It was this idea that took the automobile from being merely a play-thing of the rich and created a new age.




PROFANE COWS


Young Henry Ford hated working on his parents’ farm so much that he retained a lifelong hatred for cows. To him they symbolized laziness, and he once described the cow as “the crudest machine in the world.”


Scientists at the Ford labs were instructed to find substitutes for dairy products, because the boss believed earnestly, if somewhat irrationally, that if all cows were destroyed, there would be no more war in the world.




HE GOT HIS HANDS DIRTY


When starting out, Henry Ford received much encouragement for his automobile contraption from his hero, the great Thomas Edison. The two met at a convention, and after listening to the young man’s answers to his pointed questions, Edison urged him on: “Young man, that’s the thing! You have it—the self-contained unit carrying its own fuel with it! Keep at it!”


Ford never forgot. Many years later, when he built his museum of technology at Dearborn, he had the whole of Edison’s laboratory moved brick by brick from Menlo Park, New Jersey. After the opening ceremonies (which happened to be on October 29, 1929, until very recently the worst day in the history of the New York Stock Exchange), Ford asked his former employer what he thought of his reconstructed workplace. Thomas Edison, who enjoyed getting his hands dirty, looked at the spotlessly clean laboratory, and answered his protégé diplomatically: “It’s 99 1/2 percent perfect.”




OBSTACLES


Not all the great business tycoons were inventors of proprietary technology. On the contrary, many of them saw scientists flounder for lack of marketing know-how. It takes a special kind of person to overcome the public’s resistance to a product. Henry Ford did not invent the automobile, but he emerged as one of the few winners from among hundreds of early car manufacturers simply because he made it easier for people to buy his product. His mass-production methods enabled him to lower the price of his automobile, which in turn attracted vast numbers of new customers, who made him successful.


Similarly, Powel Crosley, Jr., did not invent radio, but practically founded the radio business. In 1919 his son heard a radio and asked Dad to buy him one. But the cheapest set cost $119. Although he knew nothing about radio, Crosley bought a manual for a quarter and hired a couple of engineering students from the University of Cincinnati, who put together a smaller one-tube set that Crosley could sell for $20. However, there were still other obstacles that discouraged the public from buying radio sets even at the much lower price. The box had nothing coming out of it that was worth listening to. Crosley got another two amateurs to build a twenty-watt transmitter, which later led to the first commercial broadcasting station. For a while Powel Crosley was the world’s largest manufacturer of radios.



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