Behind the Lines
Little Big Man
In the early sixties, around the time that a young salesman for IBM named Henry Ross Perot was trying to decide what to do with his life, a New Yorker writer named John Bainbridge moved to Texas for a year to observe the state's rich and powerful. The resulting series of articles eventually became a book called The Super-Americans. Its thesis held that Texas is the epitome of America, and "the epitome of Texas is its most picturesque product, its millionaires." Across the pages of the book, the Super-Americans boasted, blustered, wheeled, dealed, and conspicuously consumed. Today, Bainbridge's Texas is unrecognizable. Rich Texans haven't acted that way in years, no, decades, and the rest of us wouldn't like it if they did. High up among the reasons for the change, along with the Kennedy assassination, the oil bust, and the increasing awareness of the poverty in our midst, is the career of Ross Perot. Before him, the Super-Americans made their money from the land, from oil and gas and real estate. He made his fortune from ideas, in particular the notion that the ability to gather and process data efficiently was the essential skill in what would come to be called the Information Age. He had one thing in common with the Super-Americans; as Bainbridge put it, "The life-style in Texas is marked by bravado, zest, optimism, ebullience, and swaggering self-confidence." But there the similarity ends. For the Super-Americans, this meant ever bigger deals, ever more sumptuous mansions, and ever more fancy parties. For Perot, this meant deciding what was wrong with the world and how to fix it.
Three times he set out to fix the world. As the founder of Electronic Data Systems (EDS), in 1970 he became the first high-tech billionaire. As the reformer of Texas public education in 1984, he provided the model that was copied across America. As a presidential candidate in 1992, he forced the country to confront the problem of its mushrooming debt—and, as a result, probably deserves more credit for today's booming economy than any politician. No Texan of his time achieved so much. And yet, his own conduct—egotistical, belligerent, suspicious, bizarre—has greatly diminished the reputation that he built for himself.
All this came to mind with the news in late August that Perot, now seventy, is retiring as CEO of Perot Systems, which he founded in 1988 (he will remain as chairman), to be succeeded by his son, Ross Perot, Jr. Coming not only at a time when the company is floundering on Wall Street but also when the Reform party he sired is in shambles, the retirement raises the question of how we should view his legacy. Ross Perot, it has been noted many times, is a hard man to figure out. He has been described as a populist and a fascist, a genius and a crackpot, a free-enterpriser and a welfare billionaire. Subtract the negatives from the positives and not much is left.
The one contribution that is without blemish today is education reform. In 1983 Governor Mark White named Perot the chairman of a select committee on public education. Perot put on public display just how bad the Texas education system really was, then hired lobbyists out of his own pocket and took his case to a special session of the Legislature in 1984. The result was statewide testing of students for the first time, a uniform passing grade of 70 for the first time, the first state prekindergarten program for four-year-olds, smaller classes (a maximum student-teacher ratio of 22 to 1 in the lower grades), and the no-pass, no-play rule, which states that a student who is failing a course cannot participate in extracurricular activities. All of that remains in place today, although the no-play period for no-passers has been shortened from six weeks to three. Most of all, the Perot reforms changed the culture of education in Texas by putting the focus on measurable classroom achievement. Other legislatures and other governors (most notably, George W. Bush) have fine-tuned the system, but the accomplishments that Texas students, particularly ethnic minorities, are posting today would not have happened but for Ross Perot.
His reputation as a business wizard, once unassailable, has not fared so well. According to Perot legend, he resolved to leave his job as an IBM salesman and start EDS when he picked up an issue of Reader's Digest in a Dallas barbershop and read a quote from Henry David Thoreau's Walden: "The mass of men lead lives of quiet desperation." He had seen the future of the Information Age, but he was so far ahead of his time that he had to make 78 sales calls before he landed his first contract. The world discovered it needed Perot when new government health-care programs required computer systems far too sophisticated for state bureaucrats to administer. A year and a half after EDS became a publicly traded company, Perot's 78 percent interest was valued at $1.5 billion.
But he has not been able to repeat his success with Perot Systems, perhaps because the motivation behind the founding of the new company was not entrepreneurial vision but loyalty or revenge or both. In 1984 Perot worked out the sale of EDS to General Motors for $2.5 billion, of which he took home $980 million in cash and enough GM stock to get a seat on the board of directors. After two years of outspoken criticism of GM management by Perot, GM bought out his stock for $700 million and bid him adieu. Perot then launched Perot Systems in 1988 after he was approached by EDS executives who were unhappy under the GM regime, and he set out to compete against his old company. One of his first actions was to challenge EDS, unsuccessfully, for the new Texas Medicaid contract, calling its profits on the old contract "obscene"—even though EDS had gotten the contract in 1980, while Perot was still running the company. He gave up the chairmanship of the new company in 1992 but returned as the president and CEO in 1997, citing excessive debt and erratic earnings. In his first year back at the helm, earnings increased from $11 million to $40 million.
Was the old magic back? Not this time. In February 1999 Perot tried to duplicate his success of three decades earlier by taking Perot Systems public. The stock (NYSE: PER) opened at $16 and rocketed to $43.50 on the first day. Perot's family partnership, HWGA—for "Here We Go Again"—owned 36 percent of the outstanding shares. The price spiked above $80 and just as quickly went into free fall. In mid-September of this year, it was trading around $10, and revenue for the first half of 2000 was lower than for the comparable period in 1999. This circumstance has caused considerable consternation in Internet chat rooms: "Subject: bought at $75 for kids. Believed in Ross," read one sad submission. "Message: Don't let us down, Mr. Perot."
I never bought Perot Systems stock, but I know how Believed in Ross must feel, because I did buy in, briefly and naively, to the idea of his presidential candidacy in 1992. "Perot is the candidate of the disaffected, the disenchanted, the fed up: the people whose contempt for politics has passed beyond cynicism to despair," I wrote that year ("Perot in '92?," TM, June 1992). He was a natural, the amateur who was better than the pros, denouncing soundbites even as he spoke in them. "If the people don't want action," he told David Frost on PBS, "if they don't want these problems solved, if they don't want aggressive programs to get rid of the violence in the communities, to rebuild the cities, to get this country back on track, to stop the deterioration of the job base and the tax base, they don't want me."
As long as he could remain unconventional, he was unstoppable. But eventually he had to deal with the requirements of a campaign—press conferences, unfriendly questions, negative stories, consultants, travel, formal speeches—and he grew irritable and ever more combative. Then, without warning, he quit the race in July, only to reenter it on October 1. On 60 Minutes, he cited as his reason for his summer withdrawal the kooky charge that the Republicans were planning to disrupt his daughter's wedding. He still received 19 percent of the vote.
After his defeat, he tried to shape his followers into a permanent third party, but he didn't have the vision or the political skill to maneuver it toward the high ground of American politics—economic conservatism, social liberalism. Instead, he veered off on an ill-judged crusade against NAFTA that ended with a thrashing administered by Vice President Al Gore in a televised debate on the treaty. The issue of whether the Reform party stood for more than throwing the rascals out was never resolved, nor was whether it was a true party at all, rather than just a vehicle for its founder. When a credible candidate stepped forward to seek the nomination in 1996, former Colorado governor Dick Lamm, Perot jumped back into politics and claimed the prize for himself—not that it was worth much. Excluded from the debates, he garnered only 8 percent of the vote. Now the Reform party has been reduced to a battle between rival factions for $12.5 million in federal funds. 
In the early sixties, around the time that a young salesman for IBM named Henry Ross Perot was trying to decide what to do with his life, a New Yorker writer named John Bainbridge moved to Texas for a year to observe the state's rich and powerful. The resulting series of articles eventually became a book called The Super-Americans. Its thesis held that Texas is the epitome of America, and "the epitome of Texas is its most picturesque product, its millionaires." Across the pages of the book, the Super-Americans boasted, blustered, wheeled, dealed, and conspicuously consumed. Today, Bainbridge's Texas is unrecognizable. Rich Texans haven't acted that way in years, no, decades, and the rest of us wouldn't like it if they did. High up among the reasons for the change, along with the Kennedy assassination, the oil bust, and the increasing awareness of the poverty in our midst, is the career of Ross Perot. Before him, the Super-Americans made their money from the land, from oil and gas and real estate. He made his fortune from ideas, in particular the notion that the ability to gather and process data efficiently was the essential skill in what would come to be called the Information Age. He had one thing in common with the Super-Americans; as Bainbridge put it, "The life-style in Texas is marked by bravado, zest, optimism, ebullience, and swaggering self-confidence." But there the similarity ends. For the Super-Americans, this meant ever bigger deals, ever more sumptuous mansions, and ever more fancy parties. For Perot, this meant deciding what was wrong with the world and how to fix it.
Three times he set out to fix the world. As the founder of Electronic Data Systems (EDS), in 1970 he became the first high-tech billionaire. As the reformer of Texas public education in 1984, he provided the model that was copied across America. As a presidential candidate in 1992, he forced the country to confront the problem of its mushrooming debt—and, as a result, probably deserves more credit for today's booming economy than any politician. No Texan of his time achieved so much. And yet, his own conduct—egotistical, belligerent, suspicious, bizarre—has greatly diminished the reputation that he built for himself.
All this came to mind with the news in late August that Perot, now seventy, is retiring as CEO of Perot Systems, which he founded in 1988 (he will remain as chairman), to be succeeded by his son, Ross Perot, Jr. Coming not only at a time when the company is floundering on Wall Street but also when the Reform party he sired is in shambles, the retirement raises the question of how we should view his legacy. Ross Perot, it has been noted many times, is a hard man to figure out. He has been described as a populist and a fascist, a genius and a crackpot, a free-enterpriser and a welfare billionaire. Subtract the negatives from the positives and not much is left.
The one contribution that is without blemish today is education reform. In 1983 Governor Mark White named Perot the chairman of a select committee on public education. Perot put on public display just how bad the Texas education system really was, then hired lobbyists out of his own pocket and took his case to a special session of the Legislature in 1984. The result was statewide testing of students for the first time, a uniform passing grade of 70 for the first time, the first state prekindergarten program for four-year-olds, smaller classes (a maximum student-teacher ratio of 22 to 1 in the lower grades), and the no-pass, no-play rule, which states that a student who is failing a course cannot participate in extracurricular activities. All of that remains in place today, although the no-play period for no-passers has been shortened from six weeks to three. Most of all, the Perot reforms changed the culture of education in Texas by putting the focus on measurable classroom achievement. Other legislatures and other governors (most notably, George W. Bush) have fine-tuned the system, but the accomplishments that Texas students, particularly ethnic minorities, are posting today would not have happened but for Ross Perot.
His reputation as a business wizard, once unassailable, has not fared so well. According to Perot legend, he resolved to leave his job as an IBM salesman and start EDS when he picked up an issue of Reader's Digest in a Dallas barbershop and read a quote from Henry David Thoreau's Walden: "The mass of men lead lives of quiet desperation." He had seen the future of the Information Age, but he was so far ahead of his time that he had to make 78 sales calls before he landed his first contract. The world discovered it needed Perot when new government health-care programs required computer systems far too sophisticated for state bureaucrats to administer. A year and a half after EDS became a publicly traded company, Perot's 78 percent interest was valued at $1.5 billion.
But he has not been able to repeat his success with Perot Systems, perhaps because the motivation behind the founding of the new company was not entrepreneurial vision but loyalty or revenge or both. In 1984 Perot worked out the sale of EDS to General Motors for $2.5 billion, of which he took home $980 million in cash and enough GM stock to get a seat on the board of directors. After two years of outspoken criticism of GM management by Perot, GM bought out his stock for $700 million and bid him adieu. Perot then launched Perot Systems in 1988 after he was approached by EDS executives who were unhappy under the GM regime, and he set out to compete against his old company. One of his first actions was to challenge EDS, unsuccessfully, for the new Texas Medicaid contract, calling its profits on the old contract "obscene"—even though EDS had gotten the contract in 1980, while Perot was still running the company. He gave up the chairmanship of the new company in 1992 but returned as the president and CEO in 1997, citing excessive debt and erratic earnings. In his first year back at the helm, earnings increased from $11 million to $40 million.
Was the old magic back? Not this time. In February 1999 Perot tried to duplicate his success of three decades earlier by taking Perot Systems public. The stock (NYSE: PER) opened at $16 and rocketed to $43.50 on the first day. Perot's family partnership, HWGA—for "Here We Go Again"—owned 36 percent of the outstanding shares. The price spiked above $80 and just as quickly went into free fall. In mid-September of this year, it was trading around $10, and revenue for the first half of 2000 was lower than for the comparable period in 1999. This circumstance has caused considerable consternation in Internet chat rooms: "Subject: bought at $75 for kids. Believed in Ross," read one sad submission. "Message: Don't let us down, Mr. Perot."
I never bought Perot Systems stock, but I know how Believed in Ross must feel, because I did buy in, briefly and naively, to the idea of his presidential candidacy in 1992. "Perot is the candidate of the disaffected, the disenchanted, the fed up: the people whose contempt for politics has passed beyond cynicism to despair," I wrote that year ("Perot in '92?," TM, June 1992). He was a natural, the amateur who was better than the pros, denouncing soundbites even as he spoke in them. "If the people don't want action," he told David Frost on PBS, "if they don't want these problems solved, if they don't want aggressive programs to get rid of the violence in the communities, to rebuild the cities, to get this country back on track, to stop the deterioration of the job base and the tax base, they don't want me."
As long as he could remain unconventional, he was unstoppable. But eventually he had to deal with the requirements of a campaign—press conferences, unfriendly questions, negative stories, consultants, travel, formal speeches—and he grew irritable and ever more combative. Then, without warning, he quit the race in July, only to reenter it on October 1. On 60 Minutes, he cited as his reason for his summer withdrawal the kooky charge that the Republicans were planning to disrupt his daughter's wedding. He still received 19 percent of the vote.
After his defeat, he tried to shape his followers into a permanent third party, but he didn't have the vision or the political skill to maneuver it toward the high ground of American politics—economic conservatism, social liberalism. Instead, he veered off on an ill-judged crusade against NAFTA that ended with a thrashing administered by Vice President Al Gore in a televised debate on the treaty. The issue of whether the Reform party stood for more than throwing the rascals out was never resolved, nor was whether it was a true party at all, rather than just a vehicle for its founder. When a credible candidate stepped forward to seek the nomination in 1996, former Colorado governor Dick Lamm, Perot jumped back into politics and claimed the prize for himself—not that it was worth much. Excluded from the debates, he garnered only 8 percent of the vote. Now the Reform party has been reduced to a battle between rival factions for $12.5 million in federal funds.
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