How the 25 Richest Americans Failed Miserably
It's common knowledge that most entrepreneurs fail at some point. Sometimes it's a colossal failure that results in a startup closing its doors.
Other times, it's just a little hiccup that makes for a great story. Regardless of the severity of the failure, many successful individuals have had just as many defeats as victories, making every entrepreneur just a little bit wiser and stronger.
That doesn't mean that it's an easy pill to swallow. Failure isn't fun.
But if it's any consolation, even the most successful, influential, and wealthy individuals in the United States have also had their fair share of failure at some point. Here's a look at the 25 richest Americans and how they experienced failure.
Note: We excluded the Koch brothers and the Walton and Mars families because they inherited their fortunes.
1. Bill Gates
Have you ever heard of Traf-O-Data? Probably not, but it was Bill Gates' first company. Traf-O-Data was a device that read and processed traffic tapes. The problem was that it never worked and Gates was never able to sell it. Despite the failure of Traf-O-Data, Microsoft co-founder Paul Allen stated, "Even though Traf-O-Data wasn't a roaring success, it was seminal in preparing us to make Microsoft's first product a couple of years later."
Today Gates' net worth is a staggering $77.5 billion, so he must have learned a valuable lesson from that first failure.
2. Warren Buffett
Even the great Warren Buffett experienced a few slip-ups during his storied career. In 1951, Buffett purchased a Sinclair Texaco gas station and wasn't able to turn a profit. But by 1962, Buffett was a millionaire. Even then he still had some learning to do.
In 1962, Buffett began purchasing shares in the New England textile business Berkshire Hathaway, but then the company started to decline. Buffet made a deal with the CEO, Seabury Stanton, to sell back his shares. When the papers were delivered for Buffet's signature, Stanton had changed the deal and made an offer for 1/8 of a point lower. Buffett admitted later that this made him so angry that, instead of selling, he purchased enough shares to take control of the company so he could fire Stanton. To make matters worse, Buffett kept the failing textile business (the historic core of Berkshire Hathaway) open for 20 years before pulling the plug. Today, he calls this decision his "200 billion dollar mistake."
3. Larry Ellison
Larry Ellison (along with his former boss, Bob Mine), founded Oracle in 1977. By 1980, Oracle still hadn't experienced much success, which forced Ellison to mortgage his home in order to secure a line of credit.
Ellison never gave up. After rewriting an IBM paper that focused on the database-programming language SQL, he changed the course of the company by developing the business software that dominated the market in the 1980s. However, Oracle was once again on the brink of disaster in 1990 because orders weren't being fulfilled and the software contained bugs. Ellison responded by firing almost everyone in an effort to put the company's finances back in order and rewarded the salespeople who actually shipped the products. By 1995, Oracle had earned $2.5 billion in revenue.
In 1999, when he tried to best Bill Gates with the Network Computer (NC), Ellison experienced another failure. The NC might have worked today, but in 1999 it was too restricted and expensive for consumers who were only able to go online and store documents, videos, etc., on Oracle's database, which was similar to Google's Chromebook.
4. Sheldon Adelson
Always the entrepreneur, Sheldon Adelson began his career at the age of 12 selling papers and toiletries. Following his service in the army, the Boston native became a mortgage broker and investment adviser. At age 38, Adelson was worth $5 million. Unfortunately, the declining stock market and unwise business ventures caused him to lose his fortune not once, but twice.
Next, he attempted to convert apartments into condos in Boston, but that didn't go very far. Adelson struggled emotionally, mentally, and physically during these times, but he kept marching on. Eventually his love of computers lead him to create the Computer Dealers Expo (COMDEX) in 1979. COMDEX, one of the largest computer tradeshows in the world until 2003, is a big reason Adelson is worth $38 billion today.
5. Michael Bloomberg
Michael Bloomberg was let go from the investment bank Salomon Brothers. Bloomberg has stated that he went on to fund his own company because "nobody offered me a job, I was probably too proud to go look for one, and I said well, why not start your own company?" Over the next three years, Bloomberg perfected his company, which focused on finance, data, and media. The firing of this future mayor of New York City may have been for the best.
Bloomberg's big break came after Merrill Lynch purchased 20 of his terminals. Bloomberg said that during the first year of those challenging early years, "you don't think about the downside. The second year is the difficult one. The third year you see that light at the end of the tunnel."
6. Larry Page
In 1998, Larry Page co-founded a little search engine named Google--a reference to the mathematical term "googol" that represents the numeral 1 followed by 100 zeroes. Although it is now one of the most dominant Internet-service and product providers in the world today, Google has made a few mistakes as well. Do you remember Wave, SearchWiki, and Jaiku? Page, who became CEO in 2001, believes that Google, "probably missed more of the people part than we should have,"which explains why its social-media platform never took off like Facebook did.
Don't expect Page and the Big G to make that mistake again.
7. Jeff Bezos
In 1994, Jeff Bezos left behind his comfortable life in New York City and relocated to Seattle to sell books on the internet. There were some speed bumps in the early days of Amazon. The original name, Cadabra, was very often misheard as "cadaver." Bezos described one huge mistake: "We found that customers could order a negative quantity of books! And we would credit their credit card with the price and, I assume, wait around for them to ship the books."
Over the years, Bezos continued to make adjustments and take risks, and it worked. Today, Amazon is the world's largest online retailer. That success hasn't saved Amazon from experiencing failure here and there, however. For example, the bike-messenger delivery service Kozmo.com, the question-and-answer site Askville, and the Groupon competitor LivingSocial have all been less-than-successful ventures.
8. Sergey Brin
Google co-founder Sergey Brin once had an idea he though was sheer genius: He envisioned a business that allowed people to order pizza via fax machine. Reality set in when he realized that not every pizzeria and customer had a fax machine, which created a big problem for his business plan.
9. Carl Icahn
Carl Icahn is well known as a corporate raider in the business world. Since purchasing a seat on the NYSE in 1968, Icahn has made his fortune by taking over companies like RJR Nabisco, Texaco, Marvel Comics, Revlon, and Western Union.
Despite all of his success, Icahn has experienced a number of failures, such as investing in TWA, which later went bankrupt. He's also been on the losing end of the deal with companies like Blockbuster, Time Warner, and Motorola.
10. George Soros
George Soros, a Hungarian refugee who moved to New York City in 1956, began his career as an arbitrage trader. He developed an enthusiasm and talent as a short-term speculator, which led him to found one of the most lucrative hedge-fund firms, Soros Fund Management, in 1970. In 1992, Soros became $1 billion richer in just one day when he bet against the pound during Black Wednesday. However, he went on to lose $600 million dollars in 1994 after he miscalculated the value of the yen to the dollar. To his credit, Soros has stated, "I'm only rich because I know when I'm wrong."
11. Mark Zuckerberg
In 2004, while Mark Zuckerberg and his team were trying to get Facebook up and running, Zuckerberg also toyed around with a project known as Wirehog--"a peer-to-peer (P2P) file-sharing service that hooked up to Facebook." The idea behind this service was to allow Facebook users to share music, documents, etc. It was a great idea on paper--but Facebook began getting slapped with lawsuits. Thankfully, Wirehog didn't catch on and it was suspended in 2006.
Today, at just 30 years old, Mark Zuckerberg is worth $28.5 billion and is still making and learning from his mistakes: Think Facebook lite, Facebook Gifts, Facebook Home, and Poke.
12. Steve Ballmer
In 1980, Ballmer became the 30th employee at Microsoft. Over the years he held many positions within the company, including CEO from 2000 to 2014. Ballmer made so many mistakes while he was CEO at Microsoft that they were highlighted in an article by Business Insider. Some of his epic mistakes and failures include laughing off the iPhone, Windows Vista, and spending billions trying to take on Google. He was also instrumental in acquiring Danger (parent company of the Sidekick) for $500 million and the Zune.
13. Len Blavatnik
Nicknamed "King" at his holding company Access Industries, Ukrainian-born businessman Len Blavatnik made his fortune in oil and metal companies following the collapse of the Soviet Union. However, the King lost $1.2 billion after getting into the chemical industry. He borrowed money to purchase Dutch producer Basell in 2005 for $5 billion and then borrowed $20 billion more to purchase Houston-based Lyondell. After merging the companies, Blavatnik was unable to pay back the debt and declared bankruptcy. Fortunately for Blavatnik, the company has since been able to turn a profit after becoming free of debt.
In 2011 Blavatnick purchased Warner Bros. Music for $3.3 billion, which he reportedly purchased because "he loves what it can do for him socially."
14. Abigail Johnson
Abigail Johnson has earned her position as president of the family business, Fidelity Investments, by self-admittedly "doing whatever had to be done to right the ship." Johnson is one of the wealthiest and most powerful people in America, despite some serious setbacks. For example, she lost two important clients, an experience that she described as "extremely difficult and, at times, painful, personally, for me and for others."
15. Phil Knight
While at Stanford, Philip Knight wrote a term paper about a business that sold shoes. In 1962, he traveled to Japan and met with the founder of Onitsuka Tiger Co., one of the oldest shoe companies in Japan. When he returned home, he teamed up with Bill Bowerman at the University of Oregon to found Blue Ribbon Sports. Knight sold his first Tiger-brand running shoes from his green Plymouth Valiant at track meets across the Pacific Northwest. Sales skyrocketed and in 1978, the company became Nike.
Although the Air Jordan line gained great success, Nike neglected a growing trend in the late 1980s as the market was leaning toward aerobic shoes. Reebok filled that niche and Nike sales dropped 18%. In 1990, Knight and The Swoosh countered with the Nike Air, which reclaimed Nike's spot as the leading footwear brand.
16. Michael Dell
Michael Dell founded Dell Computers in a dorm room at the University of Texas, Austin, in 1984. By 1992, the 27-year-old entrepreneur had become the youngest CEO to be included in Forbes' list of the top 500 corporations. Dell's company went on to become one of the largest sellers of personal computers in the world.
Unfortunately, Dell also had a long list of failures, with his attempts to get involved in the smartphone, tablet, and even iPod market: There was the bulky Dell DJ that couldn't compete with the iPod, the disappointing smartphone Dell Aero, and the discontinued tablet Dell Streak. In 2013, Michael Dell bought back shares to make the company private.
17. Paul Allen
Paul Allen, worth $15 billion, is a relatively successful man thanks to co-founding Microsoft with Bill Gates. However, he missed out on a huge opportunity after he sold his AOL stocks in the early 1990s missing out on $40 billion.
18. Donald Bren
When you're the wealthiest real-estate developer in the United States, you're definitely a success. After becoming the sole shareholder of Irvine Co. in 1996, Bren controlled "50,000 apartments, 40 million square feet of office space, and 8 million square feet of retail space in Orange County, San Diego, Los Angeles, and Silicon Valley," valued at $15.4 billion.
Bren's business record has been spotless, but his personal life hasn't. He's been divorced three times and was involved in a bitter child-support case. While Bren was victorious in court, the reclusive real-estate mogul had his dirty laundry thrown out to the public, declaring that he "never planned to be a parent to the two children." Bren continues to make money, despite his failed marriages and the blow to his public image.
19. Ronald Perelman
Ronald Perelman learned an important trade from his father: how to purchase a company, reduce debt by selling off superfluous divisions, bring the company back to its core model, and either sit on it or sell it. That strategy worked until he hit a roadblock with Revlon. His investment firm, MacAndrews & Forbes, was unable to take Revlon private, which resulted in a penalty and a conflict of interest that kept him from acquiring Revlon.
20. Anne Cox Chambers
Anne Cox Chambers, ambassador to Belgium under Jimmy Carter, and her sister took over the now privately held media conglomerate Cox Enterprises after the passing of her father. An heiress who continues to increase her wealth, Chambers has experienced a couple of setbacks in relation to running her company. For example, there was once a proposed $4.9 billion deal between Cox Enterprises and Southwestern Bell that fell apart. However, even more embarrassing is the fact that her newspapers "make waves, but not too many." That's not a good reputation to have in a troubled field.
21. Rupert Murdoch
He was born in Melbourne, Australia, but Rupert Murdoch calls the U.S. home. Murdoch's media conglomerate is arguably the largest in the world. It encompasses some of the most-successful television, film, book, and newspaper outlets.
Murdoch is not used to failure, but he took a major hit after purchasing MySpace in 2005 for $580 million. Just six years later, he was forced to sell the once-popular social-media platform for $35 million. Murdoch simply tweeted "we screwed up in every way possible."
22. Ray Dalio
Ray Dalio, "the king of the hedge-fund industry," founded the world's biggest hedge-fund firm in a Manhattan apartment in 1975. While the last couple of years have been a bit rough, Dalio's Bridgewater Associates still has $150 billion in assets.
Dalio's failures have been more apparent in his outlandish behavior. On New Year's Eve in 1974, he got drunk and punched his boss. Around the same time, while at the "annual convention of the California Food & Grain Growers' Association, he paid an exotic dancer to drop her cloak in front of the crowd." Even so, he managed to convince some clients to go along with him when he funded Bridgewater after being fired.
23. Charles Ergen
In 1980, Charles Ergen was just your run-of-the-mill professional gambler until he got kicked out of a casino for counting cards. The next logical step? Get into the business of satellite TV. After selling satellite dishes out of the back of a truck around Denver, Ergen finally got EchoStar incorporated in 1993.
Both EchoStar and Dish Network have been incredibly successful. However, the attempts to expand the company into something more than just a satellite-television provider have not. Ergen purchased Blockbuster in 2011, even while in bankruptcy, in an attempt to create a streaming video service to compete with Netflix. That never happened, and Ergen has continued to fail at acquiring other companies, like Sprint.
24. Harold Hamm
Harold Hamm's story is remarkable. The son of a sharecropper who never attended college, Hamm purchased his first oil rig in 1971. For the next 15 years, he stuck with his Oklahoma oil rig. Business was great in the 1970s, but the 1980s were more challenging. For example, Hamm almost went bankrupt thanks to 17 consecutive dry holes. In fact, things didn't get much better after interest in converting fuel from oil-bearing rock known as Bakken shale began to decline in the 1990s. However, Hamm stuck with the business and his company, Continental Resources, had $3.6 billion in revenue in 2013.
25. James Simons
There's a good possibility that you've never heard of James Simons, aka the "Quant King." This mathematician and code-breaker for the National Security Agency founded the hedge-fund-management company Renaissance Technologies in 1982. Since then, Simons and his company have been unstoppable. Renaissance Technologies is one of the most successful hedge-fund companies.
That's not to say that Simons is perfect. In "The Secret World of Jim Simons" by Hal Lux, it's noted that back in "1997, he folded a middling market-neutral fund into Medallion after just three years. And a mortgage-backed-derivatives fund he backed in 1995 swooned after enjoying two fine years." Simons also helped Bernie Madoff "raise money from others," but he became suspicious and began asking questions that eventually led to a regulatory investigation of Mr. Madoff, according to a Securities and Exchange Commission watchdog report.
Of course, a good leader knows when to change course.
Each one of these successful individuals had to change course at some point. Some may have changed a little bit too late, but they still changed and corrected. While building your company and attaining your vision, be sure to evaluate your viability and continually check your business's health. If you need to change course, don't be afraid to do so, it may just lead you to become number 26 on this list!
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DREW HENDRICKS | Columnist
Drew Hendricks is a tech, social-media, and environmental addict. He's written for many major publications, such as Forbes and Entrepreneur.