Sunday night, World Wrestling Entertainment scion Shane McMahon proved he was willing to risk death for the family business, leaping from a 20-foot steel cage as part of his Wrestlemania match against The Undertaker and subsequently leaving the ring on a stretcher. (McMahon gave a thumbs-up as he was being wheeled out, presumably signaling he would be fine.)
The stage dive was part of McMahon’s attempt to reclaim control of WWE, which has been woefully mismanaged since he left his position as WWE’s executive vice president of global media in 2009, he claims. He has a point: WWE stock closed at $16.56 on Tuesday, nearly half its 2014 high of $30.94, and ratings have been at historic lows. If successful, Shane would become the fourth in the McMahon lineage to run the company.
That Shane is even in such a position is an anomaly: Despite their institutional knowledge and intimate love for the brand, sons and other descendants who inherit the family business often run it into the ground.
“Less than 30 percent of family-owned businesses survive into the third generation of family ownership,” according to management consultancy McKinsey & Company. Most firms see profitability drop by 10 to 20 percent after leadership transitions from the founder to the heir, MIT professor Antoinette Schoar said in a Freakonomics Radio piece on the subject. Finance professor Francisco Perez-Gonzalez attributes many of these botched successions to the succeeding owner’s not having attended a prestigious university and inheriting the business despite not being qualified to do so.
The most infamous example is Anheuser-Busch, the St. Louis–based brewery that was founded by German immigrant Eberhard Anheuser in 1857 and became an American icon under five generations of family operation. (Eberhard’s son-in-law, Adolphus Busch, was the first successor; hence the name.) By 2001, A-B had 52 percent of the U.S. market. But that was all undone by August Busch IV, nicknamed “Lazy,” who was appointed CEO in 2006 and sold the company to foreign beverage giant InBev in 2008. Now Budweiser, a beer as supposedly American as apple pie, is sold by a company based in Belgium.
In honor of the McMahons, MEL decided to highlight the exceptions to the unfortunate demise of family-owned businesses — the companies that grew after their founding fathers left, and the heirs who oversaw those successes.
You might recognize Jim Perdue as the folksy old man who hawks his family’s eponymous chicken products in those commercials. Jim is actually the third Perdue man to run the family poultry business — his grandfather Arthur founded the company in 1920, and his father Frank took it over in the 1950s.
But Jim was reluctant to follow in their footsteps. In an apparent act of rebellion, Jim initially forsook the chicken business to study another species: fish. He spent a decade as a young man earning a doctorate in marine biology and trying to make money in the salmon business before rejoining Perdue in 1983.
He started in the processing plant; his father Frank was a legendarily hard-working boss, patrolling the company’s facilities during the day and making calls at night until 2 or 3 a.m. One of Frank’s biggest contributions was investing in grain receiving and soybean processing in order to mitigate against swings in the poultry market. He was also one of the first CEOs to feature himself in his company’s commercials. Jim was equally innovative, showing a knack for sussing out and catering to changes in consumption trends — he was quick to recognize the organic food phenomenon, and made Perdue into the country’s largest seller of organic chicken.
The company that makes your favorite cheat-day snack foods — Combos, M&Ms, Snickers, Twix — began in 1911 when Frank Mars started selling butter cream candy from his kitchen in Tacoma, Washington. It was his son, Forrest, who shepherded the company into a confectionary conglomerate. Forrest joined the business in 1929, and took control in 1934 following his father’s death. He engineered the company’s entry into the pet food business in 1935 — Mars now owns some of the world’s most prominent pet-store brands, including Iams and Pedigree — and made Mars one of the first U.S. companies to embrace advertising on the radio. His greatest legacy might be M&Ms, which he created in 1940. Mars is still 100 percent family-owned, between Jacqueline, John and Forrest, Jr. But those three only sit on the board and have no daily role in the business, making the Forrest, Sr. the last CEO heir.
SC Johnson has gone from a parquet flooring company based in Racine, Wisconsin, to an international enterprise comprising several iconic home care brands, including Windex and Ziploc. The company was founded by Samuel C. Johnson in 1886; its first homecare product was floor wax. Samuel’s son Herbert F. took the reins 20 years later and the company then expanded to Australia and Canada. In 1939 it opened a new Racine office designed by Frank Lloyd Wright. SC Johnson brands Raid, Glade, Off and Pledge were becoming household names by the late ’50s. In the 21st century the company began investing in windmills. The only constant during all this time has been the company’s management structure: SC Johnson has had five CEOs, all of them Johnson men. No wonder, then, that the company’s tagline is “SC Johnson: A Family Company.”
Contrasting with the Anheuser-Busch cautionary tale is the success of D.G. Yuengling & Son. Founded by David Yuengling in 1829, Yuengling is the oldest continuously running brewery in the U.S. and still under family management. Current CEO Dick Yuengling is a fifth-generation owner, and the company has flourished with him at the helm. Dick took control of Yuengling in 1985 after having left the family business as a young man. The company was broke at the time, but slowly grew under his leadership, opening two new breweries, expanding its product line and extending its brand recognition beyond its East Coast roots. In 2014, Yuengling surpassed Boston Beer Company, maker of Samuel Adams, as the largest craft beer producer in the U.S. And although Dick hasn’t announced a succession plan, his two daughters, Jennifer Yuengling and Wendy Yuengling Baker, work in the family business and have already started grooming their children to take it over one day.
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