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Thursday, October 24, 2013

How John D. Rockefeller got rich

How John D. Rockefeller Became The Richest Person In Modern History

If you take the five richest people in the world right now — Bill Gates, Vladimir Putin, Carlos Slim Helu, Warren Buffett, and Amancio Ortega — and add up their fortunes, you still would be about $13.5 billion short of the net worth of the richest person in modern history: John Davison Rockefeller. Adjusted for inflation, the Standard Oil Company founder's personal fortune would be worth an astounding $340 billion in today's dollars. But you may be surprised to learn that in addition to his ungodly success in the oil industry, Rockefeller was also a pioneering philanthropist. Both in his lifetime and after death, Rockefeller used his money to help establish and grow universities, eradicate entire diseases, further medical research, and offer educational opportunities to African Americans during the height of the Jim Crow South. He was the first person in history to reach a personal net worth of $1 billion, and his fortune at one point accounted for 1.53 percent of the entire U.S. economy. What's even more amazing is the fact that Rockefeller began his ascent to the highest levels of capitalism at the very bottom of the food chain. This is his story.
John D. Rockefeller - Life Story
John D. Rockefeller – Life Story
Born on July 8, 1839, in Richford, New York, to William Avery and Eliza Rockefeller, John Davison was the second of six children. His father, a traveling salesman and vagabond known to neighbors as "Devil Bill," abandoned his wife and children when John was a teenager. Before leaving, though, Bill had two other children with a live-in mistress and was frequently away from the family. John's mother was a devout Baptist who instilled thriftiness and discipline in her children. Young John's first venture into business came at the age of 7 or 8, when his mother provided him with some turkeys to care for and sell. From the start, John kept track of every penny spent and earned in a notebook. His mother encouraged him to work hard and to give a percentage of his earnings to the church and to the disadvantaged. By 14, he was lending money to neighbors at 7 percent interest, quickly learning that he could make more this way than through manual labor.
After a few moves around New York, the Rockefellers settled in a suburb of Cleveland, where John attended Central High School. He completed a short business course at a small nearby college and jumped into a career as a bookkeeper. Despite — or in spite of — his father's eccentric example, John was described as serious and discreet, with a penchant for numbers. He was also very active in a local church. When the church was threatened with closure due to unpaid debts, John solicited contributions every Sunday until he'd raised enough to keep the church open. At 16, he got a job as an assistant bookkeeper at a wholesale produce commission in Cleveland. After a year, he became the head bookkeeper, earning an annual salary of $500. The following year, he was offered $700, but turned it down to go into business for himself. From his very first paycheck, he tithed 10 percent of his earnings to his church.
Young Rockefeller
Young Rockefeller
At 19, Rockefeller invested $2,000 to co-found Clark & Rockefeller, a commission business with a partner 10 years his senior. He borrowed a lot of money from local banks to finance the expansion of the business, but had the best credit in town because of his "normal" habits, his church attendance, and his ability to pay back his debts on time. While the company grew, Rockefeller lived frugally, saved money, and reinvested back in the business, which was turning a profit from day one. At the age of 23, his economic habits allowed him to jump at the chance to enter the oil business when the "black gold" was discovered in Pennsylvania. Along with his partner, he invested in a refinery planned by Clark Andrews. The company, Andrews, Clark & Co., didn't even bare Rockefeller's name. By 1865, the partnership dissolved and Rockefeller bought the refinery at auction for $72,500, which he'd mostly borrowed. He renamed the firm Rockefeller & Andrews. The following year, the firm bought another Cleveland refinery established by John's brother, William, and the company became Rockefeller, Andrews & Flagler, a precursor to what would become the Standard Oil Company. Before he'd even turned 30 years old, John D. Rockefeller had a controlling interest in what was already the largest oil refinery in the world. By 31, Rockefeller incorporated the Standard Oil Company for the sum of $1 million. He made himself president. A decade later, after numerous acquisitions and further growth, the Standard Oil Trust was created. It's capital was valued at $70 million.
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Standard Oil's First Refinery in Cleveland
Standard Oil's First Refinery in Cleveland
But trouble struck towards the end of the 1870s. Standard Oil was refining more than 90 percent of the U.S.'s oil, peaking at 90 percent of oil refined in the world before dropping closer to 80 percent in the face of foreign refineries. As a result of its huge success, the company — and its president — became a target for journalists and politicians, who decried Rockefeller's monopoly on the market. In 1890, after the company had moved its headquarters to New York City, the Sherman Antitrust Act was passed. The law would be instrumental in breaking up the Standard Oil Trust. By this time, Rockefeller invested in iron ore and its transport, setting up a competition with fellow tycoon Andrew Carnegie. These interests would be sold to steel magnate J.P. Morgan, of U.S. Steel, in exchange for stock and for membership on the company's board of directors for Rockefeller and his son, John Jr. In 1911, the U.S. Supreme Court ruled that the Standard Oil Co. was in violation of the Sherman Antritrust Act, and the company was divided into 34 smaller organizations — some of which became Conoco, BP, Amoco, Chevron, and ExxonMobil. Rockefeller received proportionate shares of stock in each company, profiting handsomely in the aftermath. His personal fortune shot up to nearly $1 billion.
Standard Oil Octopus
Standard Oil Octopus
Decades earlier, throughout the 1890s, Rockefeller had been slowing down, focusing on leisure activities and retirement. He experienced health issues, including depression, digestive problems, and alopecia, which caused him to lose most of his hair. He began wearing wigs and started to withdraw from the day-to-day operations of his business. He bought a sprawling 3,400-acre estate in Westchester County, New York, in 1893. A mansion was built on the grounds 20 years later. The 40-room house has since served as a home for four generations of Rockefellers. The estate also includes a golf course, some 75 houses, a number of outbuildings, lush gardens, and 70 private roads (largely designed by Rockefeller and his son). Today, about 10 Rockefeller families live on the estate.
Rockefeller Estate in NY
Rockefeller Estate in NY
Throughout his successful business career, Rockefeller had been very generous with his money. In 1884, he was the major funder for Spelman College (named after his wife's family), a university in Atlanta for African-American women. He was also instrumental in the creation of the University of Chicago. A devout Baptist, he often gave to Baptist causes, especially educating black youth in the South. His giving also included support to Yale, Harvard, Columbia, Brown, and other eastern schools. In 1901, he founded the Rockefeller Institute for Medical Research, which eventually became Rockefeller University. In 1909, he founded the Rockefeller Sanitary Commission, which went on to eradicate hookworm disease. In 1913, he created the Rockefeller Foundation with $250 million. It helped endow the Johns Hopkins School of Hygiene and Public Health, funded a medical school in China, and eventually took over the Sanitary Commission.
During his lifetime, John D. Rockefeller offered some wisdom for the business titans of the future. Here are a few, from his New York Times obituary:
  •  Do all the good you can.
  •  Do not grow old before your time. Maintain an interest in life and all living things.
  •  A little rest now and then helps a man to accomplish more.
  •  Do not be afraid to work.
  •  Persevere. If you make a mistake, remember that it is human to err. Try again and try harder.
  •  I believe it is a duty for a man to get all the money he honestly can and to give all he can.
  •  Live within your means. One of the swiftest toboggans I know of is for a young man just starting in life to get into debt.
  •  There is no feeling in this world to be compared with self-reliance — do not sacrifice that to anything else.
  •  A clear conscience is worth more and is a greater comfort than is a great fortune gathered by dishonorable methods.
  •  Sons of wealthy parents have not the ghost of a chance compared with boys who came from the country with the determination to do something in this world.
As a boy, Rockefeller had dreamed of earning $100,000 and living to be 100. As we mentioned previously, when adjusted for inflation, Rockefeller had accumulated a personal fortune worth $340 billion. . He clearly surpassed the first life goal, and was just barely shy of the second one. Rockefeller died on May 23, 1937, at the age of 97, from arteriosclerosis. After his death, the extent of Rockefeller's generosity was made public. Between 1855 and 1934, he'd given nearly $531 million (equal to $7 billion in modern dollars) to various philanthropic efforts, surpassing even the $350 million of fellow philanthropist and business titan Andrew Carnegie. His only son continued in his father's footsteps, also giving away more than $530 million during his own lifetime. His grandchildren and great-grandchildren, many involved in politics, have kept the Rockefeller name in the forefront of the American conscience — not that John D. needed much help.

How Sheldon Adelson Went From A Poor Paperboy To A $35 Billion Casino Magnate

Rags To Riches: How Sheldon Adelson Went From A Poor Paperboy To A $35 Billion Casino Magnate
Sheldon Adelson might be the best example of the American Dream you'll ever hear about. He grew up in a poor neighborhood in Boston, the son of an immigrant taxi driver. As a child, Adelson worked as a paperboy to help support his struggling family. After dropping out of college, he earned minimum wage as a court reporter before joining the army. Today, Sheldon Adelson is the majority owner of the world's largest casino company, the Las Vegas Sands corp. His personal net worth is $35 billion. That makes him the 14th richest person in the world and by far the richest person in Las Vegas and Nevada, overall. How exactly did Sheldon Adelson transform himself from a poor paperboy to one of the richest people on the planet? You're about to find out…
Sheldon Adelson - Rags to Riches StorySheldon Adelson – Rags to Riches Story
Sheldon Adelson was born on August 4, 1933 in the Dorchester area of Boston. His father drove a taxi, his mother worked in a knitting shop. Adelson's first job, like many American kids, was a paper route. By the time he was 12-years old, this budding entrepreneur already owned his own business selling toiletries.
In the 1950s, Adelson attended the City College of New York, majoring in corporate finance, but dropped out after less than two years. After dropping out of college, he briefly attended a trade school that helped him get a job as a court reporter. He then joined the Army. When his obligations with the Army were over, Sheldon took a job as a mortgage broker and investment advisor. In the early 1960s, he took the money he made on Wall Street and moved back to Boston where he shrewdly invested in a number of businesses. By the time Sheldon reached the age of 35 in 1968, he managed to build up a personal fortune of roughly $5 million ($33 million in today's dollars). Unfortunately, thanks to a few failed business ventures and a declining stock market, Sheldon lost his entire fortune. TWICE. Thankfully, these temporary setbacks did not slow him down.
In the early 1970s, Sheldon jumped on the trend of converting apartment buildings into condominiums in Boston. He did very well for a while, but then the condo market took a dive. At this point, Adelson was adrift and depressed. The drastic ups and downs of his fortunes were taking a serious toll mentally and physically. But, despite these setbacks, Sheldon was still actively on the hunt for the next big thing. In an effort to find a more stable income stream, he soon bought a company that published magazines. One of those magazines was a computer publication called "Data Communications User". One day, while attending a trade show for his condo business, Sheldon had a life changing epiphany: If the computer industry was big enough to necessitate its own devoted magazine, could it also benefit from a trade show of its very own?
In 1973, Sheldon and some partners put together what was likely the world's first computer related trade show. Even though the event was just a modest, Sheldon was convinced that both computers and trade shows were the future. Adelson quickly liquidated his entire condo business and publishing company, to dive full speed into the trade show business.
In 1979, Adelson launched what would become his golden ticket: The Computer Dealers Expo (COMDEX) which was held at the MGM Grand Hotel in Las Vegas. The timing was perfect. Not only was public interest in personal computers beginning to take off, but itself Las Vegas was starting to become known as the go-to destination for a fun and debaucherous weekend. In other words, it wasn't all that hard to lure a bunch of computer enthusiasts to spend the weekend partying in Las Vegas for "work". At this period in time, IBM, Apple, and Microsoft were starting their rapid growth, and Adelson gave them a crucial early forum to showcase their products to both consumers and companies. Over the next decade, COMDEX grew into a behemoth for the computer industry. Comdex quickly became largest trade show in Las Vegas, grossing $20 million per year for Sheldon ($40 million in today's dollars).
COMDEX Convention in 1998COMDEX Convention in 1998
It is important to understand just how huge COMDEX was for the personal computer industry and the city of Las Vegas. I grew up in Las Vegas, and the frenzy surrounding COMDEX in the 1980s was like the frenzy surrounding Comic Con today. This was THE TICKET of the year to get in Las Vegas.
By the late 80s, as COMDEX was printing money, Adelson began looking for a hotel property to buy in Las Vegas. It was the next logical step for someone who already owned a travel company, an infamous tradeshow and a private jet. In 1988, Adelson and his partners bought the legendary Sands Hotel and Casino, (the former hangout of Frank Sinatra and the Rat Pack) for $128 million. Adelson redeveloped the property, adding a shopping mall (they were not ubiquitous in Casinos back then), and eventually a convention center which soon became host the annual COMDEX trade show.
During a 1991 trip to Italy, Adelson found himself enchanted with the canals and architecture of Venice. He soon began dreaming of a giant hotel-casino-resort modeled after Venice on the Las Vegas Strip.
In 1995, Adelson sold COMDEX for $862 million. His personal windfall from the sale was $500 million. With a half billion dollars in the bank and a $1.5 billion line of credit, Sheldon shed his partnerships and various other business interests and set out to build the Venetian Resort Hotel and Casino. He demolished the Sands Hotel and built his dream resort which opened in 1999. The entire resort was essentially built to attract business visitors. The Venetian featured a massive attached convention center and was the first all-suites hotel in Las Vegas. As you probably could guess, The Venetian was an instant smash hit. Within a few years, Adelson and the Las Vegas Sands corp were operating six casinos around the world including a location in Macau which is one of the largest buildings in the world.
The Venetian Hotel VegasThe Venetian Hotel Vegas
Adelson is heavily involved in political funding. Formerly a Democrat, Adelson became a Republican as his wealth grew. Specifically, he was annoyed with the higher tax rates he had to pay and the influence of the trade unions, which he frequently clashed with and who are a big part of the Las Vegas casino workforce. He backed George W. Bush's second presidential bid, Newt Gingrich and Mitt Romney, by contributing tens of millions of dollars to their campaigns, including a $20 million gift to Romney's super PAC. Adelson also donates generously to charitable organizations, giving millions to various causes especially those that support Israeli and Jewish charity.
Today, the Las Vegas Sands corp is the largest casino company in the world with annual revenues of more than $11 billion. The company went public in 2004 and currently has a market cap $60.35 billion. Adelson remains the company's Chief Executive Officer and Chairman. Thanks largely to his 52.3% ownership stake in the company, Sheldon Adelson's personal net worth today is $35 billion.
But like most of Sheldon's business ventures, even the Las Vegas Sands corp has experienced its share of ups and downs. When the economy tanked in 2008, Las Vegas tourism was obliterated. The trade show industry was especially hard hit. The low point was March of 2009 when the price of a single share of LVS stock hit an all time low of $1.70. Just 16 months earlier, LVS shares peaked at $140. That's a 98.8% drop in value. Adelson saw his wealth plunge from $40 billion to less than $2 billion. Things got so bad that the company came literally within an inch of being forced into bankruptcy. As a last resort, Adelson invested $1 billion of his own personal cash to help the company get through the financial crisis. The gamble worked and eventually LVS recovered.
Sheldon Adelson was born into a poor family, dropped out of college, and lost large chunks of his fortune more than once due to unpredictable changes in the economy. By keeping his attention focused on the next big thing and never quitting, Adelsomn was able to earn one of the 15 largest personal fortunes on the planet. A true rags to riches American dream inspiration that comes complete with this private jet: