The very process of creating wealth is the best possible education for creating more wealth. Every enterprise is an experimental test of an entrepreneurial idea. If it succeeds, it yields a twofold profit: a financial increase and an enlargement of learning. An economy can continue to expand only if its profits are joined with entrepreneurial knowledge. In general, our society's wealth can grow only if the people who create it control it. Divorce the financial profits from the learning process, and the economy stagnates. Like a tree or a garden, an economy grows by photosynthesis. Without the light of new knowledge and the roots of ownership, it withers.
The riches of the Forbes 400 all ultimately stem from this entrepreneurial process. Well over one-half of them did not inherit significant wealth, and most of the rest gained their fortunes from entrepreneurial parents.
Entrepreneurial knowledge has little to do with the certified expertise of advanced degrees or the learning of establishment schools. It has little to do with the gregarious charm or the valedictory scope of the students judged most likely to succeed in every high school class. The fashionably educated and cultivated spurn the kind of fanatically focused learning commanded by entrepreneurs. Wealth usually comes from doing what other people consider insufferably boring.
The treacherous intricacies of building codes or garbage routes or software languages or groceries, the mechanics of butchering sheep and pigs or frying and freezing potatoes, the mazes of high-yield bonds and low-collateral companies, the murky lore of petroleum leases or housing deeds or Far Eastern electronics supplies, the ways and means of pushing pizzas or insurance policies or hawking hosiery or pet supplies or grubbing for pennies in fast-food unit sales, the chemistry of soap or candy or the siliconsilicon dioxide interface, the motivating of workers and the blandishing of union bosses and federal inspectors and the IRS and EPA -- all those tasks are deemed tedious and trivial by the established powers.
Most people think they are above learning the gritty and relentless details of life that foster the creation of great wealth. They leave it to the experts. But the Inc. 500 show that success comes not by leaving it to experts but by creating new expertise, not by knowing what the experts know but by learning what they think is beneath them.
Entrepreneurs also perform work that others spurn. David Sun, the chief executive of this year's top Inc. 500 company, Kingston Technology, can be found doing everything from boxing circuit boards to sweeping the floors. (See "Built on Speed," October 1992, [Article link].)
Perhaps the most exemplary moment in the recent history of entrepreneurship in America came on a morning in the late 1960s when a young accountant in Houston named Thomas J. Fatjo found himself immersed up to his armpits in garbage. Driving a door-to-door route in the city, he had jumped into a bin to stomp down the contents after the compactor had broken down with 70 more houses to go. Within 10 years Fatjo parlayed his rare combination of skills in accounting and garbage into the creation of one of the world's largest solid-waste-disposal companies, Browning-Ferris Industries.
In the same way, potato tycoon J. R. Simplot came upon the most crucial insight of his career while sorting spuds tediously by hand in a local warehouse. That task gave him an instant and all-but-overwhelming sense of the value of inventing the electric potato sorter, the device that thrust him into the food-processing trade, which he came to dominate. Similarly, Henry Ford, Soichiro Honda, Sony's Akio Morita, and Apple founder Steve Wozniak all began in the "skunk works" of their trades, with their hands on the intricate machinery that would determine the fate of their companies. Bill Gates began by mastering the tedious intricacies of programming languages. Familiarity with the very material, the grit and grease and garbage, the petty tedium of their businesses liberates entrepreneurs from the grip of established expertise and gives them the insight and confidence to turn their industries in new directions. All had to stoop to conquer the American economy.
Because entrepreneurship overthrows rather than undergirds establishments, the entrepreneurial tycoons mostly begin as rebels and outsiders. Often they live in places like Bentonville, Ark.; Omaha; or Mission Hills, Kans.; mentioned in New York chiefly as the butt of a comedy routine. When the rich move into high society, they are usually inheritors on the way down.
In a sense, entrepreneurship is the launching of surprises. What bothers many critics of capitalism is that a group like the Inc. 500 is too full of surprises. Some threescore of the current list -- and a higher share in previous years -- suffered one or more business failures before their recent home run. This is typical of the history of capitalism. Henry Ford's first two automobile companies crashed.
The surprises continue. Sam Walton's first haberdashery goes broke. He opens another, and it works. He launches a shopping-center empire in the rural South and becomes America's richest man. Who would have thunk it? Forrest Mars goes bankrupt, fails twice in other ventures, then builds a fortune in candy bars. Bill Gates drops out of Harvard and founds a software company that brings IBM into personal computers. J. R. Simplot makes his fortune in potatoes and then takes a flyer in his eighties on a microchip firm, and it becomes Micron Technology, chipping in another $150 million to his portfolio.
