Lone Star entrepreneurs ride tall in the saddle, and sometimes fall off
Texas has long been perceived as a safe harbor for entrepreneurs of all sorts. During the early 19th century the notorious Jean Lafitte based his piracy and smuggling operations on the Texas gulf coast. Venturesome men were to follow to launch more constructive empires in oil, ranching, timber, and commerce.
Today, there is still much to encourage the entrepreneur - hundreds of miles of undeveloped land, a rich bounty of natural resources, low taxes, and unobtrusive state and local governments.
But most important, risk-taking seems to be in the air. Like the charged atmosphere that precedes a thunderstorm, it is invisible but perceptible from the streets of Dallas and Houston to remote drilling sites in far west Texas.
In 1981, 41,083 new corporations were founded in Texas in spite of the recession. Venture capitalist Joseph A. Sullivan explains: ''Attitudes in Texas are different from back East. Here people are open to new ideas. There's a lot of money in Texas, and a lot of it goes toward funding new ventures.'' Mr. Sullivan's firm, Dallas Business Capital, helps start companies in return for stock.
''There are a lot of entrepreneurs here who have already made it and are willing to back ideas,'' says Mr. Sullivan, a native Virginian who now lives in Dallas. ''The age of the money may have something to do with it. Most fortunes are founded by entrepreneurs, and if a person is close to the original entrepreneurial venture, he is comfortable with taking risks and feels that, even if he loses, he can do it all over again. But the second or third or fourth generation often becomes a caretaker, more concerned with holding on to what they've got than expanding.''
One of the members of the new generation of Texas entrepreneurs is Tom J. Fatjo Jr.
In 1966 Mr. Fatjo, then an accountant, had a problem: His Houston subdivision had unsatisfactory garbage collection, and the garbage was piling up. So he suggested to the civic club that it consider buying its own garbage truck. One of his neighbors had quipped sarcastically, ''Why don't you buy a garbage truck and be our garbage man?'' After a while, Mr. Fatjorealized that the notion appealed to him - ''I was suddenly fascinated with the idea of becoming a garbage man'' - and so he invested $500 and a down payment on a truck and started awaking hours before dawn to collect trash before donning his pinstripes for his accounting job.
From this improbable beginning grew the world's largest solid-waste disposal company. Today, Browning-Ferris Industries has revenues of $661 million and is listed on the New York Stock Exchange.
What happened? As Mr. Fatjo tells it, he began to dream - first of cornering the Houston market, then of building a national garbage empire. In Houston, he found bankers and private investors willing to underwrite his dream.
Mr. Fatjo learned that most solid-waste disposal firms were undercapitalized, illiquid, and threatened by larger regional firms. He reasoned that a national company could raise capital, provide liquidity through publicly traded stock, provide better management-support and make him rich.
So the tall, bespectacled entrepreneur proceeded to consolidate what had been a highly fragmented, small-time industry into a corporate giant. (The Browning-Ferris name came from an existing publicly traded machinery company that Mr. Fatjo acquired in 1969.) Using a combination of cash and Browning-Ferris stock, Fatjo hit the merger trail and acquired more than 150 companies by 1973. He built his empire, but in 1976 - after years of travel and a divorce - he decided to leave the management of Browning-Ferris.
Fatjo, a former college athlete, had taken up running and was smitten with the idea of developing the world's best health and fitness center to help nurture what he called ''personal renewal,'' a kind of overhaul for the corporate executive's body, mind, and soul.
Today, seen Boston Marathons and $39 million later, a lean Tom Fatjo is chairman of the Houstonian, a posh health club, hotel, clinic, and conference center tucked beneath an 18-acre stand of pines in busy west Houston. The $12, 500-per-person initiation fee hasn't stopped 1,500 American companies and individuals from joining. And 750 foreigners have joined in addition to that. The Houstonian lost $3 million in 1980, its first year, but made a profit of $1 million in 1981. Fatjo also has interests in a major bank, a $70 million condominium project, and an company managing more than $5 billion in pension funds.
And does Fatjo believe entrepreneurship is alive and well, despite the obstinate recession? Yes, indeed. At this moment he is launching another venture , a corporate, employee-oriented health-promotion program called Living Well.
But not all the state's entrepreneurs are smiling. Two years ago the hottest business around was oil exploration. Scores of entrepreneurs were leaving established oil companies to become wildcatters. Many of them, often in their 20 s and 30s, became millionaires in a few months by promoting drilling projects and striking oil.
Today bankruptcy courts are filled with the remnants of those quick fortunes. Interest rates, oil glut, recession, public disenchantment with oil investments, inexperience, and dry holes knocked many wildcatters out of business.
''Lots of my friends are going bankrupt, or are near the brink,'' says R. J. Tondu, a Houston oilman who stay solvent, but whose net worth has declined by more than $1 million.
Harvey J. McMains, associate director of the Institute for Constructive Capitalism at the University of Texas in Austin, has studied entrepreneurship. He concludes: ''Texas has always been a risk-taking state. High-technology entrepreneurship is a risk business. The long history of the oil and gas industry in the state has conditioned the Texas investor to be a risk-taker. Also, because of the comparative wealth of Texas, there are resources to apply to new ventures. And Texas has a much younger population than many states. Today's youth want responsibility. At a mature company, they can't expect to gain authority in the near term. But in new enterprises, young people can get responsibility earlier.