I entered the job market at the height of the Great Depression, and launched my first business in 1950 -- five years after the end of World War II.
Points of reference: Boomers, this was before color TV and rock 'n' roll. Gen Xers, this was before video games and the Internet. Millennials, a "smart mob" would have been an oxymoron.
Since then, I have launched a half-dozen successful businesses and been responsible for a score of inventions (and more than 40 patents) in fields as diverse as credit card processing, mining, mass transit, medical equipment and off-shore oil transportation. I've also weathered a dozen recessions.
You could say that when it comes to free enterprise, I've been around the block. A few times.
My first piece of advice for those thinking about starting a small business: Don't wait. There's never a right time.
You might think that the current hard times would be the time to hunker and wait for the passing storm before testing your entrepreneurial mettle. Don't fool yourself. A tough economy can present as many opportunities for a great -- and profitable -- business idea as when the good times are rollin'.
Here, then, are my five sure-fire steps for becoming a successful entrepreneur, even during hard times:
1. Identify The Problem: What bothers you? I mean, what really grates on your nerves? Chances are, whatever the problem, others feel the same way. I made my first fortune in starting a company that automated the credit card industry, because paper cards were very problematic and really grated on the nerves of bankers.
Now, I knew nothing about high finance much less retail, but beginning in 1957 I began reading about new-fangled "charge cards" that some banks were beginning to offer their customers. And when I began talking to bankers who were offering the cards, what really bothered them was what they were made of: paper. The paper cards would tear and fray, and become difficult to read both at the merchant and bank-processing levels. Yep, I had an early Diner's Card made of paper and they were exactly right.
Rightly so, banks also were predicting a huge market for credit cards so they wanted a way to issue cards in large volume at low-cost and then be able to maintain faster files and accounts on the state-of-the-art technology at the time: IBM punch cards. Bing! Problem identified.
2. Find The Fix: In the case of credit cards, the solution was clear: Create durable credit cards with data lines such as account number and expiration dates, name, street, address, city and state.
Like the Dustin Hoffman character in the movie The Graduate, it was revealed to me that the answer to all my problems -- well, at least this one - was "plastic." I had to find a way of creating a plastic credit card. About that time, I had heard through my old contacts at Addressograph-Multigraph (the company that gave me my first job during the Great Depression), that a young man, Dunstan Sheldon, had come up with a plastic material that could be embossed upon. Fortunately for me, my ex-employer was sitting on the idea.
I tracked down the material, which hadn't been patented, and next, set to work devising a way to fulfill the banks' other requirement.
3. Connect The Dots: OK, problem identified. Check. Material (emboss-able plastic) found. Check. Now what about all that data processing the bankers were wanting for their customers' credit cards?
Here's where I had to really jump into the skin of a banker and see why this whole processing thing was so important to them. After doing more research, I learned that the flow of credit card paperwork began with the merchant at the point of sales. If that starting point couldn't be automated, the entire system would fall like a house of (credit) cards.
4. Gather The Troops: OK, I'm not an engineer, but I have some engineering genes in me. Also, I knew some very talented engineers. This is why it is so important to form strategic partnerships with people who have skills which you lack. I hired then to work with me on reproducing and embossing a keyboard embosser that embossed plastic credit cards with their name, account number, and expiration date. This machine was operated by punch cards, one for each customer. It was able to emboss 1,000 cards per hour. We also developed an imprinting machine which imprinted all the information on a plastic card, which was inserted into the imprinter and printed out all the info on the card, and was then signed by the customer.
These machines printed account numbers, dollar amount, merchant number and date onto a sales draft that could later be scanned and read by optical character readers. The results were not only faster but foolproof. The problem of human error -- caused by sales clerks writing down the wrong information or bank clerks misreading the right information -- was eliminated.
We used existing technology to build these machines. However, it was the application of this technology in a new way that met the bankers needs that proved decisive.
In 1958, Dashew Business Machines received an initial order from 300,000 BankAmericard plastic credit cards and 3,000 imprinters and 1 electronic Databosser to emboss the credit card information on the plastic credit card and from the IBM punch cards.
Here's the takeaway: When you lack the skills or experience to overcome a roadblock to your success, don't be afraid to ask -- you friends, family, existing clients, vendors or colleagues -- for help.
5. Roll With The Punches: Business looked good for Dashew Business Machines in 1958, if only all the players remained in place. Of course, they did not.
Joe, the Bank of America executive who had helped me secure my deal, was out. He lost his bid to be president and along with his departure, we were shown the door. And the final kick in the pants was that we had just ordered costly parts for 10,000 credit-card imprinters in anticipation of the millions of BankAmericards we were going to be making.
Rather than throw in the towel (and I did think about it, more than once), I eventually came up with what I thought was a pretty original strategy. I hired Joe, now newly unemployed, to find a way of creating an entirely new credit card that could be used nationwide -- an 'unheard of' concept at a time when bank charge cards, like banks themselves, were restricted by law to do business in only one state.
It was an enormous undertaking and truth be told, we never accomplished it. (The first "national" credit card would not emerge until 1966 with MasterCharge, which would later become MasterCard.) But something even better happened. While speaking with Chase Manhattan Bank (now Chase Morgan), Joe got us a deal to take over its failing charge card operations. Chase was, and is today, such a blue-chip brand name in the banking industry, that it was relatively easy to raise financing on Wall Street to cover the deal.
And here's the cherry on top: Soon, American Express came calling and bought the company we had created to handle the Chase operations. The deal called for cash and a generous amount of Amex stock. Within a year, following the successful conclusion of a lawsuit, Amex stock skyrocketed.
It was now 1965, and I was in the thick of the revolutionizing the financial habits of middle America. It was BIG and we knew it.