Inc. Magazine's Special 30th Anniversary Issue (April 2009)
asks experts, including Carl Schramm of the Kauffman Foundation, to
name entrepreneurs who made a difference in past 30 years.
By Carl Schramm, president and CEO, Ewing Marion Kauffman Foundation
Daily
headlines remind us just how tough things really are: layoffs,
bankruptcies, foreclosures, and outright failures seem to define the
times, as they define all recessions. But they are, thankfully, only
part of the story. The untold story of recessions and bear markets is
how many successful firms are founded – or small firms expanded – that
not only help lead the country out of the downturn, but later become
integral parts of our economy.
My choices share a common history
of fighting their way up through tough times, helping to end recessions
and creating renewed growth.
Robert Swanson and Herbert Boyer create Genentech and establish the biotechnology industry
In
April 1976 – the high-water mark of “stagflation” and the misery index
– a young venture capitalist named Robert Swanson met with medical
researcher Herbert Boyer. Boyer was already a recognized scientific
genius; at Stanford, he and biochemists Stanley Cohen and Paul Berg
collaborated to develop the basis of genetic engineering. The
Boyer-Swanson collaboration would take that scientific breakthrough and
turn into a commercial watershed.
This timely union of science
and commerce gave rise to an entirely new industry focused on finding
bio-therapeutic cures to life-threatening and debilitating diseases.
Today, Genentech – recently acquired by Roche – boasts 11,000 employees
and annual revenues of more than $13 billion.
Herb Kelleher – Southwest Airlines Redefines the Airline Industry
Herb
Kelleher founded his firm in 1967, but it took him and his partners
four years to overcome the onerous regulatory barriers that had made
the airline industry so anti-competitive in previous decades. By the
time he flew his first flight in 1971 (just within the state of Texas
to avoid further federal red tape), he was flying into economic
headwinds that would easily have grounded a weaker entrant. Despite
the weakest economy since the Great Depression, Southwest Airlines
attained profitability in 1973 and remained profitable every year for
the next 31 years.
Southwest prospered by avoiding the
hub-and-spoke system that was rapidly eroding passenger satisfaction
and focusing instead on delivering a superior customer experience.
Fred Smith – FedEx Makes Overnight Delivery An Expectation
On
June 18, 1971, Fred Smith founded Federal Express on the strength of a
$4 million inheritance and more than $90 million in venture capital.
His ability to raise so much money on an untried idea was based on an
extraordinarily well-conceived business plan, the outgrowth of an
undergraduate term paper on the coming impact of computers on society,
and his experience as a Marine in Vietnam, where he immersed himself in
the art of logistics. Appalled by the inefficiencies of the military
system, he vowed to do better.
Smith’s solution was an
integrated air and ground system, based on a non-linear model derived
from the financial services industry: a bank clearing house. Other
companies – such as Dell – eventually followed FedEx’s lead and took
advantage of Just-in-Time delivery systems. Today, FedEx employs
170,000 people and has annual revenues of $16 billion.
Bob Johnson and BET – Creating The First Minority-Owned TV Network
When
Bob Johnson – the great-grandson of a freed slave and the first member
of his family to attend college – launched Black Entertainment
Television in January 1980 (initially broadcasting for just two hours a
week) the United States was on the verge of a deep recession that would
not end until late 1982. Eleven years later, BET became the first
black-controlled company listed on the New York Stock Exchange.
Johnson
also became the first African-American owner of a major sports
franchise in 2002 when he paid $300 million to bring a new National
Basketball Association expansion team, the Bobcats, to Charlotte , N.C.
, beginning with the 2004-2005 season. “To be honest,” he later
recalled, “the entrepreneurial path I traveled came about most of all
because I never really liked the idea of working for anybody. I just
didn’t like taking instruction.”
Gary Burell and Min Kao of Garmin – Making GPS Ubiquitous
Garmin
Ltd. (based in Kansas City, home town of the foundation I lead)
created an entirely new consumer electronics product segment by
adapting military technology – the global positioning system (GPS) –
across several markets: automotive, aviation, marine, fitness, outdoor
recreation and wireless applications.
Founders Burrell and Kao
left jobs at Allied Signal when that aerospace engineering company
decided not to invest in hand-held GPS devices: like so many business
pioneers before them, they recognized a market opportunity that their
employer did not see. Garmin went public in 2000, just as the ’90s tech
bubble began to burst. But it was one of the survivors that not only
made it through the ensuing recession, but grew and thrived. Today,
Garmin employs more than 7,000 people and has annual revenues of $870
million.
