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The Family Business PantheonSix more family companies—large and small— that changed the world for the better.Wal-Mart, Ford and Cargill are celebrated for their size. Other family companies—like Japan's 1,400-year-old Kongo Gumi or America's 380-year-old Zildjian Cymbal Co.—are known for their longevity. Then there are the family firms like Beretta or Benetton or Gallo, whose products have made them household names. And then there's that elite circle of family role models whose companies literally have changed the world for the better. In the past two years the editors of Family Business have honored 19 family companies, past and present, that have made a major positive impact on the world without sacrificing their "family touch". These members of the "Family Business Pantheon" are now joined on the following pages by six more examples of family business overachievers. We can thank these companies for (among other stunning achievements) global trade, the first newspapers, pneumatic tires, electric light bulbs, Italian opera and open competition on Wall Street. Beyond their products and services, our honorees stand out for their willingness to speak truth to power. One of our inductees forced the resignation of a U.S. President. Another broke the monopoly of the New York Stock Exchange. Yet another derailed a Holy Roman Emperor's scheme to buy himself the papacy. Our new inductees trace their origins to four countries (the U.S., France, Austria and Italy). Some were launched as far back as the 14th century, others just a generation or two ago. Some remain thriving family concerns today, some are currently struggling, some are no longer family companies and some have ceased to exist altogether. But the broad changes they produced remain with us still. Incidentally, our newest group of inductees offers further proof that even small companies can influence the world in a major way. "One man with courage makes a majority," Andrew Jackson famously remarked. He might have added: Ditto for one family, only more so.
House of Fugger Europe's bridge to the modern ageI am rich, by God's grace, without injury to any man," the shrewd 16th-century financier Jakob Fugger claimed when criticized for his wealth. That defense wasn't entirely valid: It was the widespread revulsion toward Pope Leo X's sale of indulgences—slips of paper that promised remission of sins, which the Fuggers sold as the Pope's agents—that drove Martin Luther to launch the Reformation in 1519. But in the context of their own volatile times, the House of Fugger was a bridge between the medieval and modern worlds. The virtues of a global economy, of trade as a tool for progress, of intelligence over inheritance, of philanthropy, even the world's first newspapers—all these features of enlightened free societies can be traced to this remarkable family of Austrian bankers and traders. The dynasty began in 1367 when a country weaver named Hans Fugger moved his family to Augsburg, Bavaria, and started a business in the weaving of fustian, a strong cotton-and-linen fabric. His sons Andreas and Jakob I developed the family textile trade before severing their partnership in 1454. On their own, both branches continued to expand their reach. Andreas and his sons moved into finance, in Antwerp and Venice as well as Augsburg. Jakob's sons—most notably Jakob II (1459-1525)—evolved from trade in textile goods to cotton and spice, then into transactions for the Roman curia and ultimately into the mining and processing of silver and copper. In the process the family developed a network of trading posts that by 1525 extended from the Mediterranean to the Baltic. Jakob Fugger II survived repeated crises, even the confiscation by the Hungarian King Louis II of property Jakob held in Hungarian territory. Jakob was a hard and resolute businessman, but also deeply religious and concerned with social problems. Although he financed the career and wars of the Habsburg Holy Roman Emperor Maximilian I, Jakob refused to lend a cent to Maximilian's attempt to crown his career by acquiring the papacy. Between 1516 and 1523 Jakob built "the Fuggerei"—a colony of 52 houses in Augsburg for poor Catholic artisans and day-laborers. And he so richly endowed his foundation that the Fuggerei still survives—the oldest social settlement in the world. Under Jakob's nephew and successor Anton (1493-1560), the Fuggers expanded even more dramatically, extending their trade and financial ties to Spain and England. The next generation—especially Anton's nephew Hans Jakob (1516-1575)—kept tabs on their holdings through regular reports from their agents throughout the known world. These "Fugger Newsletters" dealt mainly with business affairs but also occasionally with other topics, and the brothers circulated them among their associates and some German princes. This was one of the first uses of the word news to refer to deliberate attempts to gather the latest intelligence. Thanks to their astute ancestor Jakob II—who hedged his bets by investing in landed estates—his descendants lived for centuries in castles along the upper Danube. Three branches of descendants survive today; one of them—Prince Carl Fugger-Baben- hausen—re-established the Fugger bank in 1954.
Casa Ricordi The civilizing gift of musicWhere would modern civilization be without great music to transport people to sublime heights of beauty, sorrow, exhilaration, humor, goodwill, terror—in short, to the fundamental elements of existence? And where would classical music be without Italian opera? So it's truly remarkable to consider that throughout most of the 19th and 20th centuries the history of Italian opera was directly tied to the fortunes of a single family publishing house. From its founding in 1808 until its sale in 1994, Casa Ricordi of Milan repeatedly staked its reputation and its assets on a long line of unsung composers who subsequently became global household names. The great Milan opera house of La Scala was only a year old when Giovanni Ricordi was born in 1788. After transcribing musical scores for several Milan theaters during the Napoleonic Age, young Giovanni mastered the new technique of musical copperplate engraving and opened his music publishing house when he was barely 20 years old. In 1814 he published the first of a long series of catalogs that subsequently introduced the works of Rossini, Bellini and Donizetti throughout Europe while simultaneously funneling a steady flow of royalties to the struggling composers. As early as 1839 Giovanni paid 1,600 lire for the rights to the first work of an obscure composer who became perhaps the greatest operatic composer of all time: Giuseppe Verdi. To protect his composers (as well as himself), Giovanni successfully lobbied the Italian states and the Habsburg empire for one of the first copyright acts. After Giovanni died in 1853, his pianist son Tito (1811-1888) opened branches in Florence, Rome, London, Palermo and Paris. Tito's son Giulio (1840-1912) also composed music under the pseudonym Burgmein. But he's best remembered for his willingness, during the 1880s, to tolerate the fiascoes of the young and insecure Giaccomo Puccini out of his faith that Puccini would ultimately develop a voice that would bring glory to opera. Giulio's support paid off years later with three works that remain among the most performed of all operas: La Bohème in 1896, Tosca in 1900 and Madama Butterfly in 1904. Giulio Ricordi's son Tito II (1865-1933) expanded Casa Ricordi into an international operation that added music textbooks to its repertoire. The Ricordi archives in Milan—a unique trove of letters and musical exchanges between the house and its famous clients—was damaged by bombs during World War II but carefully restored, and it remains to this day a priceless resource for music researchers. But the Ricordi family is no longer involved: Since 1994 Casa Ricordi has operated as a unit of the Bertelsmann Group's music division.
Michelin Group They put the world on the roadThe invention of the wheel some 4,500 years ago released human mobility and imagination like almost nothing before or since. But only in the past century or two has the wheel's liberating potential been truly unleashed. The bicycle, the automobile and the airplane all owe their effectiveness largely to one unique French family's pioneering ability to team the wheel with another scientific wonder: rubber. The Michelins' fascination with rubber began in 1832 when the cousins Aristide Barbier and Edouard Daubree set up a small farm machinery and pump manufacturing business in Clermont-Ferrand. Daubree was the nephew by marriage of the Scotsman who discovered that rubber was soluble in benzene, and Daubree's Scots wife was fond of making rubber balls for their children to play with. In short order the two partners perceived the industrial possibilities of using vulcanized rubber to make seals, belts, valves and parts. After they died, Barbier's grandsons—Edouard Michelin and his older brother André—took over the business in 1886 and re-christened it Michelin & Cie. in 1889. That year Edouard discovered that air-filled (that is, pneumatic) tires made bicycling more comfortable. But because pneumatic tires were glued to the rims, they required hours to change. Edouard resolved that dilemma in 1891 by developing a detachable tire that took only 15 minutes to change. With the arrival of automobiles and planes over the next 15 years, the Michelins promoted their tires by sponsoring long-distance bike, auto and plane races, and they encouraged auto travel by launching the Guide Michelin for auto tourists (in 1900) and the first road maps (1910). Their marketing genius was reflected in the company's famous symbol, "Bibendum" the Michelin Man, who was born one day in 1898 when André (a trained artist) remarked that a stack of tires would resemble a man if it had arms. By 1908 the Michelin Company had operations in London, Italy and New Jersey. In the years to come the Michelins introduced the world to detachable rims and spare tires (1906), tubeless tires (1930), treads (1934) and radial tires (1946). Edouard ran the company for 51 years until his death in 1940, and Michelin men have remained in charge ever since. François Michelin stepped down in 1999 after leading the company for more than 40 years, succeeded by his youngest son, Edouard. Today's Michelin Group owns factories and rubber plantations around the globe, produces more than 840,000 tires a day, and makes some 36,000 products. In some circles the company is known less for its tires than for its authoritative red and green travel guides. With its incorruptible anonymous inspectors and its scrupulous rating system of stars and forks for hotels and restaurants, the red Guide Michelin has carved out a reputation for honesty rarely found in the hospitality business. In the process, the Michelin name has become one of France's most venerated institutions.
Corning Inc. The world's first technology firmAmory Houghton, a Massachusetts farmer's son, was a 19th- century entrepreneur entranced by the cutting-edge technology of his day: the use of glass as a building material. His glass business floundered, moved to Corning, N.Y., changed its name to Corning Glass Works and went bankrupt in 1868. But his sons Amory Jr. and Charles revived the firm, sustained his passion for the cutting edge and turned the firm into the first great technology company anywhere. Their company blew the glass for Thomas Edison's first incandescent light bulb, an invention that instantly illuminated city streets and extended the operating hours of factories and offices. The Houghton brothers also produced the first red-yellow-green traffic light systems, glass tubing for thermometers, and borosilicate glass (capable of withstanding sudden temperature changes) for oven and laboratory ware. Three more generations of Houghtons (with a few breaks in between) have kept Corning Inc. on the cutting edge ever since. By 1945 the company was applying its glass technology to the first mass-produced television tubes, freezer-to-oven ceramic cookware (Pyroceram) and automobile headlights. The 1960s brought the invention of Corning Ware—a ceramic cookware that's stronger than glass and harder than steel—and of fiber-optic cable, which has driven the expansion of global telecommunications systems ever since. Outside the lab, Corning was one of the first businesses to form joint ventures on a regular basis. Early examples included Pittsburgh Corning in 1937 (to make glass construction blocks with Pittsburgh Plate Glass), Owens-Corning in 1938 (for fiberglass building materials with Owens-Illinois), and Dow Corning in 1943 (for silicone products with Dow Chemical). More recently, Corning created international joint ventures with Siemens, Mitsubishi and Samsung. The Houghton family's mythic status has been compounded by generations of philanthropy, civic activity in the town of Corning, and enlightened public service. The founder's son, Alanson Houghton, became the first U.S. ambassador to Germany after World War I. His son, Amory Houghton Sr., was Eisenhower's ambassador to France. And his son, Amory Jr., has been a Republican member of Congress since 1987. The family's stake in Corning is now down to about 5%, and when the fifth-generation Jamie Houghton retired in 1996, the company seemingly left the ranks of family businesses. But not quite. When Corning suffered with the telecom industry's downturn, Jamie returned as chairman in 2001 in an attempt to repeat his great-grandfather's rescue operation. Last year, at 66, he resumed his CEO title.
Weeden & Co. David vs. Goliath on Wall StreetDonald Weeden was not yet 30 when his father received a troubling phone call one morning in 1959. Frank Weeden, a sea captain's son, had founded Weeden & Co. with his brother Norman in San Francisco in 1922 on a stake of just $25,000. Together they had steered their small family bond-trading house through the Great Depression, World War II and a move to New York. But now a Dallas securities dealer was on the line with a potential crisis. The New York Stock Exchange had arbitrarily removed the ticker tape from the office of a small Dallas broker whom the Exchange suspected (wrongly, as it turned out) of shady business practices. The damage was potentially fatal: The Dallas broker, like Weeden & Co., was not a member of the NYSE; it depended on the Exchange's tape to learn current stock prices. "If the New York Stock Exchange could do this to someone," Don Weeden later remembered thinking, "they could do it to us." Frank Weeden and his three broker sons had good reason to fear the wrath of the NYSE. Since 1949 their firm had been making markets in direct competition with the Big Board, capitalizing on a peculiar advantage that Weeden and other non-member firms enjoyed. For nearly 170 years, the Exchange had embraced the central principle of fixed commission rates: All members agreed to charge the identical minimum price for their services—the buying and selling of stocks on the floor of the Exchange. Investors—even large institutions, like pension plans—had no choice but to pay those rates or give up trading in the world's most liquid stock market. The "Third Market" created by Weeden enabled institutions to circumvent the NYSE. Weeden lacked the Big Board's liquidity, of course, but because Weeden wasn't locked into the Exchange's rigid commission schedule, it could often offer investors a better net price than traders on the Exchange floor. Instead of intimidating the Weedens, that 1959 phone call launched their 15-year crusade for free competition in the buying and selling of stocks. By 1968 Weeden & Co. was handling 8% of all trading in stocks listed on the Big Board. Virtually alone, Weeden & Co. demonstrated for the first time that stock traders need not be beholden to the NYSE. The Weeden crusade reached its climax in 1975, when the Securities & Exchange Commission abolished the Big Board's 183-year-old price-fixing agreement. That watershed ruling forced investment houses to stop coasting on their brokerage fees and find new ways to make money, like investment banking, financial consulting, tax shelters and real estate. "We were not trying to change the world," Don Weeden insisted in 1993. "We merely wanted to compete." One victim of the upheavals was Weeden & Co. itself. It was sold in 1979, then reborn as an employee-owned firm in 1986 with Don as its chairman.
Washington Post Company All the king's men vs. one familyWhen five motley men were arrested while burglarizing Democratic Party headquarters at the Watergate building in Washington in June 1972, the White House dismissed the incident as a "third-rate burglary," and most of the media swallowed that line. But two enterprising young Washington Post reporters—Bob Woodward and Carl Bernstein—found a connection between the burglars and the Central Intelligence Agency. Their dogged pursuit of the Watergate story over the next two years tied the burglary to the White House and led to President Richard Nixon's resignation in August 1974. Woodward and Bernstein were able to follow their journalistic instincts in the face of government threats, media hostility and even skepticism within their own newsroom thanks to the support of their publisher and CEO, Katharine Meyer Graham. And Katharine Graham drew her courage and instincts from her family's heritage. Her father, the investment banker Eugene Meyer, bought the Post for $825,000 at a bankruptcy auction in 1933. "My only interest," he wrote a friend shortly after, "is to make a contribution to better knowledge and better thinking. If I could not feel an ability to rise above my personal interests.... I would not have the slightest pleasure in being a publisher." For most of the next 21 years the Post lost money, but Meyer explicitly placed the public interest ahead of his own: "In the pursuit of truth," he wrote in 1934, "the newspaper shall be prepared to make sacrifices of its material fortunes, if such a course be necessary for the public good." Long before family business consultants concluded that "equal isn't necessarily fair," Meyer left all his Post stock to his daughter Katharine Graham—the only one of his five children who demonstrated interest in the paper. (To mollify her siblings, he gave them cash equivalents.) His gift of the deficit-plagued Post to Katharine became valuable only because she and her husband, Philip Graham, made it valuable—and her siblings, for the most part, subsequently acknowledged as much. Under Philip Graham, after 1947 the Post grew into Washington's dominant newspaper as well as a profitable company that owned TV stations and Newsweek magazine. But when the manic-depressive Graham killed himself in 1963, the enterprise was again in jeopardy. Graham's shy and submissive widow, Katharine, surprised all observers by taking charge of the company herself and pushing the Post to new heights—publishing the Pentagon Papers in 1970, facing down the Post's unions, building a publicly traded media conglomerate with $2.6 billion revenues in 2002, and winning two Pulitzer Prizes—one for Watergate, and one for her own autobiography. In the Watergate investigation, Graham confronted a federal government that possessed the power to revoke her lucrative TV licenses. "She risked losing an entire media company by trusting an editor and two young reporters with a news source who could not even be publicly identified," the columnist Russell Baker noted. She also supervised something almost as rare among family companies: a smooth succession. When Katharine Graham died in July 2001, her son Donald had already been CEO for ten years.
The Pantheon's previous membersClass of 2001
Kongo Gumi House of Medici N.M. Rothschild & Sons E.I. Du Pont David Sassoon & Co. John A. Roebling Sons Co. Johnson & Johnson R.H. Macy & Co. Drexel, Morgan & Co. and successor J.P. Morgan & Co. New York Times Co. Cadbury Ltd.
Class of 2002 Dutch East India Co. Barings Bank Levi Strauss A & P Mellon Bank Tata Group Eli Lilly Bechtel Group | |||