And They Said It Couldn't Be Done
And They Said It Couldn't Be Done...
This article appeared in Entrepreneur Magazine, December, 2008 and offers four classic inspiring examples- mini-case studies- of four great entrepreneurs who made it big when other said they would not succeed.
Entrepreneurs are notorious for their ability to press on with their ideas despite what other people tell them. Naysayers abound when innovators want to try things nobody has ever done. Fortunately, innovative entrepreneurs have persisted with their efforts and given us some of the modern luxuries we now take for granted.
The Wright brothers mimicked the birds. Henry Ford harnessed horse power. They are but two well-known examples of visionaries who propelled the 20th century forward. Other now-famous people stared down negativity and triumphed. Find out how four such business-savvy folks stuck it out in the face of adversity.
Clarence Birdseye knew inferior freezing methods led to bland-tasting reheated food, so he developed quick-freeze machinery to produce quality frozen food. Shoppers didn't believe. Birdseye went broke. He stuck with it, eventually overcame consumer skepticism and went on to set the industry standard.
Clarence Birdseye, Founder of General Seafood Corp, Founded: 1922
"I do not consider myself a remarkable person. I am just a guy with a very large bump of curiosity and a gambling instinct."-Clarence Birdseye
One of the hallmarks of a true entrepreneur is the ability to recognize a business opportunity that others overlook. It was this ability, along with a restless curiosity, a love of the outdoors and a propensity for taking risks, that enabled frozen-food pioneer Clarence Birdseye to turn a centuries-old tradition into a revolutionary process that would create a multibillion-dollar industry and make Birdseye a very wealthy man.
Born in Brooklyn, New York, in 1886, Clarence Birdseye, like many successful entrepreneurs, embarked on the path of free enterprise at an early age. When he was just 10 years old, he heard about an English lord seeking wild game for his estate, so the young Birdseye shipped off a dozen muskrats he had trapped on Long Island. His first venture netted him $9, which he used to buy a shotgun.
Fueled by a burning interest in plants and animals, Birdseye entered Amherst College to study biology. He paid his tuition through several unique ventures, including selling baby frogs to the Bronx Zoo for snake food and trapping rare black rats in a local butcher shop for a genetics professor. But the funds generated by these and other sideline businesses were insufficient to meet increasing tuition costs, so Birdseye dropped out of Amherst after two years to try his hand in the fur-trading business.
Grubstaked by a New York fur house, Birdseye traveled by dogsled to Labrador, Newfoundland, where he was able to turn a small profit buying and selling pelts for cash. While in the Arctic, he was introduced to the Inuit Indians' practice of "quick freezing" the fish they caught. The fisherman simply laid the fish on the ice, and the combination of ice, wind and temperature froze the fish almost instantly. Even more amazing, Birdseye noted that when the fish were cooked and eaten, they were tender and flaky, and tasted almost as good as when freshly caught. Birdseye also noticed the same was true for the frozen caribou, geese and heads of cabbage that he stored outside his cabin during the long Canadian winter.
Birdseye knew that efforts to freeze meat and vegetables commercially in the United States had failed, largely because the foods did not keep their flavor or texture. But at that time, freezing methods took 18 hours or more. Birdseye concluded that the Inuit's quick-freeze method kept large ice crystals from forming in the food, preventing damage to the cellular structure and thereby preserving the food's "fresh" quality. He also concluded that the public back home would gladly pay for such palatable frozen foods, if he could deliver them.
Armed with this knowledge, Birdseye returned to New York in September 1922. He organized his own company, Birdseye Seafood Inc., and began developing quick-freeze machinery with an eye toward retail buyers. While his early efforts were a success from a technological point of view, they were a failure commercially. Shoppers were skeptical, and Birdseye was unable to convince grocers and housewives that his quick-frozen fish was different than the dry, tasteless food created by traditional, slow-freezing techniques. The company soon went broke.
Undaunted by this failure, Birdseye continued to work on perfecting his quick-freeze machinery. In 1924, he developed a process of packaging dressed fish or other food in cartons, then quick-freezing the contents between two flat, refrigerated surfaces under pressure. Realizing that he had discovered the basis for an entirely new type of freezing operation, Birdseye decided to form a new company to capitalize on his invention.
With the help of financial banking from several wealthy New York businessmen, Birdseye organized General Seafood Corp., and the frozen-food industry was born. Despite the revolutionary improvements Birdseye had made, he still could not overcome the public's distrust of frozen food. But even though it wasn't widely accepted, Birdseye's quick-frozen food would still make him a wealthy man. With sales lagging, General Seafood sold its assets, including Birdseye's patents, to Postum Co. in 1929 for what was then a staggering $22 million.
Postum reorganized itself as General Foods Corp. and appointed Clarence Birdseye president of its new Birds Eye Frosted Foods division. In 1930, the company launched a major campaign to win acceptance for its new lines of "frosted foods." The campaign was a success, and Birds Eye's selection of foods soon ranged from frozen peas, spinach and cherries to fish and several kinds of meat. After two false starts, Clarence Birdseye's dream of making quick-frozen food available to the general public had become a reality.
Restless as ever, Clarence Birdseye spent the next 25 years working on new inventions, including reflecting light bulbs, an electric fishing reel and a recoilless harpoon for whale hunters. Working in his kitchen with a fan, heat from an electric coffee maker, and a batch of bread cubes, he developed a process for dehydrating foods. He even wrote a book about wildflowers with his wife. At the time of his death in October 1956, he held nearly 300 patents. Shortly before his death, Birdseye offered this advice to college graduates seeking to get ahead in the world: "I would go around asking a lot of damn fool questions and taking chances."
Frozen Peas Were Just The Beginning
Clarence Birdseye did more than just create the frozen-food market. The quick-freezing process pioneered by Birdseye spawned new opportunities in both business and agriculture. It opened up a year-round market for fresh fruits and vegetables that greatly increased farm production in the United States. And in the case of frozen orange juice, it created a product where none existed before.
New industries were also created to support Birdseye's invention. In 1934, Birdseye contracted with American Radiator Corp. to manufacture the first inexpensive, low-temperature retail display cooling equipment for Birds Eye foods. Ten years later, Birds Eye leased the first insulated railroad cars designed for nationwide food distribution, giving birth to the refrigerated shipping industry.
Desi Arnaz & Lucille Ball, Co-founders of Desilu Productions, Founded: 1950
Television network executives weren't sure the viewing public would accept a sit-com with a Cuban leading man married to a feisty, American redhead. So Desi Arnaz and Lucille Ball produced the "I Love Lucy" pilot with their own money. Network execs said TV shows had to be produced in New York and with kinescopes. Lucy and Desi took a salary cut to produce the show in Hollywood on expensive film, but, as part of the deal, the couple kept rights to the show. At every turn, Lucy and Desi were a step ahead of the studios, revolutionizing television along the way.
"Instead of divorce lawyers profiting from our mistakes, we thought we'd profit from them."-Lucille Ball
When the creators of such mega-hits as "Friends," "Seinfeld" and "ER" cash their hefty syndication residual checks, they should take a moment to pay homage to Desi Arnaz¬ and Lucille Ball-two of the savviest and most innovative entrepreneurs ever to grace the star-studded streets of Tinseltown. In addition to laying the groundwork for the multibillion-dollar television syndication industry, they introduced many of the production techniques that would become standard television practice and almost single-handedly made Hollywood the television capital of the world.
The couple met in 1940 on the set of the RKO Studios musical "Too Many Girls." It was a classic case of love at first sight, and they married later that same year. But the first decade of their lives together would prove to be rocky. While Ball made pictures in Hollywood and gained fame as the star of the radio show "My Favorite Husband," Arnaz spent much of his time on the road touring with his band.
Arnaz's notorious womanizing, along with his excessive drinking, prompted Ball to file for divorce in 1944. But a passionate reconciliation led her to reconsider, and the lovers vowed to find more opportunities to work together. Their big chance came in 1950, when CBS approached Ball about moving "My Favorite Husband" to the fledgling medium of television. Seeing it as a chance to finally work with her real-life spouse, Ball asked the network to cast Arnaz in the role of her husband.
The network executives were reluctant, fearing viewers would have difficulty accepting the Cuban Arnaz as the husband of the all-American redhead. To prove that they could make the sitcom work, Arnaz and Ball formed Desilu Productions (the very first independent television production company) and used $5,000 of their own money to produce the pilot for "I Love Lucy." In doing so, Arnaz and Ball made themselves their own bosses, providing their product to CBS rather than working directly for the network or a sponsor, which was then the common practice in television.
This wasn't the only show biz convention the duo would shatter. In the early days of television, most production was done in New York, mainly because the Hollywood studios considered television to be a threat to their film empires. So, quite naturally, CBS expected Arnaz and Ball to move to New York. But the couple insisted on staying in Hollywood.
Again CBS protested, claiming that live production in Los Angeles was impractical. Because of the time difference between the coasts, the network would be forced to air blurry kinescopes in the East, where most television-viewing homes were located. Arnaz and Ball offered a simple solution: produce the show on film and dispense with kinescopes altogether. CBS wasn't exactly thrilled with this suggestion. Using film would double production costs. To offset the added cost, Arnaz and Ball agreed to cut their joint weekly salary from $5,000 to $4,000 on the condition that Desilu retained all rights to the show. CBS agreed, and in one fell swoop Arnaz and Ball invented reruns, paved the way for syndication, and pulled off what would become one of the most lucrative deals in television history.
"I Love Lucy" debuted in October 1951 and quickly became one of the top-rated shows on television. The show made production in Hollywood so acceptable that by 1961 virtually every major prime-time television show was filmed on the West Coast.
While Ball busied herself with the joys of motherhood (she gave birth to the couple's second child, Desi Jr., in 1953), Arnaz expanded the Desilu empire, producing an impressive roster of hits, including "The Ann Sothern Show," "The Untouchables" and "Sheriff of Cochise." As the growing company needed more space, Arnaz and Ball turned to the gold mine of "I Love Lucy" reruns they owned and sold the syndication rights to the first 180 episodes back to CBS for $5 million (approximately $19.5 million by today's standards).
Armed with the expansion capital they needed, the couple bought RKO Studios (Ball's former employer) in 1957. The 14-acre movie lot soon became home to such hits as "The Dick Van Dyke Show," "The Andy Griffith Show" and "My Three Sons," making Desilu a successful independent production house.
But even this tremendous success wasn't enough to keep the star-crossed sweethearts together. The demands of running a corporation while still playing his role on "I Love Lucy" began to take their toll on Arnaz and the marriage. Arnaz's drinking became more excessive, and the couple would often break into violent arguments on the set of the show. So after 20 years together, Arnaz and Ball finally divorced in 1960.
By 1961, Ball had remarried and was starring in "The Lucy Show"¬-with ex-husband Arnaz directing. But it proved to be too much for Arnaz to handle, and in 1962, he asked Lucy to buy him out of Desilu. She paid him $2.5 million for his shares and became the first woman CEO of a major television and movie production company.
It was not the best time for such a first, however. Desilu's revenue was down and movie studios were beginning to produce their own television shows, squeezing independent production companies out of business. Realizing she could not turn the company around on her own, Ball hired CBS executive Oskar Katz to be her executive vice president. At the time, the only show Desilu had in production was Lucy's. Katz believed the key to turning the company around was getting Desilu back into the business of production, so he produced "Star Trek" and "Mission Impossible." Based on the popularity of these now classic shows, Ball had succeeded in making Desilu profitable again by 1967. Her goal accomplished, she sold her shares of Desilu to Paramount Studios for $17 million.
By the time of their deaths in 1986 and 1989 respectively, Arnaz and Ball were firmly enshrined in the Television Hall of Fame, not merely for their talent as comedians, but for their groundbreaking contributions to the art and business of television production.
* Desilu Productions purchased the equipment used to film "I Love Lucy" with money from CBS but structured the deal so Desilu owned the equipment and "rented" it back to the studio for each episode. This ingenious arrangement, first introduced by Desi Arnaz, would later become a standard practice in the television industry.
* Arnaz was the first television producer to film with three cameras instead of one, so he could shoot angles and close-ups simultaneously. Sitcoms are still shot this way to this day.
Birth Of A Rerun
In the early days of television, shows were performed in New York and broadcast live to viewers on the East Coast. For viewers in other time zones to see the shows, they were recorded from a special television picture tube called a kinescope and rebroadcast at later times. These "kinescopes," as the recordings were called, were less clear than live broadcasts, and their quality tended to degrade as they were rebroadcast.
By insisting that "I Love Lucy" be recorded on film, which could be easily stored and broadcast over and over again without any degradation of picture quality, Desi Arnaz initiated the industry practice of airing reruns, which made summer hiatuses possible and opened up a new market for the sale of film rights.
Fred Smith, Founder of Federal Express Corp., Founded: 1971
Fred Smith wrote a term paper based on an idea for reliable overnight delivery. His professor gave him a C because the idea wasn't feasible. Years later, many potential investors agreed with the professor, refusing to send capital Smith's way. The funds he did raise in 1971 and ‘72 were gone by ‘74, along with his investors. One catchy slogan and several million dollars of hard-won capital later, Federal Express was on its way to profitability and long-term success.Fred Smith
"You absolutely, positively have to innovate-if only to survive."-Fred Smith
While attending Yale University in the mid-1960s, Fred Smith wrote an economics term paper on the need for reliable overnight delivery in a computerized information age. His professor was less than impressed and responded: "The concept is interesting and well-formed, but in order to earn better than a ‘C', the idea must be feasible." Several years later, through a combination of innovative thinking, unbridled charisma and sheer determination, Smith would use this "interesting but unfeasible" concept to found the world's first overnight delivery company and change the transportation industry forever.
Smith was born to a well-to-do family in 1944 in a small suburb outside Memphis, Tennessee. His father, who died when Smith was only 4, became a self-made millionaire after founding the Dixie Greyhound Bus Lines and a chain of restaurants called the Toddle House.
Smith was born with a congenital birth defect-a bone socket hip disorder called Calve-Perthes disease-which caused him to wear braces and walk with the aid of crutches for most of his youth. His mother worked diligently to build his self-esteem, and encouraged his participation in all sorts of physical activities. He eventually grew out of the disease, and in prep school, Smith played both basketball and football.
After earning a bachelor's degree in economics from Yale, Smith enlisted in the Marines and was sent to Vietnam where he received an education of a very different kind. "As a platoon leader in Vietnam, I was in charge of a group of youngsters who had come from very different backgrounds than I had. You know, blue-collar backgrounds: steelworkers, truck drivers, gas station folks," Smith reveals in a 1998 Fortune magazine interview. "The experience gave me a very different perspective than most people who end up in senior management positions on what people who wear blue collars think about and the way they react to things, and what you should do to try to be fair to those folks. A great deal of what FedEx has been able to accomplish was built on those lessons I learned in the Marine Corps."
After two tours of duty, Smith left Vietnam weary of destruction and eager to focus his energy on building rather than tearing down. "I wanted to do something productive after blowing so many things up," he remembers. His stepfather, retired Air Force general Fred Hook, had bought a struggling company in Little Rock that modified aircraft and overhauled their engines, and Smith went to Arkansas to help him run it. Difficulty in getting parts brought Smith back to the overnight delivery concept he'd hit upon in college.
Determined to make it work, he came up with a plan for creating an integrated air and ground delivery system in which packages from all over the country would be flown to a central point, or "hub," sorted, and then flown out again along specific routes, or "spokes" to their destinations. Under this "hub and spokes" system, the flying would be done at night, when airlanes were comparatively empty. The airports used would be in sizable cities, and trucks would carry the packages to their final destinations, whether in those cities or smaller communities.
Convinced his idea was feasible, Smith decided to take the plunge with $4 million he'd inherited from his father. At that point, Smith's life became a marathon nonstop journey into the canyons of Wall Street to raise the capital he would need to purchase the fleet of airplanes vital to his plan. "I was a kind of naive about the whole thing," he confesses in a Nation's Business magazine interview. "I thought there would be basketfuls of checks right away." There weren't. But Smith kept at it. His charisma and the knowledge he gleaned from several years of studying the air-freight industry (both in the military in Vietnam and later in the United States) impressed investors, and by the end of 1972, he had managed to raise $80 million in loans and equity investments.
Federal Express (FedEx) began operation in April 1971, with 14 Falcon jets servicing 25 cities. Initially business was slow. During its first night, FedEx shipped a mere 186 packages. But volume picked up rapidly and service was expanded. FedEx was an overnight success. Then the roof caved in. Because of rapidly inflating fuel prices, costs surpassed revenue, and by mid-1974, FedEx was losing more than $1 million a month.
Smith asked his disappointed investors for more money to keep the company afloat, but they refused. Bankruptcy was a distinct possibility. Then fate stepped in. While waiting for a flight home to Memphis from Chicago after being turned down for capital by General Dynamics, Smith impulsively hopped a flight to Las Vegas, where he won $27,000 playing blackjack. "The $27,000 wasn't decisive, but it was an omen that things would get better," Smith says. And indeed they did. Returning to his quest for funds, he raised another $11 million.
Although FedEx had lost nearly $13.4 million in its first two years, Smith never considered giving up. "I was very committed to the people that had signed on with me, and if we were going to go down, we were going to go down with a fight. It wasn't going to be because I checked out and didn't finish," he says.
But FedEx didn't go down. Thanks to an aggressive ad campaign which featured the now famous line, "FedEx-when it absolutely, positively has to be there overnight," the company scored a profit of $3.6 million in 1976. Two years later, FedEx went public, and by 1980, revenue had zoomed to $415.4 million and profits soared to $38.7 million. From then on, it was smooth sailing for FedEx. By 1999, the company has become the No. 1 overnight shipper in the world, delivering more than 3 million packages to nearly 210 countries each working day.
Fred Smith, now chairman, president and CEO of FDX Corp., FedEx's parent company, compiled a fortune estimated at $700 million by enabling businesses to deliver their goods quickly, anywhere in the world. He was told it couldn't be done. But in the time-honored style of the true innovative visionary, Smith listened to his own counsel, and single-handedly changed the way the world does business.
Fred Smith displayed entrepreneurial talents early in life. He learned to fly when he was 15 and took up crop dusting as a part-time hobby. At age 16, he and two friends formed Ardent Record Co., a business that still exists today. The young entrepreneurs operated the firm profitably and even produced a number of hits, including "Rock House" and "Big Satin Mama."
People + Service = Profit
A key ingredient in Federal Express' success has been a corporate philosophy that emphasizes treating its workers fairly. Managers are carefully trained to foster respect for all employees, and their performance is monitored. Managers are evaluated annually by both bosses and workers to ensure good relations between all levels of the company. Fred Smith believes that fair treatment instills company loyalty, and compan
Steve Jobs, Co-founder of Apple Computer Inc., Founded: 1976
Steve Jobs wanted to give everyone a computer at a time when nobody realized computers were necessary to have. He founded Apple to create home computers, experienced some early success, faltered in the consumer market with the expensive Macintosh, was ousted from the company he founded, dabbled in computer animated movies-Pixar ring a bell?-and was eventually asked to return to his first love, where he turned around Apple at a time when it was in trouble
"We started out to get a computer in the hands of everyday people, and we succeeded beyond our wildest dreams."-Steve Jobs
Steve Jobs' vision of a "computer for the rest of us" sparked the PC revolution and made Apple an icon of American business. But somewhere along the way, Jobs' vision got clouded (some say by his ego), and he was ousted from the company he helped found. Few will disagree that Jobs did indeed impede Apple's growth, yet without him, the company lost its sense of direction and pioneering spirit. After nearly 10 years of plummeting sales, Apple turned to its visionary founder for help, and a little older, little wiser Jobs engineered one of the most amazing turnarounds of the 20th century.
The adopted son of a Mountain View, California, machinist, Steve Jobs showed an early interest in electronics and gadgetry. While in high school, he boldly called Hewlett-Packard co-founder and president William Hewlett to ask for parts for a school project. Impressed by Jobs, Hewlett not only gave him the parts, but also offered him a summer internship at Hewlett-Packard. It was there that Jobs met and befriended Steve Wozniak, a young engineer five years his senior with a penchant for tinkering.
After graduating from high school, Jobs enrolled in Reed College but dropped out after one semester. He had become fascinated by Eastern spiritualism, and he took a part-time job designing video games for Atari in order to finance a trip to India to study Eastern culture and religion.
When Jobs returned to the United States, he renewed his friendship with Wozniak, who had been hard at work trying to build a small computer. To Wozniak, it was just a hobby, but the visionary Jobs immediately grasped the marketing potential of such a device and convinced Wozniak to go into business with him. In 1975, the 20-year-old Jobs and Wozniak set up shop in Jobs' parents' garage, dubbed the venture Apple, and began working on the prototype of the Apple I.
Although the Apple I sold mainly to hobbyists, it generated enough cash to enable Jobs and Wozniak to improve and refine their design. In 1977, they introduced the Apple II-the first personal computer with color graphics and a keyboard. Designed for beginners the user-friendly Apple II was a tremendous success, ushering in the era of the personal computer. First-year sales topped $3 million. Two years later, sales ballooned to $200 million.
But by 1980, Apple's shine was starting to wear off. Increased competition combined with less than stellar sales of the Apple III and its follow-up, the LISA, caused the company to lose nearly half its market to IBM. Faced with declining sales, Jobs introduced the Apple Macintosh in 1984. The first personal computer to feature a graphical-user interface controlled by a mouse, the Macintosh was a true breakthrough in terms of ease-of-use. But the marketing behind it was seriously flawed. Jobs had envisioned the Mac as a home computer, but at $2,495, it was too expensive for the consumer market. When consumer sales failed to reach projections, Jobs tried pitching the Mac as a business computer. But with little memory, no hard drive and no networking capabilities, the Mac had almost none of the features corporate America wanted.
For Jobs, this turn of events spelled serious trouble. He had clashed with Apple's board of directors, and in 1983, he was ousted from the board by CEO John Sculley, whom Jobs had handpicked to help him run Apple. Stripped of all power and control, Jobs eventually sold his shares of Apple stock and resigned in 1985.
Later that year, using a portion of the money from the stock sale, Jobs launched NeXT Computer Co., with the goal of building a breakthrough computer that would revolutionize research and higher education. Introduced in 1988, the NeXT computer boasted a host of innovations, including extremely fast processing speeds, superb graphics and an optical disk drive. But priced at $9,950, the NeXT was too expensive to attract enough sales to keep the company afloat. Undeterred, Jobs switched the company's focus from hardware to software. He also began paying more attention to his other business, Pixar Animation Studios, which he had purchased from George Lucas in 1986.
After cutting a three-picture deal with Disney, Jobs set out to create the first ever computer-animated feature film. Four years in the making, "Toy Story" was a certified smash hit when it was released in November 1995. Fueled by this success, Jobs took Pixar public in 1996, and by the end of the first day of trading, his 80 percent share of the company was worth $1 billion. After nearly 10 years of struggling, Jobs had finally hit it big. But the best was yet to come.
Within days of Pixar's arrival on the stock market, Apple bought NeXT for $400 million and re-appointed Jobs to Apple's board of directors as an advisor to Apple chairman and CEO Gilbert F. Amelio. It was an act of desperation on Apple's part. Because they had failed to develop a next-generation Macintosh operating system, the firm's share of the PC market had dropped to just 5.3 percent, and they hoped that Jobs could help turn the company around.
At the end of March 1997, Apple announced a quarterly loss of $708 million. Three months later, Amelio resigned and Jobs took over as interim CEO. Once again in charge of Apple, Jobs struck a deal with Microsoft to help ensure Apple's survival. Under the arrangement, Microsoft invested $150 million for a nonvoting minority stake in Apple, and the companies agreed to "cooperate on several sales and technology fronts." Next, Jobs installed the G3 PowerPC microprocessor in all Apple computers, making them faster than competing Pentium PCs. He also spearheaded the development of the iMac, a new line of affordable home desktops, which debuted in August 1998 to rave reviews. Under Jobs' guidance, Apple quickly returned to profitability, and by the end of 1998, boasted sales of $5.9 billion.
Against all odds, Steve Jobs pulled the company he founded and loved back from the brink. Apple is once again healthy and churning out the kind of breakthrough products that made the Apple name synonymous with innovation. Jobs once described himself as a "hopeless romantic" who just wanted to make a difference. Quite appropriately like the archetypal romantic hero who reaches for greatness but fails, only to find wisdom and maturity in exile, an older, wiser Steve Jobs returned triumphant to save his kingdom.
Apple may have never existed if Hewlett-Packard had been on the ball. After developing the circuit board that would become the heart of the Apple I, Steve Wozniak offered it to Hewlett-Packard, who turned it down saying that it wasn't "a salable product."
To generate the $1,350 in capital they used to start Apple, Steve Jobs sold his Volkswagen microbus, and Steve Wozniak sold his Hewlett-Packard calculator.