Today: How Daniel Ludwig, an 8th grade dropout became one of the world’s wealthiest men.
If you’ve never heard of him before it’s because despite his vast wealth, Daniel rarely spoke with the media. But his story offers us important lessons in business success.
Born in 1897 in South Haven, Michigan, Daniel’s parents separated when he was a boy and he lived with an aunt and uncle.
When he was just 9-years-old, he started his first business. Daniel saved his money and spent $75 salvaging a sunken boat, a venture others laughed off as a lost cause.
The laughter stopped after Daniel fixed up that boat and rented it out at a nice profit.
Always finding ways to make money, he dropped out of school after the 8th grade to concentrate on becoming successful, something he didn’t see happening in a class room.
For the next several years, Daniel worked various jobs in and around the docks, learning how the shipping business worked while getting paid for it.
At 19, he borrowed $5,000 in part guaranteed by his father to buy a broken down old boat and he converted it to a barge. Soon he was hauling molasses and wood all over the U.S. Great Lakes.
It became a very profitable business and taught Daniel a valuable lesson he used for the rest of his career and it is a lesson we can use today.
What he did is called “leverage.” Because he was short of funds he couldn’t buy that boat without borrowing the money but by making a profit with the boat, he could not only pay back the loan but he could borrow more money to buy more boats.
Soon Daniel had a fleet of vessels making money for him, purchased with borrowed funds.
But business goes in cycles and eventually when that business slowed, Daniel still had to pay the interest on all the funds he’d borrowed. Suddenly, this man in his 20’s went from being a success to being close to going broke, overwhelmed by his overhead.
Daniel had to come up with something fast to pay the bills.
And he did. He went into the tanker business. Tank ships carry huge quantities of liquids, typically oil or chemicals and he borrowed the funds to buy a tanker. Soon he was making money again.
With leverage, Daniel acquired a fleet of tankers and was once more making big money.
But the real turning point came for him in 1936 during the Great Depression, a disastrous time for most businesspeople. While others cut back, Daniel decided to expand,
He went to oil companies and gave them attractive terms to charter (use) new tankers from him. Then he took those commitments to one of the U.S.’s largest lenders, Chemical Bank, and used those commitments as collateral and borrowed on a grand scale to build those ships.
Using Chemical Bank’s money, and with oil company customer commitments, he had little risk and his firm grew and prospered. By the end of World War ll, Daniel owned the U.S.’s 5th biggest tanker fleet.
But when the war ended many businesspeople feared the U.S. economy would collapse back into a Depression. Daniel thought otherwise.
And he was right. Rather than a Depression, the U.S. and global economies exploded in size and he was there with his ships to accommodate that growth.
This gave Daniel another bold idea. To operate more efficiently and capture more of the business he decided to build some of the biggest tankers the world had ever seen.
To do it efficiently, Daniel expanded to war ravaged Japan, something few other businesspeople did, because labor was plentiful and cheap and they were thankful for the jobs.
Daniel built a new state of the art shipyard and created what became known as supertankers.
With those supertankers, Daniel redefined the business and harnessed the enormous economic boom of the 1950’s and 60’s to become one of the world’s wealthiest men. At its peak, he had 60 ships and employed more than 20,000 people.
He then invested in a wide variety of ventures from banking to hotels to mining to real estate with mixed results. But in shipping, he still did so well that in 1982, when Forbes magazine published its first Forbes 400 list of richest Americans, Daniel ranked No. 1.
In his personal life, Daniel married his first wife Gladys in 1928 when he was 31 and she was 24. They divorced in 1937, with a daughter Patricia born in 1936. In 1937, at 40 he married 40 year old Ginger Higgins, a widow, who had three children by a prior marriage.
The couple remained married until Daniel died in his New York City penthouse apartment at the age of 95 of heart failure in 1992.
What became of his fortune? In 1971, he endowed The Ludwig Institute for Cancer Research in Switzerland and kept donating his money to it.
Today it has nine major branches from North and South America to Europe to Australasia and affiliates in many nations and has provided over one billion dollars to cancer research and for other cancer projects.
Could you and I accomplish what he did? He used to call having a sense for potential profitable business opportunities as having, “antennae.”
“Nearly everyone has those antennae; most people just don’t use them,” he remarked in a long ago interview. “I spend my time putting projects together.” In other words he acts on his business ideas, whereas many people don’t act on theirs, and that made all the difference.
Success Tip of the Week:
As Daniel said, most of us have good business ideas, but nothing will come of them if we don’t act on them. If you have such a business idea, let this be the week you take action on it.
Thank you to my friend Nelson Davis, founder and head of Nelson Davis Television Productions and creator of the long running, award winning television series “Making It! Minority Success Stories” for introducing the Daniel Ludwig story to me. Nelson’s website is a great place to go for business tips and motivation: http://www.makingittv.com/
In the next KazanToday:
How an embarrassing childhood incident helped to create a successful husband, father and businessman.