How self-made titans launched their empires

The capital crunch maddeningly persists—dispiriting news for many would-be entrepreneurs born of choice or necessity. Having a gem of a business idea isn’t worth much without the wherewithal to get it off the ground.

Certainly the lucky few “born on third base” have a better shot at achieving business superstardom than those without a safety net. According to a 2002 U.S. Census Bureau survey representing some 16 million business owners, a whopping 55 per cent were initially funded by personal and family capital. Just 11.4 per cent snagged bank loans, and 8.8 per cent got going on personal and business credit cards; much of the remainder lived on government loans and outside investors.

Yet for entrepreneurs who have truly creative ideas, unrelenting devotion and oodles of ability to execute—but who may not have fat trust funds to lean on—there’s reason for hope.

Take John Paul DeJoria—owner of Paul Mitchell Systems, a hair products company, and Partron Spritis, a high-end tequila brand—who started out as a door-to-door salesman in Los Angeles at age 9. First he sold Christmas cards but soon moved to newspapers and other subscriptions. After a short stint in the navy, he returned to his salesman roots, selling encyclopedias.

In 1980, with just US$700 and an iron will, DeJoria and friend Paul Mitchell, a hairdresser, decided to launch a new line of shampoo and other hair care products, based on a new formula Mitchell had developed. In the early months, when he wasn’t pounding on salon doors and told to bug off, DeJorira bought supplies on credit and lived in his car. “Having sold other products door-to-door, I understood that rejection was just part of the process,” says DeJoria, 65.

Without ever borrowing a dime, Paul Mitchell Systems became the largest salon-only hair care company in the U.S., with products in 10 per cent of salons across the country. Then came his (and partner Martin Crowley’s) agave assault with Patron. DeJoria currently owns a 51 per cent stake in Paul Mitchell Systems and 70 per cent of Patron. At last count, DeJoria’s net worth was US$2.5 billion.

Gift for gab helped Jeffrey Katzenberg, a high school-educated Manhattanite, climb to the top of the entertainment game. While he didn’t launch a business on a shoestring, Katzenberg did spend decades building a network that would eventually help him launch one of the most storied movie studios of all time.

Katzenberg began honing his skills at age 15 as a volunteer in John Lindsay’s campaign for mayor of New York in 1965; Lindsay won, and Katzenberg stayed on, foregoing college for the snap and crackle of politics. Through a connection at Lindsay’s office, he later met Barry Diller, then president of Paramount, who invited him to Los Angeles to work as his assistant. “No one did more for my career than Barry,” says Katzenberg, 58. “He taught me the entertainment business—not just the fun parts, but the not so fun parts that you need to learn in order to be successful.”

During his 11 years at Paramount, Katzenberg also befriended Michael Eisner, then chief executive of the movie studio. When Eisner left Paramount for Disney (nyse:DIS) in 1984, he took Katzenberg with him, and there they pumped out hits like The Little Mermaid, Beauty and the Beast and Aladdin. After a falling out with Eisner in 1994, Katzenberg left to launch his own studio, DreamWorks SKG, with the likes of Steven Spielberg and David Geffen. With partners like that, little wonder this guy is worth US$750 million.

Old-fashioned bartering helped put Kirk Kerkorian, farmer’s son and future Wall Street titan, on the map. In the late 1930s, Kerkorian, who is 91, offered to look after famous female aviator Pancho Barnes’ cattle in return for flying lessons. During World War II, he took a job with the Royal Air Force transporting planes from their Canadian factory to England for US$1,000 per month—an especially treacherous journey, as the planes weren’t designed to withstand the long trip or the harsh weather over the North Atlantic.

With savings from his wartime job, Kerkorian purchased Trans International Airlines for US$60,000 in 1947. (It is unclear whether he needed additional financing.) He later sold it to Transamerica for US$104 million in stock, used to fuel further investments. His private investment firm, Tracinda, now owns 39 per cent of MGM Mirage (nyse:MGM), down from 53 per cent in May.

Billionaire financier George Soros, 78, socked away a few pennies to jump-start his entrepreneurial career. Born in Hungary in 1930, Soros and his parents fled the Nazis and landed in England. After putting himself through the London School of Economics while working as a railway porter and waiter, Soros moved to the U.S. in 1956 and found work at several investment firms, including Arnhold and S. Bleichroeder, where he worked his way up to vice-president. After running several offshore investment funds, he launched his own investment firm with colleague Jim Rogers. Their Soros Fund began with just US$12 million under management (it’s unclear how much of that was their own capital); it has since grown into the multibillion-dollar Quantum Fund. Soros’ current net worth: about US$11 billion

Sometimes sheer talent and persistence is enough. As a single mother on welfare in Scotland, J.K. Rowling, 43, began writing the first Harry Potter novel in Edinburgh cafés whenever she could get her infant daughter to sleep. After being rejected by 12 publishing houses, Bloomsbury, a small publisher in London, offered an advance of 1,500 pounds (about US$2,400)—even while one its editors, Barry Cunningham, advised Rowling to get a day job.

Good thing she didn’t listen: The following year, U.S. publishing rights to the first Potter book sold for US$105,000. Rowling, who is now worth around US$1 billion, has since moved nearly 400 million copies worldwide, and is the only author on our list.