The Very, Very Rich and How They Got That Way (34 page)

10 Reprinted with permission from the December 6, 1970, issue of the
Chicago Tribune
Magazine. Copyright © 1970 by the Chicago Tribune and Richard Gosswiller.
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Business, like horse betting, is largely a game of predictions. You bet money or time or work, or all three, on some outcome that you hope or believe will occur in the future.

Most businessmen would argue tearfully that business is less of a gamble than horse betting. They would be right, of course. Once you’ve placed your bet at a racetrack, you are a totally helpless victim of the events that follow. You have no control over the outcome. In business, having placed your bet, you retain a degree of control over the future events that will cause you to win or lose. But you don’t have complete control, and if your predictions are too far wrong, you lose no matter what you do.

No matter how smart an operator a man night have been, if he had predicted early in the 1900s that automobiles were a passing fad and if he had then sunk his money into the buggy-whip business, he would have lost. In more recent times some very clever businessmen predicted in 1950 that nuclear energy would be a big civilian business by 1970. They lost.

Thus, prediction is undeniably a key part of the game. If you harbor a dream of getting very, very rich sometime in the decades ahead, one thing you absolutely must do is look into the future and arrive at some estimate of that future’s shape. Where and how will the next big fortunes be made?

You can be certain that thousands of other men right now are attempting to make a forecast. Some will be wrong. Some will be right and, it must surely follow, rich.

Let’s look briefly at some of the long-range forecasts that are now being made. There is, of course, no guarantee that they are correct. What can be said, however, is that they represent the thinking of organizations and men who enjoy a respectable reputation for having been right in the past. One such organization is the National Industrial Conference Board, which periodically makes detailed studies of current trends and projects them into the future – with great accuracy thus far. Another is the Economic Unit of
U.S. News and World Report
, a magazine that doesn’t seem to mind climbing out on a limb. (In the late 1950s
U.S. News
looked ahead to the next decade, the 1960s, and predicted that air and water pollution would become a major national concern. This forecast sounded crazy in the self-satisfied 1950s, when only a few college professors knew what the word
ecology
meant.)

On the basis of predictions made by such future gazers as these, we can look ahead and guess that the great rich of the coming decades may make their fortunes out of situations like these:

Empty places.
Most forecasters expect the U.S. population will increase by roughly 10% during the 1970s, to about 225 or 230 million by 1980. The forecasters also believe, optimistically, that all these people will be richer than they are now. The average American household is expected to enjoy a 30 to 40% increase in real income during this decade and perhaps another 40% during the 1980s.

Where will they all live and work? Anybody who answers this question correctly today and who has enough faith in his forecast to act on it (see chapter 13, on the trick of not listening to scoffers) stands to become one of the very, very rich.

Today’s cities and city-suburb complexes appear to be facing obsolescence. They don’t work well anymore. It is a fairly safe bet that new kinds of metropolitan centers will be developed sometime between now and the year 2000. Real estate giants such as William Levitt (chapter 17) are talking about going out into the vast, empty wilderness areas that still exist in this country and building whole new citylike complexes from the ground up.

It is wholly conceivable that some men are going to grow ridiculously rich by buying land for $50 an acre in empty areas of New Mexico, Kansas and Vermont, then selling it for thousands of dollars an acre when some new population center springs up nearby. Others may make it by being the organizers of, or stockholders in, companies that play a role in the pulling apart of old cities and the building of new ones.

Dark-horse countries.
A little over 20 years ago Japan and Germany were so nearly dead as economic entities that their financial pulses could barely be heard at all. While they lay gasping in bed with their tongues lolling out, some fabulous fools invested in them – bought their real estate, their industrial stocks. Those fools have since multiplied their money by factors of 1000 and more.

There are undoubtedly similar dark-horse countries in the world today. As of now, in the 1970s, these countries seem unlikely to get very far economically in our lifetimes. Only fools are investing in them. The fools are picking up stocks and real estate and other properties at bargain prices. Maybe they will live to see their money disappear down the drain. On the other hand. . .

South Africa is an interesting country from this point of view. So are some northern African nations. So is Australia – vast, empty, developed only around the coastal fringes. South America contains a number of huge, potentially rich countries such as Brazil and Argentina. Sometime between now and 2000, one or more of the sleeping giants will probably wake up and go.

The “third industrial revolution.”
As
U.S. News
sees it, there have been two distinct industrial revolutions so far: the first arising from the development of steam power, the second from electrical energy. The third, which the magazine’s economists believe will be recognizably here by 1980, will arise from a massive and sweeping application of electronics and nuclear energy dwarfing anything we’ve seen so far.

Nuclear energy will come into general use when the nation runs out of other forms of energy. People have been making grandiose nuclear-energy predictions for 20 years, and so far the predictions haven’t come true except in a very limited sense. But the error seems to have been in timing, not in basic fact. If the country’s population and its use of energy continue to grow as projected, a time is bound to come eventually when we’ve got to turn to the atom as a source of power on a big scale. There’s no other power source left.

Electronics will be needed in the clerical and information-juggling work of keeping this huge, staggeringly complicated society glued together. The society’s structure is already starting to fall apart in many places. There aren’t enough clerks in Wall Street, for instance, to keep the stock market running smoothly anymore. The U.S. postal system is being crushed under the weight of increasing loads of mail. The nation’s telephone system is badly overloaded. The daily flow of checks in and out of banks is already so enormous that another few percentage points of increase could bring the whole system down in a ghastly collapse. In these areas and hundreds more, electronic data processing seems to offer man his only hope of not drowning in his own seething sea of paper.

Somebody will make money out of both nuclear energy and information systems. Exactly how that money will be made, or when, is by no means clear. But the time for placing bets seems to be drawing near.

Transportation.
It has been obvious for some time now that older means of transportation, perfectly satisfactory 20 years ago, are becoming less and less useful as the population grows and society changes. Fortunes will be made by men who solve the world’s transport problems – and, at second hand, by men who invest in those solutions, whatever they turn out to be.

The conventional automobile is now reaching the point of being killed by its own outrageous success. There are too many cars on the roads, creating too much air pollution. Air travel is up against similar congestion. Many city airports are overcrowded. Attempts to build badly needed new airports always meet opposition from residents of surrounding areas, and the proposed new airports are seldom ideal solutions, anyway, because the land is either too costly or too far from the city being served.

Radically new approaches may be necessary – and this is where a lot of money will quite probably be made in years ahead. The U.S. Department of Transportation believes some answers may lie in high-speed trains running between neighboring cities and from suburbs to downtown areas. Hundred-mile-an-hour trains or other fast, convenient innovations in mass transit would not only reduce the number of cars on the roads but would also cut down the need for short-haul air traffic. Thus, the long-depressed railroad industry might spring to new life by 1980 or 1990. Whole new transportation industries may be born.

New kinds of non-polluting automobiles may also be scuttling along the roads by then. Inventors such as Bill Lear (chapter 11) are tinkering with electric engines, turbines, steam power and other means of propulsion for private vehicles. So far no system has been developed that clearly beats the dirty old gasoline engine’s three-way combination of high power, low operating cost and all-around convenience. But Lear and others think such a system may be only a few steps away.

It is pleasant to dream of being a stockholder in the company that gets there first.

Food technology and the oceans.
Like nuclear energy, ocean farming has been talked of as a business of the future for many years. The future has always turned out to be farther away than the crystal balls seemed to indicate, and it hasn’t arrived yet. But an ocean-based business boom seems almost bound to occur sooner or later.

With ever more people trying to live off the produce of ever fewer arable land acres, land-grown foods will almost certainly grow more costly as this century progresses. The more costly these foods grow, the larger and hungrier will grow the potential market for ocean foods. The first companies and men who find a way to exploit that market will sail away rich.

The U.S. Agriculture Department and companies such as General Foods have been experimenting with ocean farming for years: fenced-in fish pastures, plots of cultivated sea vegetables. But one large problem has always frustrated the seafaring farmers – the human palate. For reasons that aren’t at all clear, mankind in general tends to shy away from fish whenever meat is available. In every nation where there is an open choice, people prefer beef to mackerel. And the preference is even more stark when it comes to vegetable products. Several common sea plants are perfectly edible and highly nutritious – but, no matter how delicately they’re seasoned, they still taste like wet newspaper.

This frustrates the sea farmers for the ocean offers enormous promise in terms of yield per acre – and, as a corollary, profit per acre. It may take a promoter like Jeno Paulucci to sell new ocean foods on a large scale. It may take an intuitive flavoring genius like Ray Kroc, who made a fish sandwich palatable with a surprising slice of cheese.

One way or another, somebody will someday start to pump money out of the oceans.

It’s great fun to speculate about future businesses such as these, and it’s fun to dream of getting aboard on the ground floor just before the elevator starts to rise. But listen. Don’t ever forget old Clement Stone. He invented no dazzling new industry. He began his long climb in a business that had existed for centuries. The only predictions he made were that it would continue to exist and that he would grow in it. He can claim very little in the way of innovation. He didn’t change the shape of the industry very much. Working within a framework that other men had engineered long before, he made his fortune mainly by applying the force of his own tough, aggressive, optimistic personality.

Innovation isn’t a necessary prerequisite for becoming very, very rich. Nor is it necessary to make far-out predictions. You don’t have to be Edwin Land. There are probably hundreds of businesses in existence today in which men whose names we don’t yet know – men not yet born, perhaps – will grow monumentally wealthy.

Accurate crystal gazing helps a man grow rich, but it isn’t the whole story. The main parts of the story are tangled up in the man’s own character.

If our visit to this golden gallery has taught us any lessons, the most important one is surely this: Character is the king-pin of self-made wealth. To get rich, you need a pinch of prediction and a dash of luck and perhaps little bits of many other things. But the one thing you need in great quantity is internal strength.

In a word: guts.

Most of this book’s chapters are based on firsthand rather than published sources – that is, on interviews with the man whose life and thoughts are being discussed or on interviews with his business associates, friends, enemies and others who have drifted in and out of his life. However, the editor and the authors of the various chapters are indebted to many published sources for general background information and for shadings of opinion.

For the reader who may want to pursue his studies of wealth further than this book has been able to take him, the sources and supplemental reading suggestions are listed below by chapter.