People have pretty strong opinions about gambling. They view gamblers as degenerates or heroes. Fools that take dangerous, unnecessary risks or gutsy geniuses unafraid of laying it all on the line for a big payday. The truth is that everyone gambles.
Crossing the street, eating out, speaking to strangers – everything in life is a gamble. Some people gamble more, some less. That's a matter of risk acceptance. Some people gamble well, some poorly. That's a matter of knowing the odds. Gambling and business have those things in common, and all businesspeople are, in one way or another, gamblers. Odd, then, how businesspeople are usually admired for their vision and guts, while gamblers are so often held in contempt for taking risks and hoping to get paid off.
Business, like life, is at its core a gamble, and the rewards are in proportion to the amount of risk the businessperson is willing to accept. Every inventory item is a sunken cost. Every service an investment that may never be recouped. Every contract a potential loss. In the words of Dwight Eisenhower, plans are worthless, but planning is essential. In other words, even the best business plan can go awry, and the least thought-out enterprise can become a goldmine. Little surprise, then, that so many entrepreneurs are also gamblers.
Here's a list of five businesspeople who took gambling quite literally, taking huge, calculated, life-changing risks. Some gambled at the casino. Some in business itself. All of them were made or broken by their decisions. It would be nice to believe that none of them had any regrets. One thing is for certain: all of these people aimed for the moon, and one or two managed to land among the stars.
5 5: Fred Smith's Great Big Spin
A CEO, especially a founding CEO, is the personification of his company. Its public face, its spirit made form. When you look at the CEO of a company you see the company itself. And that is why when you think of Fred W. Smith, you should think he is much like FedEx itself: Methodical, risk-averse, dependable, sober. It might surprise you to learn, then, if you haven't already heard this famous story, that Fred W. Smith once risked all of FedEx's money on blackjack.
At the time, nothing like Federal Express had ever been attempted before. An overnight delivery company anywhere in the world was so unthinkable that at the time it was conceived by Fred in his Yale class the professor gave him a C, saying the assignment had been to plan a business that could actually be created. That's why Fred Smith left Yale.
One day in the company's early years Fred's professor was nearly proven right. They had only $5,000 in the coffers and no willing donors or lenders. This was not enough money to fuel the planes to make the Monday morning deliveries. The company would fail in its mission, collect no more revenue, and be grounded for life. Like many a nearly destitute entrepreneur, Fred decided to turn to the comfort of those who once had money: Gambling. He took the $5k to Vegas. He put it on blackjack and …
… in the course of the weekend, made $32,000 – enough to keep the company solvent. His reasoning was grim but simple: If he'd failed the company wouldn't be any worse off.
4 4: Emperor Norton Rice
It takes a special kind of person to name themselves the emperor of a country that was born of the concept that royalty is evil. That special kind of person was Emperton Norton I, the first and only emperor of the United States. That quality that made Norton do such a thing was insanity. And that insanity was driven by the biggest gamble a man can make: All his savings.
Before he was Emperor Norton I, darling of San Francisco and duly respected celebrity ruler of the United States, he was Joshua Abraham Norton, a South African immigrant businessman living in late 19th century San Francisco. He was a smart and genial man by all accounts, and he decided to make a great wager. Due to a famine and subsequent ban on rice exports in China, Norton would invest in rice in San Francisco – home to a large Asian population of former and current rail workers.
The price of rice had skyrocketed in the area, and Norton’s move proved to be a wise choice. When the soon-to-be emperor heard of a Peruvian ship coming into port with 200,000 pounds of rice, he saw his chance and pounced, buying the entire ship's stock at one third the market price. He'd hit a goldmine.
A fool's goldmine. He'd over-leveraged himself, and when several more ships carrying Peruvian rice came into port, flooding the market, the price of rice plummeted and led to Norton's bankruptcy. His bankruptcy is most likely what gave San Francisco it's most beloved resident. Norton declared himself the emperor of America and issued proclamations and laws – which were actually respected. He issued his own currency, which actually became valuable because it carried his autograph. He ate for free at restaurants. He will always be remembered, not something a rice speculator is likely to achieve. You may say his ruination was actually his fortune.
3 3: Purchasing All The Bottles (Softsoap)
Robert Taylor had a dream. It wasn't the most exciting dream. It wasn't the most interesting dream. But it was a dream nonetheless. Taylor wanted to squirt soap out of a container and rub it on his hands, and he wanted the world to share the experience. You see, liquid soap wasn't a new idea, but squirting it out of a pump bottle was. Taylor knew his idea would be a hit but that he wouldn't be able to patent it. So, in 1980, he did what anyone would do. He made it literally impossible for his competitors to copy his idea.
He bought all the squirt bottles. Actually, that's not entirely accurate. He didn't buy all the bottles. He bought all the bottles and the manufacturing capacity of the bottle manufacturers. So he not only owned the only bottles suitable for pumping soap into your hand. He bought all the future bottles as well. Truly was he the bottle king of the future. Well, a year anyway.
It didn't even take a year for his company, Soft Soap, to become a household name. Even today, if you're shooting soap from a pump bottle, it's probably Soft Soap. It was purchased by Colgate-Palmolive in 1987.
2 2: Ashley And The Life Savings Roulette Spin
There is no game of chance that more perfectly epitomizes gambling than roulette. The most risky roulette bet – betting on any one number – has a one in thirty-seven chance of winning. The safest (red or black, odd or even) has just under a fifty percent chance of winning. There's no skill unless you count precognition. It's really all just luck. Ashley Revell decided to test his luck.
Revell took all his money out of the bank. He sold all his possessions. He changed his middle name to Blue Square to secure funds from the online bookmaker of the same name. He then went to Las Vegas and put the whole pile, $135,300, on red.
The first result, if Revell is anything like me, was a series of minor heart attacks. The second was that he doubled his money, tipped the dealer, and promptly left the casino with $270,000. Good thing. He'd sold his clothes. And what does a man who just gambled his entire life do when he finds he has a whole lot of money?
Why, he starts PokerUTD.com and helps other people potentially do the same thing. And it failed. Good news, though – he now owns iGaming Recruitment, a staffing agency / networking website for the digital gambling industry.
1 1: Larry Flynt
Larry Flynt's whole life was a gamble. He started as a moonshiner, spent his money on a strip club and found himself in hot water pretty quickly when he wasn't making enough money. So he did what anyone... no, no he didn't. He did what Larry Flynt would do. He started a porno mag. Kind of.
Hustler was a big gamble for the owner of the club by the same name. It cost too much money, but it was the only way the man could figure out how to advertise the girls in his club. The writing was truly secondary, only there to appease the strict anti-pornography laws of the day. Laws that Flynt would challenge very soon.
Hustler magazine was soon making more money than the Hustler club. It was a good little gamble and not the subject of this entry. The subject of this entry is Flynt's choice to create illegal pornography. He knew it'd be popular. And, in his mind, it would become a first amendment issue.
Flynt was the first man to create undisguised, mass market pornography in the United States. Before him no one would show female genitalia. After him... well, let your internet browser educate you.
Flynt spent a great deal of his life in court battling obscenity charges. And, let's face it, Hustler is pretty obscene. But the Supreme Court eventually decided that he had a right to be obscene and made Hustler and its subsidiary companies some of the most successful in the world. It also resulted in Flynt becoming fabulously wealthy and, thanks to one anti-pornography crusader's bullet, a paraplegic.