Give a Cigar Aficionado subscription and we'll send you a Pocket Guide to Cuba FREE!

Email this page Print this page
Share this page

American Tycoons

Tycoon. The word comes from Japan, where it means the equivalent of shogun. But long ago America confiscated the title. It was in the U.S. that tycoons became paragons of power and influence. American tycoons swung deals, not swords, and changed the
From the Print Edition:
J.P. Morgan, Mar/Apr 00

(continued from page 1)

"The Titanic disaster brought radio to the front, and also me," he would later say. Sarnoff would use his genius for self-promotion and sense of emerging technology to become the electronic media visionary who popularized radio and television. He created a multinational communication's powerhouse by turning the wireless radio into a mass device of entertainment and news.

He fathered the radio network NBC, which for a time had two programming stations (the Federal Communications Commission would force RCA to spin off one as ABC), and was instrumental in ushering in the age of television. A Russian immigrant, Sarnoff started working in his early teens hawking newspapers, became an office boy and then worked as a telegraph operator for Marconi Wireless Telegraph Co. of America.

Although fascinated by wireless technology, he focused his efforts on commercializing radio. In 1915, Sarnoff advocated "bringing music into the house by wireless." Scoffed at by the Marconi executive team, Sarnoff repositioned his idea and moved on. A few years later at RCA, he would pen a memo to senior executives, saying: "We must have a suitable apparatus for sale before we can sell [the radio]."

Seeking that apparatus himself, Sarnoff pushed through the first radio sports broadcast in 1921. Radio owners listened as heavyweight boxing champion Jack Dempsey dropped challenger Georges Carpentier. Radio sales skyrocketed as America scanned the radio dial for Glenn Miller and the news. As head of RCA, Sarnoff was the first to string together radio sounds through telephone lines.

In 1926, the National Broadcasting Company's radio network was born. People in Iowa could now listen to a news broadcast from New York. Sarnoff turned the company's resources towards an invention known as the iconoscope, an early television. At the 1939 World's Fair in New York, he delivered another first: a television broadcast. He also felt a duty to deliver programming of high culture to the masses, creating an NBC orchestra and helping to develop high-fidelity FM. The tycoon also had a touch of the imperious. After offering Franklin Roosevelt "all the facilities and personnel" of RCA for the Second World War effort, Sarnoff was named a brigadier general. He liked the title, and was so addressed by colleagues and co-workers thereafter.--JS

RAY KROC (1902-1984) MAC DADDY

The story goes that toward the end of his life McDonald's head Ray Kroc was driving in Southern California when he decided to indulge his penchant for surprise checks of franchise restaurants. Recognizing the Burger Meister, employees rolled out the red carpet for their boss. A subsequent story in a local paper reported that Kroc was chagrined to have been caught in his little ruse, but suggested that his arrival in an $80,000 limousine might have been a tip-off to the countermen. When a friend ribbed him about it, Kroc called the story pure nonsense, saying: "It was a $40,000 limousine. Only an idiot would pay $80,000 for a car."

Apocryphal or not, the story is pure Kroc. He sold burgers by the billions by scrupulously patrolling his preserve and securing every economy. It was at the not-so-tender age of 52 that he had the brainstorm that would put the country on a fast-food diet. Kroc, a milkshake machine salesman, had noticed that one San Bernadino, California, restaurant ordered inordinate numbers of his product, so he went to see it for himself.

What he found was the first McDonald's, a drive-in offering quick, efficient and friendly service coupled with low prices and a carefully selected menu. It had a devoted and passionate customer base, with people driving many miles just to taste its hamburgers, fries and milkshakes. Kroc fell in love with the idea. The owners, Mac and Dick McDonald, were hesitant, but soon approved Kroc's expansive desire to multiply the concept into a nationwide chain. Within a year, Kroc had opened a McDonald's franchise in Des Plaines, Illinois, near his hometown.

Within 10 years, the chain, by then owned by Kroc (he bought out the brothers for $2.7 million in 1961), had expanded to 700 eateries. Today, that number has increased to more than 25,000 McDonald's worldwide, with franchises in Central America, Russia and Japan. Kroc relied heavily on perseverance and hard work. During the first years of operation, Kroc refused to take a dime from McDonald's profits, opting instead to live off his salesman salary.

He wore many hats, often cooking fries, ordering supplies or helping the janitor clean the restaurant. He insisted on exacting standards for every restaurant in the chain (the parking lots of each establishment are cleaned on the same strict schedule and condiments are dabbed out in uniform proportions on every burger) and created a Hamburger U. for prospective franchisees to make sure those standards were kept. He also listened to his employees and franchisees; some of McDonald's most popular items, such as the Big Mac, Filet-O-Fish and Egg McMuffin, were invented by franchise operators.

His passion to make McDonald's succeed did not jibe with a happy home life, however, and he lost two wives to divorce. A third became his widow and oversaw charities funded by the millions he had earned.--SD

THOMAS WATSON JR. (1914-1993) COMPUTER MAGNATE

Many men determine to outdo their father in business. But not many have to go to the extent that Thomas Watson Jr. did. Taking over an already successful IBM from his father, he spent $5 billion (the most expensive private undertaking of its time) to take the company into a new age of computing.

Pronounced as "arguably the greatest capitalist who ever lived" by Fortune magazine in 1987, Watson inherited Big Blue from his father, Tom Sr. Of the transition, Watson said, "Fear of failure became the most powerful force in my life. I think anybody who gets a job like mine, unless he's stupid, must be a little bit afraid." From the time he was born in 1914 (the year his father joined International Business Machines, then called Computing-Tabulating-Recording Co.), trouble seemed to stick to Watson Jr., who was known to his neighbors as Terrible Tommy.

Never a good student, it took Watson six years and three schools to graduate from high school. Growing up in the shadow of his father's success often left him feeling inadequate and lost. Watson went to Brown University where he excelled in drinking and carousing. He joined IBM as a salesman, but was less than enthusiastic. Watson Jr.'s playboy behavior was at odds with his father's puritanical rules. A devotion to flying also distracted young Watson. By his early 20s, he had logged more than 1,000 hours of flying time. A stint in the Second World War as a pilot changed Watson.

Suddenly in a position of authority, he found himself using his father's management techniques. He returned mature and focused. Watson Sr. had built IBM to be the leader in punch-card tabulators. He also built an intensely loyal workforce of dark-suited men. Under Watson Sr., IBM men sang IBM pride songs and worshipped their CEO--who challenged them to think. Things would be different under Watson Jr. He saw the future of the company in electronic computers and for 10 years, battled his father to make the move from punch cards to circuit boards.

Watson Jr. was a tougher boss than his father and executives worked under high stress. During Watson's two decades at the helm, IBM saw revenue grow from $900 million to $7.5 billion and the number of employees rise from 72,500 to 270,000. He introduced the idea of unbundling the technology package, breaking sales down to each aspect of a computer's hardware and software.

At 57, Watson retired. After having a heart attack Watson decided that "I wanted to live more than I wanted to run IBM." But Watson was always more than his corporate persona. While battling antitrust lawsuits, Watson regularly referred to a list he kept in his desk drawer of adventures he had yet to take, such as flying a helicopter and sailing the Arctic. In retirement he served as President Carter's diplomat to the Soviet Union for two years. When he died, at 79, Time called him the "oldest living jet pilot."--Stacey C. Rivera

SAM WALTON (1918-1992) DIMESTORE COWBOY

When Sam Walton finished a peripatetic hitch in the Army at the end of the Second World War, he had a college degree, some experience working at J.C. Penney's, and a hankering to go into retail for himself. He was considering a deparment store in St. Louis when his wife, Helen, spoke up: "Sam, we've been married two years and we've moved 16 times. Now, I'll go with you anyplace you want so long as you don't ask me to live in a big city."

Mrs. Walton's dictum would aptly define the Wal-Mart retailing empire to come: a chain of discount stores set up in small towns with little competition and low overhead. By following it, Mr. Sam would come from nowhere to be the richest man in America by 1985. But Walton's was a long day's journey into overnight success. It was two decades before he would fully roll out the Wal-Mart concept. The young Missourian made his bones as owner-manager of a number of Ben Franklin variety stores throughout Arkansas.

As he added stores he stuck to small towns and always undercut the competition, feeling he could make up in volume what he lost in margin. As he worked, the gregarious Walton learned--from his own experience and by watching others in the burgeoning world of discount. By 1962, he was ready to start a chain of his own design. When Ben Franklin wouldn't back him, he went out on his own. Hands-on attentiveness, imaginative promotions, relentless expansion, strong customer service and gung-ho employees were the secrets to the Wal-Mart formula. Walton became the cheerleader for the chain.

He once cajoled workers by promising to do the hula on Wall Street if they surpassed projections. Sam danced that jig. After taking Wal-Mart public in 1970, he focused on paying back "associates," or employees, instituting profit-sharing and stock-option programs that left many longtime workers millionaires. He entertained every employee's idea and was willing to try anything on a small basis until it failed. The chain led the industry in using computers for inventory and distribution. Soon Walton was able to circumvent manufacturer's reps and buy directly from the maker getting lower prices and faster delivery.

From this stemmed Walton's Buy American program. Yes, it was flag waving, but Mr. Sam also helped U.S. suppliers compete. Innovation draws detractors. They said he was destroying the character of downtown America, he was killing the small businessman, he was antilabor. But to defend himself Walton pointed to his low prices, the number of retailers who had thrived in his wake, and the employees he had made wealthy. "The whole thing is driven by customers, who are free to choose where to shop."--JB

TED TURNER (1938- ) MEDIA MAVERICK

It was the worst disaster in yachting history. About 300 yachts, including Ted Turner's Tenacious, were competing in 1979's Fastnet race off Ireland when a fierce storm hit. The race became a fight for survival, and Turner and his crew, among many others, were reported missing. By the time the storm passed, 22 sailors had died; only 92 boats crossed the finish line. The Tenacious was first across, with Ted regaling the press at dockside. He's been called Captain Outrageous and Terrible Ted.

But cable TV pioneer Robert Edward Turner III, Time Warner's vice chairman (and its largest shareholder), has also been compared to broadcasting legend William Paley. And no one's ever called him boring. Son of a disciplinarian father, young Ted grew up in military schools. After expulsion from college, he worked for his father Ed's billboard company. A natural salesman, Ted quickly moved up.

In 1963, Ed Turner committed suicide. Few expected Ed's playboy son, then 24, to take over. But Turner expanded the business, buying ailing radio stations and promoting them with his billboards. In the early 1970s, he bought two bankrupt UHF TV stations, investments so controversial that his accountant quit. But behind his impulsiveness was a gift for seeing potential in overlooked properties. He broadcast old movies and TV shows, wrestling and Atlanta Braves games, selling his programming as escapism.

By 1973 he was broadcasting from Atlanta via microwave, creating the first cable network. Four years later he began beaming his signal via satellite to cable systems nationwide, then a radical idea. TBS, his Atlanta "Superstation," would become the country's most profitable. During this time Turner, an avid sailor, raced his yachts, earning four Yachtsman of the Year titles and, in 1977, the America's Cup. In 1980 he launched the Cable News Network, the first global channel. By the 1990s, TBS was cable's largest network with 18 channels, a vast film archive and an unprecedented global reach. In 1996, Turner sold TBS to Time Warner in a $7.5 billion stock swap; his cut--nine percent of Time Warner's common stock.

In January, America Online and Time Warner agreed to merge. Worth an estimated $10 billion, Turner will be vice chairman of the new company. Though Turner's impulsiveness often pays off, his shoot-from-the-lip style has offended many. His mercurial behavior and decades of reputed womanizing contributed to the breakups of his first two marriages. He separated from third wife, Jane Fonda, in January. America's largest private landowner, with 1.4 million acres, Turner has become a conservationist. Promoting global understanding, he created the Goodwill Games and has pledged $1 billion to the United Nations. Critics say his save-the-world dreams are unrealistic. To Turner, they're just another challenge.--TF

BILL GATES (1955- ) SOFTWARE POKER

William H. Gates III had business on his mind right from the beginning. At the ripe old age of 10, he wrote a $5 contract giving him unlimited access to his older sister's baseball mitt. In 1980, Gates inked a far shrewder deal, licensing a disk operating system to IBM Corp. for its new personal computer.

The move gave Gates's young Microsoft Corp. revenues from every computer sold with that system and created a pair of juggernauts--Microsoft has revenues of $19.7 billion, and Gates is, by a comfortable margin, the wealthiest man in the world. Forbes magazine estimates his net worth at $90 billion. The IBM deal was like a poker game, which Gates was ready to play.

The Harvard dropout spent many nights playing cards until daybreak, and his negotiating talents were considerable. He didn't have the software that IBM needed, but he was negotiating with a competitor who did. Gates kept the details cloaked from both parties and bought the system he needed for $50,000. That program became MS-DOS, which powers more than 80 percent of the computers sold in the world today.


< 1 2 3 >

Share |

You must be logged in to post a comment.

Log In If You're Already Registered At Cigar Aficionado Online

Forgot your password?

Not Registered Yet? Sign up–It's FREE.

FIND A RETAILER NEAR YOU

Search By:

JOIN THE CONVERSATION

    

Cigar Insider

Cigar Aficionado News Watch
A Free E-Mail Newsletter

Introducing a FREE newsletter from the editors of Cigar Aficionado!
Sign Up Today