By categorising expenses and limiting spending, they argue, you can have enough left over every month to save money and grow rich.
The problem is that when you budget, you pay everyone else first - the landlord, the credit card companies, the phone company, and so on. So at the end of the month, you have nothing left to put in the bank. You promise yourself you’ll do better next month, but you never do. There are always unexpected bills to pay, unanticipated sales to take advantage of.
Budgeting doesn’t work. But there is something that does: putting some predetermined percentage of your income into a savings account each month before you pay any of your bills.
Think of yourself as a personal corporation and the money you save as your personal income. All the other money you spend on house and car payments and so forth are the expenses of your personal corporation. Only the portion that goes into a savings account is really yours.You might, for example, have a portion of your paycheque automatically deposited in your savings account each month - as soon as the check is deposited.
Pay yourself first by putting as much money as you can into a tax-deferred savings vehicle (like an RA).Do this for yoursef, you spouse, and children. Then pay the government next by creating a separate holding account into which you deposit a percentage of every fee that’s paid to you - the money that you going to owe in taxes. Then you pay your bills. Then you will realise that what you have left divided by the days in a month is adequate to cover expenses.
Friday, October 24, 2008
Thursday, October 23, 2008
Sir Isaac Newton knew about investing.
The bailout wasn't going to solve the world’s economic problems immediately, The approval was something that would bring about some sense of order.
Now what? Obviously the market isn’t going to fix itself - so where do we go from here? That is a good question. Only time will tell, but Sir Isaac Newton probably got it right with his first law of motion: An object in motion will stay in motion and an object at rest will stay at rest unless acted on by an unbalanced force.
At this point, the market is in motion… and that movement is on the downswing. The bailout could have been the opposing force to halt the downward motion, but now we will never know. This economic slowdown is far from over until an unbalanced force comes up.I believe that every individual can give the economy the drive it deserves to end the world crisis.
Now what? Obviously the market isn’t going to fix itself - so where do we go from here? That is a good question. Only time will tell, but Sir Isaac Newton probably got it right with his first law of motion: An object in motion will stay in motion and an object at rest will stay at rest unless acted on by an unbalanced force.
At this point, the market is in motion… and that movement is on the downswing. The bailout could have been the opposing force to halt the downward motion, but now we will never know. This economic slowdown is far from over until an unbalanced force comes up.I believe that every individual can give the economy the drive it deserves to end the world crisis.
Wednesday, October 22, 2008
The Window has four panes (quadrants) that divide your "personal awareness"
The lines dividing the four panes are like window shades that can move up and down or left and right as an interaction progresses.characteristics into Open, Hidden, Blind, and Unknown.
The "Open" Quadrant (upper-left)
In the Open quadrant of the Window go things that both you and your customer/prospect know about you.
In an online marketing context, when a new prospect "opts in" to your list, the window shade in this quadrant is practically closed, since there has been little information exchanged between the two of you. But as you build rapport with that prospect by using autoresponder sequences, blog posts, e-letter articles, teleseminars, and other marketing communications, the window shade starts opening and the Open quadrant gets bigger.
The "Blind" Quadrant (upper-right)
In the Blind quadrant go things that your prospect/customer knows about you (on a personal or professional level) that you are unaware of.
Let’s say you’re conducting a teleseminar and one of your callers hangs up in the middle because she has to pick up her kids from school. This information is in your Blind quadrant because she knows she’s hanging up the phone but you don’t.
If that same person calls you after the teleseminar and tells you she had to hang up before the call was over, the window shade in the Blind quadrant starts closing by moving to the right, which enlarges the Open quadrant.
The "Hidden" Quadrant (lower-left)
In the Hidden quadrant go things that you know about yourself or your marketing campaigns (in a business context) that your prospect/customer doesn’t know.
If, for example, you’ve intentionally withheld information about an upcoming marketing launch, this information is in the Hidden quadrant. But as soon as you inform your list about the details of that launch, you pull the window shade down, narrowing the Hidden quadrant and enlarging the Open quadrant.
Here’s the interesting part: As you get to know your prospects and customers better, it’s only natural for you to feel more comfortable about disclosing more intimate details about yourself, right? Well, in a Johari Window context, this process is called: "self-disclosure." In a marketing context, I call it "transparency."
Granted, it’s a little scary to be transparent with your prospects and customers the first time. But when you make a habit of it, you’ll discover that it’s the highest impact rapport "accelerator" of all marketing communication methods.
The "Unknown" Quadrant (lower-right)
In the Unknown quadrant are things that neither you nor your prospects/customers know about you or your business.
If you’ve ever done any public speaking, you know how much new information can be revealed to both you and your audience during the course of a typical Q&A session. An interactive situation like this almost always triggers personal growth.
In a Johari Window context, this process moves even more information into the Open quadrant, shrinking the Unknown quadrant. In a marketing context, interacting with your prospects/customers is a "win-win" situation.
So what’s your next step?
Building rapport with your customers/prospects - expanding the Open quadrant of your relationship - is like the game of chess: It’s easy to learn the basics, but it takes a lifetime to master.
But understand this: Once you start communicating with your prospects/customers - especially when you muster up the courage to be increasingly transparent with them - you’ll find that the majority of those relationships will become long-lasting and profitable.
The "Open" Quadrant (upper-left)
In the Open quadrant of the Window go things that both you and your customer/prospect know about you.
In an online marketing context, when a new prospect "opts in" to your list, the window shade in this quadrant is practically closed, since there has been little information exchanged between the two of you. But as you build rapport with that prospect by using autoresponder sequences, blog posts, e-letter articles, teleseminars, and other marketing communications, the window shade starts opening and the Open quadrant gets bigger.
The "Blind" Quadrant (upper-right)
In the Blind quadrant go things that your prospect/customer knows about you (on a personal or professional level) that you are unaware of.
Let’s say you’re conducting a teleseminar and one of your callers hangs up in the middle because she has to pick up her kids from school. This information is in your Blind quadrant because she knows she’s hanging up the phone but you don’t.
If that same person calls you after the teleseminar and tells you she had to hang up before the call was over, the window shade in the Blind quadrant starts closing by moving to the right, which enlarges the Open quadrant.
The "Hidden" Quadrant (lower-left)
In the Hidden quadrant go things that you know about yourself or your marketing campaigns (in a business context) that your prospect/customer doesn’t know.
If, for example, you’ve intentionally withheld information about an upcoming marketing launch, this information is in the Hidden quadrant. But as soon as you inform your list about the details of that launch, you pull the window shade down, narrowing the Hidden quadrant and enlarging the Open quadrant.
Here’s the interesting part: As you get to know your prospects and customers better, it’s only natural for you to feel more comfortable about disclosing more intimate details about yourself, right? Well, in a Johari Window context, this process is called: "self-disclosure." In a marketing context, I call it "transparency."
Granted, it’s a little scary to be transparent with your prospects and customers the first time. But when you make a habit of it, you’ll discover that it’s the highest impact rapport "accelerator" of all marketing communication methods.
The "Unknown" Quadrant (lower-right)
In the Unknown quadrant are things that neither you nor your prospects/customers know about you or your business.
If you’ve ever done any public speaking, you know how much new information can be revealed to both you and your audience during the course of a typical Q&A session. An interactive situation like this almost always triggers personal growth.
In a Johari Window context, this process moves even more information into the Open quadrant, shrinking the Unknown quadrant. In a marketing context, interacting with your prospects/customers is a "win-win" situation.
So what’s your next step?
Building rapport with your customers/prospects - expanding the Open quadrant of your relationship - is like the game of chess: It’s easy to learn the basics, but it takes a lifetime to master.
But understand this: Once you start communicating with your prospects/customers - especially when you muster up the courage to be increasingly transparent with them - you’ll find that the majority of those relationships will become long-lasting and profitable.
Thursday, October 16, 2008
crash course on Forex trading 101.
Step 1. Find a forex-trading house you can trust.
There are a number of currency trading houses you can use. We recommend F.X.C.M. which has its global headquarters in New York. It is a registered Futures Commission Merchant or F.C.M. that specialises solely in spot Forex trading. With over a million trades executed each month via their Trading Station, F.X.C.M. is the unrivalled leader in the online currency market.
Step 2. Take the plunge!
Open your first forex account and do your research
Opening an account is as easy as going to the F.X.C.M. website on www.fxcm.com and downloading the registration documents. You`ll need to fax these back to the F.X.C.M. head office in New York after which a dealer from the New York trading desk will contact you. After transferring cash overseas to the F.X.C.M. account you will be able to begin trading online. The trading platform can be downloaded from the website onto your desktop and with your login and password you can then trade. If you have any hassles there is a toll-free number to contact around the clock.
Then you need to decide what currency pair you want to trade and when you should buy or sell it. You only trade the four major currencies against the US dollar, namely: the Japanese yen, British pound, the euro and the Swiss franc. This is because they are the most active in terms of trading volume and they are also the cheapest to trade.
The US dollar alone accounts for 80-90% of all currency transactions. Trading currency is not like buying a share, it`s more like putting down a deposit and taking a view on whether a certain currency will weaken or strengthen against another. This deposit is referred to as a margin. If you are wrong, the loss will be taken from your deposit. If your prediction is correct your margin will be returned to you along with your profit from the trade. Due to certain built-in safety mechanisms, you can`t lose more than your margin. If the position goes completely wrong, your currency broker will close the position automatically preventing further losses.
Step 3. You wouldn`t buy a car without test-driving it first, so don`t go into forex trading blind either!
Changes in interest rates around the world and other economic data cause exchange rates to fluctuate violently, however the best way to trade currencies is technically. By this I mean making use of technical charts and various leading and lagging indicators to time your entry into the market. You will have to brush up on the interpretation of the various technical indicators, which you can do online, or with the help of any number of technical analysis books, available in your local bookstore. To be able to test your technical trading strategy you can open a mini-demo account with F.X.C.M. and trade online with fictitious money. The technical charts and indicators are available online via the trading station (www.fxcm.com) and are free of charge.
Step 4. Take a deep breath and make that trade!
A typical trade will be as follows: A quote on the euro/US dollar might be as follows:
Sell: 1.5560. Buy: 1.5564
This means that if you believe that the euro will strengthen against the US dollar you can buy the euro. In taking this view you are expecting the US dollar to weaken against the euro. You can buy one euro lot at 1.5564 and assuming you are correct and the euro does strengthen against the US dollar the quote may look as follows: Sell: 1.5643. Buy: 1.5647.
Step 5. Keep both eyes on your trade ? at all times!
Currency trading is a short-term exercise. When you execute a trade it is a position that is held normally for a few days, often sometimes even for a few hours. The reason for this is that when a position is taken one is geared.
There are a number of currency trading houses you can use. We recommend F.X.C.M. which has its global headquarters in New York. It is a registered Futures Commission Merchant or F.C.M. that specialises solely in spot Forex trading. With over a million trades executed each month via their Trading Station, F.X.C.M. is the unrivalled leader in the online currency market.
Step 2. Take the plunge!
Open your first forex account and do your research
Opening an account is as easy as going to the F.X.C.M. website on www.fxcm.com and downloading the registration documents. You`ll need to fax these back to the F.X.C.M. head office in New York after which a dealer from the New York trading desk will contact you. After transferring cash overseas to the F.X.C.M. account you will be able to begin trading online. The trading platform can be downloaded from the website onto your desktop and with your login and password you can then trade. If you have any hassles there is a toll-free number to contact around the clock.
Then you need to decide what currency pair you want to trade and when you should buy or sell it. You only trade the four major currencies against the US dollar, namely: the Japanese yen, British pound, the euro and the Swiss franc. This is because they are the most active in terms of trading volume and they are also the cheapest to trade.
The US dollar alone accounts for 80-90% of all currency transactions. Trading currency is not like buying a share, it`s more like putting down a deposit and taking a view on whether a certain currency will weaken or strengthen against another. This deposit is referred to as a margin. If you are wrong, the loss will be taken from your deposit. If your prediction is correct your margin will be returned to you along with your profit from the trade. Due to certain built-in safety mechanisms, you can`t lose more than your margin. If the position goes completely wrong, your currency broker will close the position automatically preventing further losses.
Step 3. You wouldn`t buy a car without test-driving it first, so don`t go into forex trading blind either!
Changes in interest rates around the world and other economic data cause exchange rates to fluctuate violently, however the best way to trade currencies is technically. By this I mean making use of technical charts and various leading and lagging indicators to time your entry into the market. You will have to brush up on the interpretation of the various technical indicators, which you can do online, or with the help of any number of technical analysis books, available in your local bookstore. To be able to test your technical trading strategy you can open a mini-demo account with F.X.C.M. and trade online with fictitious money. The technical charts and indicators are available online via the trading station (www.fxcm.com) and are free of charge.
Step 4. Take a deep breath and make that trade!
A typical trade will be as follows: A quote on the euro/US dollar might be as follows:
Sell: 1.5560. Buy: 1.5564
This means that if you believe that the euro will strengthen against the US dollar you can buy the euro. In taking this view you are expecting the US dollar to weaken against the euro. You can buy one euro lot at 1.5564 and assuming you are correct and the euro does strengthen against the US dollar the quote may look as follows: Sell: 1.5643. Buy: 1.5647.
Step 5. Keep both eyes on your trade ? at all times!
Currency trading is a short-term exercise. When you execute a trade it is a position that is held normally for a few days, often sometimes even for a few hours. The reason for this is that when a position is taken one is geared.
Smart Strategies for Simplifying your Life
Here are 6 simple tools to help you find bargain shares to invest in. Using nothing more than a daily newspaper and a pocket calculator, you can join the investment world`s sharpest minds in uncovering unloved shares, set to soar. You will need to look at the following key ratios to select the shares that are set to do well:
The first one you need to look at is the Dividend yield. A dividend is the money paid on each share from the company`s net profits. Small companies often don`t pay dividends ? they plough their profits back into growing their business. But if a large company doesn`t increase its dividend or cuts it, you can bet it needs the money simply to survive. As the share price falls though, the dividend yield (dividend compared against share price) will rise. This could make the stock a relative bargain.
The second and most important ratio is the Earnings per Share or E.P.S. It represents a company`s post-tax profits divided by the total number of shares in issue. Generally, an E.P.S. higher than the cash flow per share (shown on the cash-flow statement in the company`s annual report) indicates a company with strong value. A steadily rising E.P.S. indicates financial health and growth.
The next ratio is the Dividend Cover. This tells you whether a company can afford to pay its shareholders their dividend or not. Divide the E.P.S. by the dividend announced by the company. The result should be 1 or higher. If it`s less than 1, avoid it. The firm hasn`t got the cash to pay its dividend and is digging into cash reserves.
The fourth ratio is the Price-Earnings Ratio or P.E. It`s calculated by dividing the share price by the earnings per share. If you`re investing for the mid to long term, look for shares with a low P.E. compared with other firms in its sector. If you want a fast profit though, you could buy a stock with a high P.E. Although these shares are overvalued, the price will have upwards momentum. Investors who move quickly can make money. But you must sell the stock before it rebounds.
The next one is the Price/sales ratio or P.S.R. Use this ratio for new companies with fast growth, but no profits yet. Divide last year`s sales figure by the market value of a firm. Buy if a stock has a low P.S.R. compared to others within its sector ? especially if it`s less than one. For market leaders, the P.S.R. will be around 3 or 4.
The final ratio is the Return on capital employed or R.O.C.E. This measures management performance. The R.O.C.E. is calculated as profits before tax and interest on loan repayments, divided by capital employed. In sectors like retail, the share price will increase if there is a rising R.O.C.E. A company can improve its R.O.C.E. by buying back shares from the stock market. This can also improve its share price. Buybacks are a definite buy signal for you ? but you have to buy as soon as the buyback is announced to get the maximum financial gain.
The first one you need to look at is the Dividend yield. A dividend is the money paid on each share from the company`s net profits. Small companies often don`t pay dividends ? they plough their profits back into growing their business. But if a large company doesn`t increase its dividend or cuts it, you can bet it needs the money simply to survive. As the share price falls though, the dividend yield (dividend compared against share price) will rise. This could make the stock a relative bargain.
The second and most important ratio is the Earnings per Share or E.P.S. It represents a company`s post-tax profits divided by the total number of shares in issue. Generally, an E.P.S. higher than the cash flow per share (shown on the cash-flow statement in the company`s annual report) indicates a company with strong value. A steadily rising E.P.S. indicates financial health and growth.
The next ratio is the Dividend Cover. This tells you whether a company can afford to pay its shareholders their dividend or not. Divide the E.P.S. by the dividend announced by the company. The result should be 1 or higher. If it`s less than 1, avoid it. The firm hasn`t got the cash to pay its dividend and is digging into cash reserves.
The fourth ratio is the Price-Earnings Ratio or P.E. It`s calculated by dividing the share price by the earnings per share. If you`re investing for the mid to long term, look for shares with a low P.E. compared with other firms in its sector. If you want a fast profit though, you could buy a stock with a high P.E. Although these shares are overvalued, the price will have upwards momentum. Investors who move quickly can make money. But you must sell the stock before it rebounds.
The next one is the Price/sales ratio or P.S.R. Use this ratio for new companies with fast growth, but no profits yet. Divide last year`s sales figure by the market value of a firm. Buy if a stock has a low P.S.R. compared to others within its sector ? especially if it`s less than one. For market leaders, the P.S.R. will be around 3 or 4.
The final ratio is the Return on capital employed or R.O.C.E. This measures management performance. The R.O.C.E. is calculated as profits before tax and interest on loan repayments, divided by capital employed. In sectors like retail, the share price will increase if there is a rising R.O.C.E. A company can improve its R.O.C.E. by buying back shares from the stock market. This can also improve its share price. Buybacks are a definite buy signal for you ? but you have to buy as soon as the buyback is announced to get the maximum financial gain.
Advertising In Magazines
1.Very potential customer belongs to at least one business, professional, occupational or vocational niche AND has at least one interest on the side. And people pay infinitely more attention to what comes to them through those side windows than through their front doors.
2. The "small" magazines often have ridiculously cheap advertising rates. They cater to a small crowd with a narrow interest. They don’t attract any big, dumb, image advertisers and that forces them to keep their rates low. These magazines are analogous to what small towns were for Woolworths and what university-campus-adjacent locations were for Steers.
3. Some magazines may rent their subscriber lists. And even local marketers can benefit from the work they do by rounding up and identifying people with very, very, very specific interests.
4. Everybody - including you - stubbornly, incorrectly, insists and devoutly believes that they’re different. The miniature dog owner, for example, thinks his critter has nothing at all in common with a full-size dog. I laugh every time I open up one magazine for those of us in harness racing, and see a stupid company’s big, full-colour ad for a feed or vitamin or gadget with a picture of a thoroughbred horse in the ad.
2. The "small" magazines often have ridiculously cheap advertising rates. They cater to a small crowd with a narrow interest. They don’t attract any big, dumb, image advertisers and that forces them to keep their rates low. These magazines are analogous to what small towns were for Woolworths and what university-campus-adjacent locations were for Steers.
3. Some magazines may rent their subscriber lists. And even local marketers can benefit from the work they do by rounding up and identifying people with very, very, very specific interests.
4. Everybody - including you - stubbornly, incorrectly, insists and devoutly believes that they’re different. The miniature dog owner, for example, thinks his critter has nothing at all in common with a full-size dog. I laugh every time I open up one magazine for those of us in harness racing, and see a stupid company’s big, full-colour ad for a feed or vitamin or gadget with a picture of a thoroughbred horse in the ad.
Top-Earning Athletes In The World
When we looked at the highest-paid athletes in the world three years ago, Tiger Woods narrowly topped the list ahead of German Formula One legend Michael Schumacher. Today, Woods still sits on top--and no one is even close.
Tiger Woods left his competitors on the golf course gasping for air this year with seven victories in only 16 tournaments, including four wins in his last five events.
His scoring average of 67.8 was 1.5 strokes better than the second place finisher, Ernie Els. For perspective on how big a gap that is on the PGA Tour, 1.5 strokes was also the difference between No. 2 Els and the 88th-ranked player in scoring average.
But for all his domination on the links, Woods' prowess off the course might have been even more impressive.
Woods earned $100 million in the 12 month period ending June 2007. That is the most an athlete has ever made in one year. Woods banked $13 million in prize money and $87 million from endorsements and appearance fees. His take was more than twice the amount earned by the second highest-paid athlete, pugilist Oscar De La Hoya. The "Golden Boy" pocketed $43 million from his May fight with Floyd Mayweather Jr.
One big shift on this year's list is the presence of athletes from outside the U.S. Only three of the highest-paid athletes were from outside the U.S. in 2004. This year that numbered tripled to nine athletes, led by Finnish Formula One driver Kimi Raikkonen, who earned $40 million and ranked fourth overall.
Other international notables: British soccer star David Beckham, ranked sixth with $33 million; Brazil's Ronaldinho, tied for ninth with $31 million; Valentino Rossi, the Italian motorcycling champ, who raked in $30 million, placing him at No. 11; and Yao Ming, China's most famous export, who banked $26.3 million in the NBA. He was 17th overall.
Our list represents both the young and old. Tennis star Maria Sharapova can’t legally buy a drink at 20 years old, but she can certainly afford it on her $23 million income last year. Sharapova ranked 25th, and is the sole woman on the list (no women made the list in 2004).
On the other end of the spectrum is 78-year old golfing legend Arnold Palmer. Despite retiring from competitive golf last year, Palmer still earned $25 million from sponsors like Callaway, Rayovac and Rolex.
Woods doesn't show any sign of slowing down either. Off the course, he extended his contract with Nike (nyse: NKE - news - people ) at the end of last year. The Swoosh has been writing Woods his biggest paychecks since he turned pro in 1996 (a grand total of more than $150 million). The new deal should be worth more than $25 million a year for Woods, including royalties.
He recently signed a five-year deal with PepsiCo's (nyse: PEP - news - people ) Gatorade--it's valued at a reported $100 million, which would be by far the largest beverage deal ever for an athlete
.
On the course, Woods continues to out-drive his competitors in earnings. He just picked up $10 million for his retirement account by winning the PGA Tour's inaugural FedEx Cup. His career prize money stands at $77 million, 42% higher than second-ranked Vijay Singh, No. 18 on our list. Over the course of his career, Woods has earned $650 million in endorsements and prize money, and at this rate, should become the first athlete to cross the $1 billion threshold by 2010.
The minimum earnings to make our list of the 25 highest-paid athletes was $23 million this year, up from $19 million three years ago. These athletes earned $813 million cumulatively. Basketball was the best represented sport with seven NBA players making the cut, led by Los Angeles Laker Kobe Bryant, who earned $32.9 million and ranked seventh overall--just one spot ahead of his nemesis Shaquille O’Neal.
Despite its role as the richest U.S. sports league, only two NFL players made the cut: Leonard Davis from the Dallas Cowboys and the New Orleans Saints' Reggie Bush. Blame the league's strict salary cap, which keeps football stars from being paid as much as their counterparts in basketball and baseball--plus, those pesky helmets keep most NFL stars from being well recognized, except pitchman extraordinaire Peyton Manning, who just missed our list.
In Pictures: The 25 Top-Earning Athletes In The World
Tuesday, October 14, 2008
7 Ways to Turn a Profit Online
These simple business models can help you get started, whether you want to create a Web site for your existing company or start from scratch with a new e-business.
Going online can be a great adventure--and a lot of fun--for any small business. But if you want your Web site to be more than a hobby, you need to put some thought into how to make it profitable. No matter what your business is, you should always be thinking about ways to diversify your revenue streams to boost your profits.
So to get you thinking about new strategies, I've put together a list of the seven ways you can earn income on the Web, and then I've explained how you can incorporate all of these methods to create success.
Online Profit Steams
Whether you're just beginning to develop your business model or simply analyzing an existing business, your chief focus should be on how you're going to generate income. There are seven ways to generate revenue on the Web:
• Sell your own products
• Sell your own services
• Drop ship products
• Recommend affiliate products
• Sell ad space
• Create a joint venture with like-minded businesses
• Start an affiliate program
Let me explain each of these a little further:
1. Sell your own products. The main advantage to selling your own products is that you ultimately control how much profit you make on every sale and you therefore have the potential for the biggest profit margin. You know exactly what each product costs, and you can try out different price points to see what works the best. People appreciate good value, and removing the middleman is a great way to provide your customers with competitive prices that keep them coming back for more.
2. Sell your own services. Whether you're a small-town dentist, a high-priced online legal consultant, a real estate agent, a tutor, a landscaper, a bed and breakfast owner, an auto-mechanic, a caterer, a fitness trainer or anything in between, you can profit from selling your service online. It's easy to get started selling a service online, but your revenue potential, in most cases, is limited. That's because, unlike someone selling a physical product that can be stored and shipped on demand, you can only provide as many services as your time allows.
When you sell a service, you're essentially selling a relationship with yourself. And this requires that you spend more time and effort establishing your credibility and developing rapport with your visitors than is typically required on a site selling a physical product. You not only need to establish the benefits of the service you're offering, you also need to establish the value of you providing this service.
3. Drop ship products. If you want to sell products without the hassles of tracking your inventory, setting up warehouse space and maintaining a confusing shipping/receiving infrastructure, drop-shipping may be the choice for you. Drop shipping lets you sell quality, brand-name products on your site for a hefty profit, while the drop shipper takes care of fulfilling the order. They warehouse the stock, pack the orders and ship them out to your customers.
4. Recommend affiliate products. Recommending affiliate products creates a "no-risk" partnership that allows you to promote another company's products or services on your site to earn a percentage of their sales. As one of the company's "affiliates" or promotion partners, you earn a commission each time someone you've referred to their site makes a purchase. To advertise their wares, you might post a banner on your site that links to the affiliate program's site, or you might publish an article about the company and their products in your newsletter.
5. Sell ad space. Once your site has lots of highly targeted traffic, or a large, targeted opt-in list, you may be able to sell advertising. Advertisers are willing to buy ads when they're being directed at large numbers of their target market. Nowadays, though, advertising revenues are a lot less than they used to be, so I don't recommend you plan on making this your sole source of income. Selling ad space can be a great additional profit stream, but it's unlikely to keep your business afloat on its own.
6. Create a joint venture with like-minded businesses. Joint ventures are all about related businesses teaming up and combining skills, products, services and resources to create new streams of income and profit. One great way to profit through joint ventures is to seek out products or services that would benefit your visitors, and then approach the companies that provide those products or services. Ask them if you can recommend their product or service on your site for a portion of the profits. Most companies will gladly agree to this arrangement--after all, there's no risk for them since they only pay you when you refer a paying customer.
7. Start an affiliate program. With your own affiliate program, you can recruit an army of people (your affiliates) who will recommend your product on their web site for a percentage of any sale they refer. You have the power to exponentially increase your income as more and more affiliates sign up and you continue to teach your existing affiliates how to increase their commission checks (and your income).
It's one of the most powerful forms of online advertising I know. It allows you to grow your profits while keeping your business small, since you don't have to go out and spend money on salespeople and advertising. Your affiliates do the advertising for you, and you only pay them when they make a sale.
There's no reason why you can't incorporate several of these different income opportunities into your business model. The key is to focus on one, maximize revenue from it and then move on to the next.
Of course, this choice should be made with extra consideration to your budget. If, like most small-business people, you have a limited budget, you'll want to focus on revenue streams (like selling products or recommending affiliate products) that will produce results quickly. A good place for you to start might be:
The Sales Model
When most people think about taking a small business online, they go straight to the sales model. That's because it's fairly straight-forward and your source of income is obvious. You function as an online merchant, and every time you make a sale, you earn a profit. The more sales you make, the bigger your profits grow.
But the really great thing about the sales model is that once you have your main revenue stream running smoothly, you can add every single other profit stream I mentioned above in order to diversify your income and explode your profits! For example, let's say you run a small business that manufactures garden tools. When you set up your sales site, you can sell your own product (garden tools), earning the largest profit margin.
This should be your main source of income, so make sure you focus on this first.
You could also sell a service that complements your products or that your customers might need before or after using your product. Your garden tools sales site, for example, could offer landscaping consultations with professional landscapers. Next, you could find products available to drop ship that complement your main product. Maybe your new garden tool owners will need other items for their garden. Find a drop shipper that offers bird feeders or garden gloves, and arrange to offer those products for sale on your site.
Why not recommend affiliate products that your customers will be interested in? You could set up a "Gardening Resources" page on your site and use it to promote affiliate products related to gardening, such as books or magazines about gardening, packets of seeds, flower bulbs, plant pots or just about anything else gardeners would be interested in. (Remember, though, keep your focus and avoid turning this page into a general flea market or you'll end up losing traffic.)
Try selling ad space to advertisers who are interested in your target market. A site that sells rain gear, for example, might be interested in advertising to gardeners since they spend a lot of time outside. Another option would be to create a joint venture with other businesses. Maybe you know a great local landscaper who has never considered offering his service online. You could set up an arrangement where you earn a portion of the profits on any sales you send his way. Then, write a quick e-mail promotion about his service and send it to all of your customers who live in his area.
Finally, start an affiliate program to promote your site. You could do all your selling yourself . . . but why would you? Think about it--you boost your visibility when your affiliates start publicizing your site, you gain credibility with your affiliates' customers, and you simply make more sales! And in a sales model site, that's your ultimate goal.
The Click & Mortar Model
In the click & mortar model, you combine your offline business with an online presence to increase exposure and expand your market. What you do with your Web site will depend on the type of offline business you've already established. Your online venture could be anything from a site that mainly functions as a marketing tool for your offline business to a fully e-commerce- enabled electronic store. Here are some of the profit streams you should consider when taking your existing small business online:
If your offline business involves selling products, you should consider online sales. Your two channels (online and offline) can share resources, including marketing dollars, fulfillment systems, and inventory. Adding the online channel allows you to expand your geographic and product market, while keeping your business small.
If you sell an offline service, think about ways you could promote your service online. This can be effective no matter what service you offer. Whether you're a real estate agent, a doctor, a dentist, a lawyer, a landscaper or a hairdresser, you can use your Web site to sell your service. For example, you could take appointments through your site or create a promotional campaign online that directs visitors to your physical location.
You could sell ad space to other local businesses. For example, let's say you're a real estate agent. You could sell ad space to a cleaning company since people might be interested in having their homes professionally cleaned before moving in.
You could create a joint venture with other local businesses. For your real estate business, you could create a "Welcome to the Neighborhood" package filled with helpful information and coupons for local businesses, including a pizza place, a video rental store, a plumber, a electrician and a beauty shop. Then make joint venture arrangements with all these businesses so that you profit every time one of your coupons is used. Offer this package both online and offline to increase your profits.
And, as usual, I suggest you start an affiliate program. Think about it--your affiliates could send visitors to your site, where you promote your offline service. Or you could provide your affiliates with a printable coupon campaign that they could use to send people to your physical location.
Remember that both of these business models are most effective when you combine profit streams to maximize revenue. For example, if you wanted to work with your sales model site to diversify your profit streams, you could sell your own product, while also recommending affiliate or joint venture products that would appeal to your audience and complement your offer. You could investigate drop-shipping options to even further diversify your product line. Then you could create a service that your product users would need, and send them an offer in a follow-up e-mail promotion. Plus, you can make more sales on all of these fronts by enlisting an army of affiliates to sell for you.
Diversification gives you all kinds of options when it comes to back-end and follow-up offers. And remember, if you have great offers, the customers who have bought from you once are likely to buy from you again.
Going online can be a great adventure--and a lot of fun--for any small business. But if you want your Web site to be more than a hobby, you need to put some thought into how to make it profitable. No matter what your business is, you should always be thinking about ways to diversify your revenue streams to boost your profits.
So to get you thinking about new strategies, I've put together a list of the seven ways you can earn income on the Web, and then I've explained how you can incorporate all of these methods to create success.
Online Profit Steams
Whether you're just beginning to develop your business model or simply analyzing an existing business, your chief focus should be on how you're going to generate income. There are seven ways to generate revenue on the Web:
• Sell your own products
• Sell your own services
• Drop ship products
• Recommend affiliate products
• Sell ad space
• Create a joint venture with like-minded businesses
• Start an affiliate program
Let me explain each of these a little further:
1. Sell your own products. The main advantage to selling your own products is that you ultimately control how much profit you make on every sale and you therefore have the potential for the biggest profit margin. You know exactly what each product costs, and you can try out different price points to see what works the best. People appreciate good value, and removing the middleman is a great way to provide your customers with competitive prices that keep them coming back for more.
2. Sell your own services. Whether you're a small-town dentist, a high-priced online legal consultant, a real estate agent, a tutor, a landscaper, a bed and breakfast owner, an auto-mechanic, a caterer, a fitness trainer or anything in between, you can profit from selling your service online. It's easy to get started selling a service online, but your revenue potential, in most cases, is limited. That's because, unlike someone selling a physical product that can be stored and shipped on demand, you can only provide as many services as your time allows.
When you sell a service, you're essentially selling a relationship with yourself. And this requires that you spend more time and effort establishing your credibility and developing rapport with your visitors than is typically required on a site selling a physical product. You not only need to establish the benefits of the service you're offering, you also need to establish the value of you providing this service.
3. Drop ship products. If you want to sell products without the hassles of tracking your inventory, setting up warehouse space and maintaining a confusing shipping/receiving infrastructure, drop-shipping may be the choice for you. Drop shipping lets you sell quality, brand-name products on your site for a hefty profit, while the drop shipper takes care of fulfilling the order. They warehouse the stock, pack the orders and ship them out to your customers.
4. Recommend affiliate products. Recommending affiliate products creates a "no-risk" partnership that allows you to promote another company's products or services on your site to earn a percentage of their sales. As one of the company's "affiliates" or promotion partners, you earn a commission each time someone you've referred to their site makes a purchase. To advertise their wares, you might post a banner on your site that links to the affiliate program's site, or you might publish an article about the company and their products in your newsletter.
5. Sell ad space. Once your site has lots of highly targeted traffic, or a large, targeted opt-in list, you may be able to sell advertising. Advertisers are willing to buy ads when they're being directed at large numbers of their target market. Nowadays, though, advertising revenues are a lot less than they used to be, so I don't recommend you plan on making this your sole source of income. Selling ad space can be a great additional profit stream, but it's unlikely to keep your business afloat on its own.
6. Create a joint venture with like-minded businesses. Joint ventures are all about related businesses teaming up and combining skills, products, services and resources to create new streams of income and profit. One great way to profit through joint ventures is to seek out products or services that would benefit your visitors, and then approach the companies that provide those products or services. Ask them if you can recommend their product or service on your site for a portion of the profits. Most companies will gladly agree to this arrangement--after all, there's no risk for them since they only pay you when you refer a paying customer.
7. Start an affiliate program. With your own affiliate program, you can recruit an army of people (your affiliates) who will recommend your product on their web site for a percentage of any sale they refer. You have the power to exponentially increase your income as more and more affiliates sign up and you continue to teach your existing affiliates how to increase their commission checks (and your income).
It's one of the most powerful forms of online advertising I know. It allows you to grow your profits while keeping your business small, since you don't have to go out and spend money on salespeople and advertising. Your affiliates do the advertising for you, and you only pay them when they make a sale.
There's no reason why you can't incorporate several of these different income opportunities into your business model. The key is to focus on one, maximize revenue from it and then move on to the next.
Of course, this choice should be made with extra consideration to your budget. If, like most small-business people, you have a limited budget, you'll want to focus on revenue streams (like selling products or recommending affiliate products) that will produce results quickly. A good place for you to start might be:
The Sales Model
When most people think about taking a small business online, they go straight to the sales model. That's because it's fairly straight-forward and your source of income is obvious. You function as an online merchant, and every time you make a sale, you earn a profit. The more sales you make, the bigger your profits grow.
But the really great thing about the sales model is that once you have your main revenue stream running smoothly, you can add every single other profit stream I mentioned above in order to diversify your income and explode your profits! For example, let's say you run a small business that manufactures garden tools. When you set up your sales site, you can sell your own product (garden tools), earning the largest profit margin.
This should be your main source of income, so make sure you focus on this first.
You could also sell a service that complements your products or that your customers might need before or after using your product. Your garden tools sales site, for example, could offer landscaping consultations with professional landscapers. Next, you could find products available to drop ship that complement your main product. Maybe your new garden tool owners will need other items for their garden. Find a drop shipper that offers bird feeders or garden gloves, and arrange to offer those products for sale on your site.
Why not recommend affiliate products that your customers will be interested in? You could set up a "Gardening Resources" page on your site and use it to promote affiliate products related to gardening, such as books or magazines about gardening, packets of seeds, flower bulbs, plant pots or just about anything else gardeners would be interested in. (Remember, though, keep your focus and avoid turning this page into a general flea market or you'll end up losing traffic.)
Try selling ad space to advertisers who are interested in your target market. A site that sells rain gear, for example, might be interested in advertising to gardeners since they spend a lot of time outside. Another option would be to create a joint venture with other businesses. Maybe you know a great local landscaper who has never considered offering his service online. You could set up an arrangement where you earn a portion of the profits on any sales you send his way. Then, write a quick e-mail promotion about his service and send it to all of your customers who live in his area.
Finally, start an affiliate program to promote your site. You could do all your selling yourself . . . but why would you? Think about it--you boost your visibility when your affiliates start publicizing your site, you gain credibility with your affiliates' customers, and you simply make more sales! And in a sales model site, that's your ultimate goal.
The Click & Mortar Model
In the click & mortar model, you combine your offline business with an online presence to increase exposure and expand your market. What you do with your Web site will depend on the type of offline business you've already established. Your online venture could be anything from a site that mainly functions as a marketing tool for your offline business to a fully e-commerce- enabled electronic store. Here are some of the profit streams you should consider when taking your existing small business online:
If your offline business involves selling products, you should consider online sales. Your two channels (online and offline) can share resources, including marketing dollars, fulfillment systems, and inventory. Adding the online channel allows you to expand your geographic and product market, while keeping your business small.
If you sell an offline service, think about ways you could promote your service online. This can be effective no matter what service you offer. Whether you're a real estate agent, a doctor, a dentist, a lawyer, a landscaper or a hairdresser, you can use your Web site to sell your service. For example, you could take appointments through your site or create a promotional campaign online that directs visitors to your physical location.
You could sell ad space to other local businesses. For example, let's say you're a real estate agent. You could sell ad space to a cleaning company since people might be interested in having their homes professionally cleaned before moving in.
You could create a joint venture with other local businesses. For your real estate business, you could create a "Welcome to the Neighborhood" package filled with helpful information and coupons for local businesses, including a pizza place, a video rental store, a plumber, a electrician and a beauty shop. Then make joint venture arrangements with all these businesses so that you profit every time one of your coupons is used. Offer this package both online and offline to increase your profits.
And, as usual, I suggest you start an affiliate program. Think about it--your affiliates could send visitors to your site, where you promote your offline service. Or you could provide your affiliates with a printable coupon campaign that they could use to send people to your physical location.
Remember that both of these business models are most effective when you combine profit streams to maximize revenue. For example, if you wanted to work with your sales model site to diversify your profit streams, you could sell your own product, while also recommending affiliate or joint venture products that would appeal to your audience and complement your offer. You could investigate drop-shipping options to even further diversify your product line. Then you could create a service that your product users would need, and send them an offer in a follow-up e-mail promotion. Plus, you can make more sales on all of these fronts by enlisting an army of affiliates to sell for you.
Diversification gives you all kinds of options when it comes to back-end and follow-up offers. And remember, if you have great offers, the customers who have bought from you once are likely to buy from you again.
Marketing copy
1. The first hot spot is determined by its position in the promotion.
In a standard, #10 direct-mail package, critical copy is the teaser on the outer envelope and the headline and lead of the sales letter. In a magalog, it’s the copy on the front cover… the inside front cover… the headline and lead on page 3… and the back cover. These sections are worth stressing over, because different wording can result in dramatic increases or decreases in your response rates.
2. The second hot spot is where you describe the central message, theme, or idea of your selling proposition.
For instance, do you position your newsletter’s recommendations on energy shares as a way for your reader to hedge his portfolio against a bear market triggered by rising oil prices? Or do you talk about how he can profit from the "next big thing" in energy investing - which, according to your editor, is that crude oil will reach $200 a barrel by the end of the decade? The "big idea" of your promotion - and the way you express it - really matters.
3. The third hot spot is where you describe the offer.
Offering a "free information kit," for instance, usually generates more leads than the vaguer "send for more information." The idea of a "kit" is somehow more tangible and sounds more valuable.On the order form, changing even one word in the copy can mean the difference between a winner and a disaster - for instance, "R900 a year" vs. "R1500 a year" or "10-day money-back guarantee" vs. "90-day money-back guarantee."
In a standard, #10 direct-mail package, critical copy is the teaser on the outer envelope and the headline and lead of the sales letter. In a magalog, it’s the copy on the front cover… the inside front cover… the headline and lead on page 3… and the back cover. These sections are worth stressing over, because different wording can result in dramatic increases or decreases in your response rates.
2. The second hot spot is where you describe the central message, theme, or idea of your selling proposition.
For instance, do you position your newsletter’s recommendations on energy shares as a way for your reader to hedge his portfolio against a bear market triggered by rising oil prices? Or do you talk about how he can profit from the "next big thing" in energy investing - which, according to your editor, is that crude oil will reach $200 a barrel by the end of the decade? The "big idea" of your promotion - and the way you express it - really matters.
3. The third hot spot is where you describe the offer.
Offering a "free information kit," for instance, usually generates more leads than the vaguer "send for more information." The idea of a "kit" is somehow more tangible and sounds more valuable.On the order form, changing even one word in the copy can mean the difference between a winner and a disaster - for instance, "R900 a year" vs. "R1500 a year" or "10-day money-back guarantee" vs. "90-day money-back guarantee."
Good to Great Characteristics
1. They had quiet, self-effacing leaders. People who had a "paradoxical blend" of humility and professional will. They were more like Lincoln and Socrates, Collins argued, than Patton or Caesar. These leaders placed the highest priority on surrounding themselves with great people.
2. Rather than focus on vision or strategy, they spent most of their time trying to "put the right people on the bus and get the wrong people off the bus."
3. They embraced the "Stockdale paradox" - that you must accept and confront the worst facts of your situation while maintaining an unwavering faith that you can overcome them.
4. They found something they could do better than any other company in the world. Even if it meant abandoning their core concept and moving on to something else, they maintained that lofty standard.
5. They developed a corporate culture where employees were so committed to the company’s core values that disciplinary rules were not necessary.
6. They used technology to support their core values, not as the driving force of the business.
7. The process they used to make improvements was incremental, not revolutionary. It resembled "relentlessly pushing a giant heavy flywheel in one direction, turn upon turn, building momentum until a point of breakthrough and beyond
2. Rather than focus on vision or strategy, they spent most of their time trying to "put the right people on the bus and get the wrong people off the bus."
3. They embraced the "Stockdale paradox" - that you must accept and confront the worst facts of your situation while maintaining an unwavering faith that you can overcome them.
4. They found something they could do better than any other company in the world. Even if it meant abandoning their core concept and moving on to something else, they maintained that lofty standard.
5. They developed a corporate culture where employees were so committed to the company’s core values that disciplinary rules were not necessary.
6. They used technology to support their core values, not as the driving force of the business.
7. The process they used to make improvements was incremental, not revolutionary. It resembled "relentlessly pushing a giant heavy flywheel in one direction, turn upon turn, building momentum until a point of breakthrough and beyond
Building Your Power Base
The first type of power you can develop is expert power.
The expert in any organisation is the person who has taken the time to become extremely competent in a critical area. Often, the expert in an organisation is even more powerful than the senior executives, because that individual is largely irreplaceable. This is sometimes called the "critical skill" of the company, because it is vital to continued cash flow, growth, and even the survival of the business.
The second type of power is ascribed power.
This is a form of unofficial power that gravitates toward you, like iron filings toward a magnet, because you are the kind of person others like and respect and enjoy being around. In every work situation, there is a person with ascribed power. This person has an influence out of proportion to his or her job, because people come to him or her for advice, for counsel, to solve problems, and because he or she is a genuinely likable person. Ascribed power enables you to influence a greater number of people than you could without it. And it often leads to promotions and opportunities that would not have arisen in its absence.
The key to gaining ascribed power is to be pleasant with everyone. Be positive and upbeat. Be cheerful. Get a reputation for being nice. Have something positive to say to each person about each person. Never complain. Ask people questions about themselves, and be a good listener. Ascribed power can help you go far in a short period of time.
The third type of power in an organisation is position power.
This is the power and authority that goes along with a particular position or title. For example, the person who is in charge of sales has the authority to make decisions with regard to the sales force. The person who is in charge of finance has the authority to make decisions with regard to how monies are allocated and accounted for. Position power is very important in any organisation, and one of the jobs of a boss is to make it crystal clear to everyone exactly how much authority goes with an individual’s job title and responsibilities.
The expert in any organisation is the person who has taken the time to become extremely competent in a critical area. Often, the expert in an organisation is even more powerful than the senior executives, because that individual is largely irreplaceable. This is sometimes called the "critical skill" of the company, because it is vital to continued cash flow, growth, and even the survival of the business.
The second type of power is ascribed power.
This is a form of unofficial power that gravitates toward you, like iron filings toward a magnet, because you are the kind of person others like and respect and enjoy being around. In every work situation, there is a person with ascribed power. This person has an influence out of proportion to his or her job, because people come to him or her for advice, for counsel, to solve problems, and because he or she is a genuinely likable person. Ascribed power enables you to influence a greater number of people than you could without it. And it often leads to promotions and opportunities that would not have arisen in its absence.
The key to gaining ascribed power is to be pleasant with everyone. Be positive and upbeat. Be cheerful. Get a reputation for being nice. Have something positive to say to each person about each person. Never complain. Ask people questions about themselves, and be a good listener. Ascribed power can help you go far in a short period of time.
The third type of power in an organisation is position power.
This is the power and authority that goes along with a particular position or title. For example, the person who is in charge of sales has the authority to make decisions with regard to the sales force. The person who is in charge of finance has the authority to make decisions with regard to how monies are allocated and accounted for. Position power is very important in any organisation, and one of the jobs of a boss is to make it crystal clear to everyone exactly how much authority goes with an individual’s job title and responsibilities.
Facebook discoveries
#1: Introducing Products in a "Mature" Market
Consumers aren’t looking for brand-new products. They are looking for clever new adaptations of products they already know and love. When it comes to new, the human brain can take only a little bit of it. Eighty percent of the old and 20 percent of the new is a good ratio. Your goal is not to develop brand-new ideas, but to notice trends that are beginning and develop products that anticipate that trend by a little - just enough to catch your customers’ attention.
Stanford Students’ Discovery: "It’s Never Too Late to Create a Winning App." When Stanford launched its project, over 6,000 Facebook apps already existed. Just 10 weeks later, the students had six apps in the top 100. None of them were radically innovative.
#2: The Power of Simplicity
You can sell your product very well by talking about its many benefits, but the most successful advertisements are those that highlight a single benefit above all the rest. When this benefit can be presented as uniquely characteristic of your product, you have an advertising proposition that can last and last and last. Consider any great marketing campaign - MacDonalds, Camel, Marlboro. Examine any best-selling, non-fiction book - The 7 Habits of Highly Effective People, What Colour Is Your Parachute?, Chicken Soup for the Soul, etc. What do they all have in common? Simple themes. Ideas so simple they can be expressed - and understood - in a few short words.
Stanford Students’ Discovery: "Simplicity & Clarity Are Key to Success." Too many and too clever features must be avoided. Make the app easy to understand and easy to use.
#3: Ready Fire Aim
Prudent entrepreneurs do not want to risk all their time and money on a single product. For the best chance of having a successful business, they need to be flexible about what they are going to sell. If their first product idea doesn’t sell well, they have to be able to generate a second one. Innovation matters. And so does speed.
Combined, they give your business extraordinary growing power.
Stanford Students’ Discovery: "Speed & Flexibility in Launch & Iterations." Many fast and imperfect trials beat deep thinking. Flexibility beats quality. Getting too attached to one app idea can be fatal.
#4: Teamwork Accelerates Success
Don’t even try to be a solo creator. You will get much better results much faster by working with a creative team. Sometimes you might get ideas while showering or exercising or sitting on an airplane. But don’t act on those ideas. Write them down and bring them up when you’re brainstorming with a group.
Stanford Students’ Discovery: "Community Cooperation Leads to Success." Students helped each other a lot, sharing app development tools, tips, and insights.
#5: Check Your Ego at the Door
How do you know your product idea is good? Because you think it is? Business is not and must never be about what the business owner thinks is good or right. Business is about providing value to the customer. And that value can be determined only by the customer. Don’t let your ego convince you that you can teach the marketplace what it should and should not buy, or you and your ego will soon find yourselves in the poorhouse.
Stanford Students’ Discovery: "Individual Opinions About Apps Are Worthless." Don’t be swayed by one person’s opinion. Just get the app out there and see what happens.
#6: Don’t Be a Pioneer in a Market
When it comes to answering most of the fundamental questions about selling your product, the best answer will always be this: Imitate the industry norm. If you are always trying to come up with product ideas that are completely new and different, you will likely have a very poor success record. Let others live (and die) on the "bleeding edge."
Stanford Students’ Discovery: "Copying Success Is a Cheap/Fast Way to Succeed." Novelty isn’t the best approach to apps. If you’re desperate for a win, just copy something that’s working. Flipside: If your app is doing well, expect imitators.
#7: Accelerated Failure
Success isn’t usually about genius. It is more often about trial and error. Money loves speed, so spend your time trying new permutations of existing successes rather than endlessly hoping to find the "next big thing." Don’t be satisfied when things are "running smoothly." An entrepreneurial business should never be running smoothly. Accelerate failure. Cut your losers and run with your winners.
Consumers aren’t looking for brand-new products. They are looking for clever new adaptations of products they already know and love. When it comes to new, the human brain can take only a little bit of it. Eighty percent of the old and 20 percent of the new is a good ratio. Your goal is not to develop brand-new ideas, but to notice trends that are beginning and develop products that anticipate that trend by a little - just enough to catch your customers’ attention.
Stanford Students’ Discovery: "It’s Never Too Late to Create a Winning App." When Stanford launched its project, over 6,000 Facebook apps already existed. Just 10 weeks later, the students had six apps in the top 100. None of them were radically innovative.
#2: The Power of Simplicity
You can sell your product very well by talking about its many benefits, but the most successful advertisements are those that highlight a single benefit above all the rest. When this benefit can be presented as uniquely characteristic of your product, you have an advertising proposition that can last and last and last. Consider any great marketing campaign - MacDonalds, Camel, Marlboro. Examine any best-selling, non-fiction book - The 7 Habits of Highly Effective People, What Colour Is Your Parachute?, Chicken Soup for the Soul, etc. What do they all have in common? Simple themes. Ideas so simple they can be expressed - and understood - in a few short words.
Stanford Students’ Discovery: "Simplicity & Clarity Are Key to Success." Too many and too clever features must be avoided. Make the app easy to understand and easy to use.
#3: Ready Fire Aim
Prudent entrepreneurs do not want to risk all their time and money on a single product. For the best chance of having a successful business, they need to be flexible about what they are going to sell. If their first product idea doesn’t sell well, they have to be able to generate a second one. Innovation matters. And so does speed.
Combined, they give your business extraordinary growing power.
Stanford Students’ Discovery: "Speed & Flexibility in Launch & Iterations." Many fast and imperfect trials beat deep thinking. Flexibility beats quality. Getting too attached to one app idea can be fatal.
#4: Teamwork Accelerates Success
Don’t even try to be a solo creator. You will get much better results much faster by working with a creative team. Sometimes you might get ideas while showering or exercising or sitting on an airplane. But don’t act on those ideas. Write them down and bring them up when you’re brainstorming with a group.
Stanford Students’ Discovery: "Community Cooperation Leads to Success." Students helped each other a lot, sharing app development tools, tips, and insights.
#5: Check Your Ego at the Door
How do you know your product idea is good? Because you think it is? Business is not and must never be about what the business owner thinks is good or right. Business is about providing value to the customer. And that value can be determined only by the customer. Don’t let your ego convince you that you can teach the marketplace what it should and should not buy, or you and your ego will soon find yourselves in the poorhouse.
Stanford Students’ Discovery: "Individual Opinions About Apps Are Worthless." Don’t be swayed by one person’s opinion. Just get the app out there and see what happens.
#6: Don’t Be a Pioneer in a Market
When it comes to answering most of the fundamental questions about selling your product, the best answer will always be this: Imitate the industry norm. If you are always trying to come up with product ideas that are completely new and different, you will likely have a very poor success record. Let others live (and die) on the "bleeding edge."
Stanford Students’ Discovery: "Copying Success Is a Cheap/Fast Way to Succeed." Novelty isn’t the best approach to apps. If you’re desperate for a win, just copy something that’s working. Flipside: If your app is doing well, expect imitators.
#7: Accelerated Failure
Success isn’t usually about genius. It is more often about trial and error. Money loves speed, so spend your time trying new permutations of existing successes rather than endlessly hoping to find the "next big thing." Don’t be satisfied when things are "running smoothly." An entrepreneurial business should never be running smoothly. Accelerate failure. Cut your losers and run with your winners.
Developing Trends
1. The proliferation of high-quality counterfeit merchandise will force brand-name manufacturers to increase the complexity of their designs and increase the speed at which they are marketed.
2. Driven by the illegal digital revolution in counterfeiting, high-quality products will become more and more available. Some of them will be fakes. And some will be from small manufacturers that can take advantage of the technology without feeling compelled to steal and sell the prestige.
You can benefit from these trends by resisting the urge to spend extra money on prestigious brand names. Instead, learn to recognise quality, and then use that knowledge to purchase high-quality merchandise that doesn’t carry a designer label.
2. Driven by the illegal digital revolution in counterfeiting, high-quality products will become more and more available. Some of them will be fakes. And some will be from small manufacturers that can take advantage of the technology without feeling compelled to steal and sell the prestige.
You can benefit from these trends by resisting the urge to spend extra money on prestigious brand names. Instead, learn to recognise quality, and then use that knowledge to purchase high-quality merchandise that doesn’t carry a designer label.
The Power Of Persuation
Persuade People With Deductive Reasoning
1. Identify your goal.
You must know precisely what you want to achieve. In my example with Jose, my goal was to get him to make the decision to stop playing his game and get his chores done immediately. In my video-production example, my goal was to get my partner to make the decision to invest an additional R5,000 so we could buy our own equipment.
2. Make a statement that leads the other person to the conclusion you want him to come to.
The leading statement I made to Jose was, "I’m sure you won’t forget [to do your chores before it’s time to go]." The leading statement I made to my partner was, ""I’m not sure any of these guys know more about shooting and editing a video than we do."
Let’s say you want to persuade your boss to increase your budget for a particular project. In that case, you might say something like, "I can definitely get this project done within the budget - although, with the shortcuts we’ll need to take, there may be some quality issues." That statement would lead your boss to the realisation that not giving you a bigger budget might be a bad idea.
3. Reinforce the logical conclusion the other person comes to "on his own."
When the person you’re using the Triggering Deductive Reasoning technique on comes to the conclusion you were hoping for, agree with him that he made a wise decision. You might even admit that you were thinking the same thing… and he convinced you it was the right thing to do.
1. Identify your goal.
You must know precisely what you want to achieve. In my example with Jose, my goal was to get him to make the decision to stop playing his game and get his chores done immediately. In my video-production example, my goal was to get my partner to make the decision to invest an additional R5,000 so we could buy our own equipment.
2. Make a statement that leads the other person to the conclusion you want him to come to.
The leading statement I made to Jose was, "I’m sure you won’t forget [to do your chores before it’s time to go]." The leading statement I made to my partner was, ""I’m not sure any of these guys know more about shooting and editing a video than we do."
Let’s say you want to persuade your boss to increase your budget for a particular project. In that case, you might say something like, "I can definitely get this project done within the budget - although, with the shortcuts we’ll need to take, there may be some quality issues." That statement would lead your boss to the realisation that not giving you a bigger budget might be a bad idea.
3. Reinforce the logical conclusion the other person comes to "on his own."
When the person you’re using the Triggering Deductive Reasoning technique on comes to the conclusion you were hoping for, agree with him that he made a wise decision. You might even admit that you were thinking the same thing… and he convinced you it was the right thing to do.
3 Steps to Success: Thinking, Acting, and Breaking Up the Day
Thinking, Acting, and Breaking Up the Day
1. You must recognise that good intentions are not enough.
Writing up a list of yearly goals or New Year’s resolutions might make you feel great. It may even make you feel like you are on your way. But you can’t claim to be making any progress toward accomplishing anything until you start acting on your Master Plan.
2. Don’t spend too much time thinking about your future success.
Imagining what you want out of life - the big house, the luxury cars, the yacht - may give you pleasure. But despite what the think-and-be-rich gurus says, it won’t make you successful. You must spend most of your time taking action, not daydreaming about all the toys you will have "some day."
Most of the most accomplished people I know - and in that group I include some success coaches who preach the think-and-get-rich philosophy - don’t waste their time thinking about success. What they think about is how to do a certain task or solve a specific problem. They know that wealth and success will come to them if they have a good plan and follow it.
3. Break up your busy day.
Once you begin to implement your Master Plan, you will find that you will want to keep working for hours and hours at a time. Because you will be making progress toward your goals, you will be energised by the work itself. (If this has not been your experience with work before, be prepared to start enjoying your days a whole lot more!)
The extra surge of motivation will be very useful in getting lots more important work done. You’ll be working more intensely, more intelligently, and just plain longer and harder than ever. But because you’ll be working longer and harder, you’ll need to force yourself to take little breaks - three- to five-minute breaks to reduce stress, recharge your batteries, and ensure that your body is not stuck in the same position too long.
It’s not easy to take breaks once you are in a groove. In fact, you may be amazed at how difficult it can be. Most of the successful businesspeople I know think nothing of sitting at a computer or being on the telephone for four to six hours at a stretch. This is a testament to the motivational power of having a Master Plan, but it still puts a lot of pressure on your body and brain.
1. You must recognise that good intentions are not enough.
Writing up a list of yearly goals or New Year’s resolutions might make you feel great. It may even make you feel like you are on your way. But you can’t claim to be making any progress toward accomplishing anything until you start acting on your Master Plan.
2. Don’t spend too much time thinking about your future success.
Imagining what you want out of life - the big house, the luxury cars, the yacht - may give you pleasure. But despite what the think-and-be-rich gurus says, it won’t make you successful. You must spend most of your time taking action, not daydreaming about all the toys you will have "some day."
Most of the most accomplished people I know - and in that group I include some success coaches who preach the think-and-get-rich philosophy - don’t waste their time thinking about success. What they think about is how to do a certain task or solve a specific problem. They know that wealth and success will come to them if they have a good plan and follow it.
3. Break up your busy day.
Once you begin to implement your Master Plan, you will find that you will want to keep working for hours and hours at a time. Because you will be making progress toward your goals, you will be energised by the work itself. (If this has not been your experience with work before, be prepared to start enjoying your days a whole lot more!)
The extra surge of motivation will be very useful in getting lots more important work done. You’ll be working more intensely, more intelligently, and just plain longer and harder than ever. But because you’ll be working longer and harder, you’ll need to force yourself to take little breaks - three- to five-minute breaks to reduce stress, recharge your batteries, and ensure that your body is not stuck in the same position too long.
It’s not easy to take breaks once you are in a groove. In fact, you may be amazed at how difficult it can be. Most of the successful businesspeople I know think nothing of sitting at a computer or being on the telephone for four to six hours at a stretch. This is a testament to the motivational power of having a Master Plan, but it still puts a lot of pressure on your body and brain.
Tips To Avoid Drowning In Debt Scenarios
Steve Soliz picked up his first credit card when he was a freshman in college. He applied just outside the campus bookstore. Then just 17 years old, Soliz had never had much tutoring from his parents or teachers about how to use a credit card responsibly. He knew the basics. As for the rest, he would learn it the hard way.
Don't let your retirement savings fall victim to the bear market.
At first, Soliz used the credit card for the necessities, like paying for gas. But then, gradually, he began using plastic for the stuff he didn't need. Like a lot of young students, he wanted to keep up with his buddies, so he started charging clothes and electronics.
That habit--relying on credit rather than cash--continued after Soliz graduated in 1998. He got married and had children, first a daughter and then two more--twins. More responsibilities meant more expenses. Soliz found himself now putting more and more on that little piece of plastic. He was using the credit card to pay for groceries and even day care for the kids.
Tips To Avoid Drowning In Debt
Debt began to pile up. He thought he could stay one step ahead of the game by signing up for more credit cards, trying to use one to pay for another. Soon, he had 11 cards and $40,000 in credit card debt, which he couldn't afford. He was earning $44,000 a year.
A divorce from his wife added to the debt burden. As part of the divorce settlement, Soliz agreed to take on the debt both shared as a couple: $15,000. The tipping point came when he wrote a check for $1,200 to pay a credit card bill. It bounced.
"I knew I was in trouble," Soliz says. "I decided it was time to get help."
The average amount of credit card debt per U.S. household was $9,840 in 2007, up 25% since 2000, reports CardTrak.com, a research company in Naples, Fla. Overall, Americans today carry $2.6 trillion in all kinds of consumer debt, up 24% from just 2003, according to the Federal Reserve. At the same time, Americans don't save like they used to: The nation's savings rate, which was 7.2% of disposable income in 1950, stood at 0.6% in 2007, says the Bureau of Economic Analysis.
Increasing debt and decreasing savings--coupled with an economy making headlines for all the wrong reasons--spell trouble for many of those in hock. Delinquencies for credit cards are on the rise. During the first quarter of 2008, according to the American Bankers Association (ABA), bank-card delinquencies jumped 13 basis points to 4.51%. That is now above the five-year average delinquency rate of 4.4%.
Special Offer: Profit from the pain in the financial sector with high-yielding preferred shares of some of the biggest banks. Many pay 8% or more. Click here for details with a free trial of Forbes Lehmann Income Securities Advisor.
Warning signs of overextended credit, say experts at the ABA, include paying only the minimum payment month after month, running out of cash all the time, being late on critical payments like rent or mortgage, taking longer and longer to pay off balances, and borrowing from one lender to pay another.
Credit cards are important. They establish a credit history and can teach us how to manage debt effectively and responsibly. But they can also be treacherous. Psychologically, it feels a lot easier to use plastic instead of paper. Soon, the habit becomes too comfortable, and the bills begin to pile up.
Even if you have dug a deep hole, there are ways to rid yourself of credit card debt.
The first step: Know the enemy. Gather all financial statements, park yourself at the kitchen table and figure out just how much credit card debt you have. This is a pretty basic, straightforward starting point, but it's often one people don't do, simply because they're spooked by the idea of knowing the real cost of their financial obligations.
List each credit card with its interest rate, minimum monthly payment and next due date. "We don't want anybody having a late fee," says Gail Cunningham of the National Foundation for Credit Counseling. "Late fees are now in the $40 range. You are tossing good money out the window."
Next, stop using the credit card. Instead, for everyday expenses, start using cash. It's much harder to spend greenbacks than to swipe plastic. In fact, studies show that those who pay with cash will save up to 20% per month. The reason is simple: The feel of those dollars actually leaving your hands makes you think twice about parting with that money.
"I call this the green factor," says Howard Dvorkin, founder of Consolidated Credit Services and author of Credit Hell--How to Dig out of Debt. "When you take out that plastic, there is no pain involved. But using cash, that green stuff, is different: You know how hard you worked for that money. There is immediate pain in using cash. You will spend more if you're using plastic."
In Pictures: Seven Tips To Avoid Drowning In Debt
The best tactic is to leave the credit cards at home or make it inconvenient to use. As an extreme, you can put them into a safety deposit box. Dvorkin has even seen people freeze their credit cards in blocks of ice.
Also, review all of your spending. When choked with credit card debt, it's important to differentiate between what's needed and what's not. What activities can you cut out? Create a budget and determine what expenses can be eliminated. Every little bit of saving helps and, over time, can add up to a real difference in what you owe.
Danielle R., who preferred not to use her last name, lives with her husband about 50 minutes outside San Francisco. Two years ago, the couple bought a house. But then, last summer, Danielle's husband became sick with cancer. He was the sole breadwinner for the family, but now he was unable to work. Medical expenses began to accumulate, which the couple paid with their credit cards. They found themselves struggling. They haven't paid their mortgage in seven months.
Even before sickness struck, Danielle says that she and her husband lived outside of their means. "We spent it before we had it in hand," she says.
Burdened with $70,000 in credit card debt, Danielle and her husband made some real changes. They cut back on the number of credit cards they carry, from seven to three. They only use cash and a debit card. Also, they cut back on activities that they used to enjoy but could no longer afford. For example, when times weren't as tough, they loved eating out; now, they buy more groceries and only eat at home.
"We buy a lot less," Danielle says. "We live more in the moment, and we don't use the credit cards at all any more."
Another tactic, experts offer: tackle the highest-rate loans and work your way down. This will cut down your debt load the fastest. However, this strategy, while making the most sense financially, is often hard to do. So experts say an alternative method involves just initially working off one small balance, and then moving on to the next one, right down the line.
"A lot of people need a sense of accomplishment," says Cunningham. "They want to start with the lowest balance. They need one to knock off."
This strategy, also known as the "debt snowball' approach, is one that Jessica Austin is finding helpful. A 27-year-old from Fort Smith, Ark., Austin found herself mired in credit card debt while in college. And she's still paying for it today.
In 1999, Austin enrolled in school and starting signing up for credit cards, including a bank card as well as cards with retailers like Express and Abercrombie & Fitch (nyse: ANF - news - people ). "I was 19 and spending money that I didn't have," Austin says.
Within four years, Austin had racked up $7,000 in credit card debt. Soon, she was so stressed out from her financial problems, she says, that she couldn't concentrate on her school work. In 2003, Austin dropped out of college. Then, adding to that burden, health issues popped up. She didn't have insurance. Medical bills began to fill her mailbox.
Austin can't get a credit card now because her credit score is shot. She says that she couldn't get approved for a house, even if she wanted one. But, slowly, she is regaining control of her financial situation. She works two jobs and uses mint.com, a Web site that offers free, online budgeting tools. She pays off credit card bills, dealing with the smallest balances first.
"It helps you psychologically," she says. "It puts you in the mindset that you are accomplishing something, getting something done. It doesn't seem so tedious, and you can see the effects. You are seeing these bills go away."
Special Offer: Turnaround Letter editor George Putnam told subscribers to buy Apple at $7.82 in 2003, turning $10,000 into more than $250,000 in less than five years. Click here for all current recommendations in The Turnaround Letter.
Another helpful tactic that pros point out: negotiate lower rates. Get on the phone with your credit card issuer and see if you can convince them to lower your interest rate. True, this strategy won't work so well if you have been late 10 times over the last year with your payments, says Curtis Arnold, founder of CardRatings.com and author of How You Can Profit From Credit Cards. But, he says, if you have been responsible, then call up the company. In fact, Arnold says this is a more effective tactic now than it has ever been.
"There is a big spotlight on the industry right now from the media and politicians," he says. "It is unprecedented. So they do not want disgruntled card members out there bad-mouthing their banks. You just tell them that you have a rate that you're not happy with and that you're seeing better card rates in the mail every day. If they hesitate, then ask to speak to the manager. Don't waste time. Then plead the case again and also say that you have been a good customer, have a good credit score, and that you are seeing offers from competitors all the time."
Arnold adds, "More than ever, they want to avoid negative publicity. It's a competitive market. Earnings are hurting. Their profits are down. If they start losing card members, that will only hurt their financial numbers even more. It will cost them significant money to replace you."
While you're at it, experts say, think about a balance transfer. Look around for a low-rate card but also remember to read the fine print: Does the low rate apply just to the balance transfer? Or also new purchases? Are there balance transfer fees? If so, how much? What are the annual fees? What happens if you're late on a payment?
It's the rules hidden in the tiny print at the bottom of the page that get people into trouble, says Dvorkin. "You may be in a 14% card and you get an offer to transfer to a 9% card. But that may only last for 12 months. Then they put you in a 24% card. Most people don't read the statements, unfortunately."
In Seven Tips To Avoid Drowning In Debt to make sure the minimum payments are always made. This strategy helps you avoid those painful late fees.
Arnold is a big fan. "It's not uncommon, even for the most responsible card members, to on rare occasions be late on a payment," he says. "How do you avoid that risk? Automatic payments. I use them on my cards. I don't have to worry about sending a bill in or logging online to make a payment. It automatically drafts the minimum to the account. I know that my account will be fine and that minimum payment will be taken care of and I will never be delinquent on the account."
Finally, ask for help. Check out the National Foundation for Credit Counseling. Each year, more than one million people receive counseling from NFCC member agencies, which offer services like budget counseling and education, debt management plans, counseling referral services and financial literacy courses.
Steve Soliz was turned down by a credit union when he applied for a debt-consolidation loan. He was referred to a counseling service called GreenPath Debt Solutions. Counselors there helped him create a budget to pay down his debts, and also negotiated with the lenders, getting them to lower the interest rates on his credit cards.
Soliz, now 32 years-old, has paid off four of his 11 credit cards, and nearly halved his debt to $23,000. He was even able to buy a new house in Chicago last summer.
"I feel completely better about my finances," he says. "There is still stuff to do. But I use the extra money to pay off debts."
Don't let your retirement savings fall victim to the bear market.
At first, Soliz used the credit card for the necessities, like paying for gas. But then, gradually, he began using plastic for the stuff he didn't need. Like a lot of young students, he wanted to keep up with his buddies, so he started charging clothes and electronics.
That habit--relying on credit rather than cash--continued after Soliz graduated in 1998. He got married and had children, first a daughter and then two more--twins. More responsibilities meant more expenses. Soliz found himself now putting more and more on that little piece of plastic. He was using the credit card to pay for groceries and even day care for the kids.
Tips To Avoid Drowning In Debt
Debt began to pile up. He thought he could stay one step ahead of the game by signing up for more credit cards, trying to use one to pay for another. Soon, he had 11 cards and $40,000 in credit card debt, which he couldn't afford. He was earning $44,000 a year.
A divorce from his wife added to the debt burden. As part of the divorce settlement, Soliz agreed to take on the debt both shared as a couple: $15,000. The tipping point came when he wrote a check for $1,200 to pay a credit card bill. It bounced.
"I knew I was in trouble," Soliz says. "I decided it was time to get help."
The average amount of credit card debt per U.S. household was $9,840 in 2007, up 25% since 2000, reports CardTrak.com, a research company in Naples, Fla. Overall, Americans today carry $2.6 trillion in all kinds of consumer debt, up 24% from just 2003, according to the Federal Reserve. At the same time, Americans don't save like they used to: The nation's savings rate, which was 7.2% of disposable income in 1950, stood at 0.6% in 2007, says the Bureau of Economic Analysis.
Increasing debt and decreasing savings--coupled with an economy making headlines for all the wrong reasons--spell trouble for many of those in hock. Delinquencies for credit cards are on the rise. During the first quarter of 2008, according to the American Bankers Association (ABA), bank-card delinquencies jumped 13 basis points to 4.51%. That is now above the five-year average delinquency rate of 4.4%.
Special Offer: Profit from the pain in the financial sector with high-yielding preferred shares of some of the biggest banks. Many pay 8% or more. Click here for details with a free trial of Forbes Lehmann Income Securities Advisor.
Warning signs of overextended credit, say experts at the ABA, include paying only the minimum payment month after month, running out of cash all the time, being late on critical payments like rent or mortgage, taking longer and longer to pay off balances, and borrowing from one lender to pay another.
Credit cards are important. They establish a credit history and can teach us how to manage debt effectively and responsibly. But they can also be treacherous. Psychologically, it feels a lot easier to use plastic instead of paper. Soon, the habit becomes too comfortable, and the bills begin to pile up.
Even if you have dug a deep hole, there are ways to rid yourself of credit card debt.
The first step: Know the enemy. Gather all financial statements, park yourself at the kitchen table and figure out just how much credit card debt you have. This is a pretty basic, straightforward starting point, but it's often one people don't do, simply because they're spooked by the idea of knowing the real cost of their financial obligations.
List each credit card with its interest rate, minimum monthly payment and next due date. "We don't want anybody having a late fee," says Gail Cunningham of the National Foundation for Credit Counseling. "Late fees are now in the $40 range. You are tossing good money out the window."
Next, stop using the credit card. Instead, for everyday expenses, start using cash. It's much harder to spend greenbacks than to swipe plastic. In fact, studies show that those who pay with cash will save up to 20% per month. The reason is simple: The feel of those dollars actually leaving your hands makes you think twice about parting with that money.
"I call this the green factor," says Howard Dvorkin, founder of Consolidated Credit Services and author of Credit Hell--How to Dig out of Debt. "When you take out that plastic, there is no pain involved. But using cash, that green stuff, is different: You know how hard you worked for that money. There is immediate pain in using cash. You will spend more if you're using plastic."
In Pictures: Seven Tips To Avoid Drowning In Debt
The best tactic is to leave the credit cards at home or make it inconvenient to use. As an extreme, you can put them into a safety deposit box. Dvorkin has even seen people freeze their credit cards in blocks of ice.
Also, review all of your spending. When choked with credit card debt, it's important to differentiate between what's needed and what's not. What activities can you cut out? Create a budget and determine what expenses can be eliminated. Every little bit of saving helps and, over time, can add up to a real difference in what you owe.
Danielle R., who preferred not to use her last name, lives with her husband about 50 minutes outside San Francisco. Two years ago, the couple bought a house. But then, last summer, Danielle's husband became sick with cancer. He was the sole breadwinner for the family, but now he was unable to work. Medical expenses began to accumulate, which the couple paid with their credit cards. They found themselves struggling. They haven't paid their mortgage in seven months.
Even before sickness struck, Danielle says that she and her husband lived outside of their means. "We spent it before we had it in hand," she says.
Burdened with $70,000 in credit card debt, Danielle and her husband made some real changes. They cut back on the number of credit cards they carry, from seven to three. They only use cash and a debit card. Also, they cut back on activities that they used to enjoy but could no longer afford. For example, when times weren't as tough, they loved eating out; now, they buy more groceries and only eat at home.
"We buy a lot less," Danielle says. "We live more in the moment, and we don't use the credit cards at all any more."
Another tactic, experts offer: tackle the highest-rate loans and work your way down. This will cut down your debt load the fastest. However, this strategy, while making the most sense financially, is often hard to do. So experts say an alternative method involves just initially working off one small balance, and then moving on to the next one, right down the line.
"A lot of people need a sense of accomplishment," says Cunningham. "They want to start with the lowest balance. They need one to knock off."
This strategy, also known as the "debt snowball' approach, is one that Jessica Austin is finding helpful. A 27-year-old from Fort Smith, Ark., Austin found herself mired in credit card debt while in college. And she's still paying for it today.
In 1999, Austin enrolled in school and starting signing up for credit cards, including a bank card as well as cards with retailers like Express and Abercrombie & Fitch (nyse: ANF - news - people ). "I was 19 and spending money that I didn't have," Austin says.
Within four years, Austin had racked up $7,000 in credit card debt. Soon, she was so stressed out from her financial problems, she says, that she couldn't concentrate on her school work. In 2003, Austin dropped out of college. Then, adding to that burden, health issues popped up. She didn't have insurance. Medical bills began to fill her mailbox.
Austin can't get a credit card now because her credit score is shot. She says that she couldn't get approved for a house, even if she wanted one. But, slowly, she is regaining control of her financial situation. She works two jobs and uses mint.com, a Web site that offers free, online budgeting tools. She pays off credit card bills, dealing with the smallest balances first.
"It helps you psychologically," she says. "It puts you in the mindset that you are accomplishing something, getting something done. It doesn't seem so tedious, and you can see the effects. You are seeing these bills go away."
Special Offer: Turnaround Letter editor George Putnam told subscribers to buy Apple at $7.82 in 2003, turning $10,000 into more than $250,000 in less than five years. Click here for all current recommendations in The Turnaround Letter.
Another helpful tactic that pros point out: negotiate lower rates. Get on the phone with your credit card issuer and see if you can convince them to lower your interest rate. True, this strategy won't work so well if you have been late 10 times over the last year with your payments, says Curtis Arnold, founder of CardRatings.com and author of How You Can Profit From Credit Cards. But, he says, if you have been responsible, then call up the company. In fact, Arnold says this is a more effective tactic now than it has ever been.
"There is a big spotlight on the industry right now from the media and politicians," he says. "It is unprecedented. So they do not want disgruntled card members out there bad-mouthing their banks. You just tell them that you have a rate that you're not happy with and that you're seeing better card rates in the mail every day. If they hesitate, then ask to speak to the manager. Don't waste time. Then plead the case again and also say that you have been a good customer, have a good credit score, and that you are seeing offers from competitors all the time."
Arnold adds, "More than ever, they want to avoid negative publicity. It's a competitive market. Earnings are hurting. Their profits are down. If they start losing card members, that will only hurt their financial numbers even more. It will cost them significant money to replace you."
While you're at it, experts say, think about a balance transfer. Look around for a low-rate card but also remember to read the fine print: Does the low rate apply just to the balance transfer? Or also new purchases? Are there balance transfer fees? If so, how much? What are the annual fees? What happens if you're late on a payment?
It's the rules hidden in the tiny print at the bottom of the page that get people into trouble, says Dvorkin. "You may be in a 14% card and you get an offer to transfer to a 9% card. But that may only last for 12 months. Then they put you in a 24% card. Most people don't read the statements, unfortunately."
In Seven Tips To Avoid Drowning In Debt to make sure the minimum payments are always made. This strategy helps you avoid those painful late fees.
Arnold is a big fan. "It's not uncommon, even for the most responsible card members, to on rare occasions be late on a payment," he says. "How do you avoid that risk? Automatic payments. I use them on my cards. I don't have to worry about sending a bill in or logging online to make a payment. It automatically drafts the minimum to the account. I know that my account will be fine and that minimum payment will be taken care of and I will never be delinquent on the account."
Finally, ask for help. Check out the National Foundation for Credit Counseling. Each year, more than one million people receive counseling from NFCC member agencies, which offer services like budget counseling and education, debt management plans, counseling referral services and financial literacy courses.
Steve Soliz was turned down by a credit union when he applied for a debt-consolidation loan. He was referred to a counseling service called GreenPath Debt Solutions. Counselors there helped him create a budget to pay down his debts, and also negotiated with the lenders, getting them to lower the interest rates on his credit cards.
Soliz, now 32 years-old, has paid off four of his 11 credit cards, and nearly halved his debt to $23,000. He was even able to buy a new house in Chicago last summer.
"I feel completely better about my finances," he says. "There is still stuff to do. But I use the extra money to pay off debts."
10 Cheap Ways to Build Your Brand
1. Create an affiliate program. A good affiliate network allows you to grow your e-business efficiently and affordably, channeling additional traffic to your site without the expense of pay-per-click advertising. Provide your affiliates with links and ads that carry your branding message.
2. Start or contribute to a blog. Look for a highly trafficked and searched blog in your industry, then write and post relevant articles about your business. Let your personality shine through in the tone of your writing.
3. Print your logo on labels or stickers and place them on all communication with customers. Stickers appeal to our tactile nature and add interest to just about anything. They don't need to be fancy, but they should feature your logo and colors.
4. Attach your tagline to your e-mail signature. If you don't already have a tagline or motto that communicates a key difference between you and your competition, create one and consider trademarking it.
5. Print your logo on an inexpensive premium like a hat or golf ball. The more memorable the item, the better. Distribute your premium on every sales call, to customers, prospects and even suppliers. Buy in bulk to reduce costs.
6. Start an e-mail newsletter for your customers and prospects. Include your own articles and link to other pieces related to your industry. This is a great way to keep your brand in front of customers and prospects regularly.
7. Offer your expertise to local or industry media publications that are read by your target customers. Make yourself available as a source for upcoming stories related to your business. Or, write an article and pitch it to target publications.
8. Visit your clients around holidays
(or minor holidays like Groundhog's Day), leaving them a holiday-themed surprise with your logo on it. Use the stickers you print (see No. 3) to customize the treats you choose. This one takes some creativity, but a little candy can go a surprisingly long way.
9. Follow up with customers to thank them for their business and get feedback on your product or service.
Call, e-mail or visit current customers as often as time permits.
10. Ensure that all your promotional materials match one another graphically.
At the very least, your business cards, stationery, signage, packaging, brochures and website should all feature your name, logo and tagline consistently.
At its core, branding is about building trust with your target audience. This takes time and consistency, but not a huge advertising budget.
John Williams is president and founder of LogoYes.com, the world's first and largest DIY logo website. In his 25 years in advertising, he has created brand standards for Fortune 100 companies like Mitsubishi and won numerous international awards for his design work.
2. Start or contribute to a blog. Look for a highly trafficked and searched blog in your industry, then write and post relevant articles about your business. Let your personality shine through in the tone of your writing.
3. Print your logo on labels or stickers and place them on all communication with customers. Stickers appeal to our tactile nature and add interest to just about anything. They don't need to be fancy, but they should feature your logo and colors.
4. Attach your tagline to your e-mail signature. If you don't already have a tagline or motto that communicates a key difference between you and your competition, create one and consider trademarking it.
5. Print your logo on an inexpensive premium like a hat or golf ball. The more memorable the item, the better. Distribute your premium on every sales call, to customers, prospects and even suppliers. Buy in bulk to reduce costs.
6. Start an e-mail newsletter for your customers and prospects. Include your own articles and link to other pieces related to your industry. This is a great way to keep your brand in front of customers and prospects regularly.
7. Offer your expertise to local or industry media publications that are read by your target customers. Make yourself available as a source for upcoming stories related to your business. Or, write an article and pitch it to target publications.
8. Visit your clients around holidays
(or minor holidays like Groundhog's Day), leaving them a holiday-themed surprise with your logo on it. Use the stickers you print (see No. 3) to customize the treats you choose. This one takes some creativity, but a little candy can go a surprisingly long way.
9. Follow up with customers to thank them for their business and get feedback on your product or service.
Call, e-mail or visit current customers as often as time permits.
10. Ensure that all your promotional materials match one another graphically.
At the very least, your business cards, stationery, signage, packaging, brochures and website should all feature your name, logo and tagline consistently.
At its core, branding is about building trust with your target audience. This takes time and consistency, but not a huge advertising budget.
John Williams is president and founder of LogoYes.com, the world's first and largest DIY logo website. In his 25 years in advertising, he has created brand standards for Fortune 100 companies like Mitsubishi and won numerous international awards for his design work.
How to Create a Logo
How to Create a Logo
With a well-designed logo, potential clients can instantly discover how your business can serve them
There are basically three kinds of logos. Font-based logos consist primarily of a type treatment. The logos of IBM, Microsoft and Sony, for instance, use type treatments with a twist that makes them distinctive. Then there are logos that literally illustrate what a company does, such as when a house-painting company uses an illustration of a brush in its logo. And finally, there are abstract graphic symbols-such as Nike's swoosh-that become linked to a company's brand.
"Such a symbol is meaningless until your company can communicate to consumers what its underlying associations are," says Americus Reed II, a marketing professor at the University of Pennsylvania's Wharton School, who's conducted research on the triggers that lead consumers to identify with and become loyal to a brand. But building that mental bridge takes time and money. The Nike swoosh has no inherent meaning outside of what's been created over the years through savvy marketing efforts that have transformed the logo into an "identity cue" for an athletic lifestyle.
Growing businesses can rarely afford the millions of dollars and years of effort required to create these associations, so a logo that clearly illustrates what your company stands for or does may be a better choice. Even a type treatment of your company's name may be too generic, says Placitas, New Mexico, logo designer Gary Priester, principal of gwpriester.com, the Web arm of design firm The Black Point Group. Priester believes customers should be able to tell what you do just by looking at your logo.
Getting Started
Before you begin sketching, first articulate the message you want your logo to convey. Try writing a one-sentence image and mission statement to help focus your efforts. Stay true to this statement while creating your logo.
But that may not be enough to get you started. Here are some additional tactics and considerations that will help you create an appropriate company logo:
• Look at the logos of other businesses in your industry. Do your competitors use solid, conservative images, or flashy graphics and type? Think about how you want to differentiate your logo from those of your competition.
• Focus on your message. Decide what you want to communicate about your company. Does it have a distinct personality-serious or lighthearted? What makes it unique in relation to your competition? What's the nature of your current target audience? These elements should play an important role in the overall design or redesign.
• Make it clean and functional. Your logo should work as well on a business card as on the side of a truck. A good logo should be scalable, easy to reproduce, memorable and distinctive. Icons are better than photographs, which may be indecipherable if enlarged or reduced significantly. And be sure to create a logo that can be reproduced in black and white so that it can be faxed, photocopied or used in a black-and-white ad as effectively as in color.
• Your business name will affect your logo design. If your business name is "D.C. Jewelers," you may wish to use a classy, serif font to accent the letters (especially if your name features initials). For a company called "Lightning Bolt Printing," the logo might feature some creative implementation of-you guessed it-a lightning bolt.
• Use your logo to illustrate your business's key benefit. The best logos make an immediate statement with a picture or illustration, not words. The "Lightning Bolt Printing" logo, for example, may need to convey the business benefit of "ultra-fast, guaranteed printing services." The lightning bolt image could be manipulated to suggest speed and assurance.
• Don't use clip art. However tempting it may be, clip art can be copied too easily. Not only will original art make a more impressive statement about your company, but it'll set your business apart from others.
• Avoid trendy looks. If you're redesigning your old logo, you run the risk of confusing customers-or worse, alienating them. One option is to make gradual logo changes. According to Priester, Quaker Oats modified the Quaker man on its package over a 10-year period to avoid undermining customer confidence. But don't plan to make multiple logo changes. Instead, choose a logo that will stay current for 10 to 20 years, perhaps longer. That's the mark of a good design.
In fact, when Priester designs a logo, he expects never to see that client again.
Watch Your Colors
One thing you need to be careful of as you explore color options is cost. Your five-color logo may be gorgeous, but once it comes time to produce it on stationery, the price won't be so attractive. Nor will it work in mediums that only allow one or two colors. Try not to exceed three colors unless you decide it's absolutely necessary.
Your logo can appear on a variety of media: signage, advertising, stationery, delivery vehicles and packaging, to name just a few. Remember that some of those applications have production limitations. Make sure you do a color study. Look at your logo in one-, two- and three-color versions.
Hire a Designer
While brainstorming logo ideas by yourself is a crucial step in creating your business image, trying to create a logo completely on your own is a mistake. It may seem like the best way to avoid the high costs of going to a professional design firm, which will charge anywhere from $4,000 to $15,000 for a logo design. Be aware, however, that there are thousands of independent designers around who charge much less. According to Stan Evenson, founder of Evenson Design Group, entrepreneurs on a tight budget should shop around for a designer. "There are a lot of [freelance] designers who charge rates ranging from $15 to $150 per hour, based on their experience," he says.
But don't hire someone just because of their bargain price. Find a designer who's familiar with your field . . . and with your competition. If the cost still seems exorbitant, Evenson says, "remember that a good logo should last at least 10 years. If you look at the amortization of that cost over a 10-year period, it doesn't seem so bad."
Even if you have a good eye for color and a sense of what you want your logo to look like, you should still consult a professional designer. Why? They know whether or not a logo design will transfer easily into print or onto a sign, while you might come up with a beautiful design that can't be transferred or would cost too much money to be printed. Your logo is the foundation of all your promotional materials, so this is one area where spending a little more now can really pay off later.
Using and Protecting Your Logo
Once you've produced a logo that embodies your company's mission at a glance, make sure you trademark it to protect it from use by other companies. You can apply for a trademark at the U.S. Patent and Trademark Office Web site.
Then, once it's protected, use it everywhere you can-on business cards, stationery, letterhead, brochures, ads, your Web site and any other place where you mention your company name. This will help build your image, raise your company's visibility and, ideally, lead to more business.
Creating a logo sounds easy, doesn't it? It can be. Just remember to keep your customers and the nature of your business in mind when you put it all together. In time, you'll have succeeded in building equity in your trademark, and it will become a positive and recognizable symbol of your product or service.
With a well-designed logo, potential clients can instantly discover how your business can serve them
There are basically three kinds of logos. Font-based logos consist primarily of a type treatment. The logos of IBM, Microsoft and Sony, for instance, use type treatments with a twist that makes them distinctive. Then there are logos that literally illustrate what a company does, such as when a house-painting company uses an illustration of a brush in its logo. And finally, there are abstract graphic symbols-such as Nike's swoosh-that become linked to a company's brand.
"Such a symbol is meaningless until your company can communicate to consumers what its underlying associations are," says Americus Reed II, a marketing professor at the University of Pennsylvania's Wharton School, who's conducted research on the triggers that lead consumers to identify with and become loyal to a brand. But building that mental bridge takes time and money. The Nike swoosh has no inherent meaning outside of what's been created over the years through savvy marketing efforts that have transformed the logo into an "identity cue" for an athletic lifestyle.
Growing businesses can rarely afford the millions of dollars and years of effort required to create these associations, so a logo that clearly illustrates what your company stands for or does may be a better choice. Even a type treatment of your company's name may be too generic, says Placitas, New Mexico, logo designer Gary Priester, principal of gwpriester.com, the Web arm of design firm The Black Point Group. Priester believes customers should be able to tell what you do just by looking at your logo.
Getting Started
Before you begin sketching, first articulate the message you want your logo to convey. Try writing a one-sentence image and mission statement to help focus your efforts. Stay true to this statement while creating your logo.
But that may not be enough to get you started. Here are some additional tactics and considerations that will help you create an appropriate company logo:
• Look at the logos of other businesses in your industry. Do your competitors use solid, conservative images, or flashy graphics and type? Think about how you want to differentiate your logo from those of your competition.
• Focus on your message. Decide what you want to communicate about your company. Does it have a distinct personality-serious or lighthearted? What makes it unique in relation to your competition? What's the nature of your current target audience? These elements should play an important role in the overall design or redesign.
• Make it clean and functional. Your logo should work as well on a business card as on the side of a truck. A good logo should be scalable, easy to reproduce, memorable and distinctive. Icons are better than photographs, which may be indecipherable if enlarged or reduced significantly. And be sure to create a logo that can be reproduced in black and white so that it can be faxed, photocopied or used in a black-and-white ad as effectively as in color.
• Your business name will affect your logo design. If your business name is "D.C. Jewelers," you may wish to use a classy, serif font to accent the letters (especially if your name features initials). For a company called "Lightning Bolt Printing," the logo might feature some creative implementation of-you guessed it-a lightning bolt.
• Use your logo to illustrate your business's key benefit. The best logos make an immediate statement with a picture or illustration, not words. The "Lightning Bolt Printing" logo, for example, may need to convey the business benefit of "ultra-fast, guaranteed printing services." The lightning bolt image could be manipulated to suggest speed and assurance.
• Don't use clip art. However tempting it may be, clip art can be copied too easily. Not only will original art make a more impressive statement about your company, but it'll set your business apart from others.
• Avoid trendy looks. If you're redesigning your old logo, you run the risk of confusing customers-or worse, alienating them. One option is to make gradual logo changes. According to Priester, Quaker Oats modified the Quaker man on its package over a 10-year period to avoid undermining customer confidence. But don't plan to make multiple logo changes. Instead, choose a logo that will stay current for 10 to 20 years, perhaps longer. That's the mark of a good design.
In fact, when Priester designs a logo, he expects never to see that client again.
Watch Your Colors
One thing you need to be careful of as you explore color options is cost. Your five-color logo may be gorgeous, but once it comes time to produce it on stationery, the price won't be so attractive. Nor will it work in mediums that only allow one or two colors. Try not to exceed three colors unless you decide it's absolutely necessary.
Your logo can appear on a variety of media: signage, advertising, stationery, delivery vehicles and packaging, to name just a few. Remember that some of those applications have production limitations. Make sure you do a color study. Look at your logo in one-, two- and three-color versions.
Hire a Designer
While brainstorming logo ideas by yourself is a crucial step in creating your business image, trying to create a logo completely on your own is a mistake. It may seem like the best way to avoid the high costs of going to a professional design firm, which will charge anywhere from $4,000 to $15,000 for a logo design. Be aware, however, that there are thousands of independent designers around who charge much less. According to Stan Evenson, founder of Evenson Design Group, entrepreneurs on a tight budget should shop around for a designer. "There are a lot of [freelance] designers who charge rates ranging from $15 to $150 per hour, based on their experience," he says.
But don't hire someone just because of their bargain price. Find a designer who's familiar with your field . . . and with your competition. If the cost still seems exorbitant, Evenson says, "remember that a good logo should last at least 10 years. If you look at the amortization of that cost over a 10-year period, it doesn't seem so bad."
Even if you have a good eye for color and a sense of what you want your logo to look like, you should still consult a professional designer. Why? They know whether or not a logo design will transfer easily into print or onto a sign, while you might come up with a beautiful design that can't be transferred or would cost too much money to be printed. Your logo is the foundation of all your promotional materials, so this is one area where spending a little more now can really pay off later.
Using and Protecting Your Logo
Once you've produced a logo that embodies your company's mission at a glance, make sure you trademark it to protect it from use by other companies. You can apply for a trademark at the U.S. Patent and Trademark Office Web site.
Then, once it's protected, use it everywhere you can-on business cards, stationery, letterhead, brochures, ads, your Web site and any other place where you mention your company name. This will help build your image, raise your company's visibility and, ideally, lead to more business.
Creating a logo sounds easy, doesn't it? It can be. Just remember to keep your customers and the nature of your business in mind when you put it all together. In time, you'll have succeeded in building equity in your trademark, and it will become a positive and recognizable symbol of your product or service.
Words From The Wise
"In 1969 I published a small book on Humility. It was a pioneering work which has not, to my knowledge, been superseded."
Lord Langford
"In the sky, there is no distinction of east and west; people create distinctions out of their own minds and then believe them to be true."
- "One of the very nicest things about life is the way we must regularly stop whatever it is we are doing and devote our attention to eating."
-Luciano Pavarotti and William Wright
"There is only one success - to be able to spend your life in your own way."
Christopher Morley
"The proof of the pudding is in the eating. By a small sample we may judge of the whole piece."
Miguel de Cervantes
"Be passionate in your work and in your searching."
Ivan Pavlov
"The habit of looking on the bright side of every event is worth more than a
thousand rand a year."
Samuel Johnson
"He who cannot give anything away cannot feel anything either."
Friedrich Nietzsche
"As long as one keeps searching, the answers come."
Joan Baez
"The way to get started is to quit talking and begin doing."
Walt Disney
"As businesspeople, it is our job to provide more and better products and services to our customers, to help them solve their problems, meet their needs, and achieve their ambitions."
- Michael Masterson
"I usually take a two-hour nap from one to four."
Yogi Berra
"Persuasion is often more effectual than force."
Aesop
"The secret of life is honesty and fair dealing. If you can fake that, you’ve got it made."
Groucho Marx
""There are some people who leave impressions not so lasting as the imprint of an oar upon the water."
Kate Chopin
"Be brave. Take risks. Nothing can substitute experience."
Paulo Coehlo
"Only the educated are free."
Epictetus
"Change is inevitable - except from a vending machine."
Robert C. Gallagher
"It has been my observation that most people get ahead during the time that others waste."
Henry Ford
"There are countless ways of attaining greatness, but any road to reaching one’s maximum potential must be built on a bedrock of respect for the individual, a commitment to excellence, and a rejection of mediocrity."
Philip Guedella
"The artist who aims at perfection in everything achieves it in nothing."
Eugene Delacroix
""The key is not to prioritise what’s on your schedule, but to schedule your priorities."
Stephen Covey
"Pleasure is the only thing to live for. Nothing ages like happiness."
"Honesty is the best policy. If I lose mine honour, I lose myself."
"Time changes everything except something within us which is always surprised by change."
"Statistics suggest that when customers complain, business owners and managers ought to get excited about it. The complaining customer represents a huge opportunity for more business."
"We have to take 'beach time' - a space for ourselves - every day, because we live in a world of burnout. Even if you take 20 to 30 minutes for yourself, you'll be a better worker, a better colleague, a better person.
It benefits the people around you as much as it benefits you."
"One cannot think well, love well, sleep well, if one has not dined well."
"How wonderful it is that nobody need wait a single moment before starting to improve the world."
"The very best impromptu speeches are the ones written well in advance."
"A champion needs a motivation above and beyond winning."
"Think of success as a game of chance in which you have control over the odds."
"Case by case we find that conformity is the easy way and the path to privilege and prestige; dissidence carries personal costs."
"The fact is, everyone is in sales. Whatever area you work in, you do have clients and you do need to sell."
One thing I feel most passionately about: love of invention will never die."
-Karl Benz
If half a century of living has taught me anything at all, it has taught me that nothing can bring you peace but yourself.”
“Authentic marketing is not the art of selling what you make but knowing what to make. It is the art of identifying and understanding customer needs and creating solutions that deliver satisfaction to the customers, profits to the producers and benefits for the stakeholders.”
Philip Kotler
“I’ve always been in the right place and time. Of course, I steered myself there.”
Bob Hope
Business opportunities are like buses, there’s always another one coming.”
Richard Branson
“I like mine with lettuce and tomato Heinz 57 and french fried potatoes
Big kosher pickle and a cold draft beer
Well good God almighty which way do I steer for my Cheeseburger in paradise”
Jimmy Buffett
"The most splendid achievement of all is the constant striving to surpass yourself and to be worthy of your own approval."
Denis Waitley
"Getting involved in a ‘win-win’ joint venture is the perfect way to add more to your bottom line."
Yanik Silver
There’s no disaster that can’t become a blessing, and no blessing that can’t become a disaster."
Richard Bach
The best thing about the future is that it comes only one day at a time."
Abraham Lincoln
"In the factory we make cosmetics; in the drugstore we sell hope."
""There are some people who leave impressions not so lasting as the imprint of an oar upon the water."
"Be brave. Take risks. Nothing can substitute experience."
"Only the educated are free."
It has been my observation that most people get ahead during the time that others waste."
""The key is not to prioritise what’s on your schedule, but to schedule your priorities."
Of all the disadvantages that small businesses have, one asset they have no excuse for lacking is a tight bond with their customers. Ultimately, that bond is built on trust--in the entrepreneur's competence, character and empathy for his customers' problems.
Lord Langford
"In the sky, there is no distinction of east and west; people create distinctions out of their own minds and then believe them to be true."
- "One of the very nicest things about life is the way we must regularly stop whatever it is we are doing and devote our attention to eating."
-Luciano Pavarotti and William Wright
"There is only one success - to be able to spend your life in your own way."
Christopher Morley
"The proof of the pudding is in the eating. By a small sample we may judge of the whole piece."
Miguel de Cervantes
"Be passionate in your work and in your searching."
Ivan Pavlov
"The habit of looking on the bright side of every event is worth more than a
thousand rand a year."
Samuel Johnson
"He who cannot give anything away cannot feel anything either."
Friedrich Nietzsche
"As long as one keeps searching, the answers come."
Joan Baez
"The way to get started is to quit talking and begin doing."
Walt Disney
"As businesspeople, it is our job to provide more and better products and services to our customers, to help them solve their problems, meet their needs, and achieve their ambitions."
- Michael Masterson
"I usually take a two-hour nap from one to four."
Yogi Berra
"Persuasion is often more effectual than force."
Aesop
"The secret of life is honesty and fair dealing. If you can fake that, you’ve got it made."
Groucho Marx
""There are some people who leave impressions not so lasting as the imprint of an oar upon the water."
Kate Chopin
"Be brave. Take risks. Nothing can substitute experience."
Paulo Coehlo
"Only the educated are free."
Epictetus
"Change is inevitable - except from a vending machine."
Robert C. Gallagher
"It has been my observation that most people get ahead during the time that others waste."
Henry Ford
"There are countless ways of attaining greatness, but any road to reaching one’s maximum potential must be built on a bedrock of respect for the individual, a commitment to excellence, and a rejection of mediocrity."
Philip Guedella
"The artist who aims at perfection in everything achieves it in nothing."
Eugene Delacroix
""The key is not to prioritise what’s on your schedule, but to schedule your priorities."
Stephen Covey
"Pleasure is the only thing to live for. Nothing ages like happiness."
"Honesty is the best policy. If I lose mine honour, I lose myself."
"Time changes everything except something within us which is always surprised by change."
"Statistics suggest that when customers complain, business owners and managers ought to get excited about it. The complaining customer represents a huge opportunity for more business."
"We have to take 'beach time' - a space for ourselves - every day, because we live in a world of burnout. Even if you take 20 to 30 minutes for yourself, you'll be a better worker, a better colleague, a better person.
It benefits the people around you as much as it benefits you."
"One cannot think well, love well, sleep well, if one has not dined well."
"How wonderful it is that nobody need wait a single moment before starting to improve the world."
"The very best impromptu speeches are the ones written well in advance."
"A champion needs a motivation above and beyond winning."
"Think of success as a game of chance in which you have control over the odds."
"Case by case we find that conformity is the easy way and the path to privilege and prestige; dissidence carries personal costs."
"The fact is, everyone is in sales. Whatever area you work in, you do have clients and you do need to sell."
One thing I feel most passionately about: love of invention will never die."
-Karl Benz
If half a century of living has taught me anything at all, it has taught me that nothing can bring you peace but yourself.”
“Authentic marketing is not the art of selling what you make but knowing what to make. It is the art of identifying and understanding customer needs and creating solutions that deliver satisfaction to the customers, profits to the producers and benefits for the stakeholders.”
Philip Kotler
“I’ve always been in the right place and time. Of course, I steered myself there.”
Bob Hope
Business opportunities are like buses, there’s always another one coming.”
Richard Branson
“I like mine with lettuce and tomato Heinz 57 and french fried potatoes
Big kosher pickle and a cold draft beer
Well good God almighty which way do I steer for my Cheeseburger in paradise”
Jimmy Buffett
"The most splendid achievement of all is the constant striving to surpass yourself and to be worthy of your own approval."
Denis Waitley
"Getting involved in a ‘win-win’ joint venture is the perfect way to add more to your bottom line."
Yanik Silver
There’s no disaster that can’t become a blessing, and no blessing that can’t become a disaster."
Richard Bach
The best thing about the future is that it comes only one day at a time."
Abraham Lincoln
"In the factory we make cosmetics; in the drugstore we sell hope."
""There are some people who leave impressions not so lasting as the imprint of an oar upon the water."
"Be brave. Take risks. Nothing can substitute experience."
"Only the educated are free."
It has been my observation that most people get ahead during the time that others waste."
""The key is not to prioritise what’s on your schedule, but to schedule your priorities."
Of all the disadvantages that small businesses have, one asset they have no excuse for lacking is a tight bond with their customers. Ultimately, that bond is built on trust--in the entrepreneur's competence, character and empathy for his customers' problems.
Medical Procedures that go wrong
. Pondering all the random, horrible ways we can get sick is enough to scare anyone stiff.
Hence the proliferation of new health screens--many not covered by insurance--that try to detect disaster early so patients can put up a decent fight. Screens differ from diagnostic tests in that screens are aimed at patients who are not at unusually high risk and exhibit no particularly alarming symptoms.
The problem: Plenty of screens don't really work that well. Many yield lots of false-positive results, which lead to unnecessary (and risky) treatments. Other tests work, though not in time for patients to act, leaving them to a life of endless dread.
"People forget that there are two sides to screening," says Dr. Barbara Yawn, director of research at Olmstead Medical Center and a member of the United States Preventive Services Task Force, a government-backed group of health care professionals that study and evaluate health screens. "[Screens] can be beneficial, but there are always other risks."
In Pictures: Seven Health Screens To Think Twice About
Here's one horror story, from Dr. Robert Centor, dean of the Hunstville campus at the University of Alabama School of Medicine. Several years ago, during a simple diagnostic chest X-ray, Centor discovered a growth on the lung of one of his patients, who appeared to be in good health. He performed a biopsy to remove the nodule, which turned out to be benign. The patient, however, caught an infection at the hospital and died a few days later.
Despite the risks, health screens are on the rise. While no hard data exist, Yawn says the Preventive Task Force has been asked to review significantly more screenings in the past four years. Dr. David E. Bruns, director of clinical chemistry at the University of Virginia and editor of Clinical Chemistry, says he has seen an increase in the number of tests cited in his medical journal.
Health screening is a business run on fear. "If you find an issue of huge concern to the public and you can market peace of mind, particularly [with regard to] cancer or heart disease, people are willing to buy it," says Dr. George Isham, chief health officer of HealthPartners, a health maintenance organization in Bloomington, Minn. "So you see a lot of tests pop up before there's good hard evidence of whether they work or not."
Indeed, the findings by the Preventive Services Task Force are underwhelming at best: Of the 60 health screens the group has evaluated, it advises that physicians use only 29--and 10 of those, it says, should be done only at the physician's discretion.
Recommended tests are those that the Task Force believes deliver sufficient preventive value--net of false readings and the risks association with doing further procedures based on them. Some commonly recommended tests include Pap smears (to screen for cervical cancer in sexually active women), high blood-pressure tests, colorectal cancer screens and something called the Factor V Leiden test, which checks a person's predisposition to blood clots.
If a certain disease runs in the family, testing may be a no-brainer. In many other cases, the decision is anything but clear.
"Every advocacy group out there has a slightly different set of recommendations on screenings, so people get confused," says Isham. "Doctors and patients are getting conflicting messages about which tests to use."
Even recommended tests yield a scary number of false readings. Take mammograms, an often promoted and routine exam. According to research compiled by the U.S. Agency for Healthcare Research and Quality, the percentage of false-positive readings is between 7% and 8% for women aged 40 to 59 who took the test. That figure drops to around 4% for women 60 to 79, mainly because the chances of getting breast cancer rise the older women get. If every woman between 40 and 59 in the U.S. had a mammogram, a few million would be fretting unnecessarily over a wrong result.
When it comes to health screens, says Yawn, "it's really important to be honest with patients--what a test is likely to cost in terms of pain, angst and visits to the doctor."
The other problem: Many screens don't discover diseases in time to treat them. "It sounds great to catch cancer early, but it doesn't help unless you can treat it,” says Centor. “You need to be able to change life expectancy and possibly quality of life because of the diagnosis."
Which screens should you think twice about before having?
Perhaps the most dubious are "total body scans." These screens, performed using electron beam computerized tomography, are advertised as a tool that ferrets out cancers, heart disease, aneurysms, you name it. Many radiologists have set up freestanding businesses to peddle these scans.
In reality, the scans are more likely to pick up "incidentalomas"--blips that don't necessarily mean anything but require a follow-up test, says Dr. Roseanne Leipzig, professor of clinical and geriatric medicine at Mount Sinai School of Medicine.
According to recent research by G. Scott Gazelle, director of Massachusetts General Hospital's Institute for Technology Assessment, 90.8% of patients who had a full-body scan got a least one positive finding that led to additional testing. However, only 2% of those actually had a disease. Worse, these tests cost between several hundred and several thousand bucks--and most insurance companies won't pick up the tab.
Prostate-cancer screens create their own dilemmas too. These involve a blood test that looks for unusually high levels of prostate-specific antigens (PSAs). The American Cancer Society suggests men in their 50s take this test yearly (along with a digital rectal exam), but there are two potential flaws.
First, PSA levels generally increase with age and can be inflated because of more benign problems in the prostate, leading to false-positive results. Many men end up having unnecessary biopsies. Second, prostate cancer tends to grow very slowly, which means it might not kill you--or if it does, it will happen much later in life.
The calculation for patients: Skip the test and take your chances, or cut out the cancer early and risk post-surgery downsides like incontinence, impotence and a lot of discomfort.
Then there's the battery of computerized tomography scans. Since 2004, the National Cancer Institute has been conducting trials to see if CT scans (and standard chest X-rays) can reduce mortality in smokers by detecting lung cancer early. Sadly, there's little evidence thus far that supports this technique. In most cases, even with a CT scan, the cancer is found too late.
A full evaluation of the efficacy of CT scans will take at least several more years before any results are found. "These trials require such a large number of people because of the rareness of lung cancer in the overall population," says Isham. "It'll be some years before we have a conclusive answer on that. Good science takes a long time."
On a recent Thursday at 6 a.m., Daniel Gonzalez, head of Hogan and Hartson's international arbitration and litigation practice, landed at Reagan International Airport in Washington, D.C., capping off a three-day business trip to Argentina. Up next: an early afternoon meeting with the Securities and Exchange Commission. Between his major commitments, he juggled bits of 15 other cases. Talk about pressure.
How do Gonzalez and other stressed-out high-performers like him keep from cracking?
For many, relieving stress is about maintaining control--or at least some semblance of it. When Gonzalez travels--between 30 and 40 weeks a year, bouncing between Latin America, Europe, Asia and United States--he uses both a laptop and Blackberry to impose a little order. "I know I can be responsive no matter where in the world I am at any given time," he says.
In Pictures: Ten Star Athletes On Staying Cool Under Pressure
Indeed, most scientific research shows job-related stress is most severe when people have high demands and little control, or perceived control, over the forces at play. A production-line worker may have a very defined, repetitive, 9-hour job but still be swamped with stress because the fate of his job is far beyond his control. The greater your feeling of control, the lower your overall work-related stress level will be, says Peter Schnall, director of the Center for Social Epidemiology at the University of California, Irvine.
Eventually, though, the long hours will get to you. Based on data from a 2001 California Health Interview Survey, Schall's research indicated people who worked 51 or more hours per week were 29% more likely to develop hypertension, versus 14% of workers that put in 40 hours a week. Such stress can also lead to heart disease and depression.
The cost of all work-related stress is squishy, but no doubt high. The American Institute of Stress estimates stress costs U.S. corporations $300 billion annually in health care costs, turnover and absenteeism. A survey by the same institute also reports more than one in four workers say they take a "mental-health day" at least once a year, specifically because of work-related stress.
The first step to wrestling with job stress is to nail down what specifically is stressing you out. "People tend to experience stress in a generalized way," says Russ Newman, executive director of the American Psychological Association. "There are going to be particular causes and triggers, but unless you take the time to look at them, you're not aware of what you're dealing with."
Sometimes those triggers are hard to pinpoint. One trick: When stress hits, put down the circumstances on paper, says Dr. Paul Rosch, president of the American Institute of Stress. That way, you can go back to your notes in a calmer moment and nail down on the source of your stress.
Once you figure out what's eating you, take some quick, smart steps to unwind, says Newman. And by that he means exercising or taking incremental breaks, not chain-smoking or binge drinking.
Next, divide the stress triggers into two categories: those you can control and those you generally can't. Obviously, knock out the ones you can control first.
As for the ones you can't, try to mollify their effects. Some things that seem out of your control may not be. It's helpful to work through these issues with an outsider, like your spouse or a friend, to gain perspective, says Rosch. If the source of your stress is truly immutable, think about changing how you experience it.
Take commuting: If driving to work for hours each day causes stress, and it's impossible to move or work from home, Rosch suggests buying a set of books on tape. Changing the experience--and thereby giving yourself more control over the situation--can lower your stress.
Another way to beat stress: Root out inefficiencies. Matt Grawitch, a professor at St. Louis University who studies work stress, saw this first-hand on a recent consulting assignment at a local hospital. In one wing, the nurses printed patient charts from one of two stations at opposite ends of the hallway. For some reason, when nurses printed charts, it was impossible to specify which printer to use, and thus where the charts would emerge. "The nurses were wasting hours a day walking to the wrong printer and walking back to the right one," he says. Result: A boatload of unnecessary stress.
Planning can also nip stress in the bud. Gonzalez says he carefully prioritizes his tasks, deciding what is possible to get done in a given week and what isn't. In any system operating near capacity, hiccups create greater problems than those with at least a modicum of slack. "Planning allows me the variable of the unknown, and to accomplish things under the highest-stress situations when emergencies come up," says Gonzalez.
And when in doubt, try a little humor, says Lloyd Greif, the founder of the Los Angeles-based mergers and acquisition firm Greif & Co. (His firm's motto: T.I.G, or "Trust in Greif.") "As an investment banker, you surround yourself with 'type As'," he says. "When things get the most stressful in the boardroom, I'm always going to say something off-the-wall to break the tension. Otherwise, the mood is going to be such that it's tough to get things done." 'Off-the-wall' comments include addressing one of his clients as 'Mutley,'
because, Greif says, the guy laughed like the old Hannah-Barbera cartoon dog.
Dr. Rosch says different people experience stress very differently. He compares stress levels to people's experiences on a rollercoaster. Some people panic, while others love the thrill. And still others are adept at using one to diffuse the other.
Top athletes do this well. Jermaine O'Neal, forward for the Indiana Pacers basketball team and six-time NBA All-Star, puts it this way: "Pressure in sports is nothing. That's the job. When the stage is bigger--the playoffs, for example--that just makes it more exciting. It's like being a kid the night before Christmas. Okay, maybe you do get a little tighter shooting a free throw at the end of a game on the road, with fans going crazy behind the backboard. But you know you've practiced that shot to win. So when you get that opportunity, that's just fun."
One last word on stress: If you're going to vent, do it with caution. Venting should be cathartic--not a way to keep reliving the same stress. "If you go down the hall to vent to an associate, that's okay," says St. Louis University's Grawitch. "But if the next step is to go upstairs and vent to someone else, then you're holding onto the incident, and it can become very disruptive."
Hence the proliferation of new health screens--many not covered by insurance--that try to detect disaster early so patients can put up a decent fight. Screens differ from diagnostic tests in that screens are aimed at patients who are not at unusually high risk and exhibit no particularly alarming symptoms.
The problem: Plenty of screens don't really work that well. Many yield lots of false-positive results, which lead to unnecessary (and risky) treatments. Other tests work, though not in time for patients to act, leaving them to a life of endless dread.
"People forget that there are two sides to screening," says Dr. Barbara Yawn, director of research at Olmstead Medical Center and a member of the United States Preventive Services Task Force, a government-backed group of health care professionals that study and evaluate health screens. "[Screens] can be beneficial, but there are always other risks."
In Pictures: Seven Health Screens To Think Twice About
Here's one horror story, from Dr. Robert Centor, dean of the Hunstville campus at the University of Alabama School of Medicine. Several years ago, during a simple diagnostic chest X-ray, Centor discovered a growth on the lung of one of his patients, who appeared to be in good health. He performed a biopsy to remove the nodule, which turned out to be benign. The patient, however, caught an infection at the hospital and died a few days later.
Despite the risks, health screens are on the rise. While no hard data exist, Yawn says the Preventive Task Force has been asked to review significantly more screenings in the past four years. Dr. David E. Bruns, director of clinical chemistry at the University of Virginia and editor of Clinical Chemistry, says he has seen an increase in the number of tests cited in his medical journal.
Health screening is a business run on fear. "If you find an issue of huge concern to the public and you can market peace of mind, particularly [with regard to] cancer or heart disease, people are willing to buy it," says Dr. George Isham, chief health officer of HealthPartners, a health maintenance organization in Bloomington, Minn. "So you see a lot of tests pop up before there's good hard evidence of whether they work or not."
Indeed, the findings by the Preventive Services Task Force are underwhelming at best: Of the 60 health screens the group has evaluated, it advises that physicians use only 29--and 10 of those, it says, should be done only at the physician's discretion.
Recommended tests are those that the Task Force believes deliver sufficient preventive value--net of false readings and the risks association with doing further procedures based on them. Some commonly recommended tests include Pap smears (to screen for cervical cancer in sexually active women), high blood-pressure tests, colorectal cancer screens and something called the Factor V Leiden test, which checks a person's predisposition to blood clots.
If a certain disease runs in the family, testing may be a no-brainer. In many other cases, the decision is anything but clear.
"Every advocacy group out there has a slightly different set of recommendations on screenings, so people get confused," says Isham. "Doctors and patients are getting conflicting messages about which tests to use."
Even recommended tests yield a scary number of false readings. Take mammograms, an often promoted and routine exam. According to research compiled by the U.S. Agency for Healthcare Research and Quality, the percentage of false-positive readings is between 7% and 8% for women aged 40 to 59 who took the test. That figure drops to around 4% for women 60 to 79, mainly because the chances of getting breast cancer rise the older women get. If every woman between 40 and 59 in the U.S. had a mammogram, a few million would be fretting unnecessarily over a wrong result.
When it comes to health screens, says Yawn, "it's really important to be honest with patients--what a test is likely to cost in terms of pain, angst and visits to the doctor."
The other problem: Many screens don't discover diseases in time to treat them. "It sounds great to catch cancer early, but it doesn't help unless you can treat it,” says Centor. “You need to be able to change life expectancy and possibly quality of life because of the diagnosis."
Which screens should you think twice about before having?
Perhaps the most dubious are "total body scans." These screens, performed using electron beam computerized tomography, are advertised as a tool that ferrets out cancers, heart disease, aneurysms, you name it. Many radiologists have set up freestanding businesses to peddle these scans.
In reality, the scans are more likely to pick up "incidentalomas"--blips that don't necessarily mean anything but require a follow-up test, says Dr. Roseanne Leipzig, professor of clinical and geriatric medicine at Mount Sinai School of Medicine.
According to recent research by G. Scott Gazelle, director of Massachusetts General Hospital's Institute for Technology Assessment, 90.8% of patients who had a full-body scan got a least one positive finding that led to additional testing. However, only 2% of those actually had a disease. Worse, these tests cost between several hundred and several thousand bucks--and most insurance companies won't pick up the tab.
Prostate-cancer screens create their own dilemmas too. These involve a blood test that looks for unusually high levels of prostate-specific antigens (PSAs). The American Cancer Society suggests men in their 50s take this test yearly (along with a digital rectal exam), but there are two potential flaws.
First, PSA levels generally increase with age and can be inflated because of more benign problems in the prostate, leading to false-positive results. Many men end up having unnecessary biopsies. Second, prostate cancer tends to grow very slowly, which means it might not kill you--or if it does, it will happen much later in life.
The calculation for patients: Skip the test and take your chances, or cut out the cancer early and risk post-surgery downsides like incontinence, impotence and a lot of discomfort.
Then there's the battery of computerized tomography scans. Since 2004, the National Cancer Institute has been conducting trials to see if CT scans (and standard chest X-rays) can reduce mortality in smokers by detecting lung cancer early. Sadly, there's little evidence thus far that supports this technique. In most cases, even with a CT scan, the cancer is found too late.
A full evaluation of the efficacy of CT scans will take at least several more years before any results are found. "These trials require such a large number of people because of the rareness of lung cancer in the overall population," says Isham. "It'll be some years before we have a conclusive answer on that. Good science takes a long time."
On a recent Thursday at 6 a.m., Daniel Gonzalez, head of Hogan and Hartson's international arbitration and litigation practice, landed at Reagan International Airport in Washington, D.C., capping off a three-day business trip to Argentina. Up next: an early afternoon meeting with the Securities and Exchange Commission. Between his major commitments, he juggled bits of 15 other cases. Talk about pressure.
How do Gonzalez and other stressed-out high-performers like him keep from cracking?
For many, relieving stress is about maintaining control--or at least some semblance of it. When Gonzalez travels--between 30 and 40 weeks a year, bouncing between Latin America, Europe, Asia and United States--he uses both a laptop and Blackberry to impose a little order. "I know I can be responsive no matter where in the world I am at any given time," he says.
In Pictures: Ten Star Athletes On Staying Cool Under Pressure
Indeed, most scientific research shows job-related stress is most severe when people have high demands and little control, or perceived control, over the forces at play. A production-line worker may have a very defined, repetitive, 9-hour job but still be swamped with stress because the fate of his job is far beyond his control. The greater your feeling of control, the lower your overall work-related stress level will be, says Peter Schnall, director of the Center for Social Epidemiology at the University of California, Irvine.
Eventually, though, the long hours will get to you. Based on data from a 2001 California Health Interview Survey, Schall's research indicated people who worked 51 or more hours per week were 29% more likely to develop hypertension, versus 14% of workers that put in 40 hours a week. Such stress can also lead to heart disease and depression.
The cost of all work-related stress is squishy, but no doubt high. The American Institute of Stress estimates stress costs U.S. corporations $300 billion annually in health care costs, turnover and absenteeism. A survey by the same institute also reports more than one in four workers say they take a "mental-health day" at least once a year, specifically because of work-related stress.
The first step to wrestling with job stress is to nail down what specifically is stressing you out. "People tend to experience stress in a generalized way," says Russ Newman, executive director of the American Psychological Association. "There are going to be particular causes and triggers, but unless you take the time to look at them, you're not aware of what you're dealing with."
Sometimes those triggers are hard to pinpoint. One trick: When stress hits, put down the circumstances on paper, says Dr. Paul Rosch, president of the American Institute of Stress. That way, you can go back to your notes in a calmer moment and nail down on the source of your stress.
Once you figure out what's eating you, take some quick, smart steps to unwind, says Newman. And by that he means exercising or taking incremental breaks, not chain-smoking or binge drinking.
Next, divide the stress triggers into two categories: those you can control and those you generally can't. Obviously, knock out the ones you can control first.
As for the ones you can't, try to mollify their effects. Some things that seem out of your control may not be. It's helpful to work through these issues with an outsider, like your spouse or a friend, to gain perspective, says Rosch. If the source of your stress is truly immutable, think about changing how you experience it.
Take commuting: If driving to work for hours each day causes stress, and it's impossible to move or work from home, Rosch suggests buying a set of books on tape. Changing the experience--and thereby giving yourself more control over the situation--can lower your stress.
Another way to beat stress: Root out inefficiencies. Matt Grawitch, a professor at St. Louis University who studies work stress, saw this first-hand on a recent consulting assignment at a local hospital. In one wing, the nurses printed patient charts from one of two stations at opposite ends of the hallway. For some reason, when nurses printed charts, it was impossible to specify which printer to use, and thus where the charts would emerge. "The nurses were wasting hours a day walking to the wrong printer and walking back to the right one," he says. Result: A boatload of unnecessary stress.
Planning can also nip stress in the bud. Gonzalez says he carefully prioritizes his tasks, deciding what is possible to get done in a given week and what isn't. In any system operating near capacity, hiccups create greater problems than those with at least a modicum of slack. "Planning allows me the variable of the unknown, and to accomplish things under the highest-stress situations when emergencies come up," says Gonzalez.
And when in doubt, try a little humor, says Lloyd Greif, the founder of the Los Angeles-based mergers and acquisition firm Greif & Co. (His firm's motto: T.I.G, or "Trust in Greif.") "As an investment banker, you surround yourself with 'type As'," he says. "When things get the most stressful in the boardroom, I'm always going to say something off-the-wall to break the tension. Otherwise, the mood is going to be such that it's tough to get things done." 'Off-the-wall' comments include addressing one of his clients as 'Mutley,'
because, Greif says, the guy laughed like the old Hannah-Barbera cartoon dog.
Dr. Rosch says different people experience stress very differently. He compares stress levels to people's experiences on a rollercoaster. Some people panic, while others love the thrill. And still others are adept at using one to diffuse the other.
Top athletes do this well. Jermaine O'Neal, forward for the Indiana Pacers basketball team and six-time NBA All-Star, puts it this way: "Pressure in sports is nothing. That's the job. When the stage is bigger--the playoffs, for example--that just makes it more exciting. It's like being a kid the night before Christmas. Okay, maybe you do get a little tighter shooting a free throw at the end of a game on the road, with fans going crazy behind the backboard. But you know you've practiced that shot to win. So when you get that opportunity, that's just fun."
One last word on stress: If you're going to vent, do it with caution. Venting should be cathartic--not a way to keep reliving the same stress. "If you go down the hall to vent to an associate, that's okay," says St. Louis University's Grawitch. "But if the next step is to go upstairs and vent to someone else, then you're holding onto the incident, and it can become very disruptive."
Hip Hop Cash Kings
Hip-Hop's Cash Kings 2008
The 50 Cent Machine
From Kotex To Crunk
Q&A: Jermaine Dupri On The Future Of Music
Hip-Hop Homes For Sale
The Beatz Goes On
In Pictures:
Hip-Hop's 20 Biggest Earners, 2008
Inside The 50 Cent Machine
Hip-Hop Homes For Sale
Video:
50 Cent: Future Billionaire
Bringing Back Hip Hop's Glory
.
It's been some year for Shawn "Jay-Z" Carter. In the past 12 months, the Brooklyn, N.Y.-born hip-hop demigod released a platinum album, signed a 10-year, $150 million deal with concert promoter Live Nation and tied the knot with longtime girlfriend Beyoncé Knowles. Quite a record. But only good enough for a silver medal.
While Jay-Z topped Forbes.com's inaugural Hip-Hop Cash Kings list of the top-earning people in the business last year, in 2008 he cedes the throne to Curtis "50 Cent" Jackson, who raked in $150 million over the past 12 months--almost twice what Jay-Z made.
In Pictures: The Year's 20 Cash Kings Of Hip-Hop
The new king of hip-hop wealth banked $100 million after taxes on one deal alone when his stake in VitaminWater's parent, Glacéau, was bought by Coca-Cola (nyse: KO - news - people ) as part of a $4.1 billion deal. 50's portfolio also includes the popular G-Unit clothing line and record label, plus films, videogames and a slew of platinum albums, including last year's Curtis. Also in the works: a mining partnership with South African billionaire Partrice Motsepe (see "The 50 Cent Machine").
50 Cent isn't the only star in the growing firmament of "hip-hopreneurs." After years of violent rivalry marked by the murders of such icons as Tupac Shakur and the Notorious B.I.G., rap's focus has shifted from beef to cake--making money, that is. Unlike most pop and rock musicians, who make the bulk of their earnings from record sales and tours, rappers have more diversified portfolios.
These impresarios have mastered the arts of branding and cross-promotion, with licensing deals for everything from booze to books. Others own record labels, clothing lines, bars and restaurants. As 50 Cent says of lesser entrepreneurs, "They're trying to buy some Gucci / I'm trying to buy the mall."
For the second year in a row, Sean "Diddy" Combs finished third on our list. The ageless Dapper Don of rap banked a cool $35 million from his revenue streams, including his clothing line Sean John, record label Bad Boy, premium vodka Ciroc and two reality-TV shows. Last year Diddy collaborated with fellow list-toppers Jay-Z and 50 Cent to release "I Get Money (The Forbes 1, 2, 3 Remix)" in honor of their success.
Kanye West clocks in at No. 4 with $30 million. The pink-polo-sporting rapper and producer released his third solo album, Graduation, last September. After handily outselling 50 Cent's Curtis in a head-to-head opening-week matchup, West's album went multiplatinum and won four Grammys. West has penned hits for Jay-Z, Alicia Keys and Diddy, among others. Earlier this month, he headlined the music festival Lollapalooza in his native Chicago.
Some hip-hop legends don't need to do anything to keep earning outrageous sums of money. Andre "Dr. Dre" Young banked $15 million even though he hasn't had a hit in years--he still gets rich on royalties from two decades of hits. A founder of the seminal rap group N.W.A he released his multiplatinum solo opus The Chronic in 1992 and has produced hits for the likes of Snoop Dogg, 50 Cent, Eminem and Tupac Shakur.
Tupac himself pulled in a handsome sum this year--about $15 million--even though he's been dead for over 10 years. Tupac is probably having himself a last laugh from beyond the grave, knowing that his onetime friend Suge Knight isn't cashing in on the bonanza. Knight, the bodyguard-turned-president of Death Row Records, long rumored to have arranged Shakur's killing, filed for bankruptcy and put his Malibu, Calif., mansion up for sale last June.
The 50 Cent Machine
From Kotex To Crunk
Q&A: Jermaine Dupri On The Future Of Music
Hip-Hop Homes For Sale
The Beatz Goes On
In Pictures:
Hip-Hop's 20 Biggest Earners, 2008
Inside The 50 Cent Machine
Hip-Hop Homes For Sale
Video:
50 Cent: Future Billionaire
Bringing Back Hip Hop's Glory
.
It's been some year for Shawn "Jay-Z" Carter. In the past 12 months, the Brooklyn, N.Y.-born hip-hop demigod released a platinum album, signed a 10-year, $150 million deal with concert promoter Live Nation and tied the knot with longtime girlfriend Beyoncé Knowles. Quite a record. But only good enough for a silver medal.
While Jay-Z topped Forbes.com's inaugural Hip-Hop Cash Kings list of the top-earning people in the business last year, in 2008 he cedes the throne to Curtis "50 Cent" Jackson, who raked in $150 million over the past 12 months--almost twice what Jay-Z made.
In Pictures: The Year's 20 Cash Kings Of Hip-Hop
The new king of hip-hop wealth banked $100 million after taxes on one deal alone when his stake in VitaminWater's parent, Glacéau, was bought by Coca-Cola (nyse: KO - news - people ) as part of a $4.1 billion deal. 50's portfolio also includes the popular G-Unit clothing line and record label, plus films, videogames and a slew of platinum albums, including last year's Curtis. Also in the works: a mining partnership with South African billionaire Partrice Motsepe (see "The 50 Cent Machine").
50 Cent isn't the only star in the growing firmament of "hip-hopreneurs." After years of violent rivalry marked by the murders of such icons as Tupac Shakur and the Notorious B.I.G., rap's focus has shifted from beef to cake--making money, that is. Unlike most pop and rock musicians, who make the bulk of their earnings from record sales and tours, rappers have more diversified portfolios.
These impresarios have mastered the arts of branding and cross-promotion, with licensing deals for everything from booze to books. Others own record labels, clothing lines, bars and restaurants. As 50 Cent says of lesser entrepreneurs, "They're trying to buy some Gucci / I'm trying to buy the mall."
For the second year in a row, Sean "Diddy" Combs finished third on our list. The ageless Dapper Don of rap banked a cool $35 million from his revenue streams, including his clothing line Sean John, record label Bad Boy, premium vodka Ciroc and two reality-TV shows. Last year Diddy collaborated with fellow list-toppers Jay-Z and 50 Cent to release "I Get Money (The Forbes 1, 2, 3 Remix)" in honor of their success.
Kanye West clocks in at No. 4 with $30 million. The pink-polo-sporting rapper and producer released his third solo album, Graduation, last September. After handily outselling 50 Cent's Curtis in a head-to-head opening-week matchup, West's album went multiplatinum and won four Grammys. West has penned hits for Jay-Z, Alicia Keys and Diddy, among others. Earlier this month, he headlined the music festival Lollapalooza in his native Chicago.
Some hip-hop legends don't need to do anything to keep earning outrageous sums of money. Andre "Dr. Dre" Young banked $15 million even though he hasn't had a hit in years--he still gets rich on royalties from two decades of hits. A founder of the seminal rap group N.W.A he released his multiplatinum solo opus The Chronic in 1992 and has produced hits for the likes of Snoop Dogg, 50 Cent, Eminem and Tupac Shakur.
Tupac himself pulled in a handsome sum this year--about $15 million--even though he's been dead for over 10 years. Tupac is probably having himself a last laugh from beyond the grave, knowing that his onetime friend Suge Knight isn't cashing in on the bonanza. Knight, the bodyguard-turned-president of Death Row Records, long rumored to have arranged Shakur's killing, filed for bankruptcy and put his Malibu, Calif., mansion up for sale last June.
John D. Rockefeller, Sr., Industrialist / Philanthropist
• Born: 8 July 1839
• Birthplace: Richford, New York
• Died: 23 May 1937
• Best Known As: Standard Oil tycoon and big-time philanthropist
One of the richest Americans in history, John D. Rockefeller was the founder of the Standard Oil Company and, later, a philanthropist whose wealth bankrolled the Rockefeller Foundation. Hard-working and meticulous, Rockefeller started out small and then made his fortune via hard-nosed and sometimes controversial business tactics, which have since made him an entrepreneurial hero to some, a greedy fiend in the eyes of others. He started in the oil business, and by the end of the century the Standard Oil Trust controlled so many other interests that it fell afoul of anti-trust laws. In 1911 the U.S. Supreme Court called Standard Oil a monopoly and forced the Trust to separate into competing companies. By that time Rockefeller himself was no longer involved in running the business, having devoted himself completely to philanthropy since 1896. He gave away millions to schools, health organizations and civic projects through the Rockefeller Foundation, which endures today.
John D. Rockefeller, Jr. was in the family business only briefly before devoting himself to philanthropy with the Rockefeller Foundation... the elder Rockefeller's grandson, Nelson Rockefeller, was a four-time governor of New York and vice president of tJohn Davison Rockefeller
John Davison Rockefeller (1839-1937), American industrialist and philanthropist, founded the Standard Oil Company, the University of Chicago, and the Rockefeller Foundation.
John D. Rockefeller was born on July 8, 1839, in Richford, N.Y. His father owned farm property and traded in many goods, including lumber and patent medicines. His mother, a straitlaced puritanical woman, brought up her large family very strictly. The family moved west by degrees, reaching Cleveland, Ohio, in 1853, when it was beginning to grow into a city. John graduated from high school there and after three months of commercial college found his first job at the age of sixteen clerking in a produce commission house. In 1859, when he was nineteen, he started his first company with a young Englishman: Clark and Rockefeller. They grossed $450,000 in the first year of trading. Clark did the fieldwork; Rockefeller controlled office management, bookkeeping, and relationships with bankers.
Early Businesses
From the start Rockefeller revealed a genius for organization and method. The firm prospered during the Civil War. With the Pennsylvania oil strike (1859) and the building of a railroad to Cleveland, they branched out into oil refining with Samuel Andrews, who had technical knowledge of the field. Within two years Rockefeller became senior partner; Clark was bought out, and the firm Rockefeller and Andrews became Cleveland's largest refinery. A second refinery, the Standard Works, was opened in 1865 by another firm established by Rockefeller in his brother William's name; and a sales office was opened in New York City in 1866.
With financial help from S. V. Harkness and from a new partner, H. M. Flagler, who also secured favorable railroad freight rebates, Rockefeller survived the bitter competition in the oil industry. The Standard Oil Company, chartered in Ohio in 1870 by Rockefeller, his brother, Flagler, Harkness, and Andrews, had a capital of $1 million and paid a dividend of 40 percent a year later. Standard Oil controlled one-tenth of American refining, but competitive chaos remained. The chief bottleneck was the transporting of the oil. Out of this situation came the controversial South Improvement Company scheme of 1872 - a defensive alliance of Cleveland refiners to meet the bitter opposition of the oil producers of Pennsylvania. The sweeping freight rebate agreements in this scheme brought public opposition, and the plan was outlawed by the Pennsylvania Legislature. Meanwhile, a looser organization, a refiners' pool, also failed (1873).
Rockefeller still hoped to impose order on the oil industry. He bought out most of the Cleveland refineries, then acquired others in New York, Pittsburgh, and Philadelphia. He turned to new transportation methods, including the railroad tank car and the pipeline. By 1879 he was refining 90 percent of American oil, and Standard used its own tank car fleet, ships, docking facilities, barrel-making plants, draying services, depots, and warehouses. Strict economy and planning were enforced throughout. Rockefeller came through the Panic of 1873 still urging organization on the part of the refiners. As his control approached near-monopoly, he fought a war with the Pennsylvania Railroad in 1877, which created a refining company to try to break Rockefeller's control, but the bloody railroad strikes that year forced them to surrender to Standard Oil. Rockefeller's dream of order was near completion.
America's First Trust
By 1883, after winning control of the pipeline industry, Standard's monopoly was at a peak. Rockefeller created America's first great "trust" in 1882; since laws forbade one company's ownership of another's stock, ever since 1872 Standard had placed its acquisitions outside Ohio in the hands of Flagler as "trustee." All profits went to the Ohio company while the outside businesses remained nominally independent. In 1882 this was regularized. Nine trustees of the Standard Oil Trust received the stock of 40 businesses and gave the various shareholders trust certificates in return. The trust had a capital of about $70 million; it was the world's largest and richest industrial organization.
In the 1880s the nature of Rockefeller's business began to change; he moved beyond refining oil into producing crude oil itself and moved his wells westward with the new fields opening up. He pioneered in this by acquiring oil land in Ohio before it was certain that this sulfuric oil could be refined successfully; then he employed the scientist Herman Frasch, whose process (1886-1889) made these fields yield an enormous profit. Standard also expanded its marketing facilities and entered foreign markets in Europe, Asia, and Latin America. From 1885 a committee system of management was developed to control Standard Oil's enormous empire.
Attacking the Trust
Public opposition to Standard Oil grew with the emergence of the muckraking journalists; in particular, Henry Demarest Lloyd and Ida Tarbell published harsh exposés of the oil empire. Rockefeller was condemned for various alleged practices: railroad rebates (a system he did not invent and which many refiners used); price discrimination; industrial espionage and bribery; crushing smaller firms by unfair competition, such as cutting off their crude oil supplies or restricting their transport outlets. Standard Oil was investigated by the New York State Senate and by the U.S. House of Representatives in 1888. The rising tide of reform sentiment brought in the Sherman Antitrust Act (1890). Two years later the Ohio Supreme Court invalidated Standard's original trust agreement. Rockefeller formally disbanded the organization; though the trustees handed in their trust certificates, in practice the organization remained unified, and the four presidents of the state firms (John D. Rockefeller for Standard of Ohio, William Rockefeller for New York, Flagler for New Jersey, and J.A. Moffett for Indiana) still met regularly to fix overall policy. In 1899 Standard was recreated legally under a new form as a "holding company;" this merger was dissolved by the U.S. Supreme Court in 1911, long after Rockefeller himself had retired from active control in 1897.
Perhaps Rockefeller's most famous excursion outside the oil industry began in 1893, when he helped develop the Mesabi iron ore range of Minnesota. By 1896 his Consolidated Iron Mines owned a great fleet of ore boats and virtually controlled Great Lakes shipping. Rockefeller was now an iron ore magnate in his own right and had the power to dictate to the steel industry. He made an alliance with the steel king, Andrew Carnegie, in 1896: Rockefeller agreed not to enter steelmaking and Carnegie agreed not to touch transportation. In 1901 Rockefeller sold his ore holdings to the vast new merger created by Carnegie and J. P. Morgan, U.S. Steel. In that year his fortune passed the $200 million mark for the first time.
Philanthropic Endeavors
From his first employment as a clerk, Rockefeller sought to give away one-tenth of his earnings to charity. His benefactions grew with his income, and he also gave time and energy to philanthropic causes. At first he depended on the Baptist Church for advice; the Church wanted its own great university, and in 1892 the University of Chicago opened under the brilliant presidency of a man Rockefeller much admired, William Rainey Harper. The university was Rockefeller's first major philanthropic creation. He gave it over $80 million during his lifetime and left the university entirely independent under Harper. Rockefeller chose New York City for his Rockefeller Institute of Medical Research (now Rockefeller University), chartered in 1901. Among the institute's many achievements were yellow fever research, discovery of serums to combat pneumonia, advances in experimental physiology and surgery, and work on infantile paralysis. In 1902 he established the General Education Board.
The total of Rockefeller's lifetime philanthropies has been estimated at about $550 million. Eventually the amounts involved became so huge (his fortune reached $900 million by 1913) that he developed a staff of specialists to help him; out of this came the Rockefeller Foundation, chartered in 1913, "to promote the wellbeing of mankind throughout the world."
Rockefeller's personal life was fairly simple and frugal. He was a man of few passions who lived for his work, and his great talent was his organizing genius and drive for order, pursued with great single-mindedness and concentration. His life was absorbed by business and later by organized giving. In both areas he imposed order, efficiency, and planning with extraordinary success and sweeping vision. He died on May 23, 1937, in Ormond, Fla.
Further Reading
Rockefeller's Random Reminiscences of Men and Events (1909) remains interesting and important. The definitive life of Rockefeller is Allan Nevins, Study in Power: John D. Rockefeller (2 vols., 1940; rev. ed. 1953). A sympathetic account is Jules Abels, The Rockefeller Billions (1965).
For general economic history see the readings in Peter d'A. Jones, The Robber Barons Revisited (1968). The history of Standard Oil of New Jersey is treated in R. W. and M. E. Hidy, History of Standard Oil Company: Pioneering in Big Business, 1882-1911, vol. 1 (1955), and Standard is considered comparatively in Alfred D. Chandler, Jr., Strategy and Structure: Chapters in the History of Industrial Enterprise (1962). Standard's history in California to 1919 is described in Gerald T. White, Formative Years in the Far West (1962). For a broader history see Harold F. Williamson and Arnold R. Daum, The American Petroleum Industry (2 vols., 1959-
he Rockefeller, John D.
(1839-1937), industrialist and philanthropist. Rockefeller was the primary force behind the establishment of the Standard Oil Company and thus of the American petroleum industry.
Rockefeller was born in Richford, New York, and moved with his family to Cleveland, Ohio, where he finished high school in 1855. He began his business career as a bookkeeper-clerk in a commission house the same year. The first successful drilling for oil took place in western Pennsylvania in 1859, and Rockefeller realized that Cleveland was ideally suited to exploit this new resource. He built his first refinery in 1863 in partnership with others.
The early oil business was chaotic and hazardous, with barrel prices rising as high as $13.75 and falling as low as ten cents during the 1860s, but Rockefeller, a born executive, kept his firm consistently profitable and growing. In 1870 he, Henry Flagler, and others formed the Standard Oil Company, with Rockefeller owning 26.7 percent of the stock. Using such then-legal tactics as railroad rebates and predatory pricing, Standard Oil steadily increased its hold over the American oil industry until by 1880 it controlled fully 90 percent of it.
The corporate structure of this expanding enterprise had become unwieldy, and state corporation laws made it difficult to rationalize what had become a nationwide company. In 1882, Standard Oil's legal counsel devised the trust form of organization. Standard Oil thus became both the first and the largest of the "trusts," one of the great bogeymen of American politics ever since.
As such, it necessarily became a major target of reformers. Although he played the game hard, Rockefeller never operated outside the law or sought an absolute monopoly. Rather, he wanted Standard Oil to be large enough to enforce "order" in the oil business and prevent a return to the chaos that had marked the industry's early years. And despite Standard's near monopoly position, the price of oil and oil products fell drastically between 1870 and 1900. In 1883, Rockefeller moved the company's headquarters to New York.
Always active in the Baptist church, Rockefeller early began the practice of making substantial charitable contributions. As his resources grew, so did his philanthropy. He had largely retired from Standard Oil by 1897 and devoted much of his energy to looking for creative ways to give his money away. He was often guided by Baptist ministers and others, and he established an organization to investigate carefully before giving. Once he had made up his mind, however, he gave with wholly unprecedented generosity. In 1889 he gave $600,000 to establish the University of Chicago (the family would ultimately give it more than $80 million), and in the final decades of his long life he gave away an estimated $550 million to worthy causes. He also established the Rockefeller Institute, the General Education Board, the Rockefeller Foundation, and the Laura Spelman Rockefeller Memorial Foundation
United States from 1974-77 under Gerald Ford.
Rockefeller, John Davison, 1839–1937, American industrialist and philanthropist, b. Richford, N.Y. He moved (1853) with his family to a farm near Cleveland and at age 16 went to work as a bookkeeper. Frugal and industrious, Rockefeller became (1859) a partner in a produce business, and four years later, with his partners, he established an oil refinery, entering into an industry already thriving in Cleveland.
In 1870 he and his associates—including S. V. Harkness, H. M. Flagler, and his brother William—organized the Standard Oil Company of Ohio, capitalized at $1 million. By enforcing strict economy and efficiency, through mergers and agreements with competitors, by ruthlessly crushing weaker competitors, and by accumulating large capital reserves, Rockefeller soon dominated the American oil-refining industry. Rebate agreements, which he forced from the railroads, and the control of pipeline distribution of refined oil strengthened the near monopoly of the Standard Oil Company.
In 1882 the diverse holdings of the various members of Rockefeller's combination were tied together into the Standard Oil trust. Court action compelled the trust to dissolve 10 years later, but in a few years the Standard Oil Company of New Jersey was chartered as a holding company, with a capitalization of $110 million. Rockefeller was also prominent in the affairs of railroads and banks, being second only to J. P. Morgan in the domain of finance. When the United States Steel Corporation was formed (1901), Rockefeller was one of the directors. In 1911 a decision of the U.S. Supreme Court required the holding company to dissolve and its directors to relinquish their control over the numerous subsidiaries. Rockefeller personally ruled over his enormous petroleum business until 1911, when he retired with a fabulous fortune.
Intensely religious, Rockefeller had an interest in philanthropy as deep as his interest in business. He gave generously to the Baptist Church, to the YMCA, and to the Anti-Saloon League. He also founded (1892) the Univ. of Chicago. The most prominent of the philanthropic enterprises to which he eventually turned over some $500 million were the Rockefeller Institute for Medical Research, founded (1901) in New York City and since 1965 known as Rockefeller Univ.; the General Education Board, organized (1902) to make gifts to various educational and research agencies; the Rockefeller Foundation, established (1913) to promote public health and to further the medical, natural, and social sciences; and the Laura Spelman Rockefeller Memorial, founded (1918) in memory of his wife, for the furthering of child welfare and the social sciences. He wrote Random Reminiscences of Men and Events (1909).
Son and Grandsons
His son John Davison Rockefeller, Jr., 1874–1960, b. Cleveland, grad. Brown, 1897, took over active management of his father's interests in 1911 and engaged in numerous philanthropies. Riverside Church in New York City was built through his gifts. He also gave vast sums for religious projects, for scientific investigation, and for the restoration of historic monuments. Among his most notable philanthropies were the restoration of colonial Williamsburg, Va., and the donation of the site for the United Nations headquarters in New York City. He founded (1931) and helped plan Rockefeller Center in New York City, which the Rockefeller interests completed in 1939. John D. Rockefeller, Jr., had six children, and his five sons all became famous in various fields of endeavor.
His eldest son, John Davison Rockefeller 3d, 1906–78, b. New York City, grad. Princeton, 1929, was active in the management of family interests as well as art collecting and the support of numerous civic and philanthropic ventures, such as Lincoln Center for the Performing Arts, the United Negro College Fund, and the Population Council.
His second son was Nelson Aldrich Rockefeller.
Laurance Spellman Rockefeller, 1910–2004, b. New York City, grad. Princeton, 1932, was noted for his involvement in conservation and the protection of wildlife. He funded the expansion of Grand Teton National Park and promoted creation and expansion of numerous other national parks. An astute investor, he was the principal backer of Eddie Rickenbacker when the latter founded Eastern Airlines in the 1930s, and was subsequently an early underwriter of a number of successful companies.
Winthrop Rockefeller, 1912–73, b. New York City, attended (1931–34) Yale and then went into investment management. Interested in agriculture, he became the owner of a farm in Arkansas noted for its experiments in animal husbandry. A Republican, he served as governor of Arkansas from 1967 to 1970.
David Rockefeller, 1915–, b. New York City, grad. Harvard, 1936, Ph.D. Univ. of Chicago, 1940, joined what became the Chase Manhattan Bank in 1948 and headed it from 1969 until his retirement in 1981. He acted as spokesman for the U.S. business community on several occasions. His Memoirs were published in 2002.
Jay Rockefeller (John Davison Rockefeller 4th), 1937–, b. New York City, son of John D. Rockefeller 3d, was elected governor of West Virginia as a Democrat in 1976; reelected in 1980, he was then elected to the U.S. Senate in 1984 and reelected in 1990, 1996, and 2002. He has chaired the committee on veterans' affairs (1993–1995; 2001–3) and the select committee on intelligence (2007–).
Bibliography
See biographies of J. D. Rockefeller by A. Nevins (rev. ed. 1959), J. Abels (1965), and R. Chernow (1998); J. T. Flynn, God's Gold (1932, repr. 1971); W. Inglis, John D. Rockefeller Interview, 1917–1920 (1989); studies by D. Frost (1987) and J. Harr and P. Johnson (1988); biography of J. D. Rockefeller, Jr., by R. B. Fosdick (1956) and of Laurance Rockefeller by R. Winks (1997).
John Davison Rockefeller, Sr. (July 8, 1839 – May 23, 1937) was an American industrialist and philanthropist. Rockefeller revolutionized the oil industry and defined the structure of modern philanthropy. Rockefeller had always believed since he was a child that his purpose in life was to make as much money as possible, and then use it wisely to improve the lot of mankind. In 1870, Rockefeller founded the Standard Oil Company and ran it until he retired in the late 1890s. He kept his stock and as gasoline grew in importance, his wealth soared and he became the world's richest man and first billionaire.
Standard Oil was convicted in Federal Court of monopolistic practices and broken up in 1911. Rockefeller spent the last forty years of his life in retirement. His fortune was used to create the modern systematic approach of targeted philanthropy with foundations that had a major impact on medicine, education, and scientific research. His foundations pioneered the development of medical research, and was instrumental in the eradication of hookworm and yellow fever. He was a devout Northern Baptist and supported many church-based institutions throughout his life.
Always avoiding the spotlight, Rockefeller was remembered for handing dimes to those he encountered in public. Married in 1864, Rockefeller outlived his wife Laura Celestia ("Cettie") Spelman. The Rockefellers had four daughters and one son (John D. Rockefeller, Jr.). "Junior" was largely entrusted with supervision of the foundations.
Rockefeller was born in Richford, New York, second of six children to William Avery Rockefeller (November 13, 1810 - May 11, 1906) and Eliza Davison (September 12, 1813 - March 28, 1889). Genealogists trace his line back to Germany in the 1600s [1]. His father was a traveling salesman of dubious products, such as "cancer cures." He was also a philanderer and a bigamist. As William was frequently gone for extended periods, Eliza struggled to maintain a semblance of stability at home. Young Rockefeller's contemporaries described him as articulate, methodical, and discreet. [2]. When he was a boy, his family moved from Richford to Moravia and, in 1851, to Owego, where he attended Owego Academy. In 1853, his family bought a house in Strongsville, a town close to Cleveland, Ohio.
Even as a young boy, John knew how to make money. He would buy candies and later sell them to his brothers and school children for profit.
At fifteen, John entered Central High School in Cleveland. He joined the Erie Street Baptist Church[3], where he became a deacon at the age of nineteen and a trustee at the age of 21. He left high school in 1855, to take a business course at Folsom Mercantile College, completing the six-month course in three months.
The 16-year-old Rockefeller found employment as an apprentice bookkeeper at Hewitt & Tuttle, commission merchants and produce shippers, for 5 cents a day. His seriousness, diligence, and honesty led to steadily increasing responsibilities and pay over the next two years. In 1859 he left to form his own produce commission business with a partner, Maurice Clark. Clark & Rockefeller quickly became a successful firm, and its partners accumulated enough capital to invest in other Cleveland businesses. In 1863, they invested in an oil refinery with a chemist Samuel Andrews.
Beginnings in oil
In 1865, Rockefeller had become so involved in the oil business and was so confident that at about the same time Rockefeller's brother, William Rockefeller, started another refinery. In 1867, Rockefeller & Andrew absorbed this business, and Henry M. Flagler joined the partnership, forming Rockefeller, Andrews & Flagler. In 1870, the two Rockefellers, Andrews, Flagler, and a silent partner, Stephen V. Harkness, formed the Standard Oil Company, with John D. Rockefeller as president.
Family
Rockefeller married Laura Celestia ("Cettie") Spelman (September 22,1839 - March 12,1915), on September 8, 1864 in Cleveland. The couple had four daughters and a son, John Jr. The eldest daughter, Bessie (1866-1906), married Charles Strong, a philosopher. The second daughter, Alice (1869-1870), died in infancy. Alta (1871-1962), married E. Parmalee Prentice, a lawyer. The youngest daughter, Edith (1872-1932), married Harold Fowler McCormick, a friend of John, Jr., and son of Cyrus McCormick, inventor of the mechanical harvesting reaper. His only son and scion, John Davison Rockefeller, Jr. (1874-1960), married Abigail "Abby" Greene Aldrich, the daughter of Nelson Wilmarth Aldrich, the most powerful leader in the United States Senate, and eventually inherited much of the family fortune and expanded his father's philanthropic work.
Standard Oil
Main article: Standard Oil
As a youth, Rockefeller allegedly said that his two great ambitions were to make $100,000 and to live 100 years. Rockefeller died on May 23, 1937, 26 months shy of his 100th birthday, at the Casements, his home in Ormond Beach, Florida. He was buried in Lake View Cemetery in Cleveland.
Rockefeller had a long and controversial career in industry followed by a long career in philanthropy. His image is an amalgam of all of these experiences and the many ways he was viewed by his contemporaries. These contemporaries include his former competitors, many of whom were driven to ruin, but many others of whom sold out at a profit (or a profitable stake in Standard Oil, as Rockefeller often offered his shares as payment for a business), and quite a few of whom became very wealthy as managers as well as owners in Standard Oil. They also include politicians and writers, some of whom served Rockefeller's interests, and some of whom built their careers by fighting Rockefeller and the "robber barons."
Biographer Allan Nevins, answering Rockefeller's enemies, concluded:
“ The rise of the Standard Oil men to great wealth was not from poverty. It was not meteor-like, but accomplished over a quarter of a century by courageous venturing in a field so risky that most large capitalists avoided it, by arduous labors, and by more sagacious and farsighted planning than had been applied to any other American industry. The oil fortunes of 1894 were not larger than steel fortunes, banking fortunes, and railroad fortunes made in similar periods. But it is the assertion that the Standard magnates gained their wealth by appropriating "the property of others" that most challenges our attention. We have abundant evidence that Rockefeller's consistent policy was to offer fair terms to competitors and to buy them out, for cash, stock, or both, at fair appraisals; we have the statement of one impartial historian that Rockefeller was decidedly "more humane toward competitors" than Carnegie; we have the conclusion of another that his wealth was "the least tainted of all the great fortunes of his day."[7]
”
Biographer Ron Chernow wrote of Rockefeller:
“ What makes him problematic—and why he continues to inspire ambivalent reactions—-is that his good side was every bit as good as his bad side was bad. Seldom has history produced such a contradictory figure."[8]
”
Notwithstanding these varied aspects of his public life, Rockefeller may ultimately be remembered simply for the raw size of his wealth. In 1902, an audit showed Rockefeller was worth about $200 million—compared to the total national wealth that year of $101 billion. His wealth grew significantly after as the demand for gasoline soared, eventually reaching about $900 million, including significant interests in banking, shipping, mining, railroads, and other industries. By the time of his death in 1937, Rockefeller's remaining fortune, largely tied up in permanent family trusts, was estimated at $1.4 billion. Rockefeller's net worth over the last decades of his life would easily place him among the very wealthiest persons in history. As a percentage of the United States economy, no other American fortune—including Bill Gates or Sam Walton—would even come close.
The Rockefeller wealth, distributed as it was through a system of foundations and trusts, continued to fund family philanthropic, commercial, and, eventually, political aspirations throughout the 20th century. Grandson David Rockefeller was a leading New York banker, serving for over 20 years as CEO of Chase Manhattan (now the retail financial services arm of JP Morgan Chase). Another grandson, Nelson A. Rockefeller, was Republican governor of New York and the 41st Vice President of the United States. A third grandson, Winthrop Rockefeller, served as Republican Governor of Arkansas. Great-grandson, John D. "Jay" Rockefeller IV is currently a Democratic Senator from West Virginia, and another, Winthrop Paul Rockefeller, served ten years as Lieutenant Governor of Arkansas.
Rockefeller has passed into popular culture as the embodiment of wealth. Oysters Rockefeller was named for him because the dish was so 'rich'. The Rockefeller family was a major benefactor in funding the reconstruction effort in France after World War I. As a consequence, Rockefeller (along with the Rothschilds) was considered in that country the canonical billionaire—synonymous with extreme wealth. John D. Rockerduck is a Disney character popular in Europe who is a foil to other well-known rich duck, the avaricious Scrooge McDuck
• "I had no ambition to make a fortune; mere moneymaking has never been my goal. I had an ambition to build." - John D. Rockefeller.
• "Two men have been supreme in creating the modern world: Rockefeller and Bismarck. One in economics, the other in politics, refuted the liberal dream of universal happiness through individual competition, substituting monopoly and the corporate state, or at least movements toward them" - Bertrand Russell, Freedom Versus Organization, 1814 to 1914, as quoted in Ron Chernow, Titan, (1998), preface.
• "Let the good work go on. We must ever remember we are refining oil for the poor man and he must have it cheap and good." - Rockefeller in a letter in 1885, to one of his partners in the Standard Oil Trust.
• When asked once, "How much money is
enough money?" he replied, "Just a little bit more." - John D. Rockefeller.
• "Mr. Rockefeller your fortune is rolling up, rolling up like an avalanche! You must keep up with it! You must distribute it faster than it grows! If you do not, it will crush you and your children and your children's children" - Frederick T. Gates in 1906, quoted in the PBS documentary: American Experience, The Rockefellers (Part 1).
• "On one occasion, Rockefeller met in Pittsburgh with a group of refiners. After the meeting, several of the refiners went off to dinner. The talk centered on the taciturn, ungregarious, menacing man from Cleveland. 'I wonder how old he is,' a refiner said. Various other refiners offered their guesses. 'I've been watching him,' one finally said. 'He lets everybody else talk, while he sits back and says nothing. But he seems to remember everything, and when he does begin he puts everything in its proper place... I guess he's 140 years old - for he must have been 100 years old when he was born'" - Quoted from Daniel Yergin's book, The Prize, (1991), (p.47).
• "Let us prey." -- John D. Rockefeller.
• "Every right implies a responsibility; every opportunity an obligation; every possession a duty." -- John D. Rockefeller.
Children
• Elizabeth Rockefeller (1866–1906)
• Alice Rockefeller (July 14, 1869–August 20, 1870)
• Alta Rockefeller (1871–1962)
• Edith Rockefeller (1872–1932)
• John Davidson Rockefeller Jr (1874–1960)
Rockefeller family
The Rockefeller family, founded by John D. Rockefeller (1839-1937) ("Senior") and his brother William Rockefeller (1841-1922), is an American industrial, banking, and philanthropic family of British-French-German-American origin that made the world's largest private fortune in the oil business during the late 19th and early 20th century, primarily through the Standard Oil Company.[1] The family is also known for its long association with and financial interest in the Chase Manhattan Bank, now JP Morgan Chase.
Name and origin
The name is an Americanized version of the German and French Rokkenfelder or Rockenfeller, meaning from Rockenfeld. This indicates the latter origins of the family, which can be traced back to the villages of Ehlscheid, Segendorf and Fahr, (all suburbanised to Neuwied). These are neighbored to the small settlement of Rockenfeld - part of Neuwied's quarter Feldkirchen.[2] In Germany, the version Rockenfeller is known as a family name.
However, it is sometimes stated that the Rockefeller surname originated from the Roquefeuille, from the region of Limousin, France. If true, that may explain why they were located in the Midwest, where most of the French immigrants settled. This New France, which consisted of 15 states north of Louisiana, was home to more than 150,000 Frenchmen and women in 1803 when Louisiana was sold to the USA. In France, the version Roquefeuille is also known as a family name. Back in the 16th century, French nobles were Protestant and fled the absolutist Catholic regime to go to Germany. They dispersed throughout the German kingdoms and Switzerland. This is generally the favored version of historians to explain the ultimate roots of the Rockefeller name. The name may also come from the "Roquefeuil", a Catholic family from the region of Languedoc (France).
The earliest known ancestor is Goddart Rockenfeller (1590, Fahr).[3] The Rockefeller family is descended from Johann Peter Rockenfeller (1682–1763), grandson of Goddart, and Johann Thiel Rockenfeller (1695–1796), great-grandson of Goddart. Johann Peter immigrated to New Jersey from the German Palatinate in 1723 and acquired large landholdings.
His grandson, William, married a distant relative, Christina, the granddaughter of a cousin of Johann Peter. This marriage produced a son, Godfrey, who married Lucy Avery in 1806. Avery's ancestors were part of the Puritan tide from Devon, England to Massachusetts around 1630. Lucy Avery could justly claim descent from Edmund Ironside, the English king, crowned in 1016.
Godfrey and Lucy eventually shifted to the remote, backwater stagecoach stop of Richford, in the western part of New York State. Their son, William Avery Rockefeller (1810–1906) was a trader in salt and timber who adopted a vagabond life as a confidence man and was known as "Big Bill", who sired two illegitimate children to his housekeeper. He married up, to Eliza Davison in 1837; her father, John Davison, was relatively rich for the time. Their second child was John Davison Rockefeller, and their third William Rockefeller.[4]
Generational philanthropy
The members of the Rockefeller family are noted for their philanthropy; a Rockefeller Archive Center study in 2004 documents an incomplete list of 72 major institutions that the family has created and/or endowed up to the present day.[5] Historically, the major focus of their benefactions have been in the educational, health and conservation areas. However, through its principal philanthropic organisation, the Rockefeller Foundation (established in 1913), and more recently the Rockefeller Brothers Fund (1940) and the Rockefeller Family Fund (1967), this focus extends outwards to encompass every major facet of American society.
Family leaders in both philanthropy and business have included John D. Sr., John D. Jr. ("Junior"), John D. 3rd, Laurance Rockefeller and David Rockefeller, who is the family's current patriarch. Several family members have held high public office, including Vice President of the United States (Nelson Rockefeller), United States Senator (Jay Rockefeller), state Governor (Nelson, Jay, and Winthrop Rockefeller), and Lieutenant Governor (Winthrop Paul Rockefeller). Another noted family member was Michael Rockefeller, son of Nelson, an anthropologist who came to media attention after he was presumed killed in New Guinea in 1961.
The corporate, financial and personal affairs of the family - numbering around 150 blood relatives of John D. Rockefeller - are run from the family office, Room 5600, known officially as "Rockefeller Family and Associates". It comprises three floors of the GE Building in Rockefeller Center; all private family legal matters are handled by the family-associated New York law firm of Milbank, Tweed, Hadley & McCloy. Room 5600 is also the base of the current family historian, Peter J. Johnson, who assisted with David Rockefeller's Memoirs, published in 2002.
To distinguish the generations and facilitate communication, the fourth generation is generically known as "The Cousins" (24 in all, with 21 still living) and the younger family members are known as the "Fifth/Sixth" generation. Many if not all of these family members are involved in institutionalised philanthropic pursuits. Family links are solidified through the practice of ritualised family meetings - which started with the regular "brothers' meetings" held in Room 5600 or in their respective private residences, beginning in 1945. Family get-togethers are held today at the "Playhouse", in the Westchester County family estate of Pocantico, in June (the "cousins weekend") and December of each year (see Kykuit).
In addition to this is Senior and Junior's involvement in seven major housing developments: Forest Hill Estates in Cleveland, Ohio; the City Housing Corporation's efforts at Sunnyside Gardens in Queens (NY); Thomas Garden Apartments in the Bronx (NY); Paul Lawrence Dunbar Housing in Harlem; Lavoisier Apartments in Manhattan (NY); Van Tassel Apartments in Tarrytown, New York; and a development in Radburn, New Jersey.[6] A further project involved David Rockefeller in a major middle-income housing development when he was elected in 1947 as chairman of Morningside Heights Inc. in Manhattan by fourteen major institutions that were based in the area, including Columbia University. The result, in 1951, was the six-building apartment complex known as Morningside Gardens.[7]
Senior's donations led to the formation of the University of Chicago in 1889, the Nobel prize-winning University where the first American Nobel Prize in science was produced in 1907, and notable for the Chicago School of Economics.[8]. This was one instance of a long family and Rockefeller Foundation tradition of financially supporting Ivy League and other colleges and universities over the generations - seventy-five in total. This includes Harvard University, Princeton University, Stanford University, Yale University, Massachusetts Institute of Technology, Brown University, Columbia University, and Cornell University. This financial assistance extends overseas to the likes of London School of Economics and University College London, amongst many others.[9]
Senior (and Junior) also created the Rockefeller University in 1901; the General Education Board in 1902, which later (1923) evolved into the International Education Board; the Rockefeller Sanitary Commission in 1910; the Bureau of Social Hygiene in 1913 (Junior); the International Health Commission in 1913; and the China Medical Board in 1915.
In the 1920s, the International Education Board granted important fellowships to pathbreakers in modern mathematics, such as S.Banach, B.L.van der Waerden and Andri Weil, which was a formative part of the gradual shift of world mathematics to the US over this period. To help promote cooperation between physics and mathematics Rockefeller funds also supported the erection of the new Mathematical Institute in Gottingen University between 1926 and 1929, while the rise of probability and mathematical statistics owes much to the creation of the Institute Henri Poincari in Paris by American philanthropy also around this time.[10]
Junior also financially supported numerous other major institutions, notable among them his ongoing support for the highly influential foreign policy think tank, the New York Council on Foreign Relations, established in 1921. In 1978 the Rockefeller Foundation initiated the founding of the high-powered financial advisory council called the Group of Thirty, as well as many grants to a myriad of universities, think tanks and other institutions.
Junior was also responsible for the creation and endowment of the Colonial Williamsburg Foundation, which operates the restored historical town at Williamsburg, Virginia, one of the most extensive historic restorations ever undertaken in history.
Conservation
Beginning with Rockefeller Senior, the family has been a major force in land conservation. Over the generations, it has created more than 20 national parks and open spaces, including the Cloisters, Acadia National Park, Forest Hill Park, the Nature Conservancy, and Grand Teton National Park, amongst many others. Rockefeller Jr, and his son Laurance (and his son Larry) were particularly prominent in this area. Most of these efforts were accomplished without public fanfare.
The family was honored for its conservation efforts in November, 2005, by the National Audubon Society, one of America's largest and oldest conservation organizations, at which over 30 family members attended. At the event, the society's president, John Flicker, notably stated: "Cumulatively, no other family in America has made the contribution to conservation that the Rockefeller family has made".[11]
International politics/finance/economics
The family has been awarded the annual UNA-USA’s Global Leadership Award, along with other recipients over time, including Bill Clinton and Michael Bloomberg. Members of the Rockefeller family into the fourth generation (especially the prominent banker and statesman David Rockefeller, who is the present family patriarch) have been heavily involved in international politics, and have donated money, established or be
Historians studying the economic developments of the Gilded Age open themselves to questions about the proper methods of business that have never been comfortably resolved. The "second industrial revolution" surpassed the textile factories of England in bringing consumers large quantities of useful commodities at affordable prices, and producers had either to adapt to the new economy of mass production or sell to larger producers. In many cases, single figures all but eradicated the competition and exerted what some considered an undue influence over the market of a particular commodity.
One figure who thrived in this atmosphere was John D. Rockefeller, Sr., who outwitted his competitors in the oil refining business and obtained close to 90 percent of the American market, becoming the world's first billionaire in the process. Ron Chernow's thoughtful biography Titan: The Life of John D. Rockefeller, Sr. (New York, 1998), gives us an opportunity to discuss the issue of why monopolies are such a feared economic development, and if this fear is well-placed, how they affect consumers and other businesses.
Monopoly presents the economic theorist with a dilemma. In theory, the only way for a firm to become a monopoly, outside government sponsorship, is to win the loyalty of consumers by lowering prices and creating a more useful product than competitors. Would-be monopolists are a positive force in capitalistic systems because they have an incentive to bestow such benefits on consumers, in hope of later charging high, monopolistic prices. Paradoxically, if firms have a real chance at becoming a monopoly, the economy is in danger from monopolies that charge higher prices.
The ideal economic system for the consumer, then, would cajole producers into thinking that they have a chance at obtaining a monopoly without actually giving them the chance. This is, of course, unworkable, but the apologist for monopolies contends that a system with a real chance of monopoly is the best we can achieve in a less-than-ideal world. The danger of prospective competitors and substitute products would keep prices down, they claim, and that the benefits conferred in pursuit of monopoly outweigh the marginally higher prices that set in after the monopoly is achieved. Does history justify this economic theory? From the evidence given in Titan, what situation really existed in the paradigm case of Standard Oil? Did this situation warrant the antitrust case against it?
One way in which a business can confer benefits on consumers is to provide a superior product. Did Standard Oil fulfill the free market economist's promise of monopoly in this manner? Here, we must digress from Standard Oil to illustrate the role oil played in the economy of Standard Oil's time. Oil provided an affordable way to light people's homes in the evening. When refined into kerosene, it was the only "cheap illuminant that burned in a bright, clean, safe manner," by far better than blubber and lard (p. 73). Oil was also available in much larger quantities than earlier products, and therefore cheaper. Prior to kerosene lamps, most lamps consisted of whale blubber. The whaling industry had already hunted sperm whales close to extinction, and desperate whaling ships were pursuing them in icy waters. By the mid 1860s, whale-oil was unaffordable to most people, and to the extent that it could light homes, was an unsustainable source of light. The amount of oil one well could produce in a day exceeded the amount of whale oil collected from two to three years of whaling in the depleted oceans of the 1860s.[1]
Oil was also a far better lubricant than lard, which greased the gears of most engines and factories before the 1860s. Within five years of the development of the oil industry, oil replaced lard.[2] By the 1880s, oil refiners developed varieties of oil suited to different lubricating jobs, whereas the lubricant made from animal fat had been one and all-purpose.
Standard Oil, however, cannot receive the credit for this technological progress. John D. Rockefeller was mostly in the business of refining oil, rather than gathering crude oil from oil wells. Before the 1860s, kerosene was refined from coal, and the process by which kerosene was refined from oil was readily adapted from the coal refinery before Standard Oil was founded. Even the technology for the transportation of oil--pipelines and single iron tank cars--was established before Rockefeller's entry.
Rockefeller was unquestionably an able, hands-on businessperson. He oversaw every step of the production process in the early years. Chernow writes that "he was often seen at Kingsbury Run at 6:30 A.M., going into the cooper shop to roll out barrels, stack hoops, or cart out shavings, reflecting the thrift inculcated by his mother and his puritanical religious upbringing" (p. 79). He made small improvements to cut waste. For example, he hired chemists to increase the kerosene yield per barrel of oil. He also tried to make use of the by-products of oil, selling benzine, paraffin, and petroleum jelly, and at one point drawing up plans to convert sulfuric acid into fertilizer (p. 100). Rockefeller found that he could obtain better barrels, and at lower prices, by having Standard Oil produce them. Standard Oil could then make them for less than a dollar per barrel, down from $2.50 from external barrel suppliers (p. 100).
Nevertheless, Rockefeller's main advantage over other oil refiners was, at first, his ability to obtain loans, and later, his ability to obtain low rates from railroads. The confidence of bankers in Rockefeller enabled him to secure loans, develop a deep war chest, and buy out other Cleveland refineries. Local bankers trusted Rockefeller because of his strict adherence to Baptist morality, honest presentations of his business predicament, and outstanding credit history (p. 105). In addition, his brother William proved to be adept at securing loans from banks in New York City, where credit was more loose. By 1868, John D. Rockefeller's refining capacity was larger than the next three largest refineries combined.
He could then secure concessions from railroads by promising large, steady volumes of oil. He managed to promise sixty carloads daily, partly by arranging for shipments from other refiners. Railroads could load oil from warehouses (that Rockefeller provided) straight onto a train composed solely of oil tanks, instead of having a train composed of different types of freight cars stopping at random points to load oil from smaller refiners. Rockefeller also appeased his railroad customers by constructing the facilities for loading oil near the train stations, building and renting his own oil-tank cars, and assuming responsibility for accidents on railroad property (p. 113). Rockefeller's Cleveland-based victory over Pittsburgh refiners was fortuitous, as Pittsburgh refiners could not persuade obtuse railroad owners to grant discounts. The Pennsylvania Railroad charged high rates for Pittsburgh refiners to ship their oil to New York and Philadelphia, not realizing that over time, they were allowing competition in Cleveland to wipe out their Pittsburgh customers.
To some extent, Rockefeller's management resulted in lower prices for consumers, but a quantitative study of Standard Oil's impact on consumers is problematic due to its secret discounts p. (259). The cost of processing a gallon of crude oil dropped from 2.5 to 1.5 cents between 1880 and 1885, while between 1870 and 1890, the market price of Standard Oil dropped from 23.5 cents per gallon to 7.5 cents per gallon. Rockefeller's critics attribute this drop to a fall in crude oil prices, though Rockefeller claimed that this only accounted for half the drop (p. 258).
On top of this long-term drop, consumers indulged themselves in the occasional periods in which prices were cut to the bone to drive competitors out of business. Chernow estimates that Standard Oil charged unprofitably low prices in 9,000 out 37,000 towns where tank wagons distributed the oil (p. 259). According to economic theory, firms in a capitalist economy will not cut prices below cost for long time periods, for the price cuts will cut into profits. But this was just what Rockefeller did, because profits were not his only concern (p. 265). Rockefeller had an emotional need for stability, and he eliminated all significant competitors at a cost to his profits.
If the benefits to foreign consumers count, Standard Oil usually kept foreign prices depressed--subsidized by higher prices to American consumers--to maintain a market in Asian and European countries, in which competition from Russian oil at times captured the market from Standard Oil. In the 1870s, Standard Oil was providing free kerosene lamps to remote parts of the world, and teaching foreigners to use them, in order to build a global consumer base (p. 244).
The domestic price of oil declined during the long reign of John D. Rockefeller, but who knows whether prices would have become even lower if Rockefeller had not acquired such a large percentage of the oil market. By the time Standard Oil was founded in 1870, transient oil refiners overcrowded the oil refining business to the point where many refiners sold at a loss. Chernow writes that "With sky-high profits and ridiculously low start up costs, the field had soon grown overcrowded.... Rampant speculation had so overbuilt the industry that total refining capacity in 1870 was triple the amount of crude oil being pumped" (p. 130).
Contrary to neoclassical economic theory, these conditions did not discourage people from entering or remaining in the field. Chernow explains that "the oil market didn't correct itself...because refiners carried heavy bank debt and other fixed costs, and they discovered that, by operating at a loss, they could still service some debt" (p. 149). All oil refiners, including Rockefeller, risked bankruptcy while competing with firms selling below cost. Certainly, Rockefeller was able to lower his prices due to economies of scale, but had his competitors continued to sell at a loss, he may have been forced to reduce prices even more than he historically did. The virtual monopoly of Standard Oil was not in the interest of the lowest possible prices, unless the plethora of unprofitable oil operations would have driven it out of business before it could utilize economies of scale.
The whole point of Rockefeller's efforts to consolidate the oil-refining industry under his thumb was to sell at profitable prices and avoid the unprofitably low prices of the early oil industry. In the early oil industry, oil refiners obtained more investments when oil was more scarce and the price was high; French and German investors would not lend William Rockefeller money when news of abundant crude oil reached New York City Rockefeller's greatest nightmare was to "drown in a sea of cheap oil that would drag prices below their overhead costs".
Rockefeller's contemporaries resented him because he acquired a fortune by what it thought to be unfair, ruthless dealings with competitors and other businesses, some of which may have violated common law. The earliest episode that provoked a public outcry was the South Improvement Company (SIC), a "grand scale collusion such as American industry had never witnessed" (). Tom Scott, the overlord of the Pennsylvania Railroad, first proposed the secret cartel among Standard Oil and three major railroads (the Pennsylvania, New York Central, and Erie railroads), in which the railroads would not only give rebates to Standard Oil and a few other large refiners, but also raise rates for all other oil refiners. Additionally, the SIC oil refiners would receive "drawbacks," which were rebates on oil shipped by other refiners, and information about the prices charged by other oil refiners, which would allow Rockefeller to underprice them. Chernow exclaims "On shipments from Pennsylvania to Cleveland, for instance, Standard Oil would receive a forty-cent rebate on every barrel it shipped, plus another forty cents for every barrel shipped to Cleveland by competitors!"
Rockefeller could obtain this bargain by agreeing not to ship oil on other railroads or waterways, and use their railroads consistently. The lure of a large, predictable customer was irresistible.
While rumors of this conspiracy circulated in the oil industry, Rockefeller acquired 22 out of 26 of his Cleveland competitors (Rockefeller did not directly allude to the SIC in his negotiations, but these acquisitions would not have taken place so quickly without the rumors. Chernow writes that "The threat of the SIC, critics alleged, was the invisible club that he had waved over Cleveland refiners, forcing them to submit to his domination" Rockefeller's most significant competitor, James Clark, later told critic Ida Tarbell that fear of the SIC caused him to sell to Rockefeller (With the exception of Clark, Rockefeller bought these competitors at prices equivalent to only a quarter of their original construction costs.
Had the plan succeeded, the rebates may have enabled Rockefeller to sell oil at lower prices. Historians have no way of knowing, since the public retaliated against the SIC as the news soon leaked out. In nonviolent protest, many oil drillers signed a pledge not to sell oil to Standard Oil and other conspirators printed on blacklists. Thousands of people held public demonstrations, and vandals attacked Standard oil barrels and oil cars. So great was the public opinion against Standard Oil that people would not (or could not, due to fear for their safety) purchase it, and Rockefeller laid off 90% of his workers in 1872 .
After the SIC led to the "Cleveland Massacre," Rockefeller started a similar cartel called the National Refiner's Association, which differed by being open to all interested parties. Rockefeller designed the association this way because the secrecy and exclusivity of the SIC aroused so much protest .
Competition thwarted this cartel when members reneged on the deal, exceeding their quotas. Moreover, "free riders" outside the cartel benefitted from higher prices without restraining their own output. The National Refiner's Association was soon dissolved. Though Standard Oil later recovered and prospered, these events surely revealed to future entrepreneurs that they could not join cartels and trusts at no risk. Competitors and consumers checked outrageous price agreements while the law turned its head the other way.
Having tried other paths to restricting overproduction, Rockefeller started what Chernow calls an "unrelenting campaign of national consolidation," buying out competitors nationally as he had done in Cleveland). When industries refused to sell, Rockefeller engaged in predatory pricing in the local areas subject to competition. He required that grocers and hardware merchants sell only Standard Oil, or else he would drive them out of business with his own retail tank wagons
Rockefeller could also dictate the business of railroads, since he could delay shipment of the lubricating grease they needed to run their trains. He had the railroads thwart his competitors by cutting off transportation for non-customers, agreeing not to ship products by or to businesses that did not buy Standard Oil, or raising rates for problem customers
Rockefeller's effort to eliminate intermediaries and market Standard Oil directly to retailers by tank wagons won resentment from thousands of small retailers. Rockefeller forced these people to sell only Standard Oil. If they did not comply, Standard Oil would either sell oil door-to-door or open its own general store to drive them out of business. His station managers had to command at least 85% of the local oil trade, and it was understood that they were to spy on other distributors to make sure they were not selling competitors' oil. Incidentally, the direct control over retail probably benefitted consumers, as intermediaries had increased the price of each gallon by three to five cents for their own profit, and often mixed inferior kerosene with Standard Oil kerosene.
Rockefeller succeeded in his campaign of consolidation by 1877, when he controlled the oil markets of Cleveland, Philadelphia, Pittsburgh, West Virginia, and Baltimore, forming a total of 90% of the market. By the time Standard Oil was broken up in 1911, it faced competition from various companies in Texas and Russia, but these competitors would not have existed if political reasons did not preclude Rockefeller from eliminating them. In Texas, state antitrust laws and popular animosity toward Rockefeller made the making or selling of Standard Oil difficult, making room for new companies like Texaco. Foreign governments were simply beyond the reach of Rockefeller to obtain protection.
Chernow notes some of the disincentives that unregulated capitalism offered against Rockefeller's techniques, calling them "expensive extravagances that accompanied the creation of the monopoly" ). Some of the competitors Rockefeller bought out started up new oil firms, and many refiners entered the business just so that Rockefeller would buy them out. Rockefeller started hiring the original competitors as managers at wages above their value to him, paying them not to produce. Expensive skeleton crews were maintained on plants that were producing little or no oil. Rockefeller also bought shares in newspapers to disseminate Standard Oil's version of current events, and hired critics to work for Standard Oil to silence them
The market was inadequate to prevent Standard Oil from acquiring 90 percent of the oil refining industry. Costs such as the skeleton crews, selling below cost, and buying out competitors did not prevent Rockefeller from obtaining monopoly; although they did cost him money, he still had reduced the oil refining market to token competition by 1877. Sometimes, as with Oil Creek refineries in Pennsylvania, firms that Rockefeller bought would take on a name other than Standard Oil, so that they did not arouse hatred of Rockefeller among the workers or consumers of this oil. Consumers who thought they were buying a different brand of oil in protest were often buying Standard Oil
Part of the reason critics saw need for regulation was, ironically, other government regulations that worked in Standard Oil's favor. Rockefeller resorted using government to weed out competitors, in the late 1870's. His many attempts to bribe legislators to root out competition are too numerous to be labeled as exceptions. In 1879, Standard Oil had a near monopoly in the new method of oil transport - pipelines. A serious competitor emerged in Pennsylvania with the Tidewater Pipe Line Company. When the usual tactics failed, Standard Oil bought exclusive charters, or rights to build pipelines, in states where Tidewater planned to develop a pipeline. Not only did Standard Oil take advantage of exclusive charters, but it also lobbied and bribed legislators to continue the practice of them. Chernow writes "During the Tidewater battle, Standard lobbied hard to perpetuate the system that allowed state legislatures to grant exclusive pipeline charters...to foster the impression of a popular groundswell against the bill, he hired lawyers to pose as incensed farmers and landowners in favor of the status quo...."
The combination of predatory pricing and state charters ultimately led Tidewater to make a pact with Standard Oil, restricting its activities to 11.5 percent of the pipeline business and leaving the rest of the market to Standard Oil. In mixed economies, people may fear a monopolist because a person with so much control over the market has the opportunity to use the regulatory power of the state for his or her own benefit.
Even if Standard Oil were clearly, on balance, good for society, the reaction of politicians would be that its business practices were "still wrong." In 1890, during the debate over the Sherman Act, Representative William Mason argued that "trusts have made products cheaper, have reduced prices; but if the price of oil, for instance, were reduced to one cent a barrel, it would not right the wrong done to people of this country by the 'trusts' which have destroyed honest men from legitimate business enterprise" (Congressional Record, 51st Congress, 1st session, House, June 20, 1890, p. 4100). Later in the debate, Senator George F. Edmunds argues that although "the oil trust has reduced the price of oil immensely, that does not alter the wrong of the principle of any trust"
The popular sentiment against Standard Oil that made the antitrust case politically fruitful was produced by sensational news stories that presented business history as a tale of "good-guys" versus "bad-guys." Ida Tarbell's reports in McClure's Magazine and Henry Demarest Lloyd's Wealth Against Commonwealth mobilized public opinion against Rockefeller, who was unofficially retired by the twentieth century. Historians still cite these works as evidence of Standard Oil's depravity.
Apart from the aforementioned stories of unfair business practices, the most noticed parts of both works were the ad hominem attacks on Rockefeller and other high officials of Standard Oil. Lloyd's work was so vitriolic that he did not refer to Rockefeller or Standard Oil by name to avoid libel prosecution. Wealth Against Commonwealth pronounced blatant falsehoods, accusing Standard Oil of routinely keeping prices high and making secret arrangements with European competitors. Chernow writes that Lloyd "filled notebooks with flaming diatribes against . . . a cruel, selfish, carnivorous, short-sighted herd" and "ennobled any businessman, however greedy or inept, who opposed Rockefeller" The book's inflammatory character made its influence all the more seminal among politicians, becoming "the bible of Washington trustbusters," and the final straw that motivated Ida Tarbell to launch her attacks on Standard Oil
Ida Tarbell had watched Rockefeller put her father and other independent oil refiners out of business in her hometown of Titusville. Her motive was not to indict Rockefeller for his impact on consumers at large, then, but on other oil refiners. Chernow writes that "It revolted Ida that the trust could turn proud, independent entrepreneurs into beaten men taking orders from distant bosses" (p. 436). Contrary to the stories of "Miss Tarbarrel," as Rockefeller referred to her, the independent refiners engaged in anti-competitive agreements when they could, and many small oil producers--who Rockefeller eventually bought out along with the refiners--also resorted to violence rather than competition, destroying pumps and wells. Chernow writes "The producers terrorized each other, meting out nocturnal punishment...by setting their wells ablaze or smashing their pumping engines with sledgehammers. The producing end of the industry was populated by thousands of free booting, high-spirited speculators who were far harder to organize than the more sober refiners...."
Tarbell revived an inaccurate story that Rockefeller had defrauded Mrs. Fred M. Backus, an elderly widow who sold her Cleveland lubricating plant in 1878. Backus' factory was highly inefficient and headed toward bankruptcy, but Rockefeller had offered $79,000 for it (out of goodwill toward an old acquaintance), which was at least twice the cost of constructing a better factory (447). Backus estimated the factory's price at $150,000, and was furious at Rockefeller during the whole episode. Far from being an impoverished victim of capitalism, she was worth $300,000 at her death (p. 447). Chernow writes that the story's "Dickensian ring" caused it to spread like wildfire in the press and McClure's readership of 375,000--including President Roosevelt (
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Tarbell issued memorable diatribes against Rockefeller's personality and presence. She described him as a "living mummy" and a citizen whose churchgoing habits were only a "hypocritical facade brilliantly created by the predatory businessman" (p. 453). She completed her portrait with his physical appearance as an elderly man: "The disease which in the last three or four years has swept Mr. Rockefeller's head bare of hair, stripped away even eyelashes and eyebrows, has revealed all the strength of his great head.... The big cheeks are puffy, bulging unpleasantly under the eyes, and the skin which covers them has a curiously unhealthy pallor. It is this puffiness, this unclean flesh, which repels, as the thin slit of a mouth terrifies..."
Tarbell had also included "dirt" on Rockefeller's family, including his bitter and paranoid brother Frank, who called John a "monster," even though he depended on him for loans to finance his prodigal spending habits (p. 455). Most devastating to Rockefeller himself was the publication of the activities of his utterly depraved father, "Doc" William Avery Rockefeller, a lifelong con artist who employed the name Dr. William Levingston ever since he left his first wife for an unsuspecting younger woman.
The public was aggravated by Rockefeller's refusal to answer to the writers' charges. Standard Oil had no public relations department, and Rockefeller thought that he should not dignify the charges with a response, believing the public furor would subside. He greatly underestimated the growing influence of the press during the Progressive Era.
President Roosevelt initiated the campaign to break up Standard Oil. Roosevelt was not against trusts per se, but trusts "which gouged consumers." He favored maintaining trusts "which offered fair prices and good service" (p. 433). The price of Standard Oil fell during the nineteenth century, but the new boss, John Archbold, had increased prices during Roosevelt's time. When Roosevelt gained momentum in 1903 - by informing reporters that Rockefeller used his connections in Congress to fight the Elkins Act (which strengthened penalties against railroad rebates)--he zeroed in on the prey.
The breakup of Standard Oil may have been in the interest of lower oil prices. John Archbold raised the price of Standard Oil to increase average dividends to larger figures than Rockefeller would have permitted, keeping the twenty five-year average at 13.86%, whereas Rockefeller's average had been 8%. It was under Archbold's leadership that Standard Oil was broken up in 1911. Presidents Roosevelt and Taft claimed that they were not against trusts in and of themselves, but trusts that used their competitive advantages to raise prices. Would the antitrust case discourage future "titans" from doing their best work in industry? Rockefeller himself was imbued with missionary zeal, and would have been likely to expand his business as far as possible, even with constant pressure from antitrust laws.
Ron Chernow's Titan: The Life of John D. Rockefeller, Sr., shows that in the case of Standard Oil, the Gilded Age's most notorious monopoly, the benefits conferred on consumers in pursuit of monopoly were ambiguous. However, net economic benefits to consumers were far from the minds of journalists and politicians, who used inappropriate criteria to excite popular agitation against Standard Oil. At best, politicians and intellectuals measured the plight of businesses displaced or harassed by Standard Oil against the success of Standard Oil, rather than measuring the plight against the advantages of a non-antitrust policy to the public. Standard Oil was and is judged not on the basis of whether it was, on balance, good for society, but whether it adhered to a moral obligation to refrain from eliminating competition.
• Born: 8 July 1839
• Birthplace: Richford, New York
• Died: 23 May 1937
• Best Known As: Standard Oil tycoon and big-time philanthropist
One of the richest Americans in history, John D. Rockefeller was the founder of the Standard Oil Company and, later, a philanthropist whose wealth bankrolled the Rockefeller Foundation. Hard-working and meticulous, Rockefeller started out small and then made his fortune via hard-nosed and sometimes controversial business tactics, which have since made him an entrepreneurial hero to some, a greedy fiend in the eyes of others. He started in the oil business, and by the end of the century the Standard Oil Trust controlled so many other interests that it fell afoul of anti-trust laws. In 1911 the U.S. Supreme Court called Standard Oil a monopoly and forced the Trust to separate into competing companies. By that time Rockefeller himself was no longer involved in running the business, having devoted himself completely to philanthropy since 1896. He gave away millions to schools, health organizations and civic projects through the Rockefeller Foundation, which endures today.
John D. Rockefeller, Jr. was in the family business only briefly before devoting himself to philanthropy with the Rockefeller Foundation... the elder Rockefeller's grandson, Nelson Rockefeller, was a four-time governor of New York and vice president of tJohn Davison Rockefeller
John Davison Rockefeller (1839-1937), American industrialist and philanthropist, founded the Standard Oil Company, the University of Chicago, and the Rockefeller Foundation.
John D. Rockefeller was born on July 8, 1839, in Richford, N.Y. His father owned farm property and traded in many goods, including lumber and patent medicines. His mother, a straitlaced puritanical woman, brought up her large family very strictly. The family moved west by degrees, reaching Cleveland, Ohio, in 1853, when it was beginning to grow into a city. John graduated from high school there and after three months of commercial college found his first job at the age of sixteen clerking in a produce commission house. In 1859, when he was nineteen, he started his first company with a young Englishman: Clark and Rockefeller. They grossed $450,000 in the first year of trading. Clark did the fieldwork; Rockefeller controlled office management, bookkeeping, and relationships with bankers.
Early Businesses
From the start Rockefeller revealed a genius for organization and method. The firm prospered during the Civil War. With the Pennsylvania oil strike (1859) and the building of a railroad to Cleveland, they branched out into oil refining with Samuel Andrews, who had technical knowledge of the field. Within two years Rockefeller became senior partner; Clark was bought out, and the firm Rockefeller and Andrews became Cleveland's largest refinery. A second refinery, the Standard Works, was opened in 1865 by another firm established by Rockefeller in his brother William's name; and a sales office was opened in New York City in 1866.
With financial help from S. V. Harkness and from a new partner, H. M. Flagler, who also secured favorable railroad freight rebates, Rockefeller survived the bitter competition in the oil industry. The Standard Oil Company, chartered in Ohio in 1870 by Rockefeller, his brother, Flagler, Harkness, and Andrews, had a capital of $1 million and paid a dividend of 40 percent a year later. Standard Oil controlled one-tenth of American refining, but competitive chaos remained. The chief bottleneck was the transporting of the oil. Out of this situation came the controversial South Improvement Company scheme of 1872 - a defensive alliance of Cleveland refiners to meet the bitter opposition of the oil producers of Pennsylvania. The sweeping freight rebate agreements in this scheme brought public opposition, and the plan was outlawed by the Pennsylvania Legislature. Meanwhile, a looser organization, a refiners' pool, also failed (1873).
Rockefeller still hoped to impose order on the oil industry. He bought out most of the Cleveland refineries, then acquired others in New York, Pittsburgh, and Philadelphia. He turned to new transportation methods, including the railroad tank car and the pipeline. By 1879 he was refining 90 percent of American oil, and Standard used its own tank car fleet, ships, docking facilities, barrel-making plants, draying services, depots, and warehouses. Strict economy and planning were enforced throughout. Rockefeller came through the Panic of 1873 still urging organization on the part of the refiners. As his control approached near-monopoly, he fought a war with the Pennsylvania Railroad in 1877, which created a refining company to try to break Rockefeller's control, but the bloody railroad strikes that year forced them to surrender to Standard Oil. Rockefeller's dream of order was near completion.
America's First Trust
By 1883, after winning control of the pipeline industry, Standard's monopoly was at a peak. Rockefeller created America's first great "trust" in 1882; since laws forbade one company's ownership of another's stock, ever since 1872 Standard had placed its acquisitions outside Ohio in the hands of Flagler as "trustee." All profits went to the Ohio company while the outside businesses remained nominally independent. In 1882 this was regularized. Nine trustees of the Standard Oil Trust received the stock of 40 businesses and gave the various shareholders trust certificates in return. The trust had a capital of about $70 million; it was the world's largest and richest industrial organization.
In the 1880s the nature of Rockefeller's business began to change; he moved beyond refining oil into producing crude oil itself and moved his wells westward with the new fields opening up. He pioneered in this by acquiring oil land in Ohio before it was certain that this sulfuric oil could be refined successfully; then he employed the scientist Herman Frasch, whose process (1886-1889) made these fields yield an enormous profit. Standard also expanded its marketing facilities and entered foreign markets in Europe, Asia, and Latin America. From 1885 a committee system of management was developed to control Standard Oil's enormous empire.
Attacking the Trust
Public opposition to Standard Oil grew with the emergence of the muckraking journalists; in particular, Henry Demarest Lloyd and Ida Tarbell published harsh exposés of the oil empire. Rockefeller was condemned for various alleged practices: railroad rebates (a system he did not invent and which many refiners used); price discrimination; industrial espionage and bribery; crushing smaller firms by unfair competition, such as cutting off their crude oil supplies or restricting their transport outlets. Standard Oil was investigated by the New York State Senate and by the U.S. House of Representatives in 1888. The rising tide of reform sentiment brought in the Sherman Antitrust Act (1890). Two years later the Ohio Supreme Court invalidated Standard's original trust agreement. Rockefeller formally disbanded the organization; though the trustees handed in their trust certificates, in practice the organization remained unified, and the four presidents of the state firms (John D. Rockefeller for Standard of Ohio, William Rockefeller for New York, Flagler for New Jersey, and J.A. Moffett for Indiana) still met regularly to fix overall policy. In 1899 Standard was recreated legally under a new form as a "holding company;" this merger was dissolved by the U.S. Supreme Court in 1911, long after Rockefeller himself had retired from active control in 1897.
Perhaps Rockefeller's most famous excursion outside the oil industry began in 1893, when he helped develop the Mesabi iron ore range of Minnesota. By 1896 his Consolidated Iron Mines owned a great fleet of ore boats and virtually controlled Great Lakes shipping. Rockefeller was now an iron ore magnate in his own right and had the power to dictate to the steel industry. He made an alliance with the steel king, Andrew Carnegie, in 1896: Rockefeller agreed not to enter steelmaking and Carnegie agreed not to touch transportation. In 1901 Rockefeller sold his ore holdings to the vast new merger created by Carnegie and J. P. Morgan, U.S. Steel. In that year his fortune passed the $200 million mark for the first time.
Philanthropic Endeavors
From his first employment as a clerk, Rockefeller sought to give away one-tenth of his earnings to charity. His benefactions grew with his income, and he also gave time and energy to philanthropic causes. At first he depended on the Baptist Church for advice; the Church wanted its own great university, and in 1892 the University of Chicago opened under the brilliant presidency of a man Rockefeller much admired, William Rainey Harper. The university was Rockefeller's first major philanthropic creation. He gave it over $80 million during his lifetime and left the university entirely independent under Harper. Rockefeller chose New York City for his Rockefeller Institute of Medical Research (now Rockefeller University), chartered in 1901. Among the institute's many achievements were yellow fever research, discovery of serums to combat pneumonia, advances in experimental physiology and surgery, and work on infantile paralysis. In 1902 he established the General Education Board.
The total of Rockefeller's lifetime philanthropies has been estimated at about $550 million. Eventually the amounts involved became so huge (his fortune reached $900 million by 1913) that he developed a staff of specialists to help him; out of this came the Rockefeller Foundation, chartered in 1913, "to promote the wellbeing of mankind throughout the world."
Rockefeller's personal life was fairly simple and frugal. He was a man of few passions who lived for his work, and his great talent was his organizing genius and drive for order, pursued with great single-mindedness and concentration. His life was absorbed by business and later by organized giving. In both areas he imposed order, efficiency, and planning with extraordinary success and sweeping vision. He died on May 23, 1937, in Ormond, Fla.
Further Reading
Rockefeller's Random Reminiscences of Men and Events (1909) remains interesting and important. The definitive life of Rockefeller is Allan Nevins, Study in Power: John D. Rockefeller (2 vols., 1940; rev. ed. 1953). A sympathetic account is Jules Abels, The Rockefeller Billions (1965).
For general economic history see the readings in Peter d'A. Jones, The Robber Barons Revisited (1968). The history of Standard Oil of New Jersey is treated in R. W. and M. E. Hidy, History of Standard Oil Company: Pioneering in Big Business, 1882-1911, vol. 1 (1955), and Standard is considered comparatively in Alfred D. Chandler, Jr., Strategy and Structure: Chapters in the History of Industrial Enterprise (1962). Standard's history in California to 1919 is described in Gerald T. White, Formative Years in the Far West (1962). For a broader history see Harold F. Williamson and Arnold R. Daum, The American Petroleum Industry (2 vols., 1959-
he Rockefeller, John D.
(1839-1937), industrialist and philanthropist. Rockefeller was the primary force behind the establishment of the Standard Oil Company and thus of the American petroleum industry.
Rockefeller was born in Richford, New York, and moved with his family to Cleveland, Ohio, where he finished high school in 1855. He began his business career as a bookkeeper-clerk in a commission house the same year. The first successful drilling for oil took place in western Pennsylvania in 1859, and Rockefeller realized that Cleveland was ideally suited to exploit this new resource. He built his first refinery in 1863 in partnership with others.
The early oil business was chaotic and hazardous, with barrel prices rising as high as $13.75 and falling as low as ten cents during the 1860s, but Rockefeller, a born executive, kept his firm consistently profitable and growing. In 1870 he, Henry Flagler, and others formed the Standard Oil Company, with Rockefeller owning 26.7 percent of the stock. Using such then-legal tactics as railroad rebates and predatory pricing, Standard Oil steadily increased its hold over the American oil industry until by 1880 it controlled fully 90 percent of it.
The corporate structure of this expanding enterprise had become unwieldy, and state corporation laws made it difficult to rationalize what had become a nationwide company. In 1882, Standard Oil's legal counsel devised the trust form of organization. Standard Oil thus became both the first and the largest of the "trusts," one of the great bogeymen of American politics ever since.
As such, it necessarily became a major target of reformers. Although he played the game hard, Rockefeller never operated outside the law or sought an absolute monopoly. Rather, he wanted Standard Oil to be large enough to enforce "order" in the oil business and prevent a return to the chaos that had marked the industry's early years. And despite Standard's near monopoly position, the price of oil and oil products fell drastically between 1870 and 1900. In 1883, Rockefeller moved the company's headquarters to New York.
Always active in the Baptist church, Rockefeller early began the practice of making substantial charitable contributions. As his resources grew, so did his philanthropy. He had largely retired from Standard Oil by 1897 and devoted much of his energy to looking for creative ways to give his money away. He was often guided by Baptist ministers and others, and he established an organization to investigate carefully before giving. Once he had made up his mind, however, he gave with wholly unprecedented generosity. In 1889 he gave $600,000 to establish the University of Chicago (the family would ultimately give it more than $80 million), and in the final decades of his long life he gave away an estimated $550 million to worthy causes. He also established the Rockefeller Institute, the General Education Board, the Rockefeller Foundation, and the Laura Spelman Rockefeller Memorial Foundation
United States from 1974-77 under Gerald Ford.
Rockefeller, John Davison, 1839–1937, American industrialist and philanthropist, b. Richford, N.Y. He moved (1853) with his family to a farm near Cleveland and at age 16 went to work as a bookkeeper. Frugal and industrious, Rockefeller became (1859) a partner in a produce business, and four years later, with his partners, he established an oil refinery, entering into an industry already thriving in Cleveland.
In 1870 he and his associates—including S. V. Harkness, H. M. Flagler, and his brother William—organized the Standard Oil Company of Ohio, capitalized at $1 million. By enforcing strict economy and efficiency, through mergers and agreements with competitors, by ruthlessly crushing weaker competitors, and by accumulating large capital reserves, Rockefeller soon dominated the American oil-refining industry. Rebate agreements, which he forced from the railroads, and the control of pipeline distribution of refined oil strengthened the near monopoly of the Standard Oil Company.
In 1882 the diverse holdings of the various members of Rockefeller's combination were tied together into the Standard Oil trust. Court action compelled the trust to dissolve 10 years later, but in a few years the Standard Oil Company of New Jersey was chartered as a holding company, with a capitalization of $110 million. Rockefeller was also prominent in the affairs of railroads and banks, being second only to J. P. Morgan in the domain of finance. When the United States Steel Corporation was formed (1901), Rockefeller was one of the directors. In 1911 a decision of the U.S. Supreme Court required the holding company to dissolve and its directors to relinquish their control over the numerous subsidiaries. Rockefeller personally ruled over his enormous petroleum business until 1911, when he retired with a fabulous fortune.
Intensely religious, Rockefeller had an interest in philanthropy as deep as his interest in business. He gave generously to the Baptist Church, to the YMCA, and to the Anti-Saloon League. He also founded (1892) the Univ. of Chicago. The most prominent of the philanthropic enterprises to which he eventually turned over some $500 million were the Rockefeller Institute for Medical Research, founded (1901) in New York City and since 1965 known as Rockefeller Univ.; the General Education Board, organized (1902) to make gifts to various educational and research agencies; the Rockefeller Foundation, established (1913) to promote public health and to further the medical, natural, and social sciences; and the Laura Spelman Rockefeller Memorial, founded (1918) in memory of his wife, for the furthering of child welfare and the social sciences. He wrote Random Reminiscences of Men and Events (1909).
Son and Grandsons
His son John Davison Rockefeller, Jr., 1874–1960, b. Cleveland, grad. Brown, 1897, took over active management of his father's interests in 1911 and engaged in numerous philanthropies. Riverside Church in New York City was built through his gifts. He also gave vast sums for religious projects, for scientific investigation, and for the restoration of historic monuments. Among his most notable philanthropies were the restoration of colonial Williamsburg, Va., and the donation of the site for the United Nations headquarters in New York City. He founded (1931) and helped plan Rockefeller Center in New York City, which the Rockefeller interests completed in 1939. John D. Rockefeller, Jr., had six children, and his five sons all became famous in various fields of endeavor.
His eldest son, John Davison Rockefeller 3d, 1906–78, b. New York City, grad. Princeton, 1929, was active in the management of family interests as well as art collecting and the support of numerous civic and philanthropic ventures, such as Lincoln Center for the Performing Arts, the United Negro College Fund, and the Population Council.
His second son was Nelson Aldrich Rockefeller.
Laurance Spellman Rockefeller, 1910–2004, b. New York City, grad. Princeton, 1932, was noted for his involvement in conservation and the protection of wildlife. He funded the expansion of Grand Teton National Park and promoted creation and expansion of numerous other national parks. An astute investor, he was the principal backer of Eddie Rickenbacker when the latter founded Eastern Airlines in the 1930s, and was subsequently an early underwriter of a number of successful companies.
Winthrop Rockefeller, 1912–73, b. New York City, attended (1931–34) Yale and then went into investment management. Interested in agriculture, he became the owner of a farm in Arkansas noted for its experiments in animal husbandry. A Republican, he served as governor of Arkansas from 1967 to 1970.
David Rockefeller, 1915–, b. New York City, grad. Harvard, 1936, Ph.D. Univ. of Chicago, 1940, joined what became the Chase Manhattan Bank in 1948 and headed it from 1969 until his retirement in 1981. He acted as spokesman for the U.S. business community on several occasions. His Memoirs were published in 2002.
Jay Rockefeller (John Davison Rockefeller 4th), 1937–, b. New York City, son of John D. Rockefeller 3d, was elected governor of West Virginia as a Democrat in 1976; reelected in 1980, he was then elected to the U.S. Senate in 1984 and reelected in 1990, 1996, and 2002. He has chaired the committee on veterans' affairs (1993–1995; 2001–3) and the select committee on intelligence (2007–).
Bibliography
See biographies of J. D. Rockefeller by A. Nevins (rev. ed. 1959), J. Abels (1965), and R. Chernow (1998); J. T. Flynn, God's Gold (1932, repr. 1971); W. Inglis, John D. Rockefeller Interview, 1917–1920 (1989); studies by D. Frost (1987) and J. Harr and P. Johnson (1988); biography of J. D. Rockefeller, Jr., by R. B. Fosdick (1956) and of Laurance Rockefeller by R. Winks (1997).
John Davison Rockefeller, Sr. (July 8, 1839 – May 23, 1937) was an American industrialist and philanthropist. Rockefeller revolutionized the oil industry and defined the structure of modern philanthropy. Rockefeller had always believed since he was a child that his purpose in life was to make as much money as possible, and then use it wisely to improve the lot of mankind. In 1870, Rockefeller founded the Standard Oil Company and ran it until he retired in the late 1890s. He kept his stock and as gasoline grew in importance, his wealth soared and he became the world's richest man and first billionaire.
Standard Oil was convicted in Federal Court of monopolistic practices and broken up in 1911. Rockefeller spent the last forty years of his life in retirement. His fortune was used to create the modern systematic approach of targeted philanthropy with foundations that had a major impact on medicine, education, and scientific research. His foundations pioneered the development of medical research, and was instrumental in the eradication of hookworm and yellow fever. He was a devout Northern Baptist and supported many church-based institutions throughout his life.
Always avoiding the spotlight, Rockefeller was remembered for handing dimes to those he encountered in public. Married in 1864, Rockefeller outlived his wife Laura Celestia ("Cettie") Spelman. The Rockefellers had four daughters and one son (John D. Rockefeller, Jr.). "Junior" was largely entrusted with supervision of the foundations.
Rockefeller was born in Richford, New York, second of six children to William Avery Rockefeller (November 13, 1810 - May 11, 1906) and Eliza Davison (September 12, 1813 - March 28, 1889). Genealogists trace his line back to Germany in the 1600s [1]. His father was a traveling salesman of dubious products, such as "cancer cures." He was also a philanderer and a bigamist. As William was frequently gone for extended periods, Eliza struggled to maintain a semblance of stability at home. Young Rockefeller's contemporaries described him as articulate, methodical, and discreet. [2]. When he was a boy, his family moved from Richford to Moravia and, in 1851, to Owego, where he attended Owego Academy. In 1853, his family bought a house in Strongsville, a town close to Cleveland, Ohio.
Even as a young boy, John knew how to make money. He would buy candies and later sell them to his brothers and school children for profit.
At fifteen, John entered Central High School in Cleveland. He joined the Erie Street Baptist Church[3], where he became a deacon at the age of nineteen and a trustee at the age of 21. He left high school in 1855, to take a business course at Folsom Mercantile College, completing the six-month course in three months.
The 16-year-old Rockefeller found employment as an apprentice bookkeeper at Hewitt & Tuttle, commission merchants and produce shippers, for 5 cents a day. His seriousness, diligence, and honesty led to steadily increasing responsibilities and pay over the next two years. In 1859 he left to form his own produce commission business with a partner, Maurice Clark. Clark & Rockefeller quickly became a successful firm, and its partners accumulated enough capital to invest in other Cleveland businesses. In 1863, they invested in an oil refinery with a chemist Samuel Andrews.
Beginnings in oil
In 1865, Rockefeller had become so involved in the oil business and was so confident that at about the same time Rockefeller's brother, William Rockefeller, started another refinery. In 1867, Rockefeller & Andrew absorbed this business, and Henry M. Flagler joined the partnership, forming Rockefeller, Andrews & Flagler. In 1870, the two Rockefellers, Andrews, Flagler, and a silent partner, Stephen V. Harkness, formed the Standard Oil Company, with John D. Rockefeller as president.
Family
Rockefeller married Laura Celestia ("Cettie") Spelman (September 22,1839 - March 12,1915), on September 8, 1864 in Cleveland. The couple had four daughters and a son, John Jr. The eldest daughter, Bessie (1866-1906), married Charles Strong, a philosopher. The second daughter, Alice (1869-1870), died in infancy. Alta (1871-1962), married E. Parmalee Prentice, a lawyer. The youngest daughter, Edith (1872-1932), married Harold Fowler McCormick, a friend of John, Jr., and son of Cyrus McCormick, inventor of the mechanical harvesting reaper. His only son and scion, John Davison Rockefeller, Jr. (1874-1960), married Abigail "Abby" Greene Aldrich, the daughter of Nelson Wilmarth Aldrich, the most powerful leader in the United States Senate, and eventually inherited much of the family fortune and expanded his father's philanthropic work.
Standard Oil
Main article: Standard Oil
As a youth, Rockefeller allegedly said that his two great ambitions were to make $100,000 and to live 100 years. Rockefeller died on May 23, 1937, 26 months shy of his 100th birthday, at the Casements, his home in Ormond Beach, Florida. He was buried in Lake View Cemetery in Cleveland.
Rockefeller had a long and controversial career in industry followed by a long career in philanthropy. His image is an amalgam of all of these experiences and the many ways he was viewed by his contemporaries. These contemporaries include his former competitors, many of whom were driven to ruin, but many others of whom sold out at a profit (or a profitable stake in Standard Oil, as Rockefeller often offered his shares as payment for a business), and quite a few of whom became very wealthy as managers as well as owners in Standard Oil. They also include politicians and writers, some of whom served Rockefeller's interests, and some of whom built their careers by fighting Rockefeller and the "robber barons."
Biographer Allan Nevins, answering Rockefeller's enemies, concluded:
“ The rise of the Standard Oil men to great wealth was not from poverty. It was not meteor-like, but accomplished over a quarter of a century by courageous venturing in a field so risky that most large capitalists avoided it, by arduous labors, and by more sagacious and farsighted planning than had been applied to any other American industry. The oil fortunes of 1894 were not larger than steel fortunes, banking fortunes, and railroad fortunes made in similar periods. But it is the assertion that the Standard magnates gained their wealth by appropriating "the property of others" that most challenges our attention. We have abundant evidence that Rockefeller's consistent policy was to offer fair terms to competitors and to buy them out, for cash, stock, or both, at fair appraisals; we have the statement of one impartial historian that Rockefeller was decidedly "more humane toward competitors" than Carnegie; we have the conclusion of another that his wealth was "the least tainted of all the great fortunes of his day."[7]
”
Biographer Ron Chernow wrote of Rockefeller:
“ What makes him problematic—and why he continues to inspire ambivalent reactions—-is that his good side was every bit as good as his bad side was bad. Seldom has history produced such a contradictory figure."[8]
”
Notwithstanding these varied aspects of his public life, Rockefeller may ultimately be remembered simply for the raw size of his wealth. In 1902, an audit showed Rockefeller was worth about $200 million—compared to the total national wealth that year of $101 billion. His wealth grew significantly after as the demand for gasoline soared, eventually reaching about $900 million, including significant interests in banking, shipping, mining, railroads, and other industries. By the time of his death in 1937, Rockefeller's remaining fortune, largely tied up in permanent family trusts, was estimated at $1.4 billion. Rockefeller's net worth over the last decades of his life would easily place him among the very wealthiest persons in history. As a percentage of the United States economy, no other American fortune—including Bill Gates or Sam Walton—would even come close.
The Rockefeller wealth, distributed as it was through a system of foundations and trusts, continued to fund family philanthropic, commercial, and, eventually, political aspirations throughout the 20th century. Grandson David Rockefeller was a leading New York banker, serving for over 20 years as CEO of Chase Manhattan (now the retail financial services arm of JP Morgan Chase). Another grandson, Nelson A. Rockefeller, was Republican governor of New York and the 41st Vice President of the United States. A third grandson, Winthrop Rockefeller, served as Republican Governor of Arkansas. Great-grandson, John D. "Jay" Rockefeller IV is currently a Democratic Senator from West Virginia, and another, Winthrop Paul Rockefeller, served ten years as Lieutenant Governor of Arkansas.
Rockefeller has passed into popular culture as the embodiment of wealth. Oysters Rockefeller was named for him because the dish was so 'rich'. The Rockefeller family was a major benefactor in funding the reconstruction effort in France after World War I. As a consequence, Rockefeller (along with the Rothschilds) was considered in that country the canonical billionaire—synonymous with extreme wealth. John D. Rockerduck is a Disney character popular in Europe who is a foil to other well-known rich duck, the avaricious Scrooge McDuck
• "I had no ambition to make a fortune; mere moneymaking has never been my goal. I had an ambition to build." - John D. Rockefeller.
• "Two men have been supreme in creating the modern world: Rockefeller and Bismarck. One in economics, the other in politics, refuted the liberal dream of universal happiness through individual competition, substituting monopoly and the corporate state, or at least movements toward them" - Bertrand Russell, Freedom Versus Organization, 1814 to 1914, as quoted in Ron Chernow, Titan, (1998), preface.
• "Let the good work go on. We must ever remember we are refining oil for the poor man and he must have it cheap and good." - Rockefeller in a letter in 1885, to one of his partners in the Standard Oil Trust.
• When asked once, "How much money is
enough money?" he replied, "Just a little bit more." - John D. Rockefeller.
• "Mr. Rockefeller your fortune is rolling up, rolling up like an avalanche! You must keep up with it! You must distribute it faster than it grows! If you do not, it will crush you and your children and your children's children" - Frederick T. Gates in 1906, quoted in the PBS documentary: American Experience, The Rockefellers (Part 1).
• "On one occasion, Rockefeller met in Pittsburgh with a group of refiners. After the meeting, several of the refiners went off to dinner. The talk centered on the taciturn, ungregarious, menacing man from Cleveland. 'I wonder how old he is,' a refiner said. Various other refiners offered their guesses. 'I've been watching him,' one finally said. 'He lets everybody else talk, while he sits back and says nothing. But he seems to remember everything, and when he does begin he puts everything in its proper place... I guess he's 140 years old - for he must have been 100 years old when he was born'" - Quoted from Daniel Yergin's book, The Prize, (1991), (p.47).
• "Let us prey." -- John D. Rockefeller.
• "Every right implies a responsibility; every opportunity an obligation; every possession a duty." -- John D. Rockefeller.
Children
• Elizabeth Rockefeller (1866–1906)
• Alice Rockefeller (July 14, 1869–August 20, 1870)
• Alta Rockefeller (1871–1962)
• Edith Rockefeller (1872–1932)
• John Davidson Rockefeller Jr (1874–1960)
Rockefeller family
The Rockefeller family, founded by John D. Rockefeller (1839-1937) ("Senior") and his brother William Rockefeller (1841-1922), is an American industrial, banking, and philanthropic family of British-French-German-American origin that made the world's largest private fortune in the oil business during the late 19th and early 20th century, primarily through the Standard Oil Company.[1] The family is also known for its long association with and financial interest in the Chase Manhattan Bank, now JP Morgan Chase.
Name and origin
The name is an Americanized version of the German and French Rokkenfelder or Rockenfeller, meaning from Rockenfeld. This indicates the latter origins of the family, which can be traced back to the villages of Ehlscheid, Segendorf and Fahr, (all suburbanised to Neuwied). These are neighbored to the small settlement of Rockenfeld - part of Neuwied's quarter Feldkirchen.[2] In Germany, the version Rockenfeller is known as a family name.
However, it is sometimes stated that the Rockefeller surname originated from the Roquefeuille, from the region of Limousin, France. If true, that may explain why they were located in the Midwest, where most of the French immigrants settled. This New France, which consisted of 15 states north of Louisiana, was home to more than 150,000 Frenchmen and women in 1803 when Louisiana was sold to the USA. In France, the version Roquefeuille is also known as a family name. Back in the 16th century, French nobles were Protestant and fled the absolutist Catholic regime to go to Germany. They dispersed throughout the German kingdoms and Switzerland. This is generally the favored version of historians to explain the ultimate roots of the Rockefeller name. The name may also come from the "Roquefeuil", a Catholic family from the region of Languedoc (France).
The earliest known ancestor is Goddart Rockenfeller (1590, Fahr).[3] The Rockefeller family is descended from Johann Peter Rockenfeller (1682–1763), grandson of Goddart, and Johann Thiel Rockenfeller (1695–1796), great-grandson of Goddart. Johann Peter immigrated to New Jersey from the German Palatinate in 1723 and acquired large landholdings.
His grandson, William, married a distant relative, Christina, the granddaughter of a cousin of Johann Peter. This marriage produced a son, Godfrey, who married Lucy Avery in 1806. Avery's ancestors were part of the Puritan tide from Devon, England to Massachusetts around 1630. Lucy Avery could justly claim descent from Edmund Ironside, the English king, crowned in 1016.
Godfrey and Lucy eventually shifted to the remote, backwater stagecoach stop of Richford, in the western part of New York State. Their son, William Avery Rockefeller (1810–1906) was a trader in salt and timber who adopted a vagabond life as a confidence man and was known as "Big Bill", who sired two illegitimate children to his housekeeper. He married up, to Eliza Davison in 1837; her father, John Davison, was relatively rich for the time. Their second child was John Davison Rockefeller, and their third William Rockefeller.[4]
Generational philanthropy
The members of the Rockefeller family are noted for their philanthropy; a Rockefeller Archive Center study in 2004 documents an incomplete list of 72 major institutions that the family has created and/or endowed up to the present day.[5] Historically, the major focus of their benefactions have been in the educational, health and conservation areas. However, through its principal philanthropic organisation, the Rockefeller Foundation (established in 1913), and more recently the Rockefeller Brothers Fund (1940) and the Rockefeller Family Fund (1967), this focus extends outwards to encompass every major facet of American society.
Family leaders in both philanthropy and business have included John D. Sr., John D. Jr. ("Junior"), John D. 3rd, Laurance Rockefeller and David Rockefeller, who is the family's current patriarch. Several family members have held high public office, including Vice President of the United States (Nelson Rockefeller), United States Senator (Jay Rockefeller), state Governor (Nelson, Jay, and Winthrop Rockefeller), and Lieutenant Governor (Winthrop Paul Rockefeller). Another noted family member was Michael Rockefeller, son of Nelson, an anthropologist who came to media attention after he was presumed killed in New Guinea in 1961.
The corporate, financial and personal affairs of the family - numbering around 150 blood relatives of John D. Rockefeller - are run from the family office, Room 5600, known officially as "Rockefeller Family and Associates". It comprises three floors of the GE Building in Rockefeller Center; all private family legal matters are handled by the family-associated New York law firm of Milbank, Tweed, Hadley & McCloy. Room 5600 is also the base of the current family historian, Peter J. Johnson, who assisted with David Rockefeller's Memoirs, published in 2002.
To distinguish the generations and facilitate communication, the fourth generation is generically known as "The Cousins" (24 in all, with 21 still living) and the younger family members are known as the "Fifth/Sixth" generation. Many if not all of these family members are involved in institutionalised philanthropic pursuits. Family links are solidified through the practice of ritualised family meetings - which started with the regular "brothers' meetings" held in Room 5600 or in their respective private residences, beginning in 1945. Family get-togethers are held today at the "Playhouse", in the Westchester County family estate of Pocantico, in June (the "cousins weekend") and December of each year (see Kykuit).
In addition to this is Senior and Junior's involvement in seven major housing developments: Forest Hill Estates in Cleveland, Ohio; the City Housing Corporation's efforts at Sunnyside Gardens in Queens (NY); Thomas Garden Apartments in the Bronx (NY); Paul Lawrence Dunbar Housing in Harlem; Lavoisier Apartments in Manhattan (NY); Van Tassel Apartments in Tarrytown, New York; and a development in Radburn, New Jersey.[6] A further project involved David Rockefeller in a major middle-income housing development when he was elected in 1947 as chairman of Morningside Heights Inc. in Manhattan by fourteen major institutions that were based in the area, including Columbia University. The result, in 1951, was the six-building apartment complex known as Morningside Gardens.[7]
Senior's donations led to the formation of the University of Chicago in 1889, the Nobel prize-winning University where the first American Nobel Prize in science was produced in 1907, and notable for the Chicago School of Economics.[8]. This was one instance of a long family and Rockefeller Foundation tradition of financially supporting Ivy League and other colleges and universities over the generations - seventy-five in total. This includes Harvard University, Princeton University, Stanford University, Yale University, Massachusetts Institute of Technology, Brown University, Columbia University, and Cornell University. This financial assistance extends overseas to the likes of London School of Economics and University College London, amongst many others.[9]
Senior (and Junior) also created the Rockefeller University in 1901; the General Education Board in 1902, which later (1923) evolved into the International Education Board; the Rockefeller Sanitary Commission in 1910; the Bureau of Social Hygiene in 1913 (Junior); the International Health Commission in 1913; and the China Medical Board in 1915.
In the 1920s, the International Education Board granted important fellowships to pathbreakers in modern mathematics, such as S.Banach, B.L.van der Waerden and Andri Weil, which was a formative part of the gradual shift of world mathematics to the US over this period. To help promote cooperation between physics and mathematics Rockefeller funds also supported the erection of the new Mathematical Institute in Gottingen University between 1926 and 1929, while the rise of probability and mathematical statistics owes much to the creation of the Institute Henri Poincari in Paris by American philanthropy also around this time.[10]
Junior also financially supported numerous other major institutions, notable among them his ongoing support for the highly influential foreign policy think tank, the New York Council on Foreign Relations, established in 1921. In 1978 the Rockefeller Foundation initiated the founding of the high-powered financial advisory council called the Group of Thirty, as well as many grants to a myriad of universities, think tanks and other institutions.
Junior was also responsible for the creation and endowment of the Colonial Williamsburg Foundation, which operates the restored historical town at Williamsburg, Virginia, one of the most extensive historic restorations ever undertaken in history.
Conservation
Beginning with Rockefeller Senior, the family has been a major force in land conservation. Over the generations, it has created more than 20 national parks and open spaces, including the Cloisters, Acadia National Park, Forest Hill Park, the Nature Conservancy, and Grand Teton National Park, amongst many others. Rockefeller Jr, and his son Laurance (and his son Larry) were particularly prominent in this area. Most of these efforts were accomplished without public fanfare.
The family was honored for its conservation efforts in November, 2005, by the National Audubon Society, one of America's largest and oldest conservation organizations, at which over 30 family members attended. At the event, the society's president, John Flicker, notably stated: "Cumulatively, no other family in America has made the contribution to conservation that the Rockefeller family has made".[11]
International politics/finance/economics
The family has been awarded the annual UNA-USA’s Global Leadership Award, along with other recipients over time, including Bill Clinton and Michael Bloomberg. Members of the Rockefeller family into the fourth generation (especially the prominent banker and statesman David Rockefeller, who is the present family patriarch) have been heavily involved in international politics, and have donated money, established or be
Historians studying the economic developments of the Gilded Age open themselves to questions about the proper methods of business that have never been comfortably resolved. The "second industrial revolution" surpassed the textile factories of England in bringing consumers large quantities of useful commodities at affordable prices, and producers had either to adapt to the new economy of mass production or sell to larger producers. In many cases, single figures all but eradicated the competition and exerted what some considered an undue influence over the market of a particular commodity.
One figure who thrived in this atmosphere was John D. Rockefeller, Sr., who outwitted his competitors in the oil refining business and obtained close to 90 percent of the American market, becoming the world's first billionaire in the process. Ron Chernow's thoughtful biography Titan: The Life of John D. Rockefeller, Sr. (New York, 1998), gives us an opportunity to discuss the issue of why monopolies are such a feared economic development, and if this fear is well-placed, how they affect consumers and other businesses.
Monopoly presents the economic theorist with a dilemma. In theory, the only way for a firm to become a monopoly, outside government sponsorship, is to win the loyalty of consumers by lowering prices and creating a more useful product than competitors. Would-be monopolists are a positive force in capitalistic systems because they have an incentive to bestow such benefits on consumers, in hope of later charging high, monopolistic prices. Paradoxically, if firms have a real chance at becoming a monopoly, the economy is in danger from monopolies that charge higher prices.
The ideal economic system for the consumer, then, would cajole producers into thinking that they have a chance at obtaining a monopoly without actually giving them the chance. This is, of course, unworkable, but the apologist for monopolies contends that a system with a real chance of monopoly is the best we can achieve in a less-than-ideal world. The danger of prospective competitors and substitute products would keep prices down, they claim, and that the benefits conferred in pursuit of monopoly outweigh the marginally higher prices that set in after the monopoly is achieved. Does history justify this economic theory? From the evidence given in Titan, what situation really existed in the paradigm case of Standard Oil? Did this situation warrant the antitrust case against it?
One way in which a business can confer benefits on consumers is to provide a superior product. Did Standard Oil fulfill the free market economist's promise of monopoly in this manner? Here, we must digress from Standard Oil to illustrate the role oil played in the economy of Standard Oil's time. Oil provided an affordable way to light people's homes in the evening. When refined into kerosene, it was the only "cheap illuminant that burned in a bright, clean, safe manner," by far better than blubber and lard (p. 73). Oil was also available in much larger quantities than earlier products, and therefore cheaper. Prior to kerosene lamps, most lamps consisted of whale blubber. The whaling industry had already hunted sperm whales close to extinction, and desperate whaling ships were pursuing them in icy waters. By the mid 1860s, whale-oil was unaffordable to most people, and to the extent that it could light homes, was an unsustainable source of light. The amount of oil one well could produce in a day exceeded the amount of whale oil collected from two to three years of whaling in the depleted oceans of the 1860s.[1]
Oil was also a far better lubricant than lard, which greased the gears of most engines and factories before the 1860s. Within five years of the development of the oil industry, oil replaced lard.[2] By the 1880s, oil refiners developed varieties of oil suited to different lubricating jobs, whereas the lubricant made from animal fat had been one and all-purpose.
Standard Oil, however, cannot receive the credit for this technological progress. John D. Rockefeller was mostly in the business of refining oil, rather than gathering crude oil from oil wells. Before the 1860s, kerosene was refined from coal, and the process by which kerosene was refined from oil was readily adapted from the coal refinery before Standard Oil was founded. Even the technology for the transportation of oil--pipelines and single iron tank cars--was established before Rockefeller's entry.
Rockefeller was unquestionably an able, hands-on businessperson. He oversaw every step of the production process in the early years. Chernow writes that "he was often seen at Kingsbury Run at 6:30 A.M., going into the cooper shop to roll out barrels, stack hoops, or cart out shavings, reflecting the thrift inculcated by his mother and his puritanical religious upbringing" (p. 79). He made small improvements to cut waste. For example, he hired chemists to increase the kerosene yield per barrel of oil. He also tried to make use of the by-products of oil, selling benzine, paraffin, and petroleum jelly, and at one point drawing up plans to convert sulfuric acid into fertilizer (p. 100). Rockefeller found that he could obtain better barrels, and at lower prices, by having Standard Oil produce them. Standard Oil could then make them for less than a dollar per barrel, down from $2.50 from external barrel suppliers (p. 100).
Nevertheless, Rockefeller's main advantage over other oil refiners was, at first, his ability to obtain loans, and later, his ability to obtain low rates from railroads. The confidence of bankers in Rockefeller enabled him to secure loans, develop a deep war chest, and buy out other Cleveland refineries. Local bankers trusted Rockefeller because of his strict adherence to Baptist morality, honest presentations of his business predicament, and outstanding credit history (p. 105). In addition, his brother William proved to be adept at securing loans from banks in New York City, where credit was more loose. By 1868, John D. Rockefeller's refining capacity was larger than the next three largest refineries combined.
He could then secure concessions from railroads by promising large, steady volumes of oil. He managed to promise sixty carloads daily, partly by arranging for shipments from other refiners. Railroads could load oil from warehouses (that Rockefeller provided) straight onto a train composed solely of oil tanks, instead of having a train composed of different types of freight cars stopping at random points to load oil from smaller refiners. Rockefeller also appeased his railroad customers by constructing the facilities for loading oil near the train stations, building and renting his own oil-tank cars, and assuming responsibility for accidents on railroad property (p. 113). Rockefeller's Cleveland-based victory over Pittsburgh refiners was fortuitous, as Pittsburgh refiners could not persuade obtuse railroad owners to grant discounts. The Pennsylvania Railroad charged high rates for Pittsburgh refiners to ship their oil to New York and Philadelphia, not realizing that over time, they were allowing competition in Cleveland to wipe out their Pittsburgh customers.
To some extent, Rockefeller's management resulted in lower prices for consumers, but a quantitative study of Standard Oil's impact on consumers is problematic due to its secret discounts p. (259). The cost of processing a gallon of crude oil dropped from 2.5 to 1.5 cents between 1880 and 1885, while between 1870 and 1890, the market price of Standard Oil dropped from 23.5 cents per gallon to 7.5 cents per gallon. Rockefeller's critics attribute this drop to a fall in crude oil prices, though Rockefeller claimed that this only accounted for half the drop (p. 258).
On top of this long-term drop, consumers indulged themselves in the occasional periods in which prices were cut to the bone to drive competitors out of business. Chernow estimates that Standard Oil charged unprofitably low prices in 9,000 out 37,000 towns where tank wagons distributed the oil (p. 259). According to economic theory, firms in a capitalist economy will not cut prices below cost for long time periods, for the price cuts will cut into profits. But this was just what Rockefeller did, because profits were not his only concern (p. 265). Rockefeller had an emotional need for stability, and he eliminated all significant competitors at a cost to his profits.
If the benefits to foreign consumers count, Standard Oil usually kept foreign prices depressed--subsidized by higher prices to American consumers--to maintain a market in Asian and European countries, in which competition from Russian oil at times captured the market from Standard Oil. In the 1870s, Standard Oil was providing free kerosene lamps to remote parts of the world, and teaching foreigners to use them, in order to build a global consumer base (p. 244).
The domestic price of oil declined during the long reign of John D. Rockefeller, but who knows whether prices would have become even lower if Rockefeller had not acquired such a large percentage of the oil market. By the time Standard Oil was founded in 1870, transient oil refiners overcrowded the oil refining business to the point where many refiners sold at a loss. Chernow writes that "With sky-high profits and ridiculously low start up costs, the field had soon grown overcrowded.... Rampant speculation had so overbuilt the industry that total refining capacity in 1870 was triple the amount of crude oil being pumped" (p. 130).
Contrary to neoclassical economic theory, these conditions did not discourage people from entering or remaining in the field. Chernow explains that "the oil market didn't correct itself...because refiners carried heavy bank debt and other fixed costs, and they discovered that, by operating at a loss, they could still service some debt" (p. 149). All oil refiners, including Rockefeller, risked bankruptcy while competing with firms selling below cost. Certainly, Rockefeller was able to lower his prices due to economies of scale, but had his competitors continued to sell at a loss, he may have been forced to reduce prices even more than he historically did. The virtual monopoly of Standard Oil was not in the interest of the lowest possible prices, unless the plethora of unprofitable oil operations would have driven it out of business before it could utilize economies of scale.
The whole point of Rockefeller's efforts to consolidate the oil-refining industry under his thumb was to sell at profitable prices and avoid the unprofitably low prices of the early oil industry. In the early oil industry, oil refiners obtained more investments when oil was more scarce and the price was high; French and German investors would not lend William Rockefeller money when news of abundant crude oil reached New York City Rockefeller's greatest nightmare was to "drown in a sea of cheap oil that would drag prices below their overhead costs".
Rockefeller's contemporaries resented him because he acquired a fortune by what it thought to be unfair, ruthless dealings with competitors and other businesses, some of which may have violated common law. The earliest episode that provoked a public outcry was the South Improvement Company (SIC), a "grand scale collusion such as American industry had never witnessed" (). Tom Scott, the overlord of the Pennsylvania Railroad, first proposed the secret cartel among Standard Oil and three major railroads (the Pennsylvania, New York Central, and Erie railroads), in which the railroads would not only give rebates to Standard Oil and a few other large refiners, but also raise rates for all other oil refiners. Additionally, the SIC oil refiners would receive "drawbacks," which were rebates on oil shipped by other refiners, and information about the prices charged by other oil refiners, which would allow Rockefeller to underprice them. Chernow exclaims "On shipments from Pennsylvania to Cleveland, for instance, Standard Oil would receive a forty-cent rebate on every barrel it shipped, plus another forty cents for every barrel shipped to Cleveland by competitors!"
Rockefeller could obtain this bargain by agreeing not to ship oil on other railroads or waterways, and use their railroads consistently. The lure of a large, predictable customer was irresistible.
While rumors of this conspiracy circulated in the oil industry, Rockefeller acquired 22 out of 26 of his Cleveland competitors (Rockefeller did not directly allude to the SIC in his negotiations, but these acquisitions would not have taken place so quickly without the rumors. Chernow writes that "The threat of the SIC, critics alleged, was the invisible club that he had waved over Cleveland refiners, forcing them to submit to his domination" Rockefeller's most significant competitor, James Clark, later told critic Ida Tarbell that fear of the SIC caused him to sell to Rockefeller (With the exception of Clark, Rockefeller bought these competitors at prices equivalent to only a quarter of their original construction costs.
Had the plan succeeded, the rebates may have enabled Rockefeller to sell oil at lower prices. Historians have no way of knowing, since the public retaliated against the SIC as the news soon leaked out. In nonviolent protest, many oil drillers signed a pledge not to sell oil to Standard Oil and other conspirators printed on blacklists. Thousands of people held public demonstrations, and vandals attacked Standard oil barrels and oil cars. So great was the public opinion against Standard Oil that people would not (or could not, due to fear for their safety) purchase it, and Rockefeller laid off 90% of his workers in 1872 .
After the SIC led to the "Cleveland Massacre," Rockefeller started a similar cartel called the National Refiner's Association, which differed by being open to all interested parties. Rockefeller designed the association this way because the secrecy and exclusivity of the SIC aroused so much protest .
Competition thwarted this cartel when members reneged on the deal, exceeding their quotas. Moreover, "free riders" outside the cartel benefitted from higher prices without restraining their own output. The National Refiner's Association was soon dissolved. Though Standard Oil later recovered and prospered, these events surely revealed to future entrepreneurs that they could not join cartels and trusts at no risk. Competitors and consumers checked outrageous price agreements while the law turned its head the other way.
Having tried other paths to restricting overproduction, Rockefeller started what Chernow calls an "unrelenting campaign of national consolidation," buying out competitors nationally as he had done in Cleveland). When industries refused to sell, Rockefeller engaged in predatory pricing in the local areas subject to competition. He required that grocers and hardware merchants sell only Standard Oil, or else he would drive them out of business with his own retail tank wagons
Rockefeller could also dictate the business of railroads, since he could delay shipment of the lubricating grease they needed to run their trains. He had the railroads thwart his competitors by cutting off transportation for non-customers, agreeing not to ship products by or to businesses that did not buy Standard Oil, or raising rates for problem customers
Rockefeller's effort to eliminate intermediaries and market Standard Oil directly to retailers by tank wagons won resentment from thousands of small retailers. Rockefeller forced these people to sell only Standard Oil. If they did not comply, Standard Oil would either sell oil door-to-door or open its own general store to drive them out of business. His station managers had to command at least 85% of the local oil trade, and it was understood that they were to spy on other distributors to make sure they were not selling competitors' oil. Incidentally, the direct control over retail probably benefitted consumers, as intermediaries had increased the price of each gallon by three to five cents for their own profit, and often mixed inferior kerosene with Standard Oil kerosene.
Rockefeller succeeded in his campaign of consolidation by 1877, when he controlled the oil markets of Cleveland, Philadelphia, Pittsburgh, West Virginia, and Baltimore, forming a total of 90% of the market. By the time Standard Oil was broken up in 1911, it faced competition from various companies in Texas and Russia, but these competitors would not have existed if political reasons did not preclude Rockefeller from eliminating them. In Texas, state antitrust laws and popular animosity toward Rockefeller made the making or selling of Standard Oil difficult, making room for new companies like Texaco. Foreign governments were simply beyond the reach of Rockefeller to obtain protection.
Chernow notes some of the disincentives that unregulated capitalism offered against Rockefeller's techniques, calling them "expensive extravagances that accompanied the creation of the monopoly" ). Some of the competitors Rockefeller bought out started up new oil firms, and many refiners entered the business just so that Rockefeller would buy them out. Rockefeller started hiring the original competitors as managers at wages above their value to him, paying them not to produce. Expensive skeleton crews were maintained on plants that were producing little or no oil. Rockefeller also bought shares in newspapers to disseminate Standard Oil's version of current events, and hired critics to work for Standard Oil to silence them
The market was inadequate to prevent Standard Oil from acquiring 90 percent of the oil refining industry. Costs such as the skeleton crews, selling below cost, and buying out competitors did not prevent Rockefeller from obtaining monopoly; although they did cost him money, he still had reduced the oil refining market to token competition by 1877. Sometimes, as with Oil Creek refineries in Pennsylvania, firms that Rockefeller bought would take on a name other than Standard Oil, so that they did not arouse hatred of Rockefeller among the workers or consumers of this oil. Consumers who thought they were buying a different brand of oil in protest were often buying Standard Oil
Part of the reason critics saw need for regulation was, ironically, other government regulations that worked in Standard Oil's favor. Rockefeller resorted using government to weed out competitors, in the late 1870's. His many attempts to bribe legislators to root out competition are too numerous to be labeled as exceptions. In 1879, Standard Oil had a near monopoly in the new method of oil transport - pipelines. A serious competitor emerged in Pennsylvania with the Tidewater Pipe Line Company. When the usual tactics failed, Standard Oil bought exclusive charters, or rights to build pipelines, in states where Tidewater planned to develop a pipeline. Not only did Standard Oil take advantage of exclusive charters, but it also lobbied and bribed legislators to continue the practice of them. Chernow writes "During the Tidewater battle, Standard lobbied hard to perpetuate the system that allowed state legislatures to grant exclusive pipeline charters...to foster the impression of a popular groundswell against the bill, he hired lawyers to pose as incensed farmers and landowners in favor of the status quo...."
The combination of predatory pricing and state charters ultimately led Tidewater to make a pact with Standard Oil, restricting its activities to 11.5 percent of the pipeline business and leaving the rest of the market to Standard Oil. In mixed economies, people may fear a monopolist because a person with so much control over the market has the opportunity to use the regulatory power of the state for his or her own benefit.
Even if Standard Oil were clearly, on balance, good for society, the reaction of politicians would be that its business practices were "still wrong." In 1890, during the debate over the Sherman Act, Representative William Mason argued that "trusts have made products cheaper, have reduced prices; but if the price of oil, for instance, were reduced to one cent a barrel, it would not right the wrong done to people of this country by the 'trusts' which have destroyed honest men from legitimate business enterprise" (Congressional Record, 51st Congress, 1st session, House, June 20, 1890, p. 4100). Later in the debate, Senator George F. Edmunds argues that although "the oil trust has reduced the price of oil immensely, that does not alter the wrong of the principle of any trust"
The popular sentiment against Standard Oil that made the antitrust case politically fruitful was produced by sensational news stories that presented business history as a tale of "good-guys" versus "bad-guys." Ida Tarbell's reports in McClure's Magazine and Henry Demarest Lloyd's Wealth Against Commonwealth mobilized public opinion against Rockefeller, who was unofficially retired by the twentieth century. Historians still cite these works as evidence of Standard Oil's depravity.
Apart from the aforementioned stories of unfair business practices, the most noticed parts of both works were the ad hominem attacks on Rockefeller and other high officials of Standard Oil. Lloyd's work was so vitriolic that he did not refer to Rockefeller or Standard Oil by name to avoid libel prosecution. Wealth Against Commonwealth pronounced blatant falsehoods, accusing Standard Oil of routinely keeping prices high and making secret arrangements with European competitors. Chernow writes that Lloyd "filled notebooks with flaming diatribes against . . . a cruel, selfish, carnivorous, short-sighted herd" and "ennobled any businessman, however greedy or inept, who opposed Rockefeller" The book's inflammatory character made its influence all the more seminal among politicians, becoming "the bible of Washington trustbusters," and the final straw that motivated Ida Tarbell to launch her attacks on Standard Oil
Ida Tarbell had watched Rockefeller put her father and other independent oil refiners out of business in her hometown of Titusville. Her motive was not to indict Rockefeller for his impact on consumers at large, then, but on other oil refiners. Chernow writes that "It revolted Ida that the trust could turn proud, independent entrepreneurs into beaten men taking orders from distant bosses" (p. 436). Contrary to the stories of "Miss Tarbarrel," as Rockefeller referred to her, the independent refiners engaged in anti-competitive agreements when they could, and many small oil producers--who Rockefeller eventually bought out along with the refiners--also resorted to violence rather than competition, destroying pumps and wells. Chernow writes "The producers terrorized each other, meting out nocturnal punishment...by setting their wells ablaze or smashing their pumping engines with sledgehammers. The producing end of the industry was populated by thousands of free booting, high-spirited speculators who were far harder to organize than the more sober refiners...."
Tarbell revived an inaccurate story that Rockefeller had defrauded Mrs. Fred M. Backus, an elderly widow who sold her Cleveland lubricating plant in 1878. Backus' factory was highly inefficient and headed toward bankruptcy, but Rockefeller had offered $79,000 for it (out of goodwill toward an old acquaintance), which was at least twice the cost of constructing a better factory (447). Backus estimated the factory's price at $150,000, and was furious at Rockefeller during the whole episode. Far from being an impoverished victim of capitalism, she was worth $300,000 at her death (p. 447). Chernow writes that the story's "Dickensian ring" caused it to spread like wildfire in the press and McClure's readership of 375,000--including President Roosevelt (
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Tarbell issued memorable diatribes against Rockefeller's personality and presence. She described him as a "living mummy" and a citizen whose churchgoing habits were only a "hypocritical facade brilliantly created by the predatory businessman" (p. 453). She completed her portrait with his physical appearance as an elderly man: "The disease which in the last three or four years has swept Mr. Rockefeller's head bare of hair, stripped away even eyelashes and eyebrows, has revealed all the strength of his great head.... The big cheeks are puffy, bulging unpleasantly under the eyes, and the skin which covers them has a curiously unhealthy pallor. It is this puffiness, this unclean flesh, which repels, as the thin slit of a mouth terrifies..."
Tarbell had also included "dirt" on Rockefeller's family, including his bitter and paranoid brother Frank, who called John a "monster," even though he depended on him for loans to finance his prodigal spending habits (p. 455). Most devastating to Rockefeller himself was the publication of the activities of his utterly depraved father, "Doc" William Avery Rockefeller, a lifelong con artist who employed the name Dr. William Levingston ever since he left his first wife for an unsuspecting younger woman.
The public was aggravated by Rockefeller's refusal to answer to the writers' charges. Standard Oil had no public relations department, and Rockefeller thought that he should not dignify the charges with a response, believing the public furor would subside. He greatly underestimated the growing influence of the press during the Progressive Era.
President Roosevelt initiated the campaign to break up Standard Oil. Roosevelt was not against trusts per se, but trusts "which gouged consumers." He favored maintaining trusts "which offered fair prices and good service" (p. 433). The price of Standard Oil fell during the nineteenth century, but the new boss, John Archbold, had increased prices during Roosevelt's time. When Roosevelt gained momentum in 1903 - by informing reporters that Rockefeller used his connections in Congress to fight the Elkins Act (which strengthened penalties against railroad rebates)--he zeroed in on the prey.
The breakup of Standard Oil may have been in the interest of lower oil prices. John Archbold raised the price of Standard Oil to increase average dividends to larger figures than Rockefeller would have permitted, keeping the twenty five-year average at 13.86%, whereas Rockefeller's average had been 8%. It was under Archbold's leadership that Standard Oil was broken up in 1911. Presidents Roosevelt and Taft claimed that they were not against trusts in and of themselves, but trusts that used their competitive advantages to raise prices. Would the antitrust case discourage future "titans" from doing their best work in industry? Rockefeller himself was imbued with missionary zeal, and would have been likely to expand his business as far as possible, even with constant pressure from antitrust laws.
Ron Chernow's Titan: The Life of John D. Rockefeller, Sr., shows that in the case of Standard Oil, the Gilded Age's most notorious monopoly, the benefits conferred on consumers in pursuit of monopoly were ambiguous. However, net economic benefits to consumers were far from the minds of journalists and politicians, who used inappropriate criteria to excite popular agitation against Standard Oil. At best, politicians and intellectuals measured the plight of businesses displaced or harassed by Standard Oil against the success of Standard Oil, rather than measuring the plight against the advantages of a non-antitrust policy to the public. Standard Oil was and is judged not on the basis of whether it was, on balance, good for society, but whether it adhered to a moral obligation to refrain from eliminating competition.
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