Friday, January 30, 2009

Friedrich August von Hayek


Today we celebrate Friedrich August von Hayek (1899-1992) for his defense of capitalism. Hayek is considered one of the most important economists and political philosophers of the twentieth century. He made large intellectual contribution to both the Austrian School of economic reasoning and the theory and philosophy of law.

Born in Vienna, Austria, into a family of academics and intellectuals, Hayek's influences were more than sufficient to guide him in the same direction. At the University of Vienna he earned doctorates in both law and political science. He also studied rigorously economics, philosophy, and psychology.

Of his academic work (Wikipedia):

"Hayek was one of the leading academic critics of collectivism in the 20th century. Hayek believed that all forms of collectivism (even those theoretically based on voluntary cooperation) could only be maintained by a central authority of some kind. In his popular book, The Road to Serfdom (1944) and in subsequent works, Hayek claimed that socialism required central economic planning and that such planning in turn had a risk of leading towards totalitarianism, because the central authority would have to be endowed with powers that would have an impact on social life as well, and because the knowledge required for central planning is inherently decentralized.

Building on the earlier work of [Ludwig Von] Mises and others, Hayek also argued that while, in centrally planned economies, an individual or a select group of individuals must determine the distribution of resources, these planners will never have enough information to carry out this allocation reliably...Hayek claimed, [this] can be maintained only through the price mechanism in free markets (see economic calculation problem). [Hayek made this arguement publicly in his essay] The Use of Knowledge in Society (1945)... In Hayek's view, the central role of the state should be to maintain the rule of law, with as little arbitrary intervention as possible."

Hayek's work in monetary theory and business cycle theory earned him a 1/2 stake in the 1974 Nobel Prize. His contribution in these areas seem as relevant today as they did in the era of Great Depression (see here).

Hayek's nearly life-long devotion to free-market capitalism places him, in my opinion, among the top of our Heroes of Capitalism list (along with several other Austrian economists and philosophers we've yet to discuss). For much more on F.A. Hayek and the Austrian School, see the links below. Also check the AustrianEconomists blog for recent discussion on ongoing economic concerns.

Sources:

NewSchool.edu
Hayek at Wiki
HayekCenter.Org
Hayek at Mises.Org

Thursday, January 29, 2009

Ticket Scalpers

The most ubiquitous examples of market failure might be found in stadiums and concert venues across the country. I'm referring to primary markets in tickets to sporting, music, and exhibitor's events where the market doesn't clear. It's difficult to define a true failure; one or several events where the market doesn't clear may actually be optimal from a seller's perspective in the larger picture. But in the event buyers are unable to pay any price to obtain what was otherwise available from sellers (typically via queue-rationing), there exists an arbitrage potential that is met by everyday Heroes of Capitalism in the secondary tickets market.

Ticket scalpers fill an important void, but that's not why they're heroes to me. Scalpers face legal harassment and are subject to harsh regulatory regimes bolstered by public distrust of their work. This stems largely from popular misunderstanding of markets and a strange fealty to the notion of fixed prices for entry (reminiscent of "intrinsic value"). Suppressing prices for a fixed number of tickets makes as much sense as trying to hold a balloon underwater, but scalpers still bear the heavy burden of morally-tinged public scorn and laws meant to limit their effectiveness. End-buyers generally feel no pain (nor should they). Primary sellers, who create discord when they purposefully sell tickets below market price, should be viewed as provocateurs but generally escape responsibility for queue-rationing an otherwise perfectly marketable product and painting scalpers as improper.

A Google search shows that many people have written about ticket-scalping, including economists. I didn't want to read any of it before I jotted down my initial (haphazard and imperfect) thoughts about scalpers. A preliminary search finds an old Paul Krugman article on the matter, which adds some nuance. I can understand a venue wanting to create a shortage for various reasons (which they have a right to do). I can't, however, accept them using public authorities to squelch markets they don't like. I'd say it's up to the venues to keep their own houses in order. Regardless, ticket scalpers will hopefully continue to fulfill their role.

Wednesday, January 28, 2009

George Boedecker, Scott Seamans, and Duke Hanson

De gustibus non est disputandum. Keep that in mind as I introduce today's Heroes of Capitalism.
Besides the mouth, little speaks more for a person than their shoes. Is that person in the cubicle next to you right out of college or several years into the job? Look at their shoes. How hip of a hipster is your bike messenger? Look at his shoes. And when you see someone wearing a pair of Crocs, chances are their feet are quite comfortable.

George Boedecker, Scott Seamans, and Duke Hanson, like many of our heroes, were at the confluence of a great idea and good luck when their company's shoes caught on with the general public. Also a common theme: the idea wasn't theirs. The trio were reportedly on a trip in 2002 when Seamans praised his pair of non-slip, synthetic boat shoes. The shoes were produced by an little-known Canadian company with a proprietary formula for lightweight, non-plastic foam resin. The three entrepreneurs figured the product was under-marketed and proposed to distribute the shoes under the name of "Crocs." In 2004 they bought rights to the formula and started producing the shoes en masse. What they hoped would appeal to a niche market caught on in the northwest, east coast, and eventually across the country.

There are other heroes to this story. The founders of Crocs likely found themselves overwhelmed by their success when they asked an old college friend and successful businessman, Ron Snyder, to be their CEO. Snyder saw the global marketing potential and introduced a manufacturing presence in Europe and Asia, leading the company to a ten-fold increase in sales. He also purchased an Italian shoe designer to give the company a boost where it is criticized most. More recently, Crocs inspired Sheri and Rich Schmelzer to create a business in accessories for the shoes, which they called Jibbitz. Jibbitz are colorful plugs that fill the characteristic holes in Crocs shoes. One year later, the Schmelzers sold Jibbitz to the shoemaker for $10 million.

All of these heroes profited off the ideas of others. I'm not embarrassed to admit that's what much of capitalism is about. Sometimes a person with a new idea can profit from it; more often the information needed to do so is diffuse or capital scarce. But let's not forget the plausible dozens of other, failed shoe ideas that entrepreneurs have likely tried to market. A healthy capitalism not only rewards those who create what people want; it snuffs out the weak ideas. While I may not be a fan of the appearance of Crocs, I admire them as a testament to the power of capitalism to offer people what they want.

CNNMoney.com
Slate
Crocs website
CNNMoney.com on Jibbitz
Jibbitz website

Tuesday, January 27, 2009

Steve Smith


"And men, remember, if the women don't find you handsome, they should at least find you handy." - Red Green (Steve Smith)

Today we honor Steve Smith (b 1945) as a Hero of Capitalism. Smith is most famous for starring in the television show,"The Red Green Show" which he also produced for 15 successful seasons.

Smith entered the entertainment industry in 1979 with his wife Morag when they created a sketch comedy series called "Smith & Smith". Smith wrote and produced all 195 episodes. It was in this series that the character Red Green was born. He also wrote and produced other series including "Me and Max" and "Comedy Mill".

In 1990, Smith made the Red Green character into his own show for CHCH. However, after two seasons CHCH cancelled the show due to budgetary reasons. Smith, believing in "The Red Green Show" bought all rights to the show, found a partner for the show and returned the show to production in 1994 at CHCH. Through his umbrella production company S & S Productions Smith bought airtime and had the show syndicated across the Canada.

Smith's small sketch comedy series/sitcom about a do-it-yourself, fishing, outdoors show with an obsession for duct tape was so popular that in 1997 that the show moved to the CBC. The show ran for 15 seasons, filming over 300 episodes all written and produced by Smith. Smith's show has over 100,000 plaid shirt waring, duct tape holding members in its fan club. The last show was aired in April 2006, attracting over one million viewers; more than 100 PBS stations in the United States aired the show.

Smith continues to work for his company, S & S Productions and is a member of the Order of Canada.

Anyone who has seen this show has been enriched by the gentle, optimistic idiots at the Possum Lodge. Smith created wealth through creating and producing a simple TV show about a handy man who believes any problem can be solved with duct tape and a short cut.

Sources:
CBC.ca- Don your plaid for the final 'Red Green Show'
The Canadian Encyclopedia: Steve Smith

Monday, January 26, 2009

Mark Cuban


Mark Cuban is now well-known as the volatile, win-at-all-costs owner of the NBA’s Dallas Mavericks. In recent years, he’s received much attention for saying controversial things ranging from criticism of the officials to criticisms of the league office that frequently get him fined by the NBA. His total fines are believed to be in excess of $1.5 million. Why doesn’t he just shut up? Well, for one thing, he’s got the money. Cuban’s wealth is estimated to be in excess of $2 billion. But you don’t go from bartender to billionaire owner of a basketball franchise if you don’t know a good investment. Is it possible that his antics are also a good investment?

In 2000 when Cuban bought the Mavericks, they were part of basketball’s lower class. Cuban was able to buy the Mavs for $280 million – which put them in the bottom half of NBA franchises in terms of team value. Today they are worth $466 million, which ranks them 7th among NBA franchises, behind legendary franchises like the Lakers, Knicks and Bulls. Some of this increase in value can be attributed to Cuban bringing winning basketball to Dallas. But part of it has to be attributed to his ability to bring attention to his franchise…with his mouth.

Mark Cuban is a Hero of Capitalism not for any single accomplishment, but for always recognizing a good investment. From humble beginnings, he gathered enough resources together to start a company called MicroSolutions. MicroSolutions product was recognizing the right software solutions for a particular company among existing products and helping businesses implement these solutions. Cuban built the MicroSystems brand name and eventually sold it for $6 million to CompuServe.

Cuban then combined resources with Todd Wagner to form an internet radio network called AudioNet dedicated to broadcasting college sports – particularly college basketball. AudioNet was a hit, eventually changing its name to Broadcast.com, before being acquired by Yahoo. With a combination of entrepreneurship and timing, Cuban had become a billionaire. Cuban has since largely diversified his holding, becoming involved in a wide range of businesses ranging from movie theatres to high-definition televisions to basketball franchises (and a failed bid to buy MLB’s Chicago Cubs).

Cuban may be a controversial choice for a Hero of Capitalism, as he is now facing charges of insider-trading by the SEC. But regardless of the outcome of those hearings, it is indisputable that Cuban is an extremely effective entrepreneur, who has created a vast amount of wealth for himself and others along the way.

Cuban's Wiki

Friday, January 23, 2009

John Moses Browning

Since January 23 is the birthday of John Moses Browning, I have selected him as today's hero of capitalism. It may seem like an odd choice to some, but I think there is a good reason why his accomplishments should be celebrated.

For those of you who don't instantly recognize his name (or haven't guessed from his photo), he was an inventor and designer of firearms. In fact, he was one of the best. Browning was born in 1855 in Utah, and he worked as a young man in his father's gunsmith shop, learning the ins and outs of firearms from their basic design and manufacture to their operation and utility.

In the late 1870s, Browning and his brothers took over his then deceased father's shop and began not only repairing guns (as a gunsmith would normally do) but designing and manufacturing new ones. The quality of the designs soon caught the attention of the Winchester, Colt, and Remington companies, which all purchased and manufactured Browning-designed firearms. 

Among his many innovations was the slide design that is the essential part of an automatic handgun, the gas-cycled automatic machine gun, and the semi-automatic shotgun. In all, he is credited with over 100 patents related to firearms. His most popular models, such as the M-1911, became long-standing standard issue weapons for the US military and many police forces.

Now, for those who are still wondering why Browning is a hero of capitalism, here are the reasons. First, firearms are essential to hunting, sportsmanship, and other recreational activities. Because of the innovations Browning introduced, hundreds of businesses thrive in these areas.

The second reason, which I think is far more essential, is that firearms are absolutely essential for capitalism to exist. Firearms are an essential part of law enforcement and the military, which are themselves essential to capitalism. The fundamental root of capitalism is the right to life, and the implementation of that right requires a right to private property. To make the use of retaliatory force objective, a system of capitalism requires a police and military (two of the essential functions of government) to protect and guard the private property that leads to wealth creation. I think it is clear that when police forces and the military are armed with efficient and well-designed firearms, they are less likely to have to use them in defense of our rights and we are more likely to enjoy the freedom of wealth creation that is the hallmark of capitalism.

Sources:
Wikipedia entry on Browning
Petition for Browning holiday
The M-1911 page biography of Browning

Thursday, January 22, 2009

Charles Strite

Today we celebrate Charles Strite for his invention that has been a staple in American households for nearly 100 years - the pop-up toaster.

Patented in 1921, Strite's toaster was the first "fire-safe" version of the machine. Though a "toaster" had been introduced in the late 1800s, Strite was the first to successfully improve on the concept.

Strite started the Waters-Genter Company to manufacture and market his new product. His initial clients were mainly restaurants. After some improvement, households too would adopt his invention. In 1926, Strite added an additional feature to his toaster, an automatic pop-up. His product became known as the "toastmaster." The success of his invention eventually caught the attention of Edison Electric Co., who later acquired Waters-Genter.

As innovation often leads to further innovation, so too did the toaster lead to changes in the way other goods were manufactured. For example, a short time after Strite introduced the toastmaster, bread companies began pre-slicing their bread and marketing it as "toastmaster-friendly" - which attributed to an even larger increase in sales of both the toastmaster and bread. Ahh, the beauty of the market!

Hat tip to Justin Ross over at The Perfect Substitute blog for the inspiration for this post. Justin comments on a very interesting piece by Glenn Beck - who outlines the benefits of capitalism (includes reduction in price of toasters over time) in his article Thank You, Capitalism!.

Sources:

MIT-inventor of the week archive
Ideafinder

Wikipedia

Wednesday, January 21, 2009

James E. Casey

Today we honor James E. Casey (1888-1983) for his creation of the United Parcel Service. In 1907, Casey borrowed $100 from a friend to start a messenger service with a fleet of 2 bikes. Today UPS is a global company worth about $50 billion (and lots of trucks and planes).

Casey entrepreneurial spirit meant that he drove his company to constantly innovate. UPS is known for being one of the first companies to offer profit sharing for employees. Casey constantly searched for ways to make his company better. One pivotal decision was to be a common carrier. In 1922 UPS started to become the company we recognize today. With common carrier rights, it began to offer services like Cash on Delivery, multiple attempts and return of undeliverable packages. Then, in 1924 the conveyor belt sorting system made its debut at UPS.

Perhaps what I like best about Casey is his ability to overcome his failures. One example of this a failed attempt at air package service. Initially UPS offered air package service in 1929, but the Great Depression and lack of demand quickly ended the service. However, they reopened the option in 1953.

Today we honor James E. Casey for taking his private property and creating great wealth. I think Casey sums up the spirit of Capitalism (whether he meant to or not) with the following quote:
"One measure of your success will be the degree to which you build up others who work with you. While building up others, you will build up yourself."
Sources:
James E. Casey on Wikipedia
UPS on Wikipedia
UPS Company History

Tuesday, January 20, 2009

Herb Kelleher

Today we honor Herb Kelleher (born 1931) for co-founding and leading Southwest Airlines. Kelleher, along with Rollin King, started Southwest Airlines in 1967. As a low-cost airline in Texas, Southwest faced legal battles from larger airlines just to legally fly. Some credit the legal battles as the beginning of airline deregulation.

Kelleher maintained his vision of a low cost airline for more than 40 years as CEO and/or Chairman of the Board of Directors. He helped take the airline from being a small Texas only airline to a company that has over $9 billion in revenues. Under Kelleher's leadership, Southwest developed a method of fuel hedging, started the first airline web site, and decreased turn around times to 20 minutes! This all translates lower cost of operation, and many airlines have followed suit.

Kelleher is credited with creating a dynamic corporate culture that thrives innovation. His use of private property created wealth for himself, Southwest Air and the everyday person who depends on airplanes for transport.

Herb Kelleher on Wikipedia
Southwest on Wikipedia
Southwest's official website
Southwest's 2007 annual report

Monday, January 19, 2009

Edward Knabusch & Edwin Shoemaker

Edward Knabusch and Edwin Shoemaker are the founders of one of the most well known and respected furniture stores, La-Z-Boy. Today we celebrate these men not only for their invention of the La-Z-Boy recliner but also for their business practices that have allowed for La-Z-Boy to become a leader in the furniture industry.

Knabusch and Shoemaker started their furniture store in Knabuschs father's garage in Monroe, Michigan in the 1920s and reinvested very heavily in their young company. Their thriving company quickly out grew the garage, but in the late 1920s, the men struggled to find a bank that would loan them the money to expand the company. However, Knabusch and Shoemaker found enough community support to build a factory through loans from family and friends.

In 1929, the men developed a chair with a reclining mechanism out of orange crates. On the suggestion of a customer, the men decided to upholster their new chair and the success of their company boomed. After this invention, the men incorporated their company, once again borrowing from the community for patent and start up production costs.

The new chair needed a name, so the men held a naming contest as a marketing tool to promote the chair; the winning name was La-Z-Boy. Other marketing campaigns and tools included giving fresh produce from Knabusch's garden to potential customers, and turning shopping for furniture into a family event by hosting "Furniture Shows". These shows allowed for parents to shop while the kids were entertained by Ferris Wheels and merry-go-rounds. These techniques helped the company to grow during the early 1930s. During this time, they also changed their company so that it was also a retail store and continued to invent new pieces of furniture.

In 1972, the company passed to Knabusch's nephew and has continued to grow. Knabusch and Shoemaker have a story similar to other successful companies, through continued reinvestment, detailed marketing campaigns, and constant innovation and expansion these men created a successful billion dollar company. Through their company, Knabusch and Shoemaker have increased wealth worldwide and through their La-Z-boy recliner, they have provided a new, comfortable way to relax.

Sources:
La-Z-Boy History
Wikipedia: La-Z-Boy

Friday, January 16, 2009

David G. Booth



David G. Booth has since 1981 been a pioneering leader of the investment firm, Dimensional Fund Advisors. After earning an undergraduate degree in economics from the University of Kansas, Booth then went on to earn an MBA from the then-named University of Chicago Graduate School of Business. (The school is now known as the University of Chicago Booth School of Business, thanks to a $300 million donation Booth made last year, the largest ever to a business school.)

While at Chicago, Booth studied and worked with Eugene Fama, pioneer of the "efficient markets" hypothesis and a leader of portfolio theory and asset pricing. After he left Chicago and work for Wells-Fargo, he joined his fellow Chicago-alum Rex Sinquefield in founding Dimensional Fund Advisors. The privately-held group now manages over $120 billion in assets.

By developing and implementing the idea that markets work efficiently in their pricing of equities, Booth and Sinquefield helped popularize the index fund model, which is at the heart of millions of Americans' investment strategies and which will help them retire comfortably without having to expend enormous sums and amounts of time in trying to "out-think," "out-guess," or "time" the market. Their firm instead relies on "enhanced indexing," a concept that was considered radical in the early 1980s, but has proven over time to be incredibly wealth-producing.

Sources:
Chicago GSB profile on Booth
Dimensional Fund Advisors official website
DFA profile of Booth
Wall Street Journal article on Booth gift to U-Chicago

Thursday, January 15, 2009

Edwin Land


"Don't undertake a project unless it is manifestly important and nearly impossible" - Edwin Land

Today we celebrate Edwin Land (1909-1991), inventor of Polaroid film. Second only to Thomas Edison in patents, Edwin Land's greatest achievement was that of instant photography.

Land's interest in light polarization began early. According to one source, "...he applied for the patent for his sheet polarizer just days before his 20th birthday." By this time, Land had already entered Harvard, studied for one year, and dropped out - to focus on his light polarization research. In fact, Land would drop out of Harvard twice - once in 1928 and once in 1932 - citing both times that he needed more tome to focus on research. In 1932 however, a former Harvard professor, George Wheelwright III, would join him to form the Land-Wheelwright Laboratories - later Polaroid Corp. Wheelwright would use Land's polarizing materials to manufacture modified versions of several products of the day, including: sunglasses and windshields, among other things.

The first Polaroid Land Camera (Black and White) hit the market in 1948. Not until a decade later did Land invent the color picture version of his masterpiece. The color Polaroid camera would hit the market in 1963.

Land's dedication to science and research won him the respect of many of prominent figures. In his later years, Land would join the secret intelligence panel to work for President Eisenhower on the U-2 spyplane project. And Harvard would eventually award Land an honorary doctorate for his life-long accomplishments.

Land's dedication to his interests in polarizing light led to an invention that made us all better off. The desire to view pictures instantly, no doubt, played a role in the technological progress of today's photo industry - specifically, the digital camera. IThis ability began with Land's Polaroid.

Sources:

Wikipedia
BusinessWeek
About.com

Wednesday, January 14, 2009

Victor Borge

Today we honor Victor Borge (1909-2000) for using his intellectual property to produce wealth. Specifically, we honor Borge for his piano-playing comedic talent. I especially love his telling nickname: The Clown Prince of Denmark.

Born in Copenhagen, Borge started playing the piano at age 3! As a young man, he turned from simply playing piano concerts to doing his now-famous piano-comedy routines. According the BBC,

A typical performance would start, not with the opening bars of a classical composition, but with a minute inspection of the piano from all angles Pages of sheet music would get mixed up, hair and clothing would be checked and then the pianist would turn on the audience and scold imaginary latecomers.

Beyond Borge's performance, he led an extraordinary life. After building a reputation for poking fun at Nazi's, Borge escaped to America in 1940... but wait it gets better. Disguised as a sailor, he returned to Demark to see his dying mother! Soon after coming to the US, he was hired by Bing Crosby to be a member of Kraft Music Hall.

I could not find a source describing how much cash Borge created with his performances, but after typing his name into Amazon, I found about 25 items with his name still readily available. I cannot image the true wealth he created.

For the joy he brought to those watching his performance, to the goods produced with his image and the inspiration he imparted to millions of people, we honor Victor Borge for using his private property to create wealth.

Victor Borge on Wikipedia
victorborge.com
BBC New Article
Victor Borge Quotes
Victor Borge Goods on Amazon

Thanks Martin for the idea!
Here is a short clip of many on youtube.com

Tuesday, January 13, 2009

Lionel Martin and Robert Bramford

Today we honor Lionel Martin (pictured right) and Robert Bramford for starting the company Aston Martin. In 1913 Martin and Bramford, car salesmen, came together to build better cars. Both men were into racing, and the name of the company comes from Martin's success at hill climbing in Aston Clinton. In 1915, the first Aston Martin was officially registered in London, England.

According to the Aston Martin website, Aston Martin, "has always stood for fine, civilized high performance sports cars, designed and produced by skilled craftsmen." The company started small, in 1937 Aston Martin produced 140 cars. Throughout the early 1900s, Martin and Bramford continued to build fine cars and race them. In 1947 David Brown bought Aston Martin. The company has continued to produce winning cars. See the time line below for some famous races won by Aston Martins. Today many of us think of Aston Martin as the car of James Bond.

Today Aston Martin is a global company. In 2007, the company was bought for $848M. Aston Martin is a global operation that has brought great wealth to many people. We honor Lionel Martin and Robert Bramford for taking their private property and creating wealth for many people.

Aston Martin Company Website
Aston Marin on Wikipedia

Monday, January 12, 2009

Momofuku Ando


Today we honor Momofuku Ando (1919-2007), founder of Nissin Foods and the man who introduced instant noodles to the world.

Shortly after the end of World War II, Ando founded a small merchandising firm in Japan, but the firm went bankrupt when Ando was convicted in 1948 of tax invasion and spent two years in jail. After losing this company, he founded a company in Ikeda, Osaka, Japan producing salt. The company later became Nissin Foods.

Ando invented his instant noodles in response to the food shortages in post WWII Japan. At the time the Ministry of Health was encouraging people to eat bread made from wheat flour supplied by the United States. The Ministry of Health was insisting that the noodle industry in Japan was too small to meet demand of the country as well as was too unstable.

After hearing this response, Ando set out to develop a production process for the noodle that would make it inexpensive and easy to prepare. In 1958, he marketed his first package of precooked instant noodles. The noodles were moistened, then allowed to dry before they were flash fried. When the consumer bought the product, the only preparation for the meal involved boiling water and stirring in the seasoning packet.

While originally an expensive luxury item, Ando's instant noodles steadily declined in price. Since his original product, Ando has expanded his company to also create cup noodles, making instant noodles even easier to prepare.

After Ando's development of the instant noodle, it became a world wide sensation. In 2004, annual servings of the noodle were over 70 billion.

Ando also founded Instant Food Industry Association to help set quality guidelines for instant noodles. The Association also provides food to areas that have been hit by natural disasters. Ando believed peace will only come to the world once everyone has enough to eat, and he worked to make an easy, inexpensive dish to help meet the world's demand for food.

Sources:
Wikipedia: Momfuku Ando
Wikipedia: Nissin Foods
MIT Invetor of the week: Momfuku Ando

Friday, January 9, 2009

Jerry Richardson


Richardson is the current majority owner of the Carolina Panthers, who are preparing to play their playoff game tomorrow against the Arizona Cardinals. Richardson has also been in the news a great deal recently, as he is awaiting a heart transplant. While this makes him a sympathetic figure, it is, of course, not what makes him a Hero of Capitalism.

Richardson is an atypical owner in the NFL. He is the only former NFL player who currently is the majority owner of a team. Richardson played for 2 years in the NFL, but after failing to reach an acceptable salary agreement with the Baltimore Colts, Richardson retired, rather than accept a salary below what he felt he was worth. He instead used the money he got from a playoff check (less than $5,000) to invest in the company of a former college football teammate. This company, Spartan Foods, opened the first Hardee’s franchise, and was the primary franchisee of the Hardee’s chain. With the tremendous success of this venture, Spartan Foods expanded into several other restaurant chains, including Quincy’s Steakhouse and Denny’s. Richardson himself took over the ailing Denny’s franchise in 1987, and restored that chain to prominence (OK, relative prominence), allowing it to become a moneymaker within 3 years.

Once Richardson had made his mark in the business world, he set out to bring football to the Carolinas. This has turned out to be another shrewd investment, as his initial buy in of $206 million in 1993 has netted him a franchise now estimated to be worth $1 billion. Richardson’s entrepreneurial spirit has had a major impact on the NFL as well. As the owner of the Panthers, Richardson first introduced the innovation of the personal seat license to the financing of new NFL venues. The PSL is an up-front charge for the right to purchase season tickets each year. These fees are huge revenue generators for the franchise, and allow many teams to finance the portion of new stadium costs that is not covered by local governments. They are hated by the average NFL fan, who is understandably reluctant to part with these significant sums of money, but the news is not all bad. Most Panthers’ PSLs have actually appreciated in value, so that many of those who have invested in these PSL can actually recoup this investment if they choose.

Many would describe Richardson’s rise from “humble beginnings” to his current position of wealth as the “American dream.” Here, we simply recognize that Richardson took a small amount of money, combined it with an entrepreneurial spirit and plenty of hard work to create a tremendous amount of wealth for himself and others. This, of course, makes him a Hero of Capitalism.

Richardson Bio

Thursday, January 8, 2009

James Maynard

James H. Maynard is the chairman of Golden Corral Corporation, a business that started as a struggling local family steakhouse that now boasts over 470 units in 41 states and over $1.5 billion in annual sales.

Maynard and his partner William Carl began in 1973 with one restaurant and a vision for their business. Within six years, having survived a Nixon-administration price freeze on beef and other challenges, the brand had 100 units. Following the franchise model, there are now both company-owned and franchised locations across America.

Always focused on quality food and smart business growth, Maynard helped lead the company through changes in consumer tastes—Golden Corral introduced salad bars alongside their buffets in the 1980s.

Most people might not immediately think of top quality when you say "budget steakhouse," but Maynard has kept the chain on track to stay competitive in a tough restaurant sector. The introduction of made-to-order sirloins and fresh bakeries in all locations kept the company ahead of its competitors. Maynard also helped keep employees dedicated to the company by introducing a manager-to-partner track for the most successful members of the company.

By creating a viable budget restaurant that focuses on quality food and adaptation to consumer tastes, James Maynard is today's hero of capitalism.

Sources:
B-Net profile on Maynard
Wikipedia page on Golden Corral
Golden Corral corporate website
East Carolina University profile

Wednesday, January 7, 2009

George Dayton


Over 100 years ago, George Dayton opened the Dayton Dry Goods Company in downtown Minnieapolis. Little did he know that his retail venture would someday grow into the world-leading retail chain, Target.

After acquiring Goodfellows department store, in 1902, from fellow entrepreneur R.S. Goodfellow, Dayton transferred the store's merchandise to his new storefront in downtown Minnieapolis. Dayton would continue to market and expand, primarily, across the mid-west and western United States well into the mid-1900s, beating out - and often buying out - competition. In the 1960s, Dayton created B. Dalton Booksellers. This venture would grow into the largest U.S. chain of stores selling hardback books. Combined with Dayton's Dry Goods Co, Dayton renamed his retail creation, Target stores. In 1986, Dayton Corporation sold its rights to Dalton booksellers to a now market-dominant Barnes and Nobel, Inc.

Dayton's Target stores continue to thrive in the 21st century. Target stores can be found coast to coast and offer everything under the sun. According to Wikipedia, Target is 5th in line of largest retailers in the United States, and 31st on the list of Fortune's 500.

Sources:

Wikipedia
Target.com

Tuesday, January 6, 2009

Steve Ells

Fifteen years ago, the first Chipotle burrito shop opened its doors in Denver, Colorado. Not a big deal, right? There are thousands of similar restaurants across the country. But the founder of that store has shown remarkable acumen in turning a small group of high-quality fast food restaurants into a national institution. Additionally, the success of Chipotle (and what they've found in the apparent insatiable American appetite for burritos) has helped fueled the growth of competitors such as Qdoba, Moe's, and regional chains.

Steve Ells, an Art History graduate-turned-culinary student, had all the right stuff for leading a successful restaurant chain. To take it national, he needed capital. McDonald's had capital and one of the best distribution networks in the US. McDonald's initially bought a minority stake in the company five years after the first store opened, but quickly took a majority interest that lasted until the year of Chipotle's IPO in 2006. In the meantime, Chipotle grew to harbor over 500 stores.

Ells is today's hero because he is achieving his dreams with his own property and with the property of others who have been willing to invest in what they see as a profitable concept. Besides running a successful restaurant business, one of Ells' goals is to alter traditional methods of agriculture to make them more environmentally sustainable. With the clout of a man who knows how to make millions of diners happy, Ells is doing this in a way that fans of capitalism can appreciate. A theme at Chipotle is "food with integrity"and even if you don't buy into it, you should take the concept seriously. As American consumers become more conscious about where their food comes from, they are voting with their food dollars for new business practices. This is more powerful, and less disruptive, than government mandates.

Even if Ells was the typical caricature of a businessman, the uncaring, greedy capitalist who was only interested in enriching himself, he wouldn't be notable unless he gave people what they wanted. And what I want now, after writing this, is a Chipotle burrito.

2007 Businessweek profile
2006 Rocky Mountain News profile
BloggingStocks.com
FundingUniverse.com

Monday, January 5, 2009

Samuel Slater

Today's choice for Heroes of Capitalism may not be viewed in a unanimous light by those who value this project; defining the man is, to some degree, defining one's stance on intellectual property. I'm not a competent resource for legal knowledge in any sense, but I'm likely betraying my relativism towards the topic when I celebrate a great American pioneer of circumventing intellectual property law (as it was): Samuel Slater.

Samuel Slater (1768 - 1835) was an Englishman who emigrated from England with the intent to replicate Richard Arkwright's water frame in the United States. This invention was a powerful improvement upon the textile spinning machines of the day, itself an enhancement with problematic lineage. Arkwright was one of several entrepreneurs who developed and disputed the patent rights to the water frame's predecessor, the spinning frame, as well as a competing machine called the spinning jenny. Slater's role was, by contrast, not in doubt; he was what we would call today a "pirate" of technology. He memorized the design of the water frame and sold it to a businessman in New England with whom he built America's first water-powered textile factory.

The industrial revolution in America (broadly considered) had its early genesis in textile manufacturing. American textile manufacturing was vaulted forward by Slater's mills. There's a lot to be said about intellectual property and patents of the time, but I value Slater's actions as a form of IP arbitrage. Economic protectionism, geographic limitations, and the lack of international institutions made conceptions of intellectual property incoherent between countries such as the United States and England. While there may be ethical questions surrounding his profiting without compensation for the original developers of the water frame, there can be no doubt about the importance of what Slater started with his textile mills.

Friday, January 2, 2009

Mark Zuckerberg


While getting ready to write today's post I made a stop at my favorite procrastinating website: Facebook. So today we honor Mark Zuckerberg, founder of the free access, social networking website Facebook.

Zuckerberg first launched Facebook on February 4, 2004 in his dorm room at Harvard University. Zuckerberg was 19 years old. Within the first month of its launch, over half the students at Harvard were using the new website. Facebook was originally limited to Harvard students but after experiencing huge success, he expanded the site to other Ivy League colleges, then to all colleges.

Members of Facebook can now join networks organized by school, region, city, and workplace. Zuckerberg's site allows for people to interact through seeing the profiles of others in their network, by adding friends, sending messages, and updating personal statuses. Facebook has over 140 million active users worldwide.

Zuckerberg is now the CEO of Facebook, Inc. In April 2008, comScore rated Facebook as the top online social networking site based on unique monthly hits, putting Facebook above its competitor MySpace.

Zuckerberg is a computer programmer and an entrepreneur. His website has made social networking easier and has made online social networking more popular than ever. The ease of keeping in contact with schoolmates, coworkers, conference friends, and many other people through Zuckerberg's Facebook has made my life as well as countless other peoples' lives richer.

Sources:
Wikipedia: Facebook
Wikipedia: Mark Zuckerberg

Thursday, January 1, 2009

Dick Clark


I’m sure many of you are looking at this blog through bleary eyes this morning. And many of you either watched a little bit of Dick Clark last night, or have countless memories of New Year’s Eves spent with “America’s Oldest Teenager.” Dick Clark has been the face of the New Year since the premier of Dick Clark’s New Years’ Rockin’ Eve debuted in 1972. But why does that get him a spot in Heroesofcapitalism?

Clark started as a DJ in Philadelphia in 1952. He was a common guest host of a music themed show called Bob Horn’s Bandstand for several years. When Bob Horn left the show, Clark took over and the show became American Bandstand. It was picked up nationally shortly thereafter and Clark became a household name. But fame alone is not enough to get you mentioned on this site.

Clark is honored here for what he has done with this fame. He expanded his fame with work on numerous radio programs, and in 1973, he made the leap from famous person to entrepreneur and businessman with the creation of the American Music Awards show. After the success of the AMA’s, Clark began producing more and more shows, many of which he starred in, rolling his interests together into a production company called Dick Clark Productions. Dick Clark Productions is heavily involved in producing television shows. One of their early hits was TV’s Bloopers and Practical Jokes, but they are still a player today. The popular show, So You Think You Can Dance, is a Dick Clark Productions endeavor. But the production company also is involved in other ventures, like numerous rock and roll themed restaurants, movie theatres and the licensing of all of the images from Dick Clark’s career.

Clark's career was far-reaching; at one point his was involved in so many projects that he starred in and produced hit shows on all three major networks simulataneously. Clark used a little bit of fame and charisma, combined it with a strong work ethic and a few good ideas and turned it into a multimedia empire that recently sold for $175 million. Clark is a true entrepreneur and, in my opinion, a Hero of Capitalism.

Rock and Roll Hall of Fame Entry
Clark Bio