Monday, January 20, 2014
How did it happen? How did a couple of Jewish kids from humble origins become two of the wealthiest men in America? They are remarkable tales, the stories of Home Depot cofounder Bernie Marcus and Las Vegas Sands CEO Sheldon Adelson. Stories few Americans know. Stories of how wealth is really created in our country. And by whom. Stories that could have happened only in America.
And so we must start these two stories where it’s best to start stories — in the beginning.
Both men grew up during the Great Depression, the children of first-generation Russian immigrants. Their parents didn’t come here to change America; they came here to have America change them. Change their life prospects, and those of their children.
Marcus was born in 1929, the son of a cabinetmaker, and grew up in a tenement in Newark, N.J. Adelson was born a few years later and a few hundred miles north in the tough Dorchester neighborhood of Boston. His father drove a taxi, and his mother ran a knitting shop.
They had little money growing up, but they were not poor; they were lucky to have families that instilled in them the value of self-reliance, accountability, and charity — “the age-old virtues,” Adelson wrote in a 2012 Wall Street Journal column, “that help make our communities prosperous.” Values that would shape their lives and prepare them for the challenges life would throw their way.
They were also lucky to grow up at a time when the culture reinforced those values. The studio moguls and directors of their youth — names such as Louis B. Mayer and Frank Capra — understood the American Dream because they were themselves products of immigrant families who embraced that very same dream.
So how did these two men get where they got from where they were from? Did they go to Ivy League colleges or get MBAs and work the halls of corporate management or the canyons of Wall Street?
It turns out that neither attended a fancy college, let alone business school. Marcus attended Rutgers and graduated with a pharmacy degree; Adelson attended New York’s City College and dropped out. Their education was real-life business, their graduate school the school of trial and error. But both men possessed the tenacity to overcome obstacles that no college can impart and the capacity to take risks that MBA programs often crush.
They had varying degrees of success during their 20s and 30s, making good money — and in some cases losing even more. Marcus learned soon after graduating from college that he didn’t want to fill prescriptions for the rest of his life and that his real talent was in retail sales. He racked up big sales numbers wherever he went, and after 20-plus years of work found himself the CEO of Handy Dan Home Improvement Center in Los Angeles. Until he wasn’t. A disagreement with his boss left Marcus out of a job and on the street in his late 40s.
He didn’t know it at the time, but getting fired was the best thing that ever happened to him. In 1978, with the help of investment banker Ken Langone and partner Arthur Blank, he launched The Home Depot. The store revolutionized the home-improvement business with its warehouse concept and turned millions of homeowners into do-it-yourself contractors. And it turned Marcus into a billionaire.
Adelson’s is a classic entrepreneur’s story. He started his first business when he was 12, and he never stopped starting them. After a brief stint in the Army and college, he worked as a mortgage broker and investment adviser and made his first small fortune. In the early 1960s he moved back to Boston and invested in various companies, among them a travel-and-tour business, which were profitable. But the stock-market decline of the mid-1960s came, pushing Adelson into new lines of work. He found himself in the condominium-conversion business in the 1970s and did well for a short time. Until he didn’t.
Then came his big “break.” He bought a company that published magazines, one of which was a computer magazine, which soon led to the creation of the Computer Dealers Expo, or COMDEX. In 1995 he sold COMDEX to a Japanese firm for $860 million, with a personal share of over $500 million.
But Adelson didn’t stop there. He did what entrepreneurs are born to do: He took an even bigger risk and built the $1.5 billion Venetian Resort Hotel Casino and the Sands Expo and Convention Center in Las Vegas after a visit to Italy with his wife. Casinos in Macau and Singapore followed.
In 2009, Adelson suffered another blow, losing over 90 percent of his wealth as the stock market — and shares of his casino stock — plummeted. Rumors floated that his businesses were hovering at the edge of bankruptcy. The stock has since rebounded, making him one of the richest men in the world, but his attitude about the decline was consistent with the many economic ups and downs of his life. “So I lost $25 billion,” he told ABC News flippantly. “I started out with zero.”
They are classic underdog stories, the stories of Bernie and Sheldon. They started with nothing and created their wealth not by stealth or chicanery, manipulation or coercion. They did it by building businesses that people flocked to. They didn’t sit on their capital, or cash out early and spend their lives tanning in exotic locales and chasing exotic women. They put their wealth to work and used their God-given talents to create more wealth. They employed hundreds of thousands of people and created great sums of wealth for shareholders, many of whom were working-class Americans with pensions and 401(k)s invested in those businesses.
And yet somehow, men like this have come to be personified as bad guys? As part of the greedy 1 percent who are hurting this country? And making life harder for the middle class?
But it gets even better, this story of two American dreamers. And it reveals the dissonance between the reality of their lives and the caricature of America’s wealth creators and job creators perpetuated by our nation’s media and academic elites.
It turns out that both men weren’t just determined to build wealth; they were equally committed to giving it away. And not because they wanted the tax write-offs, but because charity was — and is — a fundamental part of their upbringing and heritage.
Both men were aware from their earliest days of tzedakah, a Hebrew word commonly used to mean charity. Both were taught from an early age that it was an obligation, not a choice, to give to those less fortunate than themselves.
“Five cents was a major issue in our lives,” Marcus told Philanthropy magazine. Occasionally, as a treat, the nickel would be spent on ice cream, he recalled, but just as often it would be used to help one cause or another. “I grew up knowing that this is what you do. It’s bred into me.”
Marcus and his wife, Billie, have done remarkable work with their wealth, and their wealth has done remarkable things for people with autism, soldiers struggling to make their way back into normal life after serving our country, and countless others. He contributed $250 million of the $300 million that was raised to build the Georgia Aquarium. It revitalized a neighborhood in Atlanta and will thrill kids and adults alike for decades to come. Marcus didn’t name the aquarium after himself, but after the state he calls home.
Adelson, too, has given generously to many causes. He and his wife, Miriam, a physician by training, have given to projects ranging from education to health, with a particular focus on medical research in the area of neural repair and rehabilitation. They have also given generously to Birthright Israel, which finances Jewish youth trips to Israel, and to Yad Vashem, Israel’s official memorial to the Jewish victims of the Holocaust.
Why do we know so little about either of these men? Or the lives of so many of the entrepreneurs who have built great American businesses? And given away so much of the wealth they’ve created? Because their life stories don’t comport with the narrative of those in charge of America’s cultural narrative.
The fact is that the lives of Bernie Marcus and Sheldon Adelson are a rebuttal to much of what passes for conventional wisdom about wealth creation in America’s newsrooms, studios, and media conglomerates, and too many economics departments in our finest colleges.
That’s why most Americans don’t know their stories, or the stories of so many other Americans who’ve turned their small businesses into bigger ones. And it’s why so many Americans know so little about how wealth is actually created — big and small fortunes alike.
It’s become harder to do — grow a business or accumulate savings. Ask any entrepreneur, and he’ll tell you the same thing: One of the biggest obstacles to success is our own government. Ask most hard-working Americans, and they’ll tell you the same thing about getting ahead: The government keeps expanding, and their paychecks keep shrinking.
Americans would love to learn how to build wealth — because we are builders by nature. And we learn best from storytelling. From the stories we hear from our culture.
In what may be the richest of ironies, it turns out that the means of production that matters most in America — the cultural means of production — is dominated by people who either don’t understand how wealth is created or don’t care. Many of them — most, I would bet — actually believe wealth redistribution is a better mechanism to improve the quality of ordinary Americans’ lives than is free enterprise.
What can be done? It’s not that complicated, actually. Our great wealth creators need to help build cultural means of production of our own. And get our stories to the American people. Because if we don’t tell them, no one will.
— Lee Habeeb is the vice president of content at Salem Radio Network and a senior adviser to AmericaStrong. He lives in Oxford, Miss., with his wife, Valerie