Entrepreneurial Profile- Rockefeller

Entrepreneurial Profile: John D. Rockefeller

Brandon Borrelli 102738337 Dr. Lee 75-290-01 February 28th, 2012

Over the past few centuries, entrepreneurship has grown considerably and become an important aspect to our economy in terms of productivity, technology, and innovation. The rapid evolution of “knowledge and technology” has promoted many of the high-tech entrepreneurial ventures which are currently widespread. In addition, with the shift in demographics (such as retirement of baby boomers and increased immigration) has prompted entrepreneurial activities which will tender to these trends. In the United States specifically, entrepreneurship has always been strong due to the fact that its culture supports risk takers and encourages its people to seek opportunities. This is due to their alertness to unexploited economic opportunities and a low fear of failure. In addition, there are a large percentage of individuals with professional technological and/or business degrees that are likely to become successful entrepreneurs.

Early Life and Business Career “I believe in the dignity of labour, whether with head or hand; that the world owes no man a living but that it owes every man an opportunity to make a living.” –John D. Rockefeller Often regarded as one of the most powerful men of his time and wealthiest person to have ever lived (while adjusting for inflation), John D. Rockefeller is the closest definition to an entrepreneur. Rockefeller was born on July 8th, 1939 in Richford, New York. John was not by any means born rich, he was raised in a family of six with a father who was at one point a lumberman and later becoming a travelling salesman. His mother was a stay-at-home mom who often struggled to ensure the well being for her family. She stressed the importance of faith and religion within the household which helped the children develop strong beliefs and values. Rockefeller`s childhood was faced with frequent moves as his father’s profession demanded constant mobility which in turn allowed John to gain key entrepreneurial characteristics. With frequent absences from his father for extended periods of time, allowed Rockefeller to gain a sense of independence but also maturing quickly for his age taking on multiple responsibilities. Being an entrepreneur requires much of the owner’s independence as they are their own boss and make all decisions on a macro level, which in turn requires a heavy burden of responsibility to be bestowed upon oneself in this position. These factors contribute to John`s characteristic as a successful entrepreneur. Due to the frequent moves, Rockefeller learned to be flexible in different environments and in turn earned him the capability to meet new people and make new friends with relative ease. As an entrepreneur, the ability to network and consistently make new contacts is crucial in the expansion of current business and to locate such assets as financing, suppliers, valuable business partners, etc. Furthermore, as the business environment constantly changes due to economic factors which affect it, an entrepreneur must be flexible to these changes and be able to adapt to the different scenarios. From any early age Rockefeller took on many household duties and earned extra money for himself by performing a number of different odd jobs such as raising turkeys, selling potatoes, to eventually lending small sums of money to neighbours. Following his father`s advice to “trade dishes for platters” Rockefeller learned to be business savvy and to preserve. Although done at an early age, I believe these actions foreshadowed Rockefeller`s entrepreneurial successes later to be expressed.

Entrepreneurship has always been a strong facet in the United States. Also, people who have participated in professional, technological, or business related studies are likely to become entrepreneurs. In 1853, his family moved to Strongsville, Ohio where Rockefeller attended Central High School and became a deacon at the Euclid Avenue Baptist Church. Rockefeller dropped out school and found work to support his family while only attending for two years. After saving money, he was interested in entrepreneurship so he chose to further his studies by partaking in a business program at Folsom`s Community College where he learned fundamentals of business and specialized in bookkeeping. An interesting point to note was that the program was a six month course in which Rockefeller finished in three. Soon after he completed the course, John was hired by Hewitt and Tuttle which were involved in produce distribution and merchant commissions. John found great success with the firm, working hard to impress his employers as he was eager to be involved in all aspects of the business. Rockefeller was reported to have organized complicated transportation deals for consumers moving freight by railroad, land, or boats. These actions helped Rockefeller to learn practical business fundamentals such as sales consulting, bookwork, and networking skills which are essential for entrepreneurs. However, Rockefeller had big dreams for himself and thought he could potentially earn more for himself elsewhere. I believe the reputation with Hewitt and Tuttle helped Rockefeller establish a strong reputation for himself within the Cleveland business community. According to (Kurkato 2009) prior job experiences influence the majority of new business ventures which is precisely the action Rockefeller had taken after leaving Hewitt and Tuttle. Sources of New Business Ideas among Men & Women

Source: William J. Dennis, a Small Business Primer (Washington, DC: National Federation of Independent Business, 1993) 27. © 2009 South-Western, a part of Cengage Learning

As his earnings grew, Rockefeller (merely at the age of 20) and his neighbour, Maurice Clark, formed a partnership in the produce commissions business or also known today as commodity trading. This venture of produce trading imposed a high degree of risk for the owners; Rockefeller seen this as a lucrative business opportunity even with the inherent risks as he seen great potential for profits. This is an inherent characteristic which permeates in entrepreneurs which is to “take risks beyond security”. Each partner had to invest $2000, so Rockefeller used

his savings of $1000 and borrowed the other thousand from his father (with interest). After the first year end, the firm earned profits and continued to be successful in the years leading up to the Civil War. In 1863 Rockefeller and his current business partner, Maurice Clark, entered into another business venture. At this time, the oil industry was in its early stages and regarded as an emerging opportunity for potential entrepreneurs. This was in part due to the construction of major railways and industrialization of the United States. Rockefeller heard of this news, identified this business opportunity, and was eager to plunge into this venture. Opportunity identification is central to entrepreneurship and involves creativity and innovation; this ability could lead to both personal and societal wealth, also the skill to sort through these ventures is not an easy one to obtain. Through this identification of the opportunity, Rockefeller viewed the drilling of oil to have high risks associated as potential for success was generally very low so he believed the refining of oil was a more suitable and steady form of business to be a part of. As both Clark & Rockefeller continued to generate profits from commodity trading, they partnered with Samuel Andrews to invest in an oil refinery. Rockefeller had big dreams and thought this venture into the oil industry would lead to further success, so he ended up selling his shares of Clark & Rockefeller (commodity trading) to his partner Maurice. So confident in the oil industry, Rockefeller used his proceeds from the sale of his shares to buyout the Clark brothers who had large stakes in the business; the refinery was renamed Rockefeller & Andrews. These actions were critical to Rockefeller’s success in this business as he quoted “It was the day that determined my career”. In addition these actions displayed his appetite for future success. By the end of the Civil War, Cleveland was one of the 5 major refiners of oil. In 1870, after Rockefeller`s brother William was brought into the partnership which brought another oil refinery into their business, Standard Oil was formed and was the world`s largest oil refining operation by volume. Rockefeller was determined to take advantage of post-war prosperity and sought to expand his business by using different business strategies. In order for entrepreneurs to initiate ventures they must locate and secure sources of capital to finance their business. Rockefeller relied heavily upon Debt Financing to support the increased growth of the firm. In addition, he would reinvest profits earned back into the business to ensure high cash flow, to pay off interest, and to increase the value for Standard Oil. Rockefeller also practiced Horizontal Integration in which he gained considerable market share of the oil refineries in the Ohio area by “buying out” or “taking over” existing competitors. This was known as the “Cleveland Conquest” in which he took-over 22 of its 26 competitors in the Cleveland area. In addition, he also strategized his pricing policies to undercut his competitors and would consistently look to improve efficiency of operations. As technology continued to advance in this industrial era, oil products which were staples for Standard Oil such as Kerosene were obsolete (with introduction of the electric light bulb). Rockefeller was very adaptable to these environmental changes and would look for new opportunities and areas where he could profit. Rockefeller also possessed a high degree of entrepreneurial imagination and creativity as he could easily seek opportunities and turn problems into solutions. He practiced not only Horizontal but also Vertical Integration creating over 300 different oil-based products such as paint, petroleum, gasoline, etc. He was an entrepreneur who led to growth by entering and expanding Standard Oil`s existing markets and

created entirely new markets by offering innovative products. By the late 1870`s, Standard Oil was refining over 90% of oil in the United States.

Philanthropy “Charity is injurious unless it helps the recipient to become independent of it.” –John D. Rockefeller Corporate Social Responsibility is defined as the managerial obligation to take action that protects and improves the welfare of society as a whole, and also organizational interests. Rockefeller is regarded as a pioneer in entrepreneurship but also is known for his generous work as a philanthropist donating nearly half of his fortune after retirement. From any early age Rockefeller was taught the importance of charity from his family, community, and strong religious ties. From his very first pay cheque, Rockefeller would donate at least 10% of his earnings to his church. As Rockefeller’s wealth grew, so did his giving; Rockefeller invested primarily in health and educational causes, but also to the sciences and arts. The University of Chicago was largely financed by Rockefeller receiving over $75,000,000 and developed the Rockefeller University giving over $50,000,000. In 1909, Rockefeller set up The Sanitary Commission which through its research helped eradicate Hookworm in the South. One of his most significant social developments was the formation of the Rockefeller Foundation established in 1913 in which Rockefeller transferred over $235,000,000 for worldwide social initiatives.

Family Life Entrepreneurs often have trouble balancing their business life with their personal life. In turn, they all take on a considerable amount of social and family risk when they form their entrepreneurial ventures. Rockefeller met the love of his life Laura Spelman in Cleveland as they had partaken in accounting classes together. After Laura returned to Ohio for a teaching position, her and Rockefeller got married in 1864; together having five children (four daughters and one son). At the early stages of their marriage, Rockefeller spent much of his time tending the business; as Standard Oil began to take-off, him and his wife devoted most of their time raising the children and undertaking social initiatives. Rockefeller enjoyed spending time with his children, often playing games and partaking in recreational activities with them. In midst of running one of the largest oil refining operations in the world, Rockefeller remained to be a family man at heart by displaying a balance between the business world and his family.

Rockefeller: The Entrepreneur, Industrialist, & Philanthropist Rockefeller has not only shown that he has the specific traits that make him an entrepreneur but has been regarded as one of the most successful business men to have ever lived (including richest). His story has definitely shown that some of the myths surrounding entrepreneurs are not accurate. Rockefeller`s entrepreneurial talent had not been given through birth as he did not grow into a wealthy family or one with a successful family business; he had to had to gain many of these skills by going out into the “real world” independently and developing a strong work ethic and motivation to succeed. Starting his first entrepreneurial venture in the commodity trading business with only $1000 of his own savings and another thousand which his father lent him; he worked very hard to build up his reputation and business. Therefore, this is proves that money and luck are not essential ingredients to the success of an entrepreneur. Rockefeller revolutionized the oil industry and increased his product line by creating hundreds of different applications for oil by applying his creativity and imagination. Therefore, this proves the myth that entrepreneurs are not just inventors but innovators as well. The true meaning of entrepreneurship lies in seeking opportunities, taking numerous risks, and pushing ones idea that would otherwise be perceived as unrealistic to society. If I could use one word/phrase to describe John D Rockefeller as an entrepreneur, it would be “perseverance”. In his early years, he had believed in himself and made it one of his goals to become a successful businessman. Coming from a low-income household growing up, he had to develop a strong work ethic and undertake a considerable amount of risks to accomplish this task. Although some may have criticized Rockefeller for some of his business practices, in my eyes he is the most successful entrepreneur to have ever lived; seen through his financial and philanthropic milestones but also his revolutionary legacy in the oil industry.

"If you want to succeed, you must strike out on new paths, rather than travel the worn out paths of accepted success."–John D Rockefeller

References

Kuratko, Donald F. Entrepreneurship: Theory Process Practice, (8th edition) South-Western, 2009. Carnegie, Dale (1932). How to win friends and Influence People Rockefeller Foundation- Our History: A Powerful Legacy. 2012. Retrieved From: http://www.rockefellerfoundation.org/who-we-are/our-history/ Public Broadcasting Service (PBS): American Experiences- John D Rockefeller Sr. 2000. Retrieved From: http://www.pbs.org/wgbh/amex/rockefellers/peopleevents/p_rock_jsr.html Encyclopædia Britannica, Inc.: Biography.com. John D Rockefeller. 2011. Retrieved From: http://www.biography.com/people/john-d-rockefeller-9461341 Evan Carmichael. The Richest Man in History: Rockefeller is born. 2011. Retrieved From: http://www.evancarmichael.com/Famous-Entrepreneurs/651/The-Richest-Man-In-HistoryRockefeller-is-Born.html Brainy Quote. John D Rockefeller Quotes. 2012. Retrieved From: http://www.brainyquote.com/quotes/authors/j/john_d_rockefeller.html