In 1960, Miller Gorrie was around 25 years old. Throughout his life, he had taken his earnings from paper routes and poured them into IBM stock, which had compounded at 20%+ for many years. This led to the young man possessing a portfolio worth more than $100,000, which adjusted for inflation, is more than $728,000 today.
He attended Auburn University and studied engineers and spent three years in the U.S. Navy’s Civil Engineering Corps prior to the purchase. After this, Gorrie was able to use the money from his investment portfolio to purchase a small construction company called Thomas C. Brasfield. He renamed the firm Brasfield and Gorrie.
Over the subsequent decades, Miller Gorrie turned that small company into one of the largest contractors in the United States with more than $2 billion in annual revenue. Today, he is one of the richest men in the world and he owns all – yes, 100% – of the membership equity of Brasfield & Gorrie, LLC.
Reader Comments
(3)
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K
Kwame
June 29, 2011
Forgive me if i didn't really understand the whole thing about Miller Gorrie owning 100% equity.
If Miller Gorrie owned 100 percent equity how-come his company is an LLC. Could you please elaborate on why that is possible and it really means to own 100% equity.
Thanks Josh.
NB. My understanding of accounting is weak.
J
Joshua Kennon
July 27, 2011
Replying to Kwame
In the United States, an LLC is a type of legal incorporation that stands for "limited liability company". I've written about it a lot in the LLC guide at Investing for Beginners.
If you formed an LLC, you can divide it almost any way you want. You could contribute all of the money and own 100% of it (equity just means ownership). In this case, you'd start the company and own the entire thing.
Likewise, you could go in business with 5 other people and each contribute 1/5th of the money to start the company. In this case you'd own 1/5th, or 20%, of the LLC equity.
It's a bit more complicated because LLC's are like partnerships in that they can be written to achieve almost anything people can require ...
For example, you could create an LLC to build a laundromat, raise $100,000 from 5 investors who contribute $20,000 each, but agree that one of the investors is entitled to 40% of profits on the first $100,000 in exchange for running the business during the day shift. You can do anything that is legal by writing it into the operating agreement.
All of my companies, for instance, have change of control provisions. If someone attempted to sell shares without approval from the firm, the company can buy out their ENTIRE stake for $100, no matter how valuable it is. That way, no one can invest with me unless I want them to or a family member couldn't sell off his or her shares without the approval of everyone else.
F
FratMan
March 10, 2017
It is worth including that Miller Gorrie's father was an IBM salesman. I offer this not to take away anything from his accomplishments--he earned the money and chose to invest it, accepting responsibility for gains and losses--but it seems there is an overwhelming tendency for people to invest in things they have a personal connection with. Either through their own employment, parental advice and business interests, local geography, or what have you.
A lot of times, you assume these smart and savvy people are objectively scoping a wide horizon for investment ideas. No doubt that's true if you're a Warren Buffett type (though see his close connection to GEICO via Graham and all the businesses he now owns that relate back to childhood interests!), but it seems that the Miller Gorrie types tend to get rich by making the best decisions based on investment opportunities within a fixed universe of possibilities based on this "personal connection" I mention.
Maybe this is a good thing because people understand businesses that seem tangible to them, and can hold through the bad times, but I also think the proximity aspect of wealth-building tends to get neglected. And yes, it's changing in the era of Vanguard index fund millionaires.
In 1960, Miller Gorrie was around 25 years old. Throughout his life, he had taken his earnings from paper routes and poured them into IBM stock, which had compounded at 20%+ for many years. This led to the young man possessing a portfolio worth more than $100,000, which adjusted for inflation, is more than $728,000 today.
Kwame
June 29, 2011
Forgive me if i didn't really understand the whole thing about Miller Gorrie owning 100% equity.
If Miller Gorrie owned 100 percent equity how-come his company is an LLC. Could you please elaborate on why that is possible and it really means to own 100% equity.
Thanks Josh.
NB. My understanding of accounting is weak.
Joshua Kennon
July 27, 2011
Replying to Kwame
In the United States, an LLC is a type of legal incorporation that stands for "limited liability company". I've written about it a lot in the LLC guide at Investing for Beginners.
If you formed an LLC, you can divide it almost any way you want. You could contribute all of the money and own 100% of it (equity just means ownership). In this case, you'd start the company and own the entire thing.
Likewise, you could go in business with 5 other people and each contribute 1/5th of the money to start the company. In this case you'd own 1/5th, or 20%, of the LLC equity.
It's a bit more complicated because LLC's are like partnerships in that they can be written to achieve almost anything people can require ...
For example, you could create an LLC to build a laundromat, raise $100,000 from 5 investors who contribute $20,000 each, but agree that one of the investors is entitled to 40% of profits on the first $100,000 in exchange for running the business during the day shift. You can do anything that is legal by writing it into the operating agreement.
All of my companies, for instance, have change of control provisions. If someone attempted to sell shares without approval from the firm, the company can buy out their ENTIRE stake for $100, no matter how valuable it is. That way, no one can invest with me unless I want them to or a family member couldn't sell off his or her shares without the approval of everyone else.
FratMan
March 10, 2017
It is worth including that Miller Gorrie's father was an IBM salesman. I offer this not to take away anything from his accomplishments--he earned the money and chose to invest it, accepting responsibility for gains and losses--but it seems there is an overwhelming tendency for people to invest in things they have a personal connection with. Either through their own employment, parental advice and business interests, local geography, or what have you.
A lot of times, you assume these smart and savvy people are objectively scoping a wide horizon for investment ideas. No doubt that's true if you're a Warren Buffett type (though see his close connection to GEICO via Graham and all the businesses he now owns that relate back to childhood interests!), but it seems that the Miller Gorrie types tend to get rich by making the best decisions based on investment opportunities within a fixed universe of possibilities based on this "personal connection" I mention.
Maybe this is a good thing because people understand businesses that seem tangible to them, and can hold through the bad times, but I also think the proximity aspect of wealth-building tends to get neglected. And yes, it's changing in the era of Vanguard index fund millionaires.