The 300-Year American Entrepreneurial Miracle of the Modern Age
A miracle that brought the world the steamboat, the revolver, the sewing machine, blue jeans, the telephone, the light bulb, the electrification of the world, air conditioning,
airplanes, refrigeration, the photocopy machine, personal computers, the internet, social media, and e-commerce.
But the American Entrepreneurial Miracle of the Modern Age is also a story of individual men and women who made America great and forever changed the world.
This 14-part series brings together the remarkable history of American business excellence,
economic world dominance, and individual achievement.
Hello, I'm Dr. Alphonse Keesley. The years highlighted in this 10th episode of American Entrepreneurial Genius were ones of upheaval. They included the death of America's industrial preeminent
and the beginning of a transition from a consumer to an information economy. These were the years that businesses were driven by an obsession with improvement, efficiency, and cost control.
Innovation focused on products that filled niches in the marketplace, while consumers, environmentalists, and political activists led a backlash against the excesses of big business.
At the same time, the American inventions of video games and the Internet set the stage for a flood of hitherto unimaginable businesses well into the 21st century.
Warren Buffett revolutionized wealth creation and accumulation.
Born in 1930, he grew up in Omaha, Nebraska during the Great Depression.
His stockbroker father lost everything in the great crash of 1929.
At an early age, he loved business and numbers.
He knew he was going to be rich, and rich he did become, at one point becoming the richest man in the world.
As a financial entrepreneur, he helped pioneer a new investment strategy – value investing. The strategy of selecting stocks that trade for less than their intrinsic values.
He has Warren Buffett, the Oracle of Omaha.
In 1947, Buffett entered the Wharton School of the University of Pennsylvania.
After two years, he transferred to the University of Nebraska in Lincoln, where at 19 he graduated with a Bachelor of Science in Business Administration.
In 1951, he earned a Masters of Science in Economics from Columbia Business School.
Returning to Omaha, Buffett started an investment management company, which allowed him and his investing friends to pull their capital to buy stocks.
As a result, he became a millionaire by the age of 32. However, Buffett wasn't happy.
He not only wanted to own stocks, but also companies, and he had a plan to achieve his goal.
Buffett set his sights on a once highly successful cotton milling operation in New Bedford, Massachusetts, Berkshire Hathaway.
By the end of the 1950s, the company had closed seven of its plants and laid off a large number of workers.
Its stock price had fallen and many analysts had written it off, but that didn't stop Warren Buffett.
In 1962, he started to buy shares in the company, believing its share price was substantially below its intrinsic value.
Taking control of Berkshire Hathaway three years later, Buffett spun the company into two operations.
First, he maintained its core business of textiles. Second, Buffett gradually used it as an investment vehicle.
In 1967, he turned the company's eyes towards the insurance business, negotiating the purchase of two Nebraska companies, National Indemnity and National Fire and Marine Insurance.
Buffett brilliantly understood the reason insurance companies charge high premiums is to guard against risk.
And in the process, companies generate large amounts of cash, cash looking for something to invest in.
However, the investments need to be in liquid assets so that if catastrophe strikes, there is money to pay claims.
The prime markets for liquid investments are stocks and bonds, which is just what Buffett went on to do.
Using the strategy of value investing, only buying companies whose stocks are underpriced, only buying companies whose management can stay in place, and only buying companies that don't have labor problems.
Warren Buffett and Berkshire Hathaway headquartered in its hometown of Omaha, Nebraska, remarkably have gone on to wholly own over 50 companies, including GEICO Insurance.
Lubrizol Chemicals, Seas Candies, Benjamin Moore Paints, Dairy Queen, Fruit of the Loom, Hellsberg Diamonds, Flight Safety International, and NetJets, while owning a large percentage of the Kraft Heinz Company and significant minority holdings in American Express, Coca-Cola, Wells Fargo, and IBM.
Buffett's largest acquisition took place on November 3, 2009. Warren Buffett and Berkshire Hathaway bought Burlington Northern Santa Fe Railroad for $44 billion.
At the time, railroads were considered an old technology on a downward business spiral.
But the shrewd-like-of-fox Buffett understood hydraulic fracking would require railroad tank cars to bring the oil from the isolated oil fields to distant refineries.
And it just so happened that the railroad owned a tank car manufacturing subsidiary, Union Tank Car Company.
In the 21st century, Buffett maintained his down-home folksy persona, while at the same time being sought after as the oracle of Omaha for business and government consultation alike.
Then, in a stunning move, he pledged in 2006 a huge amount of his wealth to the Bill and Melinda Gates Foundation, a global philanthropic organization.
A new type of running shoe and the invention of the Internet are classic entrepreneurial stories of solving a problem.
American entrepreneurs have always understood the monumental importance of connecting the country with a vital transportation infrastructure for the purpose of commerce.
It started in 1817 with the Erie Canal and the ensuing boom of the canal era, when more than 4,000 miles of canals were built.
That was followed by the railroad era, and tens of thousands of miles of rail tracks laid across the country.
When air transportation emerged at the start of the 20th century, large and small communities rushed to build airports.
In 1956, construction began on an interstate network of controlled access highways that today crisscross the nation and form a part of the national highway system.
However, for the information age, the most important infrastructure for entrepreneurial business and commerce was brought into existence in 1969 and is known as the Internet.
Born in St. Louis, Missouri in 1915, Joseph Carl Robnett Licklider became known as Computing's Johnny Apple Seed for planting the seeds of computing in the digital age.
Most importantly for the Internet's entrepreneurs, he was responsible for the theoretical basis of the Internet, an intergalactic computer network.
His idea was to create a network where many different computer systems would be interconnected to one another in order to exchange data quickly.
A true technological genius, Licklider earned degrees in physics, mathematics, and psychology.
At the age of 35, he became interested in the emerging field of information technology and worked for the government defense department where he initiated three of the most important development and information technology.
The creation of computer science departments at several major universities, time sharing, and networking.
From these three innovations, he had the vision of connecting educational research computers.
He thought up the idea after having to deal with three separate systems connecting to computers at UC Santa Barbara, the University of California Berkeley, and a system at MIT.
At the time, there were no standardized personal computers. Government, businesses, and research institutions each had their own individualized computer systems that were unable to talk to one another.
In Licklider's case, each of the three universities' terminals had different sets of user commands.
What was needed was an intermediary terminal and language between the three.
That platform became Licklider's ARPANET, Advanced Research Projects Agency Network.
The first use of that platform occurred in 1969 when computer systems at the University of California Santa Barbara, UCLA, SRI at Stanford University, and the University of Utah were connected using a central hub and a common protocol allowing them to communicate with each other.
Ten years later, computer engineers developed the URL format, Hypertex Markup Language, HTML, and the Hypertex Transfer Protocol, HTTP.
At the same time, the worldwide web was being created and the restrictions on commercial use of the internet were gradually being removed, and as they say, the rest is history.
A history JCR Licklider was able to witness before he passed away in 1990.
It's an amazing entrepreneurial story, running shoes, an iconic logo, the swoosh, exhorting everyone to reach for their highest goals, and to be like Mike.
It's the story of Nike's amazing use of the sports world and the slogan "Just Do It" to dominate a huge sector of the consumer market, athletic shoes, and apparel.
In Portland, Oregon, Phil Knight has built a monument to sports excellence, Nike Incorporated.
This monument began with a unique relationship between a University of Oregon track coach Bill Bowerman, a man in search of better running shoes, and a runner.
Philip Knight, a man in search of a way to make a living without having to give up his love of athletics.
Bill Bowerman was born in Portland, Oregon in 1911.
During World War II, he received the Silver Star and four bronze stars.
In 1948, he moved to Eugene, Oregon, to become the University of Oregon's head track coach.
His coaching prowess was legendary, his runners winning 24 NCAA individual titles, and many going on to become Olympians.
In 1962, Bowerman became aware of a new athletic activity, jogging, running for pleasure and fitness by people of all ages.
It was an activity that required a new kind of running shoe, a shoe that was lighter and didn't produce blisters.
Phil Knight was born in 1938, also in Portland, Oregon.
He ran track under Bill Bowerman at the University of Oregon, and won varsity letters from 1957 to 1959.
After graduating, he attended Stanford's Graduate School of Business.
Reunited in 1964, coach and runner established a company to import and provide low-cost, high-tech running shoes from Japan.
Operating under the name Blue Ribbon Sports, Bowerman and Knight began to sell the Japanese Tiger brand running shoes.
However, it wasn't until 1971 that both men's dreams were fulfilled.
It came with Bowerman's Eureka moment when he and his wife were making waffles for breakfast.
It sparked an idea for a grooved pattern on the sole of running shoes to help athletes grip running tracks.
This invention led Bowerman and Knight to begin designing their own athletic shoes under the company's new name, Nike Incorporated.
Their first Nike brand ambassador was the legendary Oregon runner Steve Prefontaine, who during his college career from 1969 to 1972, set seven American records from the 2000 meter to the 10,000 meter.
Then in 1985, they designed signature shoes for an NBA rookie, Michael Jordan.
His increasing popularity took Nike to new heights with record-breaking sales.
Throughout the 1980s, Bowerman and Knight, using the business philosophy of always improving their shoes and a brilliant marketing strategy of using sports stars,
would go on to make Nike the number one supplier of athletic and trading shoes in America.
In the process, they established the connection between men and women winners in sports and their promotional power to sell consumer products.
But it was the shared belief of these men in creating excellence and the declaration that we are all capable of more that led Nike to become one of the most profitable and recognizable companies on the planet.
In 1981, Bill Bowerman was inducted into the National Track and Field Hall of Fame.
He passed away in 1999.
Heavily supporting the University of Oregon, Phil Knight continued to drive Nike forward into the 21st century, becoming one of America's richest entrepreneurs.
The introduction of the video game showed how quickly a new sector of the economy could spring up out of nowhere.
The video game industry is one of the fastest growing sectors in the U.S.
In 2015, global sales of computer and video games reached $100 billion with $25 billion in U.S. sales alone.
This amazing sector of American technological development and entrepreneurship had its humble beginnings with a small company founded in what would become known as Silicon Valley.
In 1972, Atari co-founders Nolan Bushnell and Ted Dabney embarked on a new venture building a kind of sports video game.
The first engineer hired was a 22-year-old computer whiz, Alan Alcorn.
Bushnell and Dabney had previously worked with Alcorn at Ampex tape recording company.
To acclimate Alcorn to creating games, Bushnell gave him a project as a test exercise, build an electronic table tennis game.
Three months into the project, Alcorn's prototype impressed Bushnell and Dabney so much that they decided to test its functionality and marketability.
In August 1972, Bushnell and Alcorn installed the coin-operated Pong prototype at a local bar.
Andy Cap's Tavern in Sunnyvale, California.
It was a roaring success in two ways. One, Pong broke the coin-op barrier with its quarter-per-game charge.
And two, it was played obsessively by adults rather than teens and kids.
Thus, the computer game revolution was officially underway, pioneered by Atari.
Nolan Bushnell, considered by many to be the father of electronic gaming, was born in Utah in 1943 and grew up a tinkerer.
During his time at the University of Utah, he was a computer graphics student who loved games.
He also worked at an amusement park.
Combining these activities helped him conceive of a new form of entertainment, video arcades and computer games.
Fulfillment of Bushnell's vision started in 1969 when, after graduation, he moved to Northern California to join the Ampex Corporation in their Video File Information Systems Division as a research engineer.
Ampex, Silicon Valley's original Information Technology Corporation, was formed by Alexander M. Ponyatov in San Carlos, California.
He is credited with inventing the first multi-track audio recorder.
And then in 1969, he won an Emmy Award for the invention of the videotape recorder.
It was here that Bushnell cut his teeth on information and computer technology.
In addition to founding Atari, over the next four decades, Bushnell would go on to create Chuck E. Cheese's as well as founding numerous companies, including Catalyst Technologies, the first technology incubator.
Helen Alcorn was born January 1, 1948 in San Francisco, California.
Fascinated with how electronics worked, he got a job as a junior television repairman while in high school.
He graduated in 1971 from UC Berkeley with a Bachelor of Science degree in Electrical Engineering and Computer Sciences and went to work for Ampex a year later.
After his groundbreaking work with Atari, Alcorn became a Silicon Valley legend starting his own companies.
Working for Apple and inventing the first MPEG video chip.
He now counsels future information technology entrepreneurs through hands-on experience and lectures.
Interestingly, one of Atari's early hires was a young man named Stephen Jobs who would go on to found Apple computers with Steve Wozniak.
FedEx is an entrepreneurial story of finding a better way of doing something that had been around for centuries, delivering packages.
In 1965, Yale University undergraduate Frederick Smith rolled a term paper that would disrupt an industry and change completely what was possible in package shipping and overnight delivery.
His idea was to bring every package using ground transportation and jet airplanes to a central hub where it would then reverse the transportation flow of packages to its final destination.
Thus, the idea for Federal Express was born, an idea that became a reality when Federal Express officially began operations on April 17, 1973, with a mere 389 team members.
That night, operations located in Memphis, Tennessee delivered 186 packages to 25 U.S. cities.
Two years later, the company showed a profit and it soon became the premier carrier of high priority deliveries and set the standard for the express shipping industry.
By the 1980s, using large cargo jet planes, Federal Express's growth rate was compounding at about 40% annually.
In the fiscal year 1983, it reported $1 billion in revenues, making American business history as the first company to reach that financial hallmark inside of 10 years without mergers or acquisitions.
The man who orchestrated this phenomenal entrepreneurial story was Frederick W. Smith.
Smith was born in 1944 and too well to do Memphis family.
After graduating from Yale, he enlisted in the Marine Corps and served with distinction two tours of duty in Vietnam.
Returning to civilian life, Smith was quoted as saying, "I wanted to do something productive after blowing so many things up."
Returning to the plan, he outlined as a college student, the young entrepreneur raised $80 million to launch Federal Express.
In the first years of operation, the venture lost $27 million and in a short time, the company teetered on the verge of bankruptcy.
But Smith succeeded in renegotiating his bank loans and kept the company afloat.
Unlike many entrepreneurs, Smith was also a hands-on manager who directed every facet of corporate strategy, including the understanding that FedEx was in the information business.
That knowledge about a package is origin, present whereabouts, destination, estimated time of arrival, and price and shipment cost was as important as its overnight delivery.
Following the first of several international acquisitions, Smith took Federal Express International in 1984 with service to Europe and Asia.
Ten years later, he changed his company's brand name to FedEx.
In the 21st century, Fred Smith has created one of America's most recognizable brands, while amassing a vast personal fortune by enabling the world of business to deliver its goods quickly anywhere in the world.
In the ten years covered in the next episode of American entrepreneurial genius, we shall see that in spite of a major economic downturn, the engine of America's entrepreneurial and innovative genius kept chugging along.
I'm Dr. Alphonse Keesley, and thanks for watching.
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