All Commentary
Thursday, January 1, 1987

A Reviewers Notebook: Land of Opportunity

Donald Lambro, who has written some excellent books about Washington as “fat city,” believes in statistics. So, in his latest work, Land of Opportunity—The Entrepreneurial Spirit in America (Boston: Little, Brown, 176 pp., $17.95) he parades the figures about new jobs and new companies that have made the six years of Ronald Reagan’s “supply side” presidency so exciting. From 1983 through 1985, some 600,000 new companies were created each year. A total of 11 million new jobs were accounted for in the three-year span. The total labor force stood at 109 million, the highest ever. Unemployment had fallen from 10 per cent in 1982 to 7.1 per cent in 1985. The interest rate had been cut in half from the 21 per cent of 1980, and the rate of inflation had dropped from the 10.4 per cent of 1981 to 3.2 in 1983.

The really important thing about Lambro’s book is that the author is so curious about the human faces behind the statistics. What manner of people were responsible for so many new enterprises and new jobs? It wasn’t the Fortune 500, the big companies that John Kenneth Gal braith believed were about to take over the country. They are getting along with fewer and fewer employees. It has been the “little people” who are primarily responsible for thousands of new enterprises that specialize in unique services. Instead of one “ladder industry” lifting the country up, as happened in the days of the railroad and automobile tycoons, it is a case of thousands of small step-ladders.

“The rags-to-riches stories,” says Lambro, “are at once endlessly fascinating, infectious, and inspiring to all who seek to emulate them and create a successful, prosperous enterprise of their own . . . they come forth in seemingly inexhaustible numbers, people of all ages and from all classes, native Americans and immigrants, millionaires and paupers, young and old, to write their names across the sign boards of new industries and new enterprises, big and small.”

The first remarkable example cited by Lambro is Frederick W. Smith. In the mid-sixties, when he was an undergraduate at Yale, Smith wrote a paper for an economics class outlining his idea for a company that would provide next-day delivery service across 3,000 miles of country for letters and packages that “positively have to be there overnight.” The professor gave Smith a “C” on his paper. When Smith formed his company in the seventies at the age of 27, he lost $29 million in the first two years of operation. This was in the period of high energy prices. The Yale professor might have smirked for a moment, but Smith proceeded to get an “A” in practical life when his company grossed $1.4 billion in revenues in 1984, earning $115 million in post-tax profits from the delivery of 450,000 packages and letters a night for a fee of $11 per item.

Lambro is fascinated by the character of Joel Hyatt, a graduate of Dartmouth and the Yale Law School who, in the spirit of the sixties, had only disdain for businessmen. Hyatt’s father had been unhappy in his own business career in umbrellas. Imbued with the idea of “service,” Hyatt looked for a way to help that large segment of the public that was afraid of lawyers and didn’t know where to go for legal services. With his wife Susan, Hyatt founded Hyatt Legal Services in Cleveland to target the 70 per cent of the people who were worried about excessive legal fees.

The response of the public made Hyatt an entrepreneur in spite of himself. He appeared on television to sell his services to the masses, ending each spot with the promise, “You’ve got my word for it.” Thus he joined a stream of mass medium entrepreneurs that includes Maryland’s chicken salesman Frank Perdue, who talks in an ordinary voice to his customers directly.

Other Success Stories

From Hyatt, Lambro jumps to a cookbook author named David Liederman, an ex-lawyer who took a job as a chef in a French restaurant in preparation for starting his David’s Cookies, with more than 130 stores in the U.S. and abroad. Liederman has eschewed dependence on high- priced marketing researchers. Instead, he goes directly to children for opinions about his product. His 4-year-old daughter and her friends were the “experts” who were called upon to pass on David’s macadamia, chocolate chunk confections.

Colonel Sanders and his Kentucky Fried Chicken are an old story. The Sanders success has inspired people who have nothing to do with the food business. A1 Sutherland, a retired insurance salesman, was asked by his son to take care of his home during a vacation. After a few periods of house sitting, Sutherland told himself, “If chicken can have Colonel Sanders, house sitting can have me.” Sutherland now franchises his Home Sitting Service for a minimum fee of $6,000 for a city of 100,000 population.

Lambro goes on to tell how Morris Siegel built a big company on his wife’s herbal tea. His Celestial Seasonings now produces twenty-seven varieties of herbal tea and has branched out into herbal shampoo and conditioners. He refuses to install time clocks for his more than 200 employees.

Space doesn’t permit me to recite more of Lambro’s stories of “little people” who have started successful businesses. It’s a cornucopia that Lambro offers.

  • John Chamberlain (1903-1995) was an American journalist, business and economic historian, and author of number of works including The Roots of Capitalism (1959). Chamberlain also served as a founding editor of The Freeman magazine.