Encouraging Entrepreneurs

Fly Me, I'm Freddie, by Roger Eglin and Berry Ritchie, New York: Rawson, Wade Publishers, 1980, 238 pp., $9.95.

Success Forces, by Joseph Sugarman, Chicago: Contemporary Books, 1980, 213 pp., $9.95.

According to the likes of John Kenneth Galbraith, men like Freddie Laker and Joseph Sugarman no longer exist. The entrepreneur-capitalist who starts from nothing and builds an industrial empire, sometimes by sheer force of will, learning every job, surviving repeated failures, becoming a hero to his employees—these are characters from the folklore of the 19th century, or so we are told by most "modern" economists.

Yet Laker and Sugarman are uniquely products of the postwar era, men who have made their fortunes in technology-based fields (aviation and electronics, respectively), defying odds and competitors many times their size. That they exist and that they have become modern-day folk heroes both gives the lie to Galbraith's thesis and offers tribute to the irrepressible nature of the entrepreneurial spirit. These two books offer us insight into the character of these men and the nature of entrepreneurship.

Virtually everyone has heard of Freddie Laker and knows at least something of his six-year battle to win governmental approval—on both sides of the Atlantic—for his low-fare Skytrain service, a feat that broke the international airline cartel and introduced price competition. But few know of Laker's early career in aviation, beginning at age 19 as a flight engineer ferrying planes for the RAF during World War II, learning to repair engines and planes and to keep "tramp freighters" operating with cannibalized spare parts. By 1947 Laker had founded his first company, Aviation Traders, refurbishing war surplus planes and parts. The Berlin Airlift and its need for cargo haulers gave Laker his chance. His hangars full of spare parts and tired old planes suddenly became quite valuable, and Laker was in the airline business for keeps.

By the late '50s, after selling his companies to what became British United Airways (now British Caledonian), Laker ended up as managing director of that new private airline and proceeded to make it an aggressive competitor. Laker's input and first airline order were the key to launching the BAC-III, a successful British rival of the DC-9. He devised the modified DC-4 "Carvair"—a successful cross-Channel car ferry—and later developed BUA's highly successful Hovercraft service. He also introduced the long-range VC-10 on BUA routes to Africa and South America.

But as BUA became larger, it also became more bureaucratized, which Laker grew less and less able to tolerate. After five years he resigned, in 1965, to create his own airline. Starting again from scratch, he began Laker Airways as a charter firm and was soon making money. After fighting political restrictions on trans-Atlantic charters for several years, Laker had a new idea. "What we want is something simple, like a train," he told his board in 1971. And the rest, as they say, is history.

Authors Eglin and Ritchie, business reporters for the London Sunday Times, have obviously done their homework. Their account is lively, detailed, and thorough, reflecting an understanding of both the political context of postwar aviation and the technical aspects of aircraft design and operation. Whether you're an aviation buff or political economist, you'll enjoy the book.

Sugarman's book is less polished and far less detailed. To begin with, it's an autobiography and a book of advice to would-be entrepreneurs. But we find here the same sort of risk-taking, imagination, and persistence that characterize Laker's rise. There is Joe Sugarman the recording genius, Joe Sugarman the promoter of the Batman Credit Card, Joe Sugarman the founder of the Great Teeny Bopper Society. All of these ventures were flops. Yet Sugarman persisted in seeking opportunities for creative marketing and promotion.

And in 1971 he found one: the pocket calculator. Craig Corporation was about to introduce, at $240 (remember, this was 1971!) the first electronic pocket calculator. And Sugarman was captivated. Convinced he could market the devices by direct mail, he raised $12,000 from small investors and sent out a test mailing to 10 lists. All but two bombed—but those two made money. Armed with those results and a retail price cut to $180, they mailed to another 400,000 prospects. The orders poured in. JS&A (Joseph Sugarman & Associates) was born, operating out of Sugarman's basement.

More innovations followed: the first mail-order ads for calculators, the first use of a WATS line toll-free number to accept credit card orders, the introduction of many new types of electronic gadgets. The company prospered and, in 1974, bought a modern building of its own. There followed, in 1979, Sugarman's now-famous run-in with the Federal Trade Commission and his "FTC Revolt" ads, which helped generate support for 1980's congressional overhaul of the agency.

After detailing his history of failures and successes, Sugarman sets forth some of the lessons he's learned over the years—his "success forces." They're really quite simple: be honest, learn from your mistakes, don't spread yourself too thin, etc. One would be tempted to dismiss them as mere homilies, were they not distilled from the actual school-of-hard-knocks experience of one so demonstrably successful.

After reading these books you may discover that your nerves aren't up to entrepreneurship. That's nothing to be ashamed of; that's why we have a division of labor. But at the same time, if you're like me, you'll come away with a new appreciation of the value of entrepreneurs to the rest of us—and a heightened resentment at the incredible barriers government puts in their way.

Robert Poole, Jr., is the editor of REASON and the author of Cutting Back City Hall (Universe Books).