June 1992
Ross and Me
It is good to have Ross Perot as my business partner-most days.
What is it like to do a deal with H. Ross Perot? in early 1988 a 29-year-old inventor from Austin named Steve McElroy had a patent pending on a one-size-fits-all lid for cups, cans, and other food containers. But to get his invention to market, he needed a savvy partner. He decided that he wanted Perot. Three days after McElroy mailed a letter to Perot, he received a call from Perot himself. For the next three and a half years, McElroy kept letters and notes of his dealings with Perot, as their partnership flourished and foundered and Perot put McElroy to test after test. Here is McElroy’s story.
February 22, 1988
Dear Mr. Perot:
Rubbermaid, Mitsubishi International, Continental Bondware and other large companies in the packaging industry have approached me regarding the exclusive rights to my patent pending for a biodegradable, one-size-fits-all lid for all soft drink cups as well as household containers for food storage.…
My problem is, Mr. Perot, I’m green behind the ears and could use some guidance from a negotiating standpoint. I’m 29 years old and I realize these negotiations go beyond my business experiences. I want to make sure my concept is in every store and in every household, instead of nondegradable plastic products. Do you ever take on partners for this type of transaction? … The cause is a good one and offers the opportunity to solve many problems for business, the customer and the environment while making an honest profit in the huge disposable packaging industry. I think that’s good business, Mr. Perot. Thank you.
Sincerely,
Steve McElroy
ON AGAIN, OFF AGAIN
Thursday, February 25
“Steve, this is Ross Perot,” boomed the voice that I had heard so many times on television, in the salutation that would begin every phone conversation. “I got your letter and loved your idea,” he said and immediately began to fire questions at me. I reached for a chair to steady my shaking free hand.
Within seconds, he had fleshed out my background. “Well,” he said, apparently satisfied with my responses, “I can see this in every refrigerator in America. Can you Federal Express me a few so that I can play with them over the weekend? No, wait. I’ll be out of town next week. Can you come up here and see me midmorning on Monday, March 7?”
Six months earlier, I had invented the stretchable lid I call Total Top. When I filed for a patent, I sent a short press release to a few industry trade publications to see what kind of response I would get. Three hundred letters from soft-drink and fast-food businesses told me what I had hoped to hear. Now I had an appointment to see Ross Perot, the ultimate businessman, who represented honesty and integrity, as well as success. I’d be there.
Monday, February 29
Perot called again: “Steve, I have an assignment for you. Here’s my fax number. Would you briefly write down how you envision the two of us working together?”
I spent that day and the next hammering out a two-page agreement with my attorney, Mike Cook. The stock of our corporation would be owned fifty-fifty by Perot and myself, I would own the patent and license it to the company, and I would manage the company until such time as the patent was granted, the lid’s development completed, and a market for it established. Perot would supply marketing and management expertise and his name recognition.
On Wednesday, we faxed the agreement to Perot. An hour later he called: “Good, good. I like it. Come on down on Monday.”
Monday, March 7
I arrived in Dallas Sunday evening and stayed with my brother. I had given Perot my brother’s office number, and I went to his office at seven-thirty to await Perot’s midmorning call. Just as I was walking in the door, the secretary was answering the phone. A look of incredulity washed over her face as she pressed the hold button: “Are you Steve McElroy? Ross Perot is on the phone for you.” Perot told me he had finished early—“What time did he start?” I wondered—and gave me directions to his North Dallas office.
Nervously swigging from the cup of coffee that I was counting on to spur me on to peak performance, I pulled into the parking lot of the impressive silver-glass office tower. Outside the car, I hastily balanced the components of my Total Top demo set on my briefcase to free a hand to lock the car door—and jostled the coffee cup, spilling its contents all over my shirt and tie. Within seconds of the most important meeting of my life, I stood drenched in coffee. Oh, well. Emerging from the elevator on the seventeenth floor, I identified myself before one-way mirrored doors. A male attendant allowed me to pass through the doors, by his small wooden cubicle, and into the simply decorated lobby. I passed an eagle-shaped wall hanging captioned “Eagles Don’t Flock” and a collection of carved wooden birds and wild animals arranged along a wall recess. There were a few wing-back chairs arranged around side tables, a large bronze bust of Abraham Lincoln, a few paintings, and a framed Early American flag. Beyond the lobby, through another set of glass doors, I could see a long corridor lined with Norman Rockwell paintings, a few bronze busts, and framed awards and memorabilia.
After a few minutes, Perot’s secretary escorted me down the long, imposing corridor, through yet another set of glass doors, into Perot’s suite of offices. As we entered, I could hear him talking on the phone. As I waited, a very attractive blond woman who I guessed to be in her mid-twenties walked past me and into Perot’s office. A few minutes later, she emerged and introduced herself. She was Nancy Perot Mulford, one of Perot’s four daughters. She worked with her father on his venture capital projects. She was kind and polite, and I immediately felt at ease with her.
Before we made it into Perot’s office, he dashed out to greet me. Much shorter than I’d expected him to be—he and I were about the same height—he had a loud, brash voice.
The three of us took seats facing each other in very red chairs in front of Perot’s carved wood desk. As I relaxed in my chair, just beginning to feel comfortable, Perot abruptly dispensed with the small talk and began pelting me with questions about Total Top. I brought out a lid and showed him how it would fit all shapes and sizes of containers. Perot could barely conceal his delight: “This is a world-class idea,” he said and turned to his daughter. “Nancy, can’t you just see me demonstrating this on TV and every housewife in America buying them?”
Then Perot refocused on me: What was I doing for a living at the time? Figuring that Perot was trying to flesh out the breadth of my business acumen, I earnestly and in great detail described the real estate and medical products ventures that I was involved in. Suddenly, Perot’s expression darkened and he stood up: “That’s way too many things for a young man to be doing. Thank you for coming by, but I’m no longer interested. A project like this would require one hundred percent of your time; you’d have to move to Dallas if we did this deal together. But obviously you couldn’t possibly spend one hundred percent of your time on this project.” He started to show me out.
Perot had turned on me so quickly, I felt as if I’d been kicked in the stomach. I’d been in his office for all of five minutes and now I was being tossed. Somehow I summoned the presence of mind to look Perot directly in the eye. “With all due respect, Mr. Perot, I don’t do anything unless it’s one hundred percent. Although I know that your time is valuable, I’m working on a project here and my time is valuable too. At your invitation, I drove a long way, and I am insulted that you would imply that I would waste your time or mine with something my heart isn’t in. You are going to see this product on store shelves, and you’re looking at the guy who’s going to get it there.”
Nancy, who seconds earlier had registered an expression of veiled pity at the undoubtedly familiar sight of yet another felled aspirant, now looked as stunned as I felt. I stood up to shake hands with Perot and leave.
“Good answer,” thundered Perot. “I just wanted to see if you were totally committed to this project.”
I had passed his test, but there was no doubt in my mind that had I given a bad answer, or no answer, Perot would have let me go without a second thought. As it would turn out, there would always be a fine line between pleasing and displeasing Perot.
Before I left his office that first day, I was handed two quintessential bits of Perot advice: “Young man, you have to go out and collect scars in life before you can be successful” and “Never screw people who helped you get started,” as well as one of his favorite aphorisms: “All you need is one invention to live like a king.” This was a reference to a friend of his who now lived like a king after having invented the “twisty,” the plastic-coated wire that you twist to close bread bags.
I returned to Austin and called Mike Cook with the good news. I told him that Perot needed to see the patent application file. He said that before I showed anyone that information, I should make them sign a confidentiality agreement.
