A Hardvard Man Discovers Free Enterrprise
Glassman, James K.
A Harvard Man Discovers Free Enterprise by James K.Glassman You probably wouldn’t be surprised if I told you that the people I went to school with-the ones who marched on the Pentagon, sat...
...If most Americans are unwilling to test themselves in this way, then there is little hope for any kind of political, economic, or social change-all of which involve personal risk...
...Owners of 1 per cent or more of shares of The Washington Monthly Limited Partnership: Preston Brown, Washington, D.C...
...If the city wouldn’t accept the paper, then we should have found it out and not started one...
...they seemed to be within his control...
...The customer suggested that my grandfather rent him a used car for two weeks, and that gave my grandfather the idea of renting cars to people who didn’t own them, to use on dates or trips to the country...
...What has happened recently is that these barriers have extended to much smaller ventures, the kind that depend on a single brilliant invention (like the Polaroid camera...
...Richard Rovere, Rhinebeck, N.Y...
...You knew the rules and the patterns of self-testing and achievingafter all, you had followed them since grade school-and there was little chance of your failing...
...how he escaped by hopping a freight train in the dead of winter (hoping it would go south but ending up in Buffalo practically frozen to death...
...G. Total: 31,371...
...So successful small businesses almost always introduce new, valuable, creative ideas to the marketplace and stimulate the economy...
...The point is that if capital were more easily available, more people would go into small business...
...Unfortunately, if you look at who’s starting businesses today, you won’t be surprised by that statistic...
...I can’t stand betting on the dogs or the trotters-only the thoroughbreds, which I consider a matter of science...
...Fred Stanback, Jr., Salsbury, N.C...
...At the business schools and law schools, it’s the rare (usually, in fact, the unsuccessful) graduate who strikes out on his own...
...Warren Buffett, Omaha, Neb...
...As a result, his company has been struggling along for ten years, unable to raise even a tenth of the capital needed to build a pilot plant to try out the process...
...6. Names and addresses of publisher, editor and managing editor: Publisher, vacant...
...Certainly there were tests along the way, but there was little risk...
...If they saw all too clearly its flaws, they were still tied to it because their only standards of success and fulfillment were external...
...And those fewer and fewer hands are providing money for fewer and fewer large corporations...
...Carole Lee Smith, Salem, Ore...
...is sole general partner, and The Washington Monthly Corp...
...There are no authoritative statistics on the subject, but a few indicators can be pieced together...
...It’s too bad that our distinctions worked the way they did...
...Really, it was the easiest thing in the world...
...To an extent, the entrepreneur follows these same patterns as well, but somehow the quantum leap is made-the fear of failure overcome, maybe-and he ends up being outside the leviathan instead of part of it...
...Not applicable...
...The “smaller and more marginal economic units” are the 95 per cent of businesses that are classified as small...
...3. Frequency of issue: monthly except for combined July/August issue...
...Location of the headquarters or general business offices of the publishers: same...
...The balance of the nation’s capital is tilting more and more toward big companies, and only about 1.5 per cent of the American work force is made up of what the Census Bureau calls “self-employed owners and managers...
...Taylor Branch, Washington, D.C...
...I like the pressure and the constant self-testing...
...A decline in entrepreneurship indicates that fewer peopleespecially the talented, well-educated ones I’m talking about-are willing to be tested on their own merits...
...And if you can’t convince anyone to invest in your idea, then it’s probably not a very good idea to start with...
...The source of the $20,000 can best be described as “family money”-probably the most typical source of funding for a new venture...
...W. Chilton, Charleston, W. Va...
...Not only that, just five per cent of the businesses that are started today will be around in 1986...
...In a way, you can’t blame them...
...C. Total paid circulation: 26,173...
...The urge to strike out on one’s own, however, is not one of their achieving motivations, and their route has been the conventional one for someone graduating from an Ivy League college in the 60s and 70s: on to the best law school or business school possible, then to the best firm possible (usually the biggest), or the consulting route, or the government route, or the university route...
...Louis Marx, Jr., New York, N.Y...
...The MIT study found that fully half the entrepreneurs surveyed had self-employed fathers...
...The radicalism that I knew-not the drab, dull group-orientation of the Progressive Labor Party and its ilk, but the fun (and still meaningful) existential stuff-isn’t inconsistent with what I’m doing today...
...But lawyers, corporate managers, and bureaucrats are what the overwhelming majority of my Haward classmates have become: what they’re doing is serving, basically as consultants to whoever will pay for their advice, the same leviathan they railed against in college...
...If you look hard enough there’s usually someone...
...There’s no way to tellahow much of it was apocryphal, but the story went on and on, and to me the most interesting parts were about business...
...Small businesses simply can’t survive unless they have a better product or a better way of doing things...
...Actual number of copies of single issue published nearest to filing date: A. Total no...
...I think the attributes that I had that made entrepreneurship palatable, even exciting, to me are shared by my old classmates...
...The venture capital fums that proliferated in the 60s are withering away, and banks are tight with their loan money...
...My grandfather, for example, invented the rent-a-car...
...Tell someone your name (not your house, your name) is $100,000 in debt and he’ll say something solicitous like, “How can you sleep at night...
...As a result, they seemed to feel that if they stepped off the well-trod meritocratic path for even a few years they’d never be able to get back on...
...Threequarters of their ventures fail in the first year of operation, often leaving them with massive personal debts...
...To them-and to me too at the time-there was not much difference between small business and big business...
...Innovation and the Individual Anyway, what bothers me .is not the numbers, it’s the quality of small business...
...Whatever the entrepreneurial spirit is, it seems to me to be quite similar to the rebelliousness of the 1960s...
...Russell Baker, New York, N.Y...
...U drive it,” and the next morning there was a line of aspiring car renters stretched around the block in front of his garage...
...F. Copies not distributed: 1. Office use, left-over, unaccounted, spoiled after printing: 1,782...
...The encouragement to start a business simply does not exist for young people these days because of the economy and the educational environment...
...At the time, I was a journalist who wanted to start my own paper, the way a chef would want to start his own restaurant, or a poet his own small press...
...1. Title of publication: The Washington Monthly...
...When I first started thinking about the newspaper venture, after graduating from college, Michael Janeway, the executive editor of the Atlantic, warned me that I’d be spending all my time worrying about getting advertising...
...2. Returns from News agents: 2,172...
...And while the financial barriers to entry get worse every year, they aren’t insurmountable-at least not in every business...
...Not a single one of my friends from my college days-only eight or ten years ago-is an entrepreneur today, and none of them is likely to become one...
...The more organized and institutionalized our society becomes, the less bright people have to deal with failure, because to succeed they need only take each succeeding step on a well-trod path, without somehow botching it...
...N.W., Washington, D.C...
...All are really the same, already mapped out for you...
...I sleep very well, thank you, because my wife and I have created something on our own...
...John D. Rockefeller, IV, Charleston, W.Va...
...and they had never failed...
...The final characteristic that the entrepreneur has that all the acheivers I grew up with don’t is a willingness to gut himself at risk...
...Carol Trueblood, Washington, D.C...
...D. Free distribution by mail, carrier or other means: 391...
...2. Re turns from news agents: 2,208...
...it doesn’t stop the hemorrhaging...
...Joseph Freitas, Jr., San Francisco, Calif...
...Ninety-four per cent of manufacturing companies are small-but they employ only 21 per cent of all the manufacturing workers in the nation...
...Peter Lisagor, Arlington, Va...
...Anyway, I hope they were...
...There are more than nine million small businesses in America, representing 95 per cent of all businesses-but all that is by the government’s generous definition of “small”: anything with less than $7.5 million in assets and $250,000 in net annual income...
...we didn’t think of ourselves as starting a small business, the way that, say, someone starting a dry cleaning shop would...
...But it is possible to argue that for the next year or two at least, the major problem is not an overall shortage of capital, but rather the way capital is allocated...
...The number of small businesses increases at the rate of about 50,000 a year-but the size of the country is increasing faster...
...But the shortage (if it really is a shortage) seems to be affecting small businesses and new businesses far more...
...Howard W. Young, Washington, D.C...
...Murray Kempton, New York, N.Y...
...But while you do need money, you shouldn’t go overboard on the financial issue, The aluminum plant may be out, but it’s not impossible to raise money for more modest ventures...
...Of course, the barriers to entry in industries like steel and daily newspapers were massive 50 years ago too...
...And the figures themselves are less important than the concept of failure...
...the number of securities dealers fell from 4,800 to 2,900 in the same period...
...Why, if you’re bright and young and college educated, should you start your own business when there’s far more security and money in going to law school...
...B.Paid circulation: 1. Sales through dealers and carriers, street vendors and countersales: 2,153...
...It’s tough to start your own business today for two sets of reasons, one having to do with money and one with people...
...G. Total: 30,507...
...2. Date of Filing: Sep tember 8, 1976...
...Be did everything in extremes, and even his biggest gambles (he once lost $20,000 in a night at the gin rummy table) were all his own...
...For example, deposits of the ten largest banks have risen from 20 per cent of total U. S. deposits in 1962 to 33 per cent in 1975...
...Editor, Charles Peters, 5025 V St...
...It’s a lot easier, certainly, to borrow funds to go to law school or business school...
...C. Total paid circulation: 27,451...
...For one thing, we didn’t have any entrepreneurial consciousness at all...
...At least part of the economic troubles we’ve been having in recent years-including our miserably low productivity rate-is the direct result of a lack of innovation in business...
...United States Code...
...The first thing my banker told me when I asked him for a $20,000 working capital loan was, “YOU know [grinning], three-quarters of all businesses fail in the first year...
...It felt good, no doubt about it, but curiously, the feeling was not one of self-satisfaction...
...They usually get out and cut their losses or stay in and feel miserable...
...It’s ironic that as America gets more meritocratic, as economic advance is open to more people, it gets increasingly systematized in a way that discourages people from striking out on their own...
...Scott F. Smith and went to Mexico with Pershing to fight Pancho Villa...
...copies printed (Net Press Run): 31,371 B.Paid circulation: 1. Sales through dealers and carriers, street vendors and countersales: 1,209...
...Small business is one of the few endeavors in which the individual is the whole show...
...A few weeks ago I showed my banker black ink, our first year of profits...
...The only alternative they could see to joining up was not achieving at all, dropping out, and that was out of the question...
...And that brings me to my final 50 point...
...The question implies that there are forms to be filled out, permissions to be gotten, the vaunted tangle of federal regulation to thread one’s way through...
...Now I’ve found out he was partly right-I don’t spend all my time on advertising, but certainly a lot of it-and I don’t mind a bit...
...Money In 1976, you can’t simply go out and start your own steel company or electric company or daily newspaper...
...There is no other endeavor (except perhaps professional sports or the arts) where success and failure mean so much...
...I’m convinced that the kid who was taking over buildings in 1969 has a lot more in common with someone who started his own pizza stand than he does with lawyers, corporate managers, and bureaucrats...
...Hugh Sidney, Potomac, Md...
...It used to be that professionals made less money than they do now, and had less completely assured futures...
...Joseph D. Crowley, New Haven, Conn...
...Over the years we put more money into the company, took on a few more stockholders, increased our bank debt...
...Successful big businesses tend to be preoccupied with maintaining the status quo-keeping their market share or increasing it a few percentage points at the expense of their established competitors...
...I had the sense that this thing wasn’t over, that the struggle would go on forever, that the adventure would continue-just the way I want it to...
...There are fewer entrepreneur-fathers to have entrepreneur-children...
...In the depths of our business, about two years ago, if we had failed, I probably would have found good reason for it: the city, I would have told myself, wasn’t ready to accept a good paper...
...Charles loth owns the patent on a formula that some experts consider a major breakthrough in the aluminummaking process...
...Suzannah Lesard, New York, N.Y...
...It’s clear from simple empirical observation that the best members of my generation aren’t Gecoming entrepreneurs, that a lot of people who could be creating and producing are merely advising and helping things along instead...
...The venture is personal and the failure is personal, and the debts-about $100,000 of them-are personal too...
...Ann Peretz, Cambridge, Mass...
...Sidney S. Sachs, Washington, D.C...
...If I have added pain and responsibility, I have acuter pleasures than most people as well...
...copies each issue during the preceding 12 months: A. Total no...
...7. Ownrated joint venture of The Washington Monthly Limited Partnership, of which The Washington Monthly Publishing Corp...
...So in a sense I underwent a metamorphosis in the middle of starting a business, and discovered entrepreneurship by accident...
...I’m always amazed when I’m asked, how did you start your newspaper...
...AU entities at 1028 Connecticut Ave...
...A decline in entrepreneurship means that this innovativeness is being lost to society...
...copies printed (Net Press Run): 30,507...
...It’s not easy to raise money to 48 start a small business...
...That kind of security can be a good thing, but it can also magnify far out of proportion people’s fear of failure...
...Philip Stern, Washington, D.C...
...Carol Trueblood, Washington, D.C...
...I know how easy it is to go into (and out of> business because business has been a part of my own life-the background noise at homefor so long...
...F. Copies not distributed: 1. Office use, left-over, unaccounted, spoiled after printing: 1,321...
...E. Total distribution: 26,553...
...James C. Thomson, Jr., Cambridge, Mass...
...As large institutions become more important in our society, fewer people (especially in the education group I’m talking about here) are self-employed...
...Even if they did search for a place to achieve outside the world of giant law firms, they certainly never would have considered looking at pizza stands...
...Actually, it was a cinch: get a little money together, print a paper, and you’re in business...
...As John Birkelund, president of the American venture capital arm of the Rothschild interests, wrote in The New York Times recently, the talk about the capital needs of big business “is based on the premise that there is, or soon will be, a serious shortage...
...Birkelund marshals impressive evidence that money for investment is being concentrated in fewer and fewer hands...
...and I like being alone against the big boys...
...The fact is that access to capital by our smaller and more marginal economic units has become steadily more constricted...
...All that is largely a myth...
...He’s a hard-boiled entrepreneur and he wants to do the manufacturing himself...
...In 1962, Birkelund points out, the difference between the yield on a bond issued by a company with a rating of Aaa (solid, large corporation) and that issued by a company with a rating of Baa (usually smaller, slightly riskier), was only a little more than half a percentage point...
...Also, I like being on the line...
...Entrepreneurs rarely head symphony drives-not until they get rich and established, anyway...
...More importantly, I have come to the realization that simply pumping more money into a company isn’t a solution to anything...
...Those markets are already sewn up...
...Take my word for it: entrepreneurship in this country is on the decline...
...Instead of striking out on their own, most of them are oiling the machine-and they’re probably not even enjoying themselves...
...Worrying about meeting payrolls and collecting overdue bills is hardly what 1 had in mind when I started the paper, and people like me usually realize suddenly that they’ve made a mistake...
...entrepreneurship there is on a distinct decline...
...You may have a friend with a few thousand he can afford to risk-or a friend of a friend...
...I certify that the statements made by me above are correct and complete...
...At the time, I simply didn’t believe him...
...But while these personal factors are significant, there are others still more important-like family background...
...But that’s the justification of an artist, not a businessman...
...I am not sure exactly why the entrepreneur makes the leap, but I am fairly sure why the others don’t...
...Glassman is editor-in-chief of FIGARO, a weekly newspaper in New Orleans...
...When I’m invited to a fashionable cocktail party in New Orleans it’s because I’m an editor, not a small businessman...
...I like feeling like I’m creating something useful every week...
...Joseph Rosenfield, Des Moines, Iowa...
...Charles Peters, Washington, D.C...
...Alexander Ewing, New York, N.Y...
...People’s questions about my starting the paper and my reactions to them provide a good example of the difference in mind-set between the conventional achiever and the entrepreneur...
...Failure is a totally personal event to the entrepreneur...
...It’s a shame they didn’t, too, because, as a sit-in veteran and small businessman myself, I’m convinced that entrepreneurship is the last refuge of the trouble-making individual-or, if you prefer, the creative individual, the person outside the established James IC...
...Owners of 1 percent or more of stock of The Washington Monthly Corp.: Timothy J. Adams, Washington, D.C...
...The smaller firms are being left in the cold, having to pay more for the money they need-if they can get it at all...
...For me, it was a natural thing to do, an extension of the creating-and-achieving ethic I was brought up on at home and in college...
...There has been a good deal of moaning and groaning in the business press lately about a “capital shortage” that faces big industryutilities, manufacturing, even oil...
...D. Free distribution by mail, carrier or other means: 380...
...If we wanted to design a system of schools to prepare people solely for life in large institutions,” says Francis Fisher, director of Harvard’s career placement office, “wouldn’t we just keep it the way it is now...
...how he returned to Washington, joined the police force, and got shot in a race riot, resigning in protest when the man who shot him got a light sentence...
...you won’t get much help from the government in starting a business, but it won’t bother you much either...
...What’s wrong with that...
...Many of them never understood that they could still achieve, be creative and productive, outside the system...
...I am not sure what motivated my grandfather (or my father after him, who became a home-builder and then a general contractor on his own), but I think he provided the groundwork for my own career...
...Stuart Thayer, London, England...
...John Rothchild, Everglades, Fla...
...Now a bright young person can, by the age of 30, have lifetime tenure in a highpaying, well-respected job-and with those powerful allures at work, the creative impulse assumes a low place in the hierarchy of motivations...
...2. Mal subscriptions: 24,020...
...PKL Co., Inc., New York, N.Y...
...Among liberals these days, it’s somehow idealistic to go into a policy planning consultantship and base to be a building contractor...
...Richard Ottinger, Washington, D.C...
...Peode To some people, I’m sure, the main deterrent to starting a small business is the social unacceptablity of entrepreneurship...
...I never wanted to make a lot of money, just some, enough for a small profityou’d be surprised how difficult that is and how suddenly in awe you are of the guy with the shoe repair shop who’s managed to stay in business for seven years...
...I am that sort of gambler too...
...The same pattern, when it hit me, turned out differently-I stayed in, and loved the business of it...
...He was running a garage in downtown Washington in the early 20s (this after a record-breaking stint as a Sunshine Biscuit salesman), and one of his customers brought in a demolished old Ford that needed two weeks’ worth of body work...
...Fiona F. Rust, San Francisco, Calif...
...So why do people become entrepreneurs...
...8. Known bondholders, mortgagees, and other security holders owning or holding 1 per cent or more of total amount of bonds, mortgages or other securities: none...
...Managin Editor, none...
...A New Orleans firm, Toth Aluminum, has found this out...
...E. Total distribution: 27,842...
...As a result, this country is being deprived of the considerable (by our own account, anyway) creative talents of nearly a whole generation of well-educated people...
...We started our paper on $20,000 in equity capital, put up by three people, and $20,000 in bank debt...
...4. Location of known office of publication: 1028 Connecticut Ave., N.W., Washington, D.C...
...2. Mail subscriptions: 26,242...
...An extensive study of MIT graduates a few years ago showed that if you don’t start a business by the time you’re 30, you’ll probably never start one...
...9. Not applicable...
...He placed a classified ad in the Star that said: “Rent a car...
...The usual next step would be to sell this patent to a large aluminum producer, but Toth won’t do that...
...Psychologist David McClelland lumps these attributes under the heading of “the drive to achieve,” and, in his terms, my classmates were indeed achievementoriented...
...how he joined the Army at 15 Statement of Ownership, Management and Circulation (Act of August 12, 1970: Section 3685...
...Gene Gordon, Bethesda, Md...
...I don’t mean to say that entrepreneurship (which we can define broadly as the starting and running of one’s own organization) is pure enjoyment...
...The same thing is happening in the stock market, where the Dow Jones Industrial Average (which includes only hotshots like DuPont and U.S...
...And despite the lip service that politicians and social leaders pay small business, it’s not highly regarded in civic circles either...
...Most journalists who undertake this sort of thing learn very quickly that what they’re in the midst of is a business, and their main preoccupation becomes staying alive...
...The Shoe Repair Shop When my wife and I started our small business, a weekly newspaper in New Orleans, four-and-a-half years ago, we certainly didn’t do it with the good of the American economy in mind...
...Today the difference has increased to one-and-a-half percentage points...
...In fact, it’s hard to say what was in our minds...
...Owners of 1 per cent or more of stock in The Washington Monthly Publishing Corp.: Alfred C. Clark, New York, N.Y...
...He was a risk-taker who seemed to be in the game for the sheer joy (and pain) of the gamble...
...Pancho Villa and Rent-a-Cars A few months before he died, my grandfather kept my wife and me up all night one night in Norfolk telling us his life story: how he was sent to reform school in Washington for breaking a window and not being able to come up with 50 cents to replace it...
...20036.5...
...20036...
...order of big business, big government, and big foundations...
...Money has always been a problem for us, but it is not the problem...
...Steel) rose 50 per cent between 1962 and 1975, while the Value Line Index, a more democratic indicator of 1,500 New York, American, and overthecounter stocks, rose not at all...
...The vast majority of small businesses fail, with a horrible finality that a lawyer who occasionally loses a case can’t understand...
...A Harvard Man Discovers Free Enterprise by James K.Glassman You probably wouldn’t be surprised if I told you that the people I went to school with-the ones who marched on the Pentagon, sat in against Dow Chemical recruiters, and took over college administration buildings-didn’t grow up to become small businessmen...
...Even if you saw a weakness in, say, the aluminum industry, even if you had a new way of making aluminum, raising the capital to enter that market is close to impossible...
...Title 39...
...My grandfather also invented the zone system for Washington taxicabs, helped found the Fontainebleau Hotel in Miami, and, with my father and uncle, built the eponymous Glassmanor, one of Washington’s first suburbari developments...
...Starting a business is exhausting, nerve-wracking, depressing, and (in the early stages) not in the least rewarding...
...N.W., washington, D.C...
...James Fallows, Austin, Tex...
...What’s wrong is two things: m Small business has traditionally been the main innovative force in the American economy...
...Entrepreneurs are not conspicuous money-makers...
...Extent and nature of circulation: Average no...
...My college friends had been following the path all their lives, from the time they took their first standardized test just out of infancy, through admissions offices and tracking systems all through school, past transcripts and recommendations and summer jobs...
Vol. 8 • October 1976 • No. 8
