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 business landscape forever. The Gilded Age was the greatest era of tycoons. At the end of the nineteenth century, the Industrial Revolution was in full swing and every emerging market seemed to have at least one power broker ready to corner it. No antitrust laws stopped monopolies.
No income tax sapped personal wealth. Men were free to form trusts and build great monuments with their riches. To be sure, tycoons had already existed, but new technology created a boomtown. The courts and taxes did their best to remove tycoons from the playing field, breaking up the great trusts and making it harder to pass wealth through generations. What arose was an age of managers. Corporate power was consolidated by the likes of General Motors' Alfred Sloane--great businessmen but not really tycoons. F. Scott Fitzgerald seemed to think that the tycoon phenomenon had run its course when he wrote about a movie mogul in The Last Tycoon. Not by a long shot. The Electronics Age has ushered in a new round of tycoons itching to take over computer and communications markets.
Herewith, we've assembled a list of the nation's great tycoons. What do they have in common? It isn't higher education. Most of our choices never graduated from college, although five have their names on universities. The two who went to Harvard dropped out. It isn't technical preeminence. Astor never set a fur trap. Rockefeller never dug an oil well. Gates didn't design his operating system. Tycoons are set apart by their ability to change the world and their belief that the world should be theirs. Add a ravenous work ethic and you have a fair description of the men who follow.
ANDREW CARNEGIE (1835-1919) STEEL WILL
When Andrew Carnegie was a boy in Dunfermline, Scotland, his mother impressed upon him a favorite credo: "Look after the pennies, and the pounds will look after themselves." That tenet would guide Carnegie throughout his life. In 1848 Carnegie's father, a skilled weaver, lost his career to the power loom, and the family sought opportunity in America, settling near Pittsburgh. The 12-year-old Andrew started as a bobbin boy in a textile mill, then ran telegraph messages. Pennsylvania Railroad superintendent Thomas Scott hired 17-year-old Carnegie as an assistant. The young apprentice repaid his boss by boosting the railroad's profits with cost-cutting measures that would become his hallmarks: he increased the flow of freight on the lines, lowered costs with revolutionary cost-accounting techniques, and cut wages.
By 24, Carnegie was running the western branch and investing his own money in oil, iron and other companies. (During the panic of 1873, Scott would ask Carnegie for financial help. Carnegie turned him down.) By his mid-30s, Carnegie was a wealthy man with an affinity for iron and the metal of the future, steel. He built his own steel mills using the latest technology and hiring the best employees. He secured every facet needed for steelmaking, from iron deposits and coal mines to railroads and ore ships. He plowed his profits back into the business and continued to cut costs. Extremely competitive, the diminutive (5-foot-2-inch) Steel King was soon outproducing, underbidding and crushing rivals, while supplying low-priced rails and bridges to burgeoning America.
Carnegie Steel became the largest steelmaker in the world. Carnegie's business techniques belied his public persona. Son and nephew of social reformers, Carnegie portrayed himself as a friend of the working class, publicly supporting eight-hour workdays (the standard was 12) and union labor. Yet his workers labored at blast furnaces 12 hours a day, seven days a week for a Carnegie-reduced wage of 14 cents an hour. In 1892, Carnegie's partner, Henry Clay Frick, crushed Carnegie Steel's last union in bloody clashes at its Homestead steel plant outside Pittsburgh. The public was horrified, and Carnegie tried to blame Frick.
In 1901, Carnegie sold out to financier J. P. Morgan for a stunning $480 million, with Carnegie's $250 million cut making him one of the richest men in the world. Whether it was his relatives' reformist influence or a Presbyterian regard for the Final Judgment, Carnegie embarked on philanthropy with the same zeal he had brought to building his empire. Declaring that "the man who dies rich dies disgraced," Carnegie disbursed $350 million of his $400 million fortune, building more than 2,500 libraries and other institutions before his death in 1919.--Terrence Fagan
J.D. ROCKEFELLER (1839-1937) TRUST IN GOD
In 1855, a devout young Cleveland Baptist took a bookkeeping job with a local merchant and found it so fulfilling to pore over the minutiae of accounts that he thereafter celebrated the anniversary of his first payday as joyfully as his own birthday. John D. Rockefeller was so convinced that it was his providence to become rich through figures that he would later say, "God gave me my money."
Rockefeller soon embarked on a produce business, which boomed during the Civil War and must have further convinced him of his destiny. Young Rockefeller had strong antislavery sentiments, but believed so fervently in his fate to be wealthy that he paid a substitute to serve for him. His eye for opportunity was drawn to the nascent oil industry in the wilds of Pennsylvania.
Rockefeller and his partners built a business refining crude into kerosene. He brought to the venture a talent for watching the books and scrupulously securing every economy in a boomtown business full of imprudent wildcatters. His other genius was for spotting failings as well as abilities in his partners; when associates displayed weaknesses he eliminated them and replaced them with colleagues, such as Henry Flagler, Oliver Payne and John Archbold, who offered strengths.
The fledgling industry was rife with problems, not the least of which was the cost of transporting oil to market. Rockefeller solved that by securing clandestine contracts with the railroads that afforded huge rebates. With that edge, he was able to squeeze out the competition, which he usually then enveloped. With fewer bidders, he could pinch suppliers and regulate wildly fluctuating prices.
Industrial espionage and close association with politicos (his son married the daughter of trust-friendly Sen. Nelson Aldrich) smoothed out other snags for the tycoon. Another problem was retaining control of the empire while amassing the capital it would take to run it. With Flagler's aid Rockefeller incorporated. Later, Samuel Dodd helped him create a byzantine holding company, or trust, to circumvent laws that blocked businesses from owning property out of state.
Called Standard Oil, the company would come to control every facet of the business, from production and refining to shipping and barrel making. The trust garnered not only a worldwide monopoly, but the lasting enmity of ruined competitors and a horrified public. The lightning rod for disdain was the work of muckraking journalist Ida Tarbell. Rockefeller would argue that his business methods, common practice at the time, had slashed oil prices. Nevertheless, antitrust suits dissolved Standard Oil into dozens of smaller companies in 1911.
The ironic upshot was that his holdings gained so much on the open market that Rockefeller, already retired, became the country's first billionaire as a result.--Jack Bettridge
JAMES B. DUKE (1856-1925) THE DUKE OF TOBACCO
When Washington Duke returned from the Civil War to his farm near Durham, North Carolina, he had 50 cents, two blind mules and some cured tobacco. Seeing the success of the Bull Durham brand of chewing tobacco, Duke determined that selling rather than growing tobacco held a better future.
It was Washington's irrepressible son James Buchanan "Buck" Duke who saw that prerolled cigarettes represented a market segment not controlled by Bull Durham. When Duke was 33, he met with his four largest competitors in a lower Manhattan hotel on April 23, 1889 as the rough-hewn thorn in the side of the cigarette-making industry. He would emerge with an agreement that he would head the American Tobacco Co., the newly minted cigarette trust that would come to control the market for most tobacco products in the United States and gobble up more than 250 companies in its wake.
It was a combination of keen foresight, unmatched negotiating ability and cutthroat competitiveness that had put the young tobacco farmer in the position to rule his world. He attacked with a vengeance with marketing schemes such as brand names, in-store displays, trading cards, athletic endorsements, coupons and innovative packaging. Determining early on that sex sells, he even procured the endorsement of a comely actress. It was his introduction of the cigarette-making machine that allowed him the economies to go toe-to-toe with the serious competition in New York City.
Undersold at the store counter and outspent on promotions, his enemies had little choice but to join his tobacco trust. Manufacturing more than 90 percent of the country's cigarettes, Duke's trust squeezed farmers, distributors and even the manufacturer of the cigarette-making machine. Soon American Tobacco was able to corner the plug, snuff and pipe tobacco, as well as cheroots markets and start a British subsidiary. The steamroller could be stopped only when the government stepped in to divide it, in 1911. Duke groused that "in England, if a fellow had built up a whale of a business, he'd be knighted. Here, they want to put him in jail." Undeterred, Buck sought fortune in another business--electricity.
The Duke utility controlled most of the Carolina region before his death. After his will made his daughter, Doris, the country's richest woman, enough was left to fund the hastily renamed Duke University and the Duke Endowment, which is hailed as a model charity in philanthropy circles. He also left his daughter a lifelong distrust of others, and she died heirless in 1993, her affairs in as much disarray as her father's were organized.--JB
HENRY FORD (1863-1947) AUTO PILOT
Throughout his life, automotive pioneer Henry Ford had a love-hate relationship with reporters. In 1943, after columnist Drew Pearson dared to suggest that the government take control of the Ford Motor Co. because its chief was too old and frail, the 80-year-old Detroit industrialist and exercise fanatic responded, "I can lick him in any contest he suggests." Ford's adept handling of the press resulted in his being one of the best-known, best-loved and most-publicized figures of his time, despite his famous obstinacy and anti-Semitic writings. Although he didn't invent the automobile, he reinvented it, making it accessible to the public and spurring the American auto industry.
The eldest child of Irish immigrant farmers who settled near Dearborn, Michigan, Ford loved machinery and loathed farm work. He dropped out of school at age 15 and became an engineer. Ford struggled for many years to create a gas-powered car, succeeding in 1896, at age 32, when he drove his first gas-powered car, the Quadricycle, amidst little fanfare through downtown Detroit. Three years later, he built his second car, which caught the attention of several local businessmen. With their financial backing, Ford Motor Co. was launched in June 1903. Named vice president and chief engineer, Ford received a quarter interest in the firm. He publicized his cars through racing and advertising. But it wasn't until he built the now-famous Model T, in 1908, that he changed history.
At the time, cars were priced for the affluent. The Model T, the firm's ninth model, was sold at a more accessible $850, and was met with great enthusiasm. Introducing the first moving assembly line and other economies, Ford continued to reduce the price (it cost only $360 by 1916), and demand increased, with sales reaching more than 472,000 by the First World War. For the next 18 years, Ford was the preeminent automaker, producing more than half the cars sold (a whopping 15.5 million).
Profits soared and so did Ford's reputation as a man with a formidable business acumen. Workers revered him because he believed in paying them well, reducing their work hours and sharing profits. Not content with building cars, Ford made several forays into politics, embarking on an ill-fated 1915 peace campaign to Norway to end the First World War. He ran for the U.S. Senate three years later but was defeated by less than 4,400 votes.
He would never seek public office again but was politically active, vehemently opposing U.S. involvement in foreign wars and the formation of labor unions. Groomed to run the business, Ford's son, Edsel died before his father, then was commemorated by the hapless car model named for him. A grandson, Henry Ford II, eventually took over the reins to the company.--Shandana Durrani
W.R. HEARST (1863-1951) PUBLISHING PRINCE
In 1897, when renewed hostilities between Spanish colonialists and Cuban rebels seeking independence threatened, publisher William Randolph Hearst wanted lavish headlines with which to sell newspapers. He dispatched the artist Frederic Remington to Havana to supply images. Remington cabled him: "Everything is quiet. There is no trouble here. There will be no war. I want to return."
Hearst's alleged reply was in keeping with the tone of "yellow journalism," a style he helped create: "Please remain. You furnish the pictures and I'll furnish the war." The son of a millionaire gold miner turned senator, Hearst wasn't your average silver-spooned brat content to take over daddy's business. At 23, Hearst begged his father to let him run the San Francisco Examiner, which the elder Hearst had won as a gambling debt. Spending lavishly for writers, the son built circulation with sensational reportage on scandal and corruption. The newspaper became the cornerstone of an influential media juggernaut.
During the Spanish-American War, Hearst blurred the line between reporting the news and creating it. A Hearst reporter aided the escape of a Cuban political prisoner, and his New York Journal implied that the Maine, an American warship, had been sunk by Spain. A skilled editor, Hearst put his stamp on the empire. In memos, he dispensed helpful hints that became editorial guidelines. Among his dictums: "Don't print a lot of dull stuff that people are supposed to like and don't." Hearst's free spending built and ultimately endangered his empire, which at its height included more than 20 newspapers, nine magazines, telegraphic news facilities, radio stations and motion picture production syndicates. But projects such as San Simeon, his opulent modern-day castle, drained cash.
The Depression hit Hearst's empire hard, and he was forced to borrow money and sell holdings. Like his father, Hearst pursued political ambitions, serving as a U.S. representative from New York and losing gubernatorial and mayoralty races. His wife bore him five sons, before their relationship fell apart. Never bothering to divorce, Hearst lived his final 30 years with film actress Marion Davies. This and other peccadilloes were exposed in the 1941 Orson Welles film Citizen Kane, loosely based on the publisher's life. When he couldn't quash the film's release, Hearst instructed his media empire not to acknowledge it. The film was roundly hailed, but it is also credited with ruining Welles's promising career by tweaking the vindictive Hearst. Hearst passed his still-vital empire onto his sons. His granddaughter Patty became sensationalized in her own right when kidnapped by the Symbionese Liberation Army in the 1970s.--Jason Sheftell
DAVID SARNOFF (1891-1971) NETWORK NABOB
On April 15, 1912, when the Titanic plunged to the depths of the north Atlantic, David Sarnoff was a young telegraph operator manning the wireless machine atop the Wanamaker Department Store in Manhattan. Sarnoff glued himself to the wireless for a reported 72 hours, relaying news of the tragedy to newspapers and the families of the survivors.
"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.
Born in 1955 in Seattle, Gates grew up in a large home, the son of a successful lawyer. He wrote his first computer program, a clunky tic-tac-toe game, at age 13, and bonded with fellow computer whiz Paul Allen, later Microsoft's cofounder, over a prehistoric computer, which lacked a screen. All that devotion to poker and computers seemed to leave Gates little room to ponder everyday life.
Steven Ballmer, a college buddy who became Microsoft's president (and recently chief executive officer), once said that Gates never put sheets on his bed, and once left for vacation with the windows and door to his room wide open. And it was raining. Business focus has never been a problem.
Gates is a driven boss, known for shouting "That's the stupidest thing I've ever heard" at an unsavory idea. But the rewards of working for Gates are undeniable. Allen is the third richest man in America ($30 billion), according to Forbes, and Ballmer ($19.5 billion) is No. 4. An estimated 2,500 past and present Microsoft employees are millionaires. Gates has long worried about the long-term success of his company.
"Success is a lousy teacher," he wrote in his 1995 book The Road Ahead. "It seduces smart people into thinking they can't lose." Losing now looks possible--in November a judge found that the company's near monopoly harms consumers. Microsoft could go the way of Ma Bell, but Wall Street hasn't slammed the company's stock, which still trades high.--David Savona
STEVE CASE (1958- ) WEB MASTER
On August 7, 1996, the power went out for more than 6 million America Online subscribers. For nearly 19 hours, customers were cut off from e-mails, the Internet and other interactive offerings provided by the world's biggest online service. A few years earlier, such an outage would have drawn scant attention. But by 1996, the new communications medium had begun to rival the telephone as a way to keep in touch.
"If AOL five years ago had been inaccessible for a weekend, nobody would have known or cared," CEO Steve Case would spin-doctor the cataclysm to The Washington Post the following year. "We were like a little hobby people played with. Suddenly now we were more part of the everyday life." The little company has grown into an Internet powerhouse almost overnight.
Case has led AOL on a buying binge the past few years, acquiring such companies as Netscape Communications, Hughes Electronics and MapQuest.com. But the deal that rocked the media and online worlds came this January, when AOL agreed to purchase Time Warner, the entertainment, publishing and cable behemoth, for a record $165 billion. Just as radio and television transformed earlier eras, online communications has become an indispensable part of modern life.
Under Case, a shy, low-key executive who often wears khakis, AOL has grown to more than 20 million members worldwide, with annual revenues approaching $900 million and e-mail traffic equaling 80 million a day. In spite of well-publicized access and pricing problems, the online service has grown to control more than half of the U.S. home market. When Case attended Williams College in the late 1970s, his least favorite subject was computer programming.
But he was intrigued by the ability of the college's computers to talk to computers in far-off places, and he envisioned a time when computers would facilitate human interaction. Case eventually became involved with a start-up company called Control Video Corp., which struggled unsuccessfully to sell Atari video games for PCs. Rising quickly through the ranks in the '80s, he made deals for the company, now known as Quantum Computer Services, to develop online services for Apple, Tandy and IBM. I
n 1991 Case was named president and CEO of the company, which he had renamed America Online. He persuaded the board to resist the advances of Bill Gates, who wanted to buy the company as an inroad into the Internet world. After a direct mail campaign put 250 million diskettes into consumers' hands, AOL's membership exploded in 1994. Two years later, AOL usurped Prodigy and CompuServe (it would buy the latter the following year) as the online services leader.-- Bruce Goldman