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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

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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


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.

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