Perot, H(enry) Ross
PEROT, H(enry) Ross
(b. 27 June 1930 in Texarkana, Texas), businessman, philanthropist, and statesman who in the 1960s revolutionized the way services were delivered in the electronic data systems market and became a prominent advocate for U.S. prisoners of war held by the North Vietnamese government.
Perot, the son of the cotton broker Gabriel Elias Perot and Lulu May (Ray) Perot, a former secretary, spent his childhood and adolescence in Texarkana. He and his sister graduated from public schools in the northeast Texas town. Perot's charismatic personality, legendary leadership skills, and impatience with bureaucracy were already evident in high school. From 1947 to 1949 he attended Texarkana Junior College (later Texarkana Community College), where he was elected the class president in 1948. In 1949 Perot was appointed to the U.S. Naval Academy in Annapolis, Maryland. He served as the class vice president in his second year and the president in each of his final two years. He graduated from the academy in 1953 and married Margot Birmingham, a schoolteacher, on 13 September 1956. Their family grew to include five children. Perot served in the U.S. Navy from 1953 to 1957. His exemplary work on the USS Leyte brought him praise from his commanding officers and earned him ever more important duties. One day an International Business Machines (IBM) executive, who was also a naval reservist, was on the bridge while Perot was directing the movements of the Leyte and all of its support ships. Impressed with Perot's self-assurance and abilities, the executive offered him a job once he left the navy. Perot accepted, opting against reenlistment in 1957.
Working for IBM in Texas, Perot quickly became a top sales representative, finding new clients and markets for IBM's computers. One of his clients was Texas Blue Cross, where in 1960 he spent many hours learning about the databases the insurance industry used. His contacts at Texas Blue Cross and other corporations paid big dividends when he established his own company. Perot felt that IBM did not adequately compensate him for his superb sales abilities, and he grew frustrated with a bureaucracy he believed hindered employees with creative ideas. He developed a proposal that outlined a bold plan to develop software to meet the informational needs of both government and private industry clients. Convinced that the big money was in hardware, not software, IBM executives dismissed Perot's ideas.
Certain that he had glimpsed the future, Perot resigned from IBM. He envisioned a service company that would help clients achieve the maximum use and profit from their hardware investment and would supply data processing for small organizations that could not afford to purchase large computer systems. With only $1,000 he incorporated Electronic Data Systems (EDS) on 27 June 1962. Because few businesses at the time realized the value of EDS's services, the company was not an immediate success.
Early in 1963 Frito-Lay signed the first long-term facilities management (Perot's term for data processing and computing services) agreement in the technology industry. Perot's breakthrough idea was to offer his customers five-year, fixed-price contracts rather than the sixty-or ninety-day agreements that were then standard in the business. Calling on the clients he had served while selling hardware for IBM, Perot showed executives in these companies how they could make money by leasing out their computers during idle periods, usually in the middle of the night. He leased time himself and began developing the software that would make his fortune. Foreseeing a bright future in government contracting, he opened a small office in Washington, D.C., in 1963 and began lobbying to receive government contracts.
In 1964 EDS grossed $400,000, with a net of $4,100; in 1965 the gross was $865,000, with a net of $26,487. When the legislation establishing the federal Medicare and Medicaid health programs was signed into law on 30 July 1965, Perot saw his opportunity. He used his great powers of persuasion to have Texas Blue Cross hire EDS to develop the software required to keep track of the clients and money from Medicare and Medicaid; the money from the federal government began to flow in September 1967. Once the software was developed, Perot used it for other similar accounts throughout the United States. In 1968 EDS grossed $7.5 million, with a net of $2.4 million.
Under Perot's leadership, EDS developed a famously conservative corporate culture, including a strict dress code. Perot aggressively sought Vietnam veterans to work for EDS, reasoning that people who had just come from a place where they were under fire twenty-four hours a day would find the sixteen-hour days and codes of conduct at EDS a breeze. Although Perot reportedly had outbursts of temper at employees, they tended to accept his mercurial behavior because he was a great motivator and teacher; moreover, many employees became rich by following Perot's lessons in salesmanship and customer service. They could not leave EDS, however, without forfeiting their valuable stock awards, and they could not go to work for a competitor without violating signed agreements. All of these characteristics made EDS formidable, even frightening, in the eyes of some outsiders, who called EDS employees "shock troops."
When Perot took EDS public on the New York Stock Exchange on 12 September 1968, both he and his employees benefited. The stock began trading at $16.50 per share. There was a buying frenzy, with a single share becoming worth $230; Perot personally held ten million shares. By 1970 Perot was worth $1.5 billion, and EDS was established as America's largest data processing company, with expansion beginning overseas. Perot had become wealthy enough to begin contemplating philanthropy.
Perot's early philanthropic efforts were directed at assisting U.S. prisoners of war (POWs) held in North Vietnam. In December 1969 Perot rented two commercial airliners, filled them with medicine, gifts, and letters from friends and families, and set out for North Vietnam. Perot's efforts, including an offer of $100 million to release the POWs, were rejected by the North Vietnamese government. He then flew across the world to different nations to try to gain entry to North Vietnam, offered to give supplies to North Vietnamese orphans, and arranged for the POWs' families to fly to Paris so they could appeal directly to the Vietnamese mission there. Although Perot was never able to deliver the supplies, when the POWs finally returned to the United States, they reported that his high-profile gestures had resulted in somewhat improved conditions for them. He had put his own life at risk in trying to help them.
Perot's daring mission to Iran was much more successful. On 28 December 1978 Iranians arrested two EDS employees and demanded $12 million as ransom, which Perot offered to pay. When the kidnappers refused to accept the payment, Perot went to Iran to personally negotiate for the employees' release and eventually organized a rescue operation that included military veterans working for EDS. The employees escaped and fled Iran under harrowing circumstances; Perot was waiting for them in Turkey and chartered a jet to fly them home safely to the United States. This tale of derring-do became the basis of Ken Follett's book On Wings of Eagles (1983), as well as a popular television movie.
In the 1960s Perot altered the American business landscape by showing that computer software services were a valid industry and that people would pay for ideas. He laid the foundation for the fortunes made by later entrepreneurs such as Bill Gates of Microsoft and for the service economy of the 1990s and beyond. His actions during the 1960s earned him fame as a business maverick, a self-made billionaire, and an advocate for prisoners of war.
Perot's autobiography is My Life and Principles for Success (1996). Biographies include Todd Mason, Perot: An Unauthorized Biography (1990), and Gerald Posner, Citizen Perot: His Life and Times (1996). Magazine articles include Roy Rowan, "The World According to Ross Perot: The Billionaire, Superpatriot, and Gadfly Speaks Out on What's Wrong with America," Life (Feb. 1988), which includes an account by Perot of how he became a successful entrepreneur, and Paul Burka, "Little Big Man," Texas Monthly (Oct. 2000), which offers a thoughtful analysis of how Perot changed the way of doing business in America.
Kirk H. Beetz