Book Review of Forbes Greatest Business Stories of All Time by Daniel Gross

This Book Review of Forbes Greatest Business Stories of All Time by Daniel Gross is brought to you from Aaron Hafer from the Titans of Investing.

Genre: Business Motivation & Self-Improvement
Author: Daniel Gross
Title: Forbes Greatest Business Stories of All Time (Buy the Book)

Summary

An entrepreneur sees a problem or need as an opportunity then acts on that opportunity to create a business. Of course, these people shoulder a significant amount of risk along the way but do so with specific goals in mind.

Entrepreneurs have relentless focus and devote a significant amount of time to their business. Unlike most people, entrepreneurs do not complain about problems but instead develop ways to solve them. The life of an entrepreneur is filled with uncertainty, but freedom and unlimited reward attracts people.

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Daniel Gross and the editors of Forbes Magazine put together the Greatest Business Stories of All Time. These twenty short stories tell inspirational tales of some of the most successful entrepreneurs since the 18th century.

Readers see the trials and tribulations each individual faced, as well as how each person navigated through tough times. Gross also explains what worked for each person in their journey and what contributed to their ultimate success.

More importantly, readers gain an understanding of what it takes to become as successful as these people. Based on these short stories, it is clear that successful entrepreneurs take calculated risks, continuously adapt to changing business environments, learn from mistakes, and most importantly take action.

In this Titans brief, you will find answers to these questions:

  • What do most successful entrepreneurs do that ordinary people fail to do?
  • What characteristics are common among successful entrepreneurs?
  • Why do most people fail to reach the level of success these twenty men and women reached?
  • Why is taking action critically important?
  • Can anyone be an entrepreneur?

Introduction

“Successful and unsuccessful people do not vary greatly in their abilities. They vary in their desires to reach their potential.” – John C. Maxwell

What exactly is success? What must we do to become successful? These are questions many of us ask repeatedly. We want to succeed but do not know where to begin. In his book, Greatest Business Stories of All Time, Daniel Gross compiles twenty stories about twenty successful entrepreneurs who have answered these difficult questions.

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Each entrepreneur has a unique journey, but obvious similarities exist. Careful study of these inspirational stories exposes the commonality of traits that lend themselves to success. The following paragraphs will help complete the statement: Successful Entrepreneurs…

… Do Not Understand “No”

We live in a “one answer” society. Two plus two is four; the sky is blue; the grass is green. It is true that facts are a part of life, and formal education teaches children to find the “right answer.” We grow up choosing between choices A, B, and C. While education has done a fantastic job of making kids smarter, it has also done a decent job of narrowing our mindset.

All too often we hear “wrong answer” or “that is not right.” With children constantly hearing negative comments such as “no you can’t, it’s impossible, it’s too risky, and that’s never been done before,” they can lose their creativity forever. How does an entrepreneur find success through a sea of people saying, “It can’t be done?”

John H. Johnson was an African American male born in 1918.

As editor for The Guardian, Supreme Life’s company magazine, he realized the need for African Americans to have a magazine of their own. (146). However, a twenty-four year old Johnson, with minimal experience living in an area of severe segregation during World War II, experienced conditions far from ideal for opening a business.

Despite the odds, Johnson travelled to New York to seek advice from Roy Wilkins, editor of the National Association for the Advancement of Colored People’s magazine, The Crisis (146). Wilkins advised Johnson, “Save your money, young man. Save your energy. Save yourself a lot of disappointment” (146).

Despite the warning, Johnson founded the Negro Digest and managed to operate on razor thin margins for years. In 1982, after years of hard work, Johnson became the first African American featured on Forbes 400 (156).

“When I see a barrier, I cry and I curse, and then I get a ladder and climb over it.” – John H. Johnson (150)

Mary Kay Ash did not understand “no” either.

She was a successful saleswoman at Stanley Home Products in the mid-1930s. During this time most women did not work full-time, but as a single parent of three, Mary Kay did not have a choice.

She worked hard but continuously found herself in men’s shadows (236). Realizing she could do better for herself and other women, she decided to create a “dream business” that would provide women with opportunities that did not exist anywhere else (237).

Detractors constantly told her, “Oh Mary Kay, you’re thinking female” (236). In other words, you’re crazy. Mary Kay had not opened a business before and despite facing scrutiny from everyone around her, she decided to open a cosmetics business.

With a lot of hard work and ignoring a lot of “no’s,” Mary Kay went on to create one of the most successful direct sales companies of all time – run primarily by women.

May Kay spoke famously, “Aerodynamics have proven that the bumblebee cannot fly. The body is too heavy and the wings are too weak. But the bumblebee doesn’t know that, and it goes right on flying, miraculously” (233).

… Make a Wrong Decision Rather Than No Decision

“The best thing is to make the right decision. Making a wrong decision is okay too. The worst thing to do is hedge. To hedge is to fail.” – Andrew Grove, CEO of Intel Corporation (247)

Grove claimed that Intel never hedged – there was no backup plan. Gordon Moore and Robert Noyce, founders of the company, exemplified this philosophy by leaving high-paying jobs to manufacture a product they had not even invented yet (247).

Many entrepreneurs believe they have to be right the first time.

In reality, successful entrepreneurs are not afraid of being wrong and are instead terrified by inactivity. When Moore and Noyce left their day jobs to create Intel, they had not even invented a product. Most people would wait until they felt sure or comfortable before making such a dramatic life change.

Moore and Noyce understood that waiting until the “right time” would mean the opportunity had passed them by. Failure is part of being an entrepreneur, and learning from bad experiences is crucial for growth. Because of this, it is better to take action and fail rather than never take action.

American Express is another example of a company who made decisions and learned from mistakes.

American Express sought to revolutionize how people paid for big-ticket items with an ultimate goal to replace “cash” with “charge.” As successful as they would eventually become, the journey was not easy. As the company grew, its logistics did not keep up with volume.

After a year of terrible losses, Ralph Owen, the board chairman said, “We lost roughly $2 million last year, and we have made every mistake we could possibly have made in getting it going” (224). The company realized that they had the wrong technology to pay bills, and they also employed the wrong people to manage the company.

In 1960, Howard Clark took over as President and paved the way for eventual success by changing the company’s operations. First, he raised the annual price of the card from $6 to $8. Clark realized American Express had a valuable product and believed the price should reflect its quality. Clark said, “If you have the best product, sell it for a premium” (225).

Among other changes, Clark cancelled delinquent accounts and increased the discount rate charged to merchants. American Express was not created as a “perfect company,” but instead started as an imperfect business that improved along the way.

William McGowan was another ambitious entrepreneur with a big goal.

In the mid-1900s, AT&T dominated the telecommunication industry – McGowan wanted to do the impossible and compete with them. He named his company Microwave Communications Incorporated (MCI). From its inception in “1968 through 1975, MCI had cumulative losses of $96.2 million” (290).

McGowan had apparently stepped in over his head but continued to operate despite huge losses. The losses grew so much that McGowan stated, “We were not really in the communications business, we were really in the surviving business” (293).

McGowan had underestimated the competition, the costs, and the strength of AT&T’s monopoly. After an extensive negotiation process, MCI obtained rental agreements with AT&T that would allow MCI access to local exchanges for a fixed rate per month. This deal paved the way for MCI’s success and finally, in 1979, MCI saw its first profits earning $7 million (293).

Most business people would not even consider going after a monopoly’s market share. Any that did would get out after losing as much as MCI did. McGowen was undeterred by these challenges and used any setbacks as means for improvement.

Most entrepreneurs have setbacks. Walt Disney’s most popular animated films to date – Fantasia, Pinocchio, and Bambi, were not successful at the box office (134). Henry Ford’s Model T broke down. Cyrus McCormick sold his first two reapers, and they broke down as well. All of these now-renowned people made wrong decisions along the way, but those wrong decisions eventually led them to the right ones.

… Take Calculated Risk

Contrary to popular belief, entrepreneurs are usually not gun-slinging risk takers. Of course, entrepreneurs take risks, and often invest a significant amount of money in their projects. However, they position themselves to maximize earnings – not lose money. As followers of JP Morgan said, he was “a banker, not a speculator” (64).

Jerome Kohlberg, Henry Kravis, and George Roberts came together in 1976 to form Kohlberg Kravis Roberts & Co. (KKR) which would forever change the way people viewed debt. With $120,000 in initial funding, KKR pioneered the leveraged buyout (LBO) technique where an acquiring company buys back stock from a corporation’s shareholders.

They used debt as leverage by borrowing from large institutions or selling high-yield bonds (315). When the company was founded, most people viewed debt as a very risky form of raising capital and therefore avoided debt whenever possible.

The partners did not blindly acquire companies and pray for a good return, but instead utilized very strict risk metrics.

“LBOs required intensive due diligence, foresight, and patience” (323). Kohlberg told Forbes in 1978, “We look at a company and ask ourselves in our financing, ‘What happens if the earnings go flat; or if they drop back to where they were three years before we bought the company?

Is the financing substantial enough to hold the company over a bad period?’ If not, then the financing is wrong” (322). KKR paid extensive attention to cash flow and ensured they were buying companies that would generate significant returns.

KKR’s strategy proved successful.

By 1983, KKR averaged a return of 62.7 percent per year while the stock market averaged about 9 percent per year (325). KKR was built into a multibillion-dollar firm. The company inspired others to take similar risks, and the leveraged buyout became a popular strategy for other firms.

Was KKR’s investment strategy risky? Absolutely. These men had invested $120,000, quit well-paying day jobs, spent time traveling to find clients, and initiated a business model based around a “risky” form of capital – debt. What the founders of KKR did, however, was not reckless.

They had a very well thought out business model and stuck to it. They understood the risks involved, but chose to see debt as a form of leverage rather than a risky form of capital. The risks were there, but so were the plans, patience, and calculation.

There have been other instances of entrepreneurs taking risks. Bill Gates took a calculated risk when he decided to drop out of Harvard to work on Microsoft fulltime.

Leaving one of the best universities in the country was risky, but Gates foresaw his company’s potential. Making decisions “unhedged” was a risky model for Intel to operate on, but the team understood that in order to best execute their plan they had to work without reservations.

American Express did not replace cash with charge overnight, but instead did so “little by little, and assuming as little risk as possible” (231). The entrepreneurs in this book took extreme risks, but they did so with sound risk management and logical reasoning.

… Find a Need and Fill It

As a society, we complain a lot. If the temperature is above seventy-five degrees, it is too hot. If it is below seventy-five degrees, it is too cold. Most humans are pessimistic, often looking to find the bad in life.

People continuously find problems with products and services, wishing they were better and more efficient. However, those same people rarely do anything to solve these problems. The people that exploit inefficiencies and find ways to improve rather than complain are the ones that prosper.

Born in the early 1800s, Cyrus McCormick is an example of a man who found a solution rather than complaining about his problem.

In 1840, wheat farming was demanding manual work. “It took thirty-seven hours of backbreaking labor to harvest an acre of wheat by hand” (28). As much as seventy percent of America’s workforce worked the land, setting the stage for a productivity increase to revolutionize the country (26).

McCormick realized there had to be a better way, and set out to create a “Reaper” machine to make people’s lives easier. A neighbor commented, “His whole soul was wrapped up in his Reaper” (28). It was true, McCormick was focused and dedicated to serve people and fill the obvious need for agricultural improvement.

After years of trial and error, McCormick’s Reaper caught the public eye. In 1847, wheat production was four bushels per capita, but wheat production more than doubled to ten bushels per capita by the time McCormick passed. This was due in large part to McCormick’s invention (38). An entrepreneur finds great joy in leaving “American landscape visibly altered by his invention” (37).

Henry Ford was born to a modest farming family in Michigan.

While his family worked the land, young Henry helped by doing chores around the house. His innovative mind blossomed early as he found ways to reduce the pain of his farm chores by inventing machines to help him (76).

After working as a mechanic and engineer for a dozen years, he decided he wanted to build a “horseless carriage” (77). In 1893 the Duryea brothers built the first gas-powered car in the US. By 1899, there were thirty automobile manufactures, but only the wealthy could afford cars (78).

Henry Ford developed the automobile that would revolutionize transportation – The Model T. Ford stated that his goal was for everyone to be able to afford a Model T, and for everyone to have one. In order to do this, he recognized he would need to continuously reduce its price (81).

To accomplish this goal, Ford applied the assembly line process to automobile manufacturing to produce very low cost cars instead of expensive, handcrafted ones (79). Ford ultimately sold fifteen million model T’s. Automobiles have become commonplace, and the world has advanced greatly because he saw a better way.

… “Work, Work, Work”

Most people understand that achieving success is “hard work,” but what exactly does it mean to work hard, and how do successful people implement this concept into their lives? For Bill Gates this meant, “Often working from 9:30 am to midnight” (345).

Paul Allen of Microsoft said, “we would just work until we dropped” (340). For John D. Rockefeller hard work meant staying out of doors day and night. Rockefeller claimed, “I shall never forget how hungry I was in those days” (45).

Some balanced hard work in a healthy way while others did not. Sam Walton lived by his father’s advice: “The secret is work, work, work” (268). Walton balanced this by not going into the office on Sunday.

On the other hand, McGowan of MCI was described as an all-out workaholic (288). Regardless of how the work consumed the individual, the results were the same. These men and women did not just “work hard,” they “worked until they dropped.”

… Continuously Adapt

“We feel we should be the ones to obsolete our products ourselves, not leave it to someone else.” – Peter McColough of Xerox (205)

Entrepreneurs thrive on change.

Change simply means an opportunity for a new market. Change means innovation, and innovation means potential profit. However, it is against human psychology to be comfortable with change. For example, on the first day at a new school, children are nervous.

They are not nervous because they are afraid of failure, but merely because they are in an unfamiliar situation. After years of schooling and preparation, graduates are nervous to start their first job. They are fully competent, but they are entering a new environment.

Change is uncomfortable for most people, but the successful entrepreneur is able to overcome the inherent fear and stress associated with change and use change to their advantage.

Most people know Bill Gates as one of the richest men of all time.

Furthermore, most know he founded Microsoft – the most successful software company in the world. People often do not appreciate how impressive the journey was for Gates.

When he founded Microsoft, the technology market was rapidly expanding with new products superseded soon after they were released. Gates and his team had to learn to stay ahead of the curve and never think they “had arrived.” Even after building a billion dollar company, Gates told Forbes, “We’ve done some good work, but all of these products become obsolete so fast.”

Gates’ true strength was staying one step ahead. “He typically aimed his software to be more advanced than the contemporary hardware, knowing that machines would inevitably catch up” (347).

John D. Rockefeller is another example of an entrepreneur able to adjust to change.

Rockefeller founded Standard Oil, and virtually “could control every movement of a drop of oil” (54). In the late-1800s, the oil industry had a lot of opportunity, but also many obstacles.

Oil prices fluctuated wildly, “plunging from $10 a barrel to fifty cents a barrel between January and June of 1861” (44). There were also transportation issues. A few railroads dominated transportation services, and oil producers did not know how much they were going to pay to transport their oil to market.

Charles Darwin’s theories on evolution were starting to gain traction during this period and were easily applied to Rockefeller and his business. “The only businesses able to survive the competition were those able to adapt to rapidly shifting circumstances” (44).

Rockefeller lowered his prices when necessary and adjusted logistics to ensure competitive delivery prices. While many entrepreneurs and speculative operators failed to adjust to change, Rockefeller embraced change and became the richest man in America.

… Develop Positive Life Habits

“We are what we repeatedly do. Excellence, then, is not an act, but a habit.” – Aristotle

Our attitudes and habits shape the course of our lives, and our willingness to take control of our thoughts and personal development are paramount to our success. As the famous philosopher Aristotle said, we are our habits.

Robert Morris was extremely successful as the first financer of America, but became heavily in debt toward the end of his career.

He had lost his fortune, and was unable to pay back big loans. Morris was bankrupt and ended up in debtor’s prison. While most people would view bankruptcy as the end, Morris was very grounded and remained “eternally optimistic.”

Not only did Morris retain a positive life outlook, he looked forward to his next business until the day he died (6). Optimism is critical when playing the entrepreneurship game. Confidence and a positive attitude will help entrepreneurs wade through the sea of “No you can’t, and it’s impossible.”

“Whether you think you can, or you think you can’t–you’re right.” – Henry Ford

While classroom education is important for growth, education outside of the classroom is the key to success.

Many of these people were college dropouts including Bill Gates, Charles Merrill, and David Ogilvy. The difference is they were voracious readers. Joseph Wilson always read to learn from other people, and John Johnson read countless self-improvement books (145).

Dale Carnegie’s How to Win Friends and Influence People, was among the books that helped Johnson gain an audience for his magazine Negro Digest. David Sarnoff, president of Radio Corporation of America (RCA), “devour[ed] every scientific journal he could find at the New York Public Library” (109). Curiosity for continued education is extremely important for business success.

… Serve Others and Give Back

Highly successful people care for and respect others. It is rare to find wealthy people who do not feel compelled to give back. Even as one of the most controversial entrepreneurs of all time, John D. Rockefeller shared his wealth to serve society. Rockefeller was the richest man of his time and built an oil empire by acquiring smaller competition.

His strategy was often seen as hostile, but he viewed it as simply part of doing business. Because his takeovers were so aggressive, some people viewed him as “predatory and hopelessly corrupt” (54). Whether his business decisions were ethical or not are up to interpretation, but nonetheless, Rockefeller devoted much of his life to philanthropy.

“Rockefeller endowed the University of Chicago in 1892, and set up a foundation that dispensed millions to educational and wealth efforts around the world” (54). He also exercised his deep Baptist faith and served as the superintendent for Sunday school at his church (47). When he retired due to health reasons, Rockefeller spent the rest of his life devoted to charity (54).

Sam Walton is remembered as one of the most successful entrepreneurs and as a man who treated people with dignity.

As the founder of Wal-Mart, the most successful low-cost merchandise provider, Walton could have easily stiff-armed the less fortunate. The reality is quite the contrary. Walton built Wal-Mart on respect for the individual, and did not place any barriers between himself and his “associates” (268).

Weldon Wyatt worked for Wal-Mart for a long time and said in an interview that one of the most astounding characteristics of Walton was “his willingness to listen to anyone’s ideas at any time” (277). In fact, Walton had an open invitation for any store associate to contact him anytime with a problem, comment, or idea (276).

Apart from business relations, Walton gave much of his wealth away to charities and less- fortunate individuals. It was common for the Walton family to invite struggling young families out to lunch with them on Sunday (267). Walton died a multi-billionaire, but that probably mattered much less to him than the Wal-Mart cashier who had $262,000 in her retirement account after working for the company for twenty-four years (283).

Robert Morris was born in 1734, and is known as America’s first financer.

Morris served many roles in government, and played a critical political role during the American Revolution (9). When Morris took office as Congress’s Superintendent of Finance, the country faced major financial difficulties. Not only was the country in a very expensive war, there was not a tax system in place to raise funds.

Many times Morris used his own money to purchase supplies for the troops and personally paid troops their salaries (13). Morris attempted to devise a taxation system on multiple occasions, but his pleas fell on deaf ears (16). America took Morris for granted, not realizing that he routinely saved the country.

It was very much a parent and child relationship with Morris acting in the country’s best interest as the “mean” parent. Morris had many opportunities to walk away but cared more about the well-being and future of the country than for his personal stability.

When Congress exhausted Morris’ patience by ignoring his proposal of taxation, he threatened to leave office knowing he was the only one who could afford to pay the troops. Even though Congress failed to honor his wishes, Morris decided to remain in office.

He paid the troops and stayed in office because “he felt compelled to set aside the power struggle and act, both for the public good and because he believed it would be dishonorable not to pay the men for victory” (16).

J.P. Morgan was a prominent banker also known for saving America from multiple financial crises.

When the government failed to pay soldiers in 1877, Morgan paid them out of his own pocket. He rescued the government again in 1895 when gold reserves were dangerously low (64). Most notably, he returned from semi-retirement to make his biggest contribution to the country during the 1907 financial crisis.

The stock market was crashing, people felt that their bank deposits were not safe, and runs on banks caused numerous bankruptcies. Morgan assembled a group of prominent bankers to help provide liquidity for the markets and lend to failing banks (60).

Morgan saved New York City from bankruptcy when the city needed $30 million to remain solvent (69). Amazingly, “During the panic Morgan refused to take commission on the New York City loan, and did not generally profit from the crisis” (71).

This was when desperate borrowers were offering 100 percent interest on loans, and Morgan could have made a fortune (68). Instead, Morgan served the country out of a willingness to help, not a desire to become wealthier.

Conclusion

Can anyone be an entrepreneur? Yes. However, the reality is that most people are not. Why is this? It takes a special person to be able to ignore “save your money, and save yourself a lot of disappointment.” Not taking no for an answer is one critical characteristic of an entrepreneur.

Next, many people freeze when it is time to make choices – they wait for a perfect business plan and do not allow themselves to learn from mistakes. People do not like change – they stick to what is comfortable rather than chase their dreams.

Many people say they work hard, but do they really?

Bill Gates stayed in the office everyday until midnight. Most people would rather sleep. Elliott Hulse, an entrepreneur and motivational speaker, said, “Sometimes you’re tired, but it doesn’t matter. There’s no time for tired. Sleep when you’re dead.”

Hard work, exhaustion, and failure accompany entrepreneurship. It is not always a glamorous lifestyle. The men and women in this book fed off challenges and discomfort. They did not understand “no”, learned from failure, took calculated risks, and adapted to changing business environments. Yes, anyone can do this too, but taking action is the only way to set plans in motion.

“Progress always involves risks. You can’t steal second base and keep your foot on first.” – Frederick B. Wilcox

HookedtoBooks.com would like to thank the Titans of Investing for allowing us to publish this content.  Titans is a student organization founded by Britt Harris. Learn more about the organization and the man behind it by clicking either of these links.

Britt always taught us Titans that Wisdom is Cheap, and principal can find treasure troves of the good stuff in books.  We hope only will also express their thanks to the Titans if the book review brought wisdom into their lives.

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