Business Antedotes


CONDESCENSION


In 1830, after John Jacob Astor had marie the bulk of his fortune, he then set

about realizing a dream he had long cherished. When he had first come as a poor stranger to New York, he had once stopped on Broadway to notice a row of buildings that had just been erected and were considered the finest in the street, and had then made a vow that he would one day build a larger and finer house than any on Broadway. He now set to work to carry out the plan he had cherished ever since. He owned the entire block on Broadway between Vesey and Barclay streets, with the exception of one house, which was the property of a Mr. Coster, a merchant who had amassed a large fortune and retired from business . Mr. Astor made him many offers for his house, hut the old gentleman was unwilling to move. Astor offered him the full value of his house, which was $30,000 and increased the bid to $40,000 but Mr. Coster was obstinate. At length Mr. Astor, in despair, was compelled to reveal his plan to his neighbor.


“I want to build a hotel,” he said. “I’ve got all the other lots. Now name your price


Mr. Coster replied that he would sell for $60,000 if his wife would consent, and that Mr. Astor could see her the next morning. Astor was punctual for his appoint-ment, and his offer was accepted by the good lady, who said to him condescend-ingly, “I don’t want to se1l the house, but we are such old friends that I am willing for your sake.”


Mr. Astor used to remark with great glee that anyone could afford to exhibit such condescension after receiving double the value of a piece of property.




 

PROMOTER


Jeno Paulucci, the founder of Chun King , Jeno’s, Inc., and a number of

other enormously successful businesses, is the quintessential entrepreneur: promoter, ideas man, salesman. He began in the grocery business, while still in high school, as a fruit-stand barker in Duluth, Minnesota. One day a shipment of bananas came in that had been damaged during refrigeration, causing an unusual discoloration of the peel. Jeno was told by his boss to try and get rid of the bananas by discounting them from the normal twenty-five cents per four pounds. Instead, the young man hit upon the idea of exploiting the fact that these browned bananas looked different. So he set up a big pile of crates and started barking: “Argentine bananas!” Of course there was never such a thing as Argentine bananas, but, as Max Gunther wrote (in The Very, Very Rich and How They Got That Way), “The name had an exotic lilt to it, a sound of value . A crowd gathered to look at Paulucci’s speckled brown pile. He convinced his listeners that these loathsome looking objects were a new type of fruit, never before imported into the United States. Being of generous heart, he was prepared to let them go at the astonishingly low price of 10 cents a pound (nearly twice what they would have cost as ordinary, undamaged, non-Argentine bananas). He sold eighteen crates in three hours.”




WHOLESALER


As Jeno Paulucci graduated to becoming a commissioned salesman for a grocery wholesaler, he invented new techniques. Rather than calling on individual stores and selling in small amounts, Paulucci convinced grocers to form cooperatives and buy from Jeno at a discounted rate for very large bulk purchases. Another way he increased sales was to convince the buyers that they had to buy without delay to avoid higher prices later. He had his sales pitch interrupted by telegrams that he had arranged beforehand, in which his employers wanted him to warn customers of an imminent rise in the price of peas.


Paulucci was soon making more money on commission than the company pres-ident was on salary. It was time to move on, and Paulucci became fascinated with hydroponics and bean sprouts, which led him to Chun King, an unpromising can-ned food business that brought him notoriety and ultimately $63 million from Reynolds Tobacco. In the early days of trying to sell his strange combination of Cant-onese food mixed with his mother’s Italian spices, Paulucci wanted the chief buyer of the national chain Food Fair to taste his concoction. As Max Gunther tells it: Paulucci pulled out a can opener and pried the lid off a can of chop suey vegetables. Lying right on top of the vegetables, hidden from the buyer’s view by the raised can lid, was a cooked grasshopper. It was the kind of accident that can happen to any food processing company once in a while, even the biggest. Chun King’s kitchens, though housed in a Quonset hut, were in fact as clean as anybody else’s. But Paulucci was strongly aware, as he gazed horrified at the grasshopper, that his company’s grand image was in mortal danger.


He hesitated for half a second. Then he picked up a spoon, smiled broadly and said: “This looks so good that I’m going to take the first mouthful myself.” He ate the spoonful, including the grasshopper, with apparent relish.


Paulucci got the order.




IMITATION


Japan is not often thought of in terms of entrepreneurial spirit or promotional flair. But according to Forbes magazine, Den Fujita, who has co-ventured more than 500 McDonald’s franchises throughout Japan, used to promote this foreign food as something that would turn your hair blond if you kept eating it. Now his new approach is to say that it will make kids grow into larger adults. Lie thinks that the Japanese diet of rice and fish may account for the generally smaller size of his compatriots, and that if he could serve enough hamburgers to kids before they reach 12 they might not only grow but also remain addicted customers. Fujita himself sticks to noodles, hut in imitation of the late Ray Kroc, he is looking to buy a professional baseball team.





FAIR BIDDING


When Benjamin Franklin was trying to get a piece of the government printing business, he found that a competitor, Andrew Bradford, had it pretty well sewn up within the State of Pennsylvania. What riled Ben most was Bradford’s sloppy work. So, after a speech by the governor had been published by Bradford according to his usual low standard, Franklin reprinted it on fine paper, composed in the most elegant type . He then mailed a copy to the governor and to each member of the assembly . Soon afterward, Ben Franklin got all the government’s printing business in Pennsylvania.




SENSIBLE BIDDING


During the War of 1812, there were fears that the British would attack America’s Atlantic harbors . In the spring of 1814 the commissary general of the U.S. Army invited bids from boatmen for conveying provisions from New York to various military forts in the vicinity. The labor was to be performed during the three months that the militia was called out, and the successful contractor would be exempted from military duty. Bids poured in from the boatmen, offering to do the work at ridiculously low figures, mainly to secure this exemption.


Cornelius Vanderbilt, barely 20, was reluctant to hid at first, because he knew that the work could not be performed at the prices his colleagues offered. He was also something of a patriot, having helped his country’s cause the previolis year by bringing an urgent message for reinforcements from Fort Richmond to New York. Finally, as much to please his father, he ofTered to transport the provisions at a price he calculated he would need to do the job well . He so little expected to succeed that he did not go to the commissary’s office on the day of the awarding of the contract; he only heard from various other boatmen about their own lack of success.


Then he called on the commissary, merely through curiosity, to learn the name of the fortunate man, and to his utter astonishment was told that he had won the contract. The government was satisfied, from his sensible offer, that he would do the business thoroughly, and this, the commissary assured him, was the reason for his selection.





HANDSHAKE


The Reichmann brothers of Canada — Albert, Gaul, and Ralph — have built one of the largest real estate development companies in North America. Considered by the press as highly reclusive, the brothers made their presence known in 1977 when they bought eight Manhattan skyscrapers in a single deal for $320 million. Commercial properties were depressed following New York’s brush with bankruptcy, and in hindsight the transaction is sometimes ranked a close second to the $24 paid

for the whole island.


The Reichmann family are Orthodox Jews who fled to Canada from Hitler’s Germ-any via Morocco, where they became bankers and acquired their business meth-ods. The Reichmann brothers commit themselves verbally, and often they have built the actual office tower before the written contracts for the land have been negotiated and signed. They learned to do business on a handshake in Morocco, where “the first time you don’t honor a handshake is the last time anyone will shake hands with you.




 


TIMING


Sir James Goldsmith’s failure to take over Goodyear in late 1986 netted him an estimated $90 million in profits. One of the best-known international financiers and so-called greenmailers today, his motto is: “If you see a bandwagon, it is too late.”




LUCK


Gerald Ronson, one of the new breed of British entrepreneurs (voted Business-man of the year in 1984 in England), believes that luck played perhaps as much as 50 percent in helping him build his fortune. He cites the time he bought up some of the most valuable land around Tucson, Arizona. Ronson happened to be in Tucson, buying a savings and loan association, when he heard that a part of Howard Hughes’s estate, 12,500 acres of prime land, was up for quick sale for $75 million—in cash. Ronson knew where the land was—between the airport and the city center—and needed no time to figure out which direction Tucson was going to sprawl . However, in the early 1980s, interest rates were going through the roof, and one could wait for a long time for the land to accumulate. Ronson called a few friends and presold about $40 million worth before clinching the deal. Soon thereafter, he sold another $80 million worth of land, getting himself well into profit, which he estimates will in the end be at least twice the original purchase price. And all because he happened to be visiting from London to buy a small savings and loan institution. It was also his luck to have rich friends.




KNOWLEDGE


Thayer Lindsley’s chance to build one of the great mining fortunes in Canada came because Thomas Edison gave up too soon. In 1901, the famous inventor was searching for a reliable supply of the nickel he needed for building storage batteries. Edison staked out claims around the small township of Falconbridge, nea r Sudbury, Ontario. When the exploratory drilling encountered quicksand, he turned to other sources and the claims lay idle until the l920s, when Lindsley came along. As founder of a company appropriately named Ventures, Thayer Lindsley was so sure of finding ore that he bought the old Edison claims for the seemingly enormous sum of $2.5 million . It turned out to be a puny investment in what became Falconbridge, one of the largest mining concerns in the world.


A modest man completely absorbed in mining, Lindsley was so shy that he once spent several hours patiently arguing with a magazine writer why he would make a poor subject for an article.




FACTS


Howard Hughes, in his Hollywood days, was busy producing a historical epic, when a newly hired assistant pointed out that a particular scene could become ludicrous because of the inaccuracy of some historical detail. When the young man suggested that he should go to the library to check it, Hughes shouted at him: “Never check an interesting fact!”



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