Building a Business

For centuries, families have taken great pride in starting their own businesses. The family businesses, many of which began as garage start-ups with small amounts of borrowed capital, have always been the backbone of the American economy. Over time, and as a right of passage, some of these businesses have been handed down through generations, with those inheriting the family business continuing to see that it thrives and, on occasion, transforming it into a large, publicly traded company.

The list of American families who have successfully participated in this process range from the Fords and the Disneys to the Rooney and McCaskey families in professional sports, who continue to own the NFL's Pittsburgh Steelers and Chicago Bears, respectively.

It matters not whether these family businesses have been linked to the industrial revolution, the development of the entertainment industry, or the growth of professional football. Each has addressed issues of growth and family succession. They've all encountered economic downturns and fundamental shifts in consumer attitudes and regulation. They've all survived and, for the most part, thrived, revered for their perseverance and tenacity.

It's not just small family businesses that have captured the imagination of American business. Small businesses of all origins and entrepreneurial makeup have established themselves brick by brick, business deal by business deal, until that fateful day the day of their initial public offering (IPO).

The tenets for building a business are largely the same whether founded by a family patriarch like Sam Walton (Wal-Mart) or Vince McMahon (World Wrestling Federation [WWF], now called World Wrestling Entertainment [WWE]), or merely cobbled together by old college roommates or business associates, such as Yahoo! and Hewlett-Packard. The daunting challenges and stories of sacrifice are prevalent; so too is the commitment to tackling the long odds of being a successful entrepreneur.

When Vince McMahon Sr., a well-known wrestling promoter, handed the family business over to his son in 1982, Vince, Jr. had big dreams. McMahon Jr. wasn't afraid to take risks to expand the family business. He changed the company name from Capitol Wrestling Corporation to World Wrestling Federation, a name he strove to live up to. By developing compelling personalities such as Hulk Hogan and Randy "Macho Man" Savage, and by promoting wrestling on a national basis, dreams of an empire weren't hard to imagine.

McMahon didn't build the international brand, one marked by 300 full-time employees and more than 100 wrestlers under exclusive contract, without taking significant risks. In 1985, McMahon started the sport's major event, WrestleMania. Because the concept of pay-per-view TV had not yet gelled, McMahon believed enough in the product that he rented out more than 100 arenas to show the event on the big-screen TVs. According to the WWF, by fiscal year 2000, 2.3 million people attended 210 live wrestling events in 100 cities in North America, including 45 of the 50 largest metropolitan areas in the United States.

Today, with 5 million to 7 million paying for its content per year, the company has not only become among the top pay-per-view producers in the world, but its "free" programming has consistently attracted more viewers in the coveted 18- to 34-year-old demographic group than any other property airing in prime time.

After surviving a fiercely competitive ratings battle with Ted Turner's World Championship Wrestling (WCW) in the late 1990s, McMahon decided to buy the WCW in 2000. This acquisition became tougher for McMahon due to shareholder considerations that arose following his taking the company public in late 1999.

McMahon had far greater creative control and latitude when he owned 100% of the WWF. However, a reported $70 million loss in the first year of his new football league, the XFL, was enough for WWF and GE (which owned half the league) shareholders to pull the plug on the fledgling league.

And, as is often the case when companies become giants, McMahon had to deal with many lawsuits, including the one that changed the name of his brand forever. In May 2002, the WWF was forced to become WWE after losing a fight for the three-letter abbreviation with the World Wildlife Fund.

Despite its status as a publicly traded company, WWE and McMahon have still done their best to keep the business largely a family affair. His wife Linda serves as CEO and McMahon's son and daughter, Shane and Stephanie, have been worked in as WWE characters.

Long before the McMahons wrestled with shareholder issues, they focused on building their business methodically, exploiting their competitive advantages while carving out a unique niche within the sports and entertainment industry.