I first heard about this new book a few weeks ago, and since I'm currently doing a series on billionaires, I decided to read it. I must confess to approaching it with some hesitation for two reasons. One, Chuck Feeney made his fortune as a retailer which is not a business I have any interest in. Second, he specialized in duty free shops which are a class of stores I avoid religiously. (Since I don't smoke and only drink wine and beer there's no reason for me to go inside a duty-free.)
As with most business stories, the early days are the most interesting. After serving in the military during the Korean War, Chuck earned a degree from the School of Hotel Management at Cornell. Shortly after graduating, he went to Europe where his entrepreneurial radar picked up on an opportunity to make money following the US fleet from port to port in the Mediterranean in order to sell sailors duty free booze. Chuck's venture must have been one of the first affiliate businesses in that he simply took orders from his customers and then had the product drop-shipped to their stateside addresses. He never touched the merchandise or invested a dollar in inventory. In fact, he and his partners never invested a dollar in the business. It grew to over four billion in sales on internal cash flow alone. This is quite an amazing feat.
After becoming successful in Europe catering to the US armed forces with duty free liquor and cigarettes, he started partnering up with other Cornell hotel management grads and expanded into the Pacific by going after the same customers.
The business was a strong cash cow from the beginning but didn't really take off until the sixties when his company caught a new demographic wave. In the sixties, as Japan's economy started booming its citizens began traveling outside the country on their vacations. One of their favorite destinations was Hawaii where Chuck and partners opened their first duty free retail store at the main airport. They set up arrangements with Japanese travel agents and Hawaiian tour companies to steer the tourists to this store. The customers incorrectly assumed that everything in the store was duty-free and would load up on watches, jewelry, clothing, and cameras in addition to liquor and cigarettes. The partners made a killing over the next few decades by opening up additional duty free stores around the globe.
What stood out for me in the story was just how disorganized the company was for most of its life even after it had become a huge international force in retailing. The four main partners basically operated it as four separate fiefdoms spread across the globe. The partnership agreement was a verbal one as to who owned how much equity. Almost nothing was papered. Over time the two founding partners grew cold and distant over a number of disagreements but in the end, after much exasperation, they managed to come together in order to sell the company at its peak to a French retail giant. After that sale, the demographic tide turned against the company.
Over time, Chuck decided to shed his wealth which was estimated to have surpassed a billion in net worth. In the late 1990s he set aside money to take care of his wife and kids for life and then bequeathed the rest to a charitable foundation. At the end of the day he was personally worth a measly million dollars or so but everyone continued to assume that he was still a billionaire. Chuck's give-way was motivated in part by the example of Andrew Carnegie, one of the wealthiest men in history, who also gave away his fortune while he was still alive.
If you enjoy biographies, especially ones of successful businesspeople, you will probably enjoy The Billionaire Who Wasn't: How Chuck Feeney Secretly Made and Gave Away a Fortune.