What is the Best Business Growth Strategy?
There is no single one-size-fits-all answer to this question. The best answer has a great deal to do with the entrepreneur’s temperament and personality. Some entrepreneurs are more comfortable sequestered away from the public developing new products or coding software. Others, in contrast, are more people-oriented.
These latter ones prefer to spend their days interacting with people and negotiating. The deal-makers we follow here tend to fall into the latter category. However, don’t overlook the fact that even geek-driven companies begin to utilize acquisitions as part of their growth strategy once their management teams fill out and become more sophisticated. While Mark Zuckerberg may not have been able to do any deals in the first few years of Facebook, he can certainly do them now because he has people with the necessary expertise on his team.
With that out of the way, let’s look at one example of The Tycoon Playbook growth strategy in action.
The Great James Ling
Allow me tell you about a American entrepreneur who is not well known these days but worth studying.
I first discovered James Ling at about the age of ten when I came across a magazine article on the conglomerates of the 1950s and ’60s. Ling was the greatest of all the conglomerate building tycoons of the post WW II era. In ten short years he built the 14th largest company in the United States from scratch with his amazing wheeling & dealing talents. The article set my imagination on fire.
By voraciously gobbling up corporations, the LTV Corporation became the fastest-growing company in the United States from 1955 to 1965, according to Fortune magazine in 1966. At its peak in 1969, LTV employed 29,000 workers and offered 15,000 separate products – from hamburgers to missiles, from tennis rackets to jet bombers.
It was all a result of Mr. Ling’s awesomely byzantine deals. Inc. magazine in 1984 called him “a financial Beethoven who could visualize a symphony where others hear only a tune.” Colleagues said that when he talked you had to “listen fast.” (source)
By now you have probably made assumptions about the man whether you are conscious of it or not. For example, if asked to describe Ling, you would most likely guess that he came from a privileged background, had a degree from a top university, and was able to tap into capital from the get-go.
If you made these assumptions you would be dead wrong on all accounts. Ling was the anti-Trump.
The Humble Beginnings of a Tycoon
One of the most interesting things about Mr. Ling (1922 – 2004) is how he started out in life. He grew up in a poor and broken home. His father was a devout German Catholic immigrant who worked as a railroad locomotive fireman. Being in the Midwest he had a hard time of it because of his religion. One day he got into fist fight with another employee, a Protestant, who was badgering him and killed him. The jury ruled it a case of self defense. However, Ling senior was so overcome with guilt that he left his family to live out his days in a monastery. The Ling family then fell apart as a result. It was the 1930s and the depth of the Great Depression.
At first young James was shuffled between various relatives for short stays before finally hitting the road on his own as a hobo in classic Great Depression-style. He survived by doing repairs and handiwork. By 1940, at the ripe old age of 18, he was married and had a couple of children. He was then given military service exemptions because of his family obligations but still wound up joining the navy in 1944. He came out of it in ’46 as an electrician.
This is where the story starts to get interesting for us. After the war Ling made the decision to be his own boss. One of his first steps was to sell the family home for $2000 and use the money to start a small electrical contracting firm that specialized in wiring new homes in the Dallas area. He began with a truck and a small office. For a while his family lived in a room behind the office. Not too long after starting this business in ’47, he began going after industrial contracts. In 1947 the business grossed $70,000. The following year it grossed $200,000. In 1949 it was up to $400,000.
What Ling had going for him was a voracious appetite for learning how things worked. When at one point he decided that he needed to learn about European banking he flew to the continent and interviewed over 200 bankers in just six weeks. Ling quickly figured out how to leverage capital in order to grow with acquisitions.
By the mid-fifties he was becoming a recognized genius in high finance. The high school grad achieved this status by associating with bankers and brokers at a country club he had joined for that express purpose. It was in 1955 when he finally found his stride and started pursuing big opportunities by switching from mere electrical contracting to producing electronics. He then started applying the acquisition financing techniques we cover in the Playbook to aggressively grow his empire.
By 1959 his main company, Temco, was on the Fortune 500 list. By 1969 Ling-Temco-Vought was the 14th largest company in the USA and the second largest conglomerate.
Mr. Ling’s track record as a deal-maker is so amazing that the Tycoon Playbook is dedicated to him.