Excerpt from the book “The Tycoons” by Arthur M. Louis

The entrepreneurs do have one large advantage over the professionals. If they succeed, they can make a lot more money than any professional ever dreamed of making. The professionals who head even the largest companies rarely accumulate as much as $10 million in a lifetime of high salaries and generous stock options. However, personal fortunes of $50 million and more are common among entrepreneurs whose companies are relatively modest in size. Take for example the case of Henry Ross Perot, who quit his job as an IBM salesman in 1962 to start his own computer-service company on an investment of a few thousand dollars. When the company, Electronic Data Systems, went public in 1968, he kept 81 percent of the stock. When the stock reached its peak price in 1970, Perot was worth one and one-half billion dollars, which probably made him the richest man in Amer­ica at that point. The stock has gone way down since then, but Perot can still tally his wealth in the hundreds of millions.    

While Electronic Data Systems is a thriving enterprise, its reve­nues amount to just $300 million a year. The mighty Exxon Corporation grosses about three hundred times as much; yet, the head of Exxon, Clifton Garvin, is worth a mere million or two. The difference is that Perot got in at the beginning and held onto his stock as the company grew. Garvin came to Exxon seventy-seven years after its founding by John Davison Rockefeller, and he owns less than a hundredth of one percent of the stock. Although Perot does not happen to be a big spender, he is certainly in a better position than Garvin to make a splash at Tiffany or Cartier. Garvin, however, runs a company that can shape the destiny of the nation and the world. Which of them is better off? It is a matter of taste.   

Of course, there is no guarantee that entrepreneurs will succeed; in fact, the odds are heavily against it. For every person who becomes rich by founding his own business, there are thousands upon thousands who go broke or who merely scrape along at the subsistence level. The big winners--men like Perot, or Edwin Land of Polaroid, or Ray Kroc of McDonald's--get all the publicity, obscuring the fact that the chances for a rousing success are very slight indeed. Still, most budding entrepreneurs probably know what they are up against when they risk their capital on a company of their own. Yet, they do it all the same. 

Many of them have no alternative. They are the ones who lack the academic or social credentials to get ahead as professional managers. If they are to succeed in business at all, it has to be in an entrepreneurial role. Some of the more successful entrepreneurs of modern times were high school dropouts--among them Robert Forman Six, the founder of Continental Airlines, Rex David Thomas, founder of the Wendy's International restaurant chain, and Carl Henry Lindner, founder of American Financial, a diversified holding company. For all their natural talent and business savvy, they probably could never have gotten past the personnel offices at most blue-chip companies. Meshulam Riklis, founder of the Rapid-American Corporation, a retailer and manufacturer, and Charles G. Bluhdorn, who founded the Gulf and Western conglomerate, both went to college, but they still would have found it nearly impossible to reach the top in someone else's company. They are both Jewish and immigrants to boot--Riklis having come over from Israel in 1947, and Bluhdorn from Austria by way of England in 1942. Of Bluhdorn, Fortune once observed: "His manner changes swiftly from persuasive explanation to table-thumping assertion, all enunciated in mile-a-minute Viennese-American. His single-mindedness about the rightness and logic of his mission in the business world can display itself in rudeness and irascibility as well as in sudden charm." Here is a man who has built a conglomerate that really works, with revenues totaling more than $5 billion, while amassing a personal fortune of some $50 million. Yet it is difficult to imagine him attaining even a vice presidency in the prim, WASPish milieu of so many major companies.  

There are some businessmen whose academic and social backgrounds would qualify them for careers at even the most discriminating of the large, established companies, but who choose to become entrepreneurs--with all the risk and uncertainty that this entails. On close inspection, it usually turns out that these are people who are imbued with what is called the "entrepreneurial temperament." To put it in plainer English: they cannot get along with bosses. They are just too outspoken or volatile or rough mannered, or full of bright ideas or simply too full of life to play the slow, civilized games required for advancement in a business bureaucracy. 

This is not necessarily something that they know instinctively. Many of them try at first to follow careers as hired hands, because that is the way things are done in this day and age. Only after this fails do they go off to make a fortune on their own. 

When Ross Perot left IBM after five years, it was in frustration over a company policy limiting the commissions that a salesman could earn. In 1962, he had sold his quota of computers by mid-January, whereupon his superiors insisted that he spend the rest of the year in an office job. IBM seems to have a knack for discouraging its brightest people. 

Gene Myron Amdahl, the man who designed the Series 360 computer, left the company twice. He vowed to create a company of his own that would produce large computers to compete with IBM's, and in 1970, he did. Today the Amdahl Corporation has revenues of $300 million.  

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