A few Business Revolutionaries you Never Heard of
Everybody has heard of business revolutionaries such as Henry Ford Sr., Steve Jobs, Jeff Bezos, and Elon Musk. However, there are many business revolutionaries who had an enormous impact on our lives that most people are unaware of.
Our lives would be very different today, without people such as Michael J. Cullen. Yet people all over the world use Cullen’s innovations each day.
Studying obscure business revolutionaries such as Cullen can help investors spot revolutionary investors and make money. Similarly, studying unknown revolutionaries can show entrepreneurs how to improve their businesses.
Obscure Business Revolutionaries Include:
Michael J. Cullen
Cullen founded King Kullen Grocery Company, the retailer the Smithsonian Institution recognizes as the first modern American supermarket. Thus, most Americans and Europeans shop in stores based on what Cullen founded.
Cullen spent decades laboring in the grocery business, working for A&P, Kroger (KR), and other grocers as a clerk. Cullen began devising the concept of a supermarket as early as 1913, Supermarket News claims.
However, Cullen never gave up and in 1929 Cullen sent Kroger CEO William Albers a letter with a business plan for a five-store supermarket chain. In particular, Cullen praised a cash and carry system for grocery purchase being used in New Jersey. At the time, grocers often extended credit to customers.
In his letter to Albers, Cullen proposed a cash-only supermarket which would be 80% self-service. Instead of clerks pulling merchandise from a stockroom, they would stock most of the goods on shelves. Hence, customers themselves would pull the products and take them to the cashier.
Additionally, Cullen proposed selling groceries at markups of 3%, 15%, and 20%, lower than the industry standard. Cullen thought ordinary people would shop at his store to “save $1 to $3 on their food bills.”
Cullen’s estimate sounds small until you adjust it for inflation. The US Inflation Calculator estimates $1 in 1929 equals $28.40 in modern money and $3 in 1929 equals $49.32 in 2022 dollars. Additionally, Cullen proposed using newspaper supplements to attract customers.
Stupidly, Albers never responded to Cullen’s proposal. Consequently, Cullen quit Kroger moved back to New York and entered into a partnership with Harry Socoloff of the Sweet Life Foods Corp. On 4 August 1930, Cullen opened his first King Kullen supermarket in a garage in Jamaica, Queens. A cartoon drawn by Cullen’s son Bobby suggested the name King Kullen.
They opened King Kullen at the right time because the Great Depression was gripping the nation. People needed to save money, so any store that could reduce grocery expenses became popular. When the first King Kullen opened, some shoppers came from 75 to 100 miles away to shop there.
Unfortunately, the King Kullen business model was impossible to patent. All competitors, such as Kroger executives, needed to copy it was to shop at King Kullen and look around. Within a few decades all the major grocers were imitating King Kullen.
The supermarket business grew fast. By 1932, there were 300 supermarkets in the United States selling $100 million worth of groceries. By 1936, over 1,200 supermarkets were selling $500 million worth of groceries, Supermarket News estimates. There were over 4,000 supermarkets in the United States by 1939.
King Kullen still exists, but it only operates around 20 stores on Long Island. In contrast, America’s largest standalone grocer, the Kroger Company (NYSE: KR); Michael J. Cullen’s former employer, operates 2,750 supermarkets in the United States. Hence, just inventing a new business will not make you a billionaire.
Harry B. Cunningham
In 1962, Harry B. Cunningham, then president of the dime-store operator the S. S. Kresge Co., revolutionized the discount store business.
Cunningham employed the methods Cullen pioneered in supermarkets in a large discount store. For example, they stocked most merchandise on shelves; they gave customers shopping carts, and check out was in the store’s front. Cunningham called the new store K-Mart or Kmart.
Kmart became popular and grew fast. Within a few years, the S. S. Kresge Co was opening 85 Kmarts across America. Kmart was so successful, the S. S. Kresge Co left the dime store business and only operated K-marts. Some Kmart practices such as “Blue Light Specials” even became part of popular culture.
Similarly to King Kullen, an easily imitable success doomed Kmart. One person who noticed K-Mart’s growth was an Arkansas discount store operator named Sam Walton. Walton admired Kmart so much, he copied many of its methods in his Walmart stores. In his autobiography Sam Walton: Made In America, Walton credits Cunningham with inventing the modern discount store.
The success of competitors such as Walmart (WMT), Target (TGT), Kroger (KR), Costco (COST), and Amazon (AMZN) and decades of mismanagement doomed Kmart. By the end of 2021, only six Kmart stores were operating. At its height in 2002, Kmart operated over 2,002 stores.
Kmart shows that being revolutionary and being first will not guarantee success. Smart and observant competitors can steal your methods and employ them successfully. Harry B. Cunningham’s initial genius did not lead to sustainable success at Kmart.
Both Kmart and Walmart will celebrate their 60th anniversaries in 2022. However, Walmart operates 10,566 stores worldwide and 4,742 stores in the United States, while Kmart operates six. Kmart proves early success does not guarantee victory.
William C. Durant
If anybody besides Henry Ford I created the American auto industry, it was William C. Durant or Billy Durant.
Ironically, Durant was a carriage maker who was initially skeptical of automobiles. However, by 1904, Durant could see transportation’s future so he assumed control of the floundering Buick Motor Company. Under Durant’s leadership, Buick became America’s best-selling automobile for a short-time.
Sensing automobiles’ popularity, Durant envisioned a new car company that would manufacture many vehicles and market them under several brand names. Each brand would market cars to different buyers. For example, Buick sold to the middle class while Cadillac targeted the rich. To that end, Durant and Canadian carriage manufacturer Samuel McLaughlin founded the General Motors Holding Company.
Within a few months, Durant merged 13 automakers and 10 parts-and-accessories manufacturers under the General Motors (GM) brand in 1908. In 1909, GM bought two of America’s best known auto brands, Cadillac and Oakland Motor (which became Pontiac). In 1911 Durant backed Louis Chevrolet’s auto company.
In the carriage business, Durant learned the importance of vertical integration. Vertical integration means having much control over as many aspects of the production and marketing processes as possible. For example, GM bought bearing manufacturers, a radiator company, electric products manufacturers, and steel companies.
Although Durant created GM, he did not lead it to success. Ironically, Alfred P. Sloan, an executive at one of the companies Durant, acquired the Hyatt Roller Bearing Company rose to be CEO of GM. By 1918, General Motors became the General Motors Corporation which absorbed Chevrolet in 1919. However, in 1920, investor Pierre Du Pont and Sloan pushed Durant out of GM.
In 1921, Durant founded a second auto company, Durant Motors, which mimicked General Motors by selling several auto brands. However, Durant Motors lacked the resources to compete with established automakers such as Ford and GM.
Conversely, Durant Motors survived until 1933, when the Great Depression killed it. Like millions of other Americans, the Great Depression wiped Durant out. The former tycoon lived on charity in the form of a pension paid by General Motors.
In a few years, the Depression reduced Durant to running bowling alley and fast-food restaurant in Flint, Michigan. The former GM CEO ended up working as a fry cook in the establishment flipping burgers for General Motors workers. After his plan to launch a chain of bowling alleys failed, Durant bought a cinnabar mine in Goldfield, Nevada, to supply the US war effort in World War II.
Late in life, Durant was promoting a hair tonic scheme before his death. Ironically, Durant correctly predicted a massive postwar economic boom, but did not live to see it because he died in 1947.
Without Durant, General Motors went onto become the world’s largest automaker and one of its greatest industrial corporations. During World War II, GM made $12 billion worth of supplies for the Allied war effort. Additionally, William Knudsen, a former GM president, oversaw all US war production as chairman of the Office of Production.
General Motors (NYSE: GM) was America’s best-selling carmaker for 90 years from 1931 to 2021. In 2021, Toyota Motors (NYSE: TM) replaced GM as America’s top automaker.
Durant’s story shows that founding a revolutionary company will not always lead to riches. Instead, others can steal your creation and ride it to fame and fortune.
Understanding the stories of these business revolutionaries can show you how to revolutionize your enterprise.