How Self-Made Titans Launched Their Empires
by Melanie Lindner
Monday, June 15, 2009
provided by Forbes.com

You don't need a trust fund to start a great business. These world-beaters are living proof.


The capital crunch maddeningly persists -- dispiriting news for many would-be entrepreneurs born of choice or necessity. Having a gem of a business idea isn't worth much without the wherewithal to get it off the ground.

Certainly the lucky few "born on third base" have a better shot at achieving business superstardom than those without a safety net. According to a 2002 U.S. Census Bureau survey representing some 16 million business owners, a whopping 55% were initially funded by personal and family capital. Just 11.4% snagged bank loans, and 8.8% got going on personal and business credit cards; much of the remainder lived on government loans and outside investors.

Yet for entrepreneurs who have truly creative ideas, unrelenting devotion and oodles of ability to execute -- but who may not have fat trust funds to lean on -- there's reason for hope. Scan the Forbes list of the world's wealthiest people and you'll find moguls from startlingly humble origins.

Take John Paul DeJoria -- owner of Paul Mitchell Systems, a hair products company, and Partron Spritis, a high-end tequila brand -- who started out as a door-to-door salesman in Los Angeles at age 9. First he sold Christmas cards but soon moved to newspapers and other subscriptions. After a short stint in the navy, he returned to his salesman roots, selling encyclopedias.

In 1980, with just $700 and an iron will, DeJoria and friend Paul Mitchell, a hairdresser, decided to launch a new line of shampoo and other hair care products, based on a new formula Mitchell had developed. In the early months, when he wasn't pounding on salon doors and told to bug off, DeJorira bought supplies on credit and lived in his car. "Having sold other products door-to-door, I understood that rejection was just part of the process," says DeJoria, 65.

Without ever borrowing a dime, Paul Mitchell Systems became the largest salon-only hair care company in the U.S., with products in 10% of salons across the country. Then came his (and partner Martin Crowley's) agave assault with Patron. DeJoria currently owns a 51% stake in Paul Mitchell Systems and 70% of Patron. At last count, DeJoria's net worth was $2.5 billion.

Gift for gab helped Jeffrey Katzenberg, a high school-educated Manhattanite, climb to the top of the entertainment game. While he didn't launch a business on a shoestring, Katzenberg did spend decades building a network that would eventually help him launch one of the most storied movie studios of all time.

Katzenberg began honing his skills at age 15 as a volunteer in John Lindsay's campaign for mayor of New York in 1965; Lindsay won, and Katzenberg stayed on, foregoing college for the snap and crackle of politics. Through a connection at Lindsay' office, he later met Barry Diller, then president of Paramount, who invited him to Los Angeles to work as his assistant. "No one did more for my career than Barry," says Katzenberg, 58. "He taught me the entertainment business -- not just the fun parts, but the not so fun parts that you need to learn in order to be successful."

During his 11 years at Paramount, Katzenberg also befriended Michael Eisner, then chief executive of the movie studio. When Eisner left Paramount for Disney in 1984, he took Katzenberg with him, and there they pumped out hits like The Little Mermaid, Beauty and the Beast and Aladdin. After a falling out with Eisner in 1994, Katzenberg left to launch his own studio, DreamWorks SKG, with the likes of Steven Spielberg and David Geffen. With partners like that, little wonder this guy is worth $750 million.

Old-fashioned bartering helped put Kirk Kerkorian, farmer's son and future Wall Street titan, on the map. In the late 1930s, Kerkorian, who is 91, offered to look after famous female aviator Pancho Barnes' cattle in return for flying lessons. During World War II, he took a job with the Royal Air Force transporting planes from their Canadian factory to England for $1,000 per month -- an especially treacherous journey, as the planes weren't designed to withstand the long trip or the harsh weather over the North Atlantic.

With savings from his wartime job, Kerkorian purchased Trans International Airlines for $60,000 in 1947. (It is unclear whether he needed additional financing.) He later sold it to Transamerica for $104 million in stock, used to fuel further investments. His private investment firm, Tracinda, now owns 39% of MGM Mirage, down from 53% in May.

Billionaire financier George Soros, 78, socked away a few pennies to jump-start his entrepreneurial career. Born in Hungary in 1930, Soros and his parents fled the Nazis and landed in England. After putting himself through the London School of Economics while working as a railway porter and waiter, Soros moved to the U.S. in 1956 and found work at several investment firms, including Arnhold and S. Bleichroeder, where he worked his way up to vice president. After running several offshore investment funds, he launched his own investment firm with colleague Jim Rogers. Their Soros Fund began with just $12 million under management (it's unclear how much of that was their own capital); it has since grown into the multibillion-dollar Quantum Fund. Soros' current net worth: about $11 billion

Sometimes sheer talent and persistence is enough. As a single mother on welfare in Scotland, J.K. Rowling, 43, began writing the first Harry Potter novel in Edinburgh cafes whenever she could get her infant daughter to sleep. After being rejected by 12 publishing houses, Bloomsbury, a small publisher in London, offered an advance of 1,500 pounds (about $2,400) -- even while one its editors, Barry Cunningham, advised Rowling to get a day job.

Good thing she didn't listen: The following year, U.S. publishing rights to the first Potter book sold for $105,000. Rowling, who is now worth around $1 billion, has since moved nearly 400 million copies worldwide, and is the only author on our list.

In Pictures: How Self-Made Titans Launched Their Empires

Capital is a constraint for many would-be entrepreneurs -- or is it? These moguls came from humble origins. But with sweat, savings and good fortune, they launched incredible empires. Here's how they made it happen early on.


1. John Catsimatidis

Age: 60

Net Worth: $1.7 billion

Industry: Supermarkets, Real Estate, Oil

This son of a busboy entered the grocery industry in the summer of 1966, just after he graduated from high school. Befriended the owner of a Manhattan superette and started taking on more responsibilities. Four years later, the owner offered him a 50% stake in one of his stores to be acquired over the next 10 months at a rate of $1,000 per month. Within a few months, the store's sales doubled, and Catsimatidis was earning a profit of $500 per week (not bad for a 20-year-old back then). A year later, he launched the Red Apple Group, a chain of grocery stores that now includes Gristede's, Sloan's and Red Apple. Lacking working capital for inventory, he convinced vendors to let him buy on credit. By the age of 25, he owned 10 stores -- debt-free.


2. Harold Hamm

Age: 63

Net Worth: $3.5 billion

Industry: Oil and gas exploration

Youngest of 13 children in a family from Purcell, Okla., (pop: 5,571), Hamm worked school jobs as a gas station attendant to supplement his parents' incomes as cotton pickers. In 1966, two years after graduating from high school, Hamm launched his first venture. With a bank loan co-signed by a friend, he purchased a single truck, the main asset of a new oil-and-gas exploration-services business. Two years later, the company changed its name to Continental Resources. Recent market cap on the New York Stock Exchange: $5.6 billion. Hamm owns 72% of the outstanding shares.


3. George Soros

Age: 78

Net Worth: $11 billion

Industry: Finance

Like Sandy Weill, Soros socked away a few pennies to jump-start his entrepreneurial career. Born in Hungary in 1930, Soros and his parents fled the Nazis and landed in England. After putting himself through the London School of Economics while working as a railway porter and waiter, Soros moved to the United States in 1956 and found work at several investment firms, including Arnhold and S. Bleichroeder, where he worked his way up to vice-president of the company. After running several offshore investment funds, he launched his own investment firm with colleague Jim Rogers. Their Soros Fund began with just $12 million under management (it's unclear how much of that was their own capital); it has since grown into the multibillion-dollar Quantum Fund.


4. Kirk Kerkorian

Age: 91

Net Worth: $5 billion

Industry: Investments, Casinos

Old-fashioned bartering helped put this farmer's son and future Wall Street titan on the map. In the late 1930s, Kerkorian offered to look after famous female aviator Pancho Barnes' cattle in return for flying lessons. During World War II, he took a job with the Royal Air Force transporting planes from their Canadian factory to England at $1,000 per month -- an especially treacherous journey, as the planes weren't designed to withstand the long trip or the harsh weather over the North Atlantic. With savings from his wartime job, Kerkorian purchased Trans International Airlines for $60,000 in 1947. (It is unclear as to whether he needed additional financing.) He later sold it to Transamerica for $104 million in stock, used to fuel further investments. His private investment firm, Tracinda, now owns 39% of MGM Mirage, down from 53% in May.


5. J.K. Rowling

Age: 43

Net Worth: $1 billion

Industry: Media/Entertainment

Sometimes sheer talent and persistence is enough. As a single mother on welfare in Scotland, Rowling began writing the first Harry Potter novel in Edinburgh cafes whenever she could get her infant daughter to sleep. After being rejected by 12 publishing houses, Bloomsbury, a small publisher in London, offered an advance of 1,500 pounds (about $2,400) -- even while one its editors, Barry Cunningham, advised Rowling to get a day job. Good thing she didn't listen: The following year, U.S. publishing rights to the first Potter book sold for $105,000. Rowling has since sold nearly 400 million copies worldwide, and is the only author on the Forbes list of the richest people in the world.

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