Episode summary
How Boring Businesses Create Billionaires
Wall Street Week
· · Guests: Rich Kinder, Ray Chery, Dana Chery
Summary
Wealth in America often comes from private ownership in dull-seeming businesses, not from celebrity CEOs or fast-growing tech firms. Princeton economist Owen Zidar argues that there is a hidden world of “everywhere millionaires” and billionaires whose fortunes are tied to equity in privately held companies, especially in sectors like construction, professional services, finance and manufacturing.
Rich Kinder is the episode’s clearest example. He said he built most of his wealth by buying and scaling pipeline assets that others saw as outdated or unglamorous, turning Kinder Morgan into one of North America’s largest pipeline companies through acquisitions, disciplined capital spending and a focus on returns. He argued that predictable cash flow and careful leverage can compound into enormous value over time.
Ray and Dana Chery represent the same logic at a smaller scale. After corporate careers, they bought Monsam Portable Sinks because it already had product-market fit, consistent profitability and a business they could understand. Their bet is that entrepreneurship through acquisition offers a risk-adjusted path to ownership, especially as retiring owners create more opportunities to buy and expand established businesses.
Key takeaways
- Owen Zidar argues that private business owners, not public-company celebrities, make up a large hidden pool of wealth, with a thousand private owners holding at least $10 million in net worth for every public company CEO.
- Rich Kinder says he made his fortune by buying “unglamorous” pipeline assets and scaling them with acquisitions, disciplined spending and a mix of debt and equity.
- Kinder Morgan started at about $300 million in enterprise value and 175 employees, and Kinder says the company now spends about $3 billion to $3.5 billion a year on new pipelines.
- Ray and Dana Chery chose entrepreneurship through acquisition because Monsam Portable Sinks already had profitability, product-market fit and a business they felt they could learn quickly.
- Kinder and the Cherys both stress due diligence and understanding the business before investing, rather than chasing PR or unfamiliar ideas.
Notable quotes
“-I like unglamorous businesses, so it never bothered me in the least to be in an unglamorous business”
“there are a thousand private business owners who have at least $10 million in net worth for every public company CEO”
“We had this idea that we would look for assets, we would run them as efficiently as we could, we would bend over backwards to serve our customers”
“-This felt like a risk-adjusted path into entrepreneurship”
How the episode opens
This is a story about your next door neighbor. They may not look ultra wealthy, like a Jeff Bezos or a Kim Kardashian, but sometimes behind that unassuming front door lives someone who's found the secret to attaining great wealth. Princeton economist Owen Zidar calls them "everywhere millionaires.
Our colleague Scarlet Fu had the opportunity to sit down with both an everywhere billionaire and a couple that aspires to be. -You are one of the wealthiest people in America, but you keep a fairly low profile. I know that you are a known entity in Houston, but outside of Houston there may not be a lot of people who know who Rich Kinder is.
-And that's just fine. -Is that by design? -That's just fine.
Yeah. I wouldn't say it's by design, but yes, I guess it is, in retrospect. -Rich Kinder didn't make his billions climbing the corporate ladder.
Instead, Kinder created the bulk of his wealth by buying boring yet essential assets and then scaling them into what is now one of the largest pipeline companies in North America, Kinder Morgan. -I like unglamorous businesses, so it never bothered me in the least to be in an unglamorous business. -Kinder is part of a cohort of high net worth, yet unassuming, individuals that economists call the "everywhere millionaires" or in his case, billionaires.
-Wealthy people don't answer surveys, and, you know, some of them are covered by the media, but that's only a small slice of what's truly there. There's basically a hidden world of everywhere millionaires. -Owen Zidar is an Economics Professor at Princeton University who served on the Council of Economic Advisers during the Obama administration.
He now focuses his research on tax policy as it pertains to high net worth individuals. His research will be published in a book titled "The Everywhere Millionaire" later this year.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- boring businesses
- private businesses wealth
- pipelines
- portable sinks
- billionaires
Watch the episode
Watch “How Boring Businesses Create Billionaires” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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