William Crapo Durant

No matter what, you've got to believe Billy Durant would have been enraptured by the dot-com boom of the 1990s. It was his type of scene: customers, industry and wealth conjured out of absolute nothingness. Enormous fortunes that materialized for entrepreneurs who'd never built a single product. Remember the sock puppet that was the mascot for Pets.com? It used to be on TV more than Ronald McDonald. More than one bleating business pundit compared the mess to the great initial shakeout of the young auto industry, back when Durant was one of its swinging hammers.

What separates Durant today from the majority of Internet ham-and-eggers is that he actually accomplished something. History is clear that Durant shredded most business conventions when it came to overexpansion. He got sacked as the boss of General Motors, the corporation he founded, for the second time in 1920. The following year, The New York Times published a warning that growing too fast can sink any business. Today, that's a fixture in Management 101 courses. Coincidence?

Born in late 1861, he was the son of William Clark Durant, a banker who had married into the blueblood Crapo (pronounced CRAY-po) family of New Bedford, Massachusetts. Its progenitor, Peter Crapaud, came to the colonies from France and was shipwrecked off Cape Cod around 1680. The Crapo family made enormous money in shipbuilding and whaling. Billy Durant's maternal grandfather, Henry Howland Crapo, became governor of Michigan, where he supervised the family's forest holdings, in 1864. The current U.S. senator from Idaho, Mike Crapo, is a distant relative.

Durant's father, however, became an alcoholic and abandoned the family when Durant was seven. His mother, Rebecca, then moved to Flint, Michigan, where Durant ended up working in his grandfather's sawmill.

Durant didn't like being anybody's subordinate, but he did love to sell. Beginning in 1885, when he bought the fire-damaged holdings of William H. Schmedlen and Thomas O'Brien's cart works in Coldwater, Michigan, Durant was firmly in the transportation business. From there, he organized the Flint Road Cart Company with J. Dallas Dort, later renaming it Durant-Dort. Before too long, it was building hundreds of carts every day, operating 14 factories, and sinking capital into its suppliers. Durant-Dort, circa 1900 and immediately thereafter, was the blueprint for General Motors' creation.

It was shortly thereafter, in 1904, that a carriage connection drew Durant into making automobiles. Former Flint Road general manager James H. Whiting had bought out the Briscoe brothers' interest in Buick, and was regretting it. He pigeonholed Durant into test-driving a couple of the cars, and Durant agreed on the spot to buy the firm, with the contingency of total management authority. David Dunbar Buick was shoved aside, as Durant wrestled Buick's tottering finances into the black.

In 1908, Benjamin Briscoe re-entered the picture and tried convincing Durant that some 20 small automakers should be grouped into a single firm. Durant balked, but was more receptive to tying up Buick with Ford, REO and Maxwell-Briscoe, bankrolled by J.P. Morgan. Henry Ford derailed the deal by demanding cash instead of stock as payment. Continuing discord also pushed out Morgan.

Ultimately, Durant organized General Motors on his own, with $2 million in startup capital. Within three weeks, GM had bought Buick for an armful of freshly printed GM stock, but only $15,000 in cash. In short order, buy-ups of Cadillac, Oakland and Oldsmobile followed. By early 1910, Durant was at the peak of his power; GM owned 26 manufacturers and suppliers worth about $37 million.

And then the bottom fell out. Remember what we mentioned about growing too fast? The economy had cycled downward in late 1910, and after paying overly huge shareholder dividends, GM didn't have enough money to cover its operating costs and debt service. In exchange for new loans, GM's board replaced Durant as GM president with Thomas Neal in early 1911.

Undaunted, Durant allied with Buick expatriates William Little and Arthur Mason to form, ultimately, Chevrolet. Through his friends, including Pierre S. du Pont, Durant gradually scooped up GM voting stock. In 1916, he grabbed control of GM again by paying off the 1910 loan. Two years later, GM owned Chevrolet.

Durant went on another expansion binge, introducing both Frigidaire and the Samson tractor, and opening the extravagant GM headquarters in 1919. It's now obvious that his 1911 sacking had taught him little or nothing about the wisdom of good cash flow. Nobody has ever suggested that Durant was a crook; to the contrary, he sank about $90 million of his own money into propping up GM's skidding stock price, and lost most of it. GM's board still forced him out permanently in 1920.

Durant chose to call his change in status a "vacation," and soon lined up $5 million from individual investors to start the Durant Automobile Company in 1921. Its products variously included Durant, Star, Flint and, briefly, Locomobile. The industry was already contracting when Wall Street crashed, though, and Durant was done.

Leveled by a 1942 stroke, Durant died five years later in Manhattan, an unfortunate tale of Gilded Age spirit given too much rein. His personal integrity remains unblemished, however. Gandhi, Truman Capote and J. Edgar Hoover all trusted in righteousness and inevitability. Same for Billy Durant.