The Making of an Entrepreneur

The Making of an Entrepreneur

Not every entrepreneur is created equal, however there are a few characteristics one might need to have to be classified as one. In this paper, three entrepreneurs from the book New Ideas from Dead CEOs: Lasting Lessons from the Corner Office by Todd G. Buchholz will be evaluated on the basic criteria of an entrepreneur as well as a fourth entrepreneur not from the book. The three entrepreneurs that will be evaluated from the book are, first will be Amadeo Peter Giannini, the second is actually a father-son duo which are Thomas Watson Sr. and Thomas Watson Jr., and the last entrepreneur will be Ray Kroc. The entrepreneur that will be evaluated outside the book is Sarah Tulin.

The first entrepreneur that will be evaluated, is Amadeo Peter Giannini, more commonly known as A.P. and the founder of Bank of America, he is the creator of what we know of banks today. Before A.P., banks were mainly for wealthy men who needed a place to keep their money. At the time, working-men, small-business owners and housewives did not have the opportunities banks provide us today. A.P. recognized a possible opportunity in that present situation and decided that he wanted to take advantage of it and create a bank for the “common folk”. This plan of A.P.’s to create a “totally new kind of bank” for a consumer that had not yet been targeted by the banking industry but would potentially benefit from it, is a great example of entrepreneurship (Buchholz 9). A.P. capitalized on the unseen profit he could obtain from providing the working class with the access to banks.

Before A.P. changed the name to Bank of America, the name of his bank was the Bank of Italy and to benefit from the working class he had to get them to come to his bank. However, because most of the working class originally did not have access to banks, A.P. had to go out and personally advertise to inform them about his new bank so he could have them as clients. He needed to give them reasons to want to come and use his bank (Buchholz 10).

To appeal to the working class specifically, A.P. came up with a few ideas that would fulfill the wants that certain types of people would be looking to fulfill. A few of the things he offered, were the best rates in town, as well as having evening hours and being open on Sundays (Buchholz 9). Those significant differences his bank had over competing banks at the time, gave A.P. a huge advantage in the market, a defining characteristic of a good entrepreneur. That willingness to provide benefits for his customers continued through his career with his “new era” bank. More specifically, “The Bank of Italy provided its customers with 3.5 percent return to savers and just 6 percent for a mortgage”, which no other bank at the time provide for its customers (Buchholz. 11). A.P. also tried to appeal to women by opening a women’s department (Buchholz 13). A.P. seemed to be trying to fulfill the desires of every consumer that had not originally been acknowledged in the banking industry and he did a good job at it.

        The desire A.P. had of pleasing his customers only continued throughout his career. He seemed to keep finding unseen profit opportunities to exploit, one of those opportunities being branching out and having bank locations in small cities. One of his reasons for doing such a thing, was that A.P. believed that “Small local banks simply could not handle the seasonal demands of farmers. By borrowing from a big bank, the orange grove owner could get brain power and agricultural know-how of a larger entity” (Buchholz 19). In that case, A.P. is providing those farmers, a new consumer, with the opportunity to improve on a variety of levels, in turn acquiring a consumer who’s wants can potentially be filled by his bank.

The next entrepreneurs that will be evaluated next are Thomas Watson Sr. and Thomas Watson Jr..  Thomas Watson Sr. is the founder of the innovative, power house of a company known as IBM, which his son, Thomas Watson Junior, worked for and later ran after his father passed away. The company began after Tom’s (senior) discovery of connecting punch card tabulators to printers, which created a more automatic record keeping system (Buchholz 40). That innovation, made it easier for consumers to keep records, tapping into an unseen profit opportunity, a characteristic of an entrepreneur, due to the fact consumers would want to upgrade to that system for the easy, automatic record keeping. Tom took that opportunity and made it the foundation of his company, IBM.

        At the very beginning of the formation of IBM, Tom decided leasing his punch card tabulators was the best idea for his new company because “leasing created a reason for the salesman to check up regularly on the customer, binding them more closely together” (Buchholz 42). This plan exploited customers that did not want to lock into buying something, fulfilling that certain type of consumers’ wants. That plan fulfilling another criterion of being an entrepreneur, it also “helped insulate IBM against recession” because of the profit it gained from its customers paying monthly lease payments (Buchholz 42). Due to IBM’s platform, IBM dominated the market they were in.

        After years of not being involved in his father’s company, IBM, Tommy finally took interest and started working there. One of the things Tommy did to benefit the company and support that he is considered an entrepreneur was when Tommy’s father bought the ElectroMatic Typewriter Company and it did poorly for fifteen years, Tommy persuaded Father to fire the brand manager and replace him with a more innovative leader, “Wiz” Miller” (Buchholz 51). Tommy worked with Wiz to create different color typewriters to appeal to consumers and it ended up improving the typewriting side of the company. Tommy tapped into the newer consumer and gave them what they actually wanted, which showed in sales.

The third entrepreneur that will be evaluated is Ray Kroc and he is the man who took over McDonalds from the McDonald brothers and shaped it into what it is today. However, before Kroc acquired McDonalds he first experienced entrepreneurship through the selling of paper cups. At the time paper cups were not popular and Kroc originally had success selling his paper cups to venders of Italian ice because they were an easy sell due to the fact that “they had no room to lug heavy glassware on their carts. Nor did they have a convenient place to wash them” (Buchholz 144). Kroc was able to fulfill the wants of the Italian ice venders, a basic characteristic of an entrepreneur. Although he was obtaining sales from the Italian ice venders, Kroc wanted to expand (Buchholz 145). The one thing he learned through selling his paper cups to other customers that significantly helped in the development of McDonald’s was protecting his clients: “McDonald’ was virtually the only fast-food company that protected and exalted its franchises” (Buchholz 146). Through that very discipline, the entrepreneur in himself was able to connect with his consumers and provide them with what they needed.