Panic set in across Wall Street in October 1929. Banks across the nation failed – and life savings evaporated with them – ushering in an era of cost-cutting that gripped the nation until the U.S. entered World War II.
But at least seven billion-dollar families, worth a total of $31.9 billion, owe their fortunes to young businesses that stared during the Great Depression. An estimated 15 million Americans were unemployed at its height, yet these families stayed out of the shanty towns by pouring their energy into businesses that started small. Many are now household names.
Recessions create a specific breed of entrepreneurs, coined “survivalist entrepreneurs” by University of California, Los Angeles sociology professor Ivan Light. Unlike their traditional counterparts, survivalists don’t innovate. Instead, they enter industries with low education requirements and small start-up costs that consumers still need despite hard times.
“It’s counter-cyclical to employment. When unemployment goes up, so does self-employment,” Light said. “That’s a problem. There’s less money there but more people chasing it.”
The food industry is a common choice, said Robert Boyd, a sociology professor at Mississippi State University. In fact, more than half of the families whose fortunes began building during the Great Depression started there, and they now tally a combined net worth of $24.3 billion.
“During the Great Depression, many survivalist entrepreneurs in urban areas opened small grocery stores in their own homes or in abandoned storefronts,” Boyd said. “These entrepreneurs bought stocks of nonperishable food because, if they could not sell their goods, at least they and their family members could live off of the unsold inventory and avoid hunger or starvation.”
That fall-back likely helped George Jenkins quit his steady job at grocery Piggly Wiggly when his boss wouldn't see him for a short conversation, though he spent eight hours driving. He started
The McKee family survived the Depression with a similar story. Husband and wife team O.D. and Ruth McKee sold five cent cakes out of the family car, a 1928 Whippet. Then, in 1934, they bought a bakery in Chattanooga, Tenn., starting the company that would eventually become known for its Little Debbie cream pies. Descendants now run the company and are worth an estimated $1.4 billion based on our estimates.
E.&J. Gallo Winery's roots also extend to 1933. It was then that a survivalist entrepreneur brother team started crushing grapes in a California shed. Their product quickly grew popular due to its cost: they sold the wine at 50 cents a gallon, half the market rate of the time. The Gallo family, worth $9.7 billion, now owns the world’s largest wine-maker.
There's also Iowa-native J.R. Simplot, who bought an Idaho potato farm in 1929 and worked the land by himself. Anything they didn't sell, his family ate. But they soon sold a lot. He was also an innovator, and became known as the father of the frozen french fry for the freezing process he invented. Before his death in 2008, the company boasted supplying a third of the nation’s french fries, most notably to McDonald’s. The Simplots, worth $8 billion, still run the company.
The other three tycoons whose businesses got off the ground during this difficult era: one oil tycoon family, the Hesses; Columbia Sportswear retailers, the Boyles; and the investment banking Stephens clan.
Several other billion-dollar family businesses also started just before the massive downturn, and survived. John Willard Marriott lay down $6,000 for a nine-stool A&W root beer stand just two years before the stock market crash. He stuck with the franchise, and the company stayed in the food industry until it shifted to hotels in 1957. The hotel conglomerate,