"Yeah, I voted for FDR in the '40 election," admits Tom Duck Sr., the Tucson rent-a-car king. "But I honestly feel that he would have kept that war going if it killed him, because the war kept him in office. And the New Deal? That was just phony. Those projects had no long-range economic value."
Eight out of 10 INC. 500 executives are now solidly in the Reagan camp, but there are a few soft spots. The President and his party suffer a gender gap in our survey of around 20%. And, contrary to all the post-election hoopla about younger voters flocking to the GOP, the youngest of our executives lagged 20 points behind the oldest in supporting the President. Geographically, East Coast respondents were decidedly less conservative and less Republican than their brethren across the country.
CEOs with Fortune 1,000 experience, we discovered, were more virulent in their conservatism than the others. And non-founders described themselves as being to the right of founders. But most surprising to us was that those who came from poor backgrounds were no more inclined to support social welfare programs than those from comfortable backgrounds.
"I've gone through plenty of tough times, and I've found that the only one who is going to help me out of them is me," explains Roger Orton of Sacramento, whose father, a laborer, kicked him out of the house at the age of nine. "I don't believe in giveaway programs, and people who rely on them, in my opinion, are worthless."
Charles R. McDonald of Willoughby, Ohio, remembers his machinist father as a "good Roosevelt man." But now he votes for "what is best for me and my business. . . . All these socialized programs -- that's just the members of Congress buying votes."
An almost palpable disgust with welfare and "handouts" seems to motivate and energize the conservative political values of the men and women in our survey. The unfettered marketplace seems to them not just efficient, but fair. As they see it, they are living proof of how it's possible to make good without any government assistance. Or almost none. Like Orton and McDonald, about 40% of our sample took a degree from a government-subsidized state college or university.
WHAT -- ME WORRY?
It isn't the competition that keeps them up nights. For all the talk about the rigors of the marketplace, the INC. 500 CEOs ranked their rivals as merely fourth on their lists of worries -- after business finance, time commitments, and the pressure to succeed. The reason is probably because they don't have much competition: they've found a niche that allows them to define their own market.
Here are executives who measure the health of their business by its profitability -- things like revenue growth, productivity, and market share are secondary. And on the matter of profits, they are decidedly bullish. The typical executive is forecasting a whopping 35% growth in profits next year on a similar growth in revenues. And employment will climb as well, with the average company planning to add 17 new names to the 126 already on the payroll.
But David Duffield, who runs a software company in Walnut Creek, Calif., Warns his colleagues against too much optimism. "It's when you start thinking you're invincible that you get into trouble," he says. "Just because you make a million dollars in your first five years of business doesn't mean you are going to make another million in the next five.
"I'm not real humble," Duffield admits. "But I try to be."
AS INVESTORS, THEY LIKE TO GAMBLE
If the managers of INC. 500 companies are unconventional in any way, it is in their portfolios.
"A very aggressive posture," is how investment adviser Gary M. Goldberg describes the investment patterns that emerged from our study. What he means is risky. Cable TV systems. Aircraft. Fine cars. Metals futures. Even fast-food franchises. These are people who know that the way to make big money is not by clipping coupons and following the Dow Jones Industrials. But in the process, some of them have learned how to lose big money as well.
Take Len Wallace of Camarillo, Calif., for example. At one time, he had as much as 30% of his net worth in oil-drilling deals that came his way through a respected brokerage firm. At first he'd get reports saying how wonderful everything was going, but soon these gave way to reports of cost overruns, then dry wells, then rigs that were shut down. Now he is heading up a group that is suing the brokerage firm to recover the $750,000 he lost.
The INC. 500 CEOs had a median net worth of $4.7 million, nearly two-thirds of it tied up in their own businesses. Another 16% is in houses. That still leaves 22% -- or about $1 million -- to play around with. And play they do. The average portfolio sets aside 4% for new stock issues and another 10% for growth stocks of one kind or another. And more than a quarter of the CEOs report making substantial investments in new ventures.
Jack Dean of Erie Creative Coatings Inc., in North East, Pa., has 70% of his net worth tied up in new companies, among them an industrial park. "None of them made me rich, but that's the way I make my living," explains Dean, who claims to have had $200,000 stolen from him once by a shady partner. He now prefers new ventures in which he can take an active part.
James L. Earl of Tazewell, Va., says he has never lost more than $100,000 in any one of the nine new companies he's backed, most of them related to coal mining and steel. Earl says he puts 80% of his net worth into companies like these because the potential return is higher. "I'm gambler," he concedes.
Adviser Goldberg was surprised that, with so much money wrapped up in their own firms, the investment strategies of INC. 500 CEOs aren't more conservative. He'd recommend more bonds or real estate. But John D. Chaney sees it another way:
"Once you've been tried by fire -- where if the business fails everything goes -- then a growth stock doesn't look all that risky. Besides, once you have that base of wealth, you're willing to take a chance."
