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Marilyn Alva , On Wednesday January 20, 2010, 6:02 pm EST
In the early 1900s, the Big Three weren't carmakers. They were horse-drawn buggy firms -- all based in Flint, Mich. One was Durant-Dort Carriage Co., co-founded in 1886 by a young salesman, William Crapo Durant. He was the son of a Boston banker who got distracted by gambling and drink. His mother came from a prominent lumbering family. His grandfather on his mother's side was governor of Michigan.
Durant (1861-1947) later founded General Motors. It became one of the Big Three, and this time the group involved carmaking. He took awhile to shift into gear. He dropped out of high school, restless and eager to strike out on his own. By 24, he was making money as a cigar and insurance salesman. He found his next venture on an impulse. Loving the smooth ride of a horse-drawn cart, Durant vowed to buy the firm that built the cart. And he did. Enlisting his friend Josiah Dallas Dort as partner, he bought the rights to build it. The two put up $1,000 each. Durant shipped a sample cart to a Wisconsin fair, confident he could sell the public on its smooth ride. He pointed out its patented spring suspensions. He also sold judges on its merits. It won a Blue Ribbon.
Fast Work
Within days, Billy Durant had orders for 600. But how would he deliver them when he had no manufacturing plant?
Answer: He found the best carriage maker in Flint and outsourced the work, paying $12.50 for each cart. He charged clients twice that. To compete with trusts that were buying up suppliers and raising prices, Durant went on his own buying spree. He hit the road acquiring suppliers and selling product while his partner stayed in Flint running day-to-day operations. "Not only was he a great salesman, but he had a lot of courage and confidence," Larry Gustin, author of "Billy Durant: Creator of General Motors," told IBD. Those traits were based on Durant's belief, Gustin said, "that if you're going to sell something, always look for something that will sell itself."
By 1900, Durant's carriage company was said to be the top producer in the U.S., and the buggies were now coming from the firm's own plants.
Yet the horse-and-buggy era was coming to the end of the road. Durant resisted cars at first. He thought they were smelly, noisy and dangerous and sold only to doctors and other affluent types. Besides, he was then spending most of his time in New York, trading in stocks. He apparently had been hit by the same trading bug that bit his father. But when Buick Motors asked him to steer its struggling operation, he couldn't resist. Durant saw its potential. Buick had a strong valve-in-head engine -- also called an overhead valve, which feeds the combustion chambers and is considered more efficient than the side-valve designs of the time. He thought this new engine could be a chief selling point. "He saw the Buick as a self-seller, just like his road cart," Gustin said. To prove its superior engine performance, Buick entered a hill-climbing contest in New Jersey. The car easily won in its class and generated good publicity.
Soon, in early 1905, Durant showed off the car and chassis at the New York Auto Show. He returned to Flint with 1,100 orders -- 25 times the number of Buicks ever made. To raise money to make the cars, he tapped his many contacts. "He was a super salesman," Gustin said. "Most of the (investors) had never ridden in an automobile." By 1908, Buick was the top-selling car in America, with over 8,800 cars produced that year. The same year, Durant used Buick as the springboard for forming General Motors. He found backers to help finance his scheme, which relied heavily on the issuance of stock. Unlike Henry Ford and his vision for a low-priced, mass-market car, Durant wanted to target different incomes and tastes. He bought Oldsmobile and ritzy Cadillac as well as others and parts firms, folding them into GM. Predecessors to Pontiac and GMC trucks also rolled in. In contrast to the charming, energetic promoter Durant, Henry Ford seemed "a plodding, colorless mechanic utterly lacking in romance or drama," wrote Carl Glasscock in "The Gasoline Age: The Story of the Men Who Made It." Durant's multibranding approach had staying power, remaining core to GM into the next century.
"His biggest legacy is the idea that you can make a big national company work by catering to the tastes of different kinds of consumers," said Burt Folsom, author of "The Myth of the Robber Barons." GM's core lineup today includes the same cars and small trucks -- Buick, Cadillac, GMC and Chevrolet -- that Durant brought to the car firm under two stewardships over the span of six frenetic years -- from 1908 to 1910 and 1916 to 1920.
"I cannot think of another entrepreneur who was able to shift technology gears (from buggies to cars) the way Durant did," Folsom said. Durant also got GM into financing cars so customers wouldn't have to pay all in cash.
But like a lot of company founders, he wasn't very good at managing a large organization, which GM had become by 1910. In a field crowded with hundreds of car firms, GM had become the second largest. Ford Motor (NYSE:F - News) was No. 1, having made huge headway with Model Ts.
And many of Durant's acquisitions didn't pan out. As GM's debt load mounted, Durant was forced out in 1910. Bankers called for a more fiscally responsible management team to steer the growing auto firm. Durant didn't give up on cars. He started over, this time forming another car firm: Chevrolet Motor Co. Durant considered the Chevrolet company his greatest achievement, and indeed it went on to become an American icon. He partnered with Buick race car driver Louis Chevrolet. The Swiss-born Chevrolet designed a small touring car for the new company Durant had in mind. It came with a counterbalanced crankshaft and the first out-of-the-way emergency brake, under the dashboard.
Proving Durant's thesis that a good product would sell itself, the car was a hit. With huge profit from Chevy, the backing of the wealthy DuPont family and armed with GM stock, Durant regained control of GM in 1916. He promptly put Chevrolet under GM's hood. Durant also bought majority interest in car-parts manufacturer Fisher Body and folded Frigidaire, which he named himself, into GM.
Meanwhile, new talent entered GM's ranks, most notably management expert Alfred Sloan. Durant was on his way out. Overextended during the 1920 stock panic and criticized by insiders for his loose management style, he was ousted again. "Durant had the vision for General Motors," said Folsom. "But he didn't have the organization skills to bring it to the top, where it ultimately went."
At The Wheel
Sloan was the organization man who would turn GM into the world's largest car company -- before Japanese autos flooded the U.S. market with better, cheaper cars. Sloan had misgivings about Durant's management abilities, but he was dazzled by his personal style.
"I was constantly amazed by his daring ways of making a decision," Sloan said in his book, "Adventures of a White Collar Man." "Mr. Durant would proceed on a course of action guided solely by, as far as I could tell, some intuitive flash of brilliance. He never felt obliged to make an engineering hunt for facts, yet at times he was astoundingly correct in his judgments."
In 1921, Durant started still another car company -- Durant Motors. It eventually failed, due in part to the 1929 stock market crash and the Great Depression. Even before then, Durant was busy on other pursuits, namely stock trading. He was one of the big bull speculators of the Roaring '20s. Time magazine valued his fortune at $120 million, most of which he lost after the 1929 crash.
In the years before his death in 1947, at 85, Durant was running a bowling alley and restaurant in Flint. It was just a couple of blocks from the big Buick complex he'd started decades earlier.
In the early 1900s, the Big Three weren't carmakers. They were horse-drawn buggy firms -- all based in Flint, Mich. One was Durant-Dort Carriage Co., co-founded in 1886 by a young salesman, William Crapo Durant. He was the son of a Boston banker who got distracted by gambling and drink. His mother came from a prominent lumbering family. His grandfather on his mother's side was governor of Michigan.
Durant (1861-1947) later founded General Motors. It became one of the Big Three, and this time the group involved carmaking. He took awhile to shift into gear. He dropped out of high school, restless and eager to strike out on his own. By 24, he was making money as a cigar and insurance salesman. He found his next venture on an impulse. Loving the smooth ride of a horse-drawn cart, Durant vowed to buy the firm that built the cart. And he did. Enlisting his friend Josiah Dallas Dort as partner, he bought the rights to build it. The two put up $1,000 each. Durant shipped a sample cart to a Wisconsin fair, confident he could sell the public on its smooth ride. He pointed out its patented spring suspensions. He also sold judges on its merits. It won a Blue Ribbon.
Fast Work
Within days, Billy Durant had orders for 600. But how would he deliver them when he had no manufacturing plant?
Answer: He found the best carriage maker in Flint and outsourced the work, paying $12.50 for each cart. He charged clients twice that. To compete with trusts that were buying up suppliers and raising prices, Durant went on his own buying spree. He hit the road acquiring suppliers and selling product while his partner stayed in Flint running day-to-day operations. "Not only was he a great salesman, but he had a lot of courage and confidence," Larry Gustin, author of "Billy Durant: Creator of General Motors," told IBD. Those traits were based on Durant's belief, Gustin said, "that if you're going to sell something, always look for something that will sell itself."
By 1900, Durant's carriage company was said to be the top producer in the U.S., and the buggies were now coming from the firm's own plants.
Yet the horse-and-buggy era was coming to the end of the road. Durant resisted cars at first. He thought they were smelly, noisy and dangerous and sold only to doctors and other affluent types. Besides, he was then spending most of his time in New York, trading in stocks. He apparently had been hit by the same trading bug that bit his father. But when Buick Motors asked him to steer its struggling operation, he couldn't resist. Durant saw its potential. Buick had a strong valve-in-head engine -- also called an overhead valve, which feeds the combustion chambers and is considered more efficient than the side-valve designs of the time. He thought this new engine could be a chief selling point. "He saw the Buick as a self-seller, just like his road cart," Gustin said. To prove its superior engine performance, Buick entered a hill-climbing contest in New Jersey. The car easily won in its class and generated good publicity.
Soon, in early 1905, Durant showed off the car and chassis at the New York Auto Show. He returned to Flint with 1,100 orders -- 25 times the number of Buicks ever made. To raise money to make the cars, he tapped his many contacts. "He was a super salesman," Gustin said. "Most of the (investors) had never ridden in an automobile." By 1908, Buick was the top-selling car in America, with over 8,800 cars produced that year. The same year, Durant used Buick as the springboard for forming General Motors. He found backers to help finance his scheme, which relied heavily on the issuance of stock. Unlike Henry Ford and his vision for a low-priced, mass-market car, Durant wanted to target different incomes and tastes. He bought Oldsmobile and ritzy Cadillac as well as others and parts firms, folding them into GM. Predecessors to Pontiac and GMC trucks also rolled in. In contrast to the charming, energetic promoter Durant, Henry Ford seemed "a plodding, colorless mechanic utterly lacking in romance or drama," wrote Carl Glasscock in "The Gasoline Age: The Story of the Men Who Made It." Durant's multibranding approach had staying power, remaining core to GM into the next century.
"His biggest legacy is the idea that you can make a big national company work by catering to the tastes of different kinds of consumers," said Burt Folsom, author of "The Myth of the Robber Barons." GM's core lineup today includes the same cars and small trucks -- Buick, Cadillac, GMC and Chevrolet -- that Durant brought to the car firm under two stewardships over the span of six frenetic years -- from 1908 to 1910 and 1916 to 1920.
"I cannot think of another entrepreneur who was able to shift technology gears (from buggies to cars) the way Durant did," Folsom said. Durant also got GM into financing cars so customers wouldn't have to pay all in cash.
But like a lot of company founders, he wasn't very good at managing a large organization, which GM had become by 1910. In a field crowded with hundreds of car firms, GM had become the second largest. Ford Motor (NYSE:F - News) was No. 1, having made huge headway with Model Ts.
And many of Durant's acquisitions didn't pan out. As GM's debt load mounted, Durant was forced out in 1910. Bankers called for a more fiscally responsible management team to steer the growing auto firm. Durant didn't give up on cars. He started over, this time forming another car firm: Chevrolet Motor Co. Durant considered the Chevrolet company his greatest achievement, and indeed it went on to become an American icon. He partnered with Buick race car driver Louis Chevrolet. The Swiss-born Chevrolet designed a small touring car for the new company Durant had in mind. It came with a counterbalanced crankshaft and the first out-of-the-way emergency brake, under the dashboard.
Proving Durant's thesis that a good product would sell itself, the car was a hit. With huge profit from Chevy, the backing of the wealthy DuPont family and armed with GM stock, Durant regained control of GM in 1916. He promptly put Chevrolet under GM's hood. Durant also bought majority interest in car-parts manufacturer Fisher Body and folded Frigidaire, which he named himself, into GM.
Meanwhile, new talent entered GM's ranks, most notably management expert Alfred Sloan. Durant was on his way out. Overextended during the 1920 stock panic and criticized by insiders for his loose management style, he was ousted again. "Durant had the vision for General Motors," said Folsom. "But he didn't have the organization skills to bring it to the top, where it ultimately went."
At The Wheel
Sloan was the organization man who would turn GM into the world's largest car company -- before Japanese autos flooded the U.S. market with better, cheaper cars. Sloan had misgivings about Durant's management abilities, but he was dazzled by his personal style.
"I was constantly amazed by his daring ways of making a decision," Sloan said in his book, "Adventures of a White Collar Man." "Mr. Durant would proceed on a course of action guided solely by, as far as I could tell, some intuitive flash of brilliance. He never felt obliged to make an engineering hunt for facts, yet at times he was astoundingly correct in his judgments."
In 1921, Durant started still another car company -- Durant Motors. It eventually failed, due in part to the 1929 stock market crash and the Great Depression. Even before then, Durant was busy on other pursuits, namely stock trading. He was one of the big bull speculators of the Roaring '20s. Time magazine valued his fortune at $120 million, most of which he lost after the 1929 crash.
In the years before his death in 1947, at 85, Durant was running a bowling alley and restaurant in Flint. It was just a couple of blocks from the big Buick complex he'd started decades earlier.