The children of the rich and famousNovember 21, 2012: 11:36 AM ET
Not spendthrifts, sots, nor simps, these billionheirs and billionheiresses are working hard - even though they don't have to.
By Alan Farnham
This story is from the September 10, 1990 issue of Fortune. It is the full text of an article excerpted in Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2012, a Fortune Magazine book, collected and expanded by Carol Loomis.
FORTUNE -- They're exotic. Some, neurotic. They're billionaire children -- saplings bent by a green money wind. Until now they seemed too rare to be of much interest to the rest of us. When the world has thought of them at all, it has imagined them as tiny pashas-to-be, happily cocooned. Indeed, in the palace of the Sultan of Brunei, a corridor leading to the rooms of Prince Azim, age 6, is decorated like a path through a forest, with a tree trunk that has a hole large enough for the young prince to hide in.
Soon these golden boys and girls may come in for closer scrutiny, as their less privileged contemporaries seek to learn the secrets of coping with wealth. In the U.S. alone, the passing of parents from the World War II generation will put a $6.8 trillion inheritance into younger hands. Many middle-class kids will confront a problem once reserved for the rich: Why work? If you know where your next meal is coming from -- Lutèce -- why even get out of bed?
Wealthy children lack that spark of want that sends other people scurrying to offices and factories each day. From this deficiency flow others: Parents may have been too busy getting wealth to have taught heirs how to keep it. Those certain to inherit may succumb to idleness and dissipation; those not so sure of what they're getting may forfeit chances for security while yearning for a windfall. Some inheritors feel so intimidated by a forebear's accomplishments that they never attempt anything of their own, while those who do try may find their efforts dismissed as mere dilettantism. So long as their money flows, a train of con men and false friends follows them.
Against this unhappy backdrop, some inheritors learn to use their wealth to good effect, like a tool. They escape the pitfalls of their class and lead full, productive lives, accomplishing what they have set out to do. How do they succeed? What motivates them? The reasons range from personal pride to a pining for adventure. Much depends on how they were raised.
Telling children early and bluntly whether or not they will inherit makes for a good start. British publisher Robert Maxwell made it clear to his sons Kevin, 31, and Ian, 34, from the time they were small, that they should not expect to get his $2.2 billion, since the money would be going to medical research and other worthy causes. The Maxwell boys have had time to adjust to the idea that they will inherit nothing and today work alongside their father as dual managing directors of Maxwell Communications. Warren Buffett's son Howard knows that Dad intends to use his Berkshire Hathaway (BRKA) lucre to curb population growth. Yet Howard, 35, has not wasted time complaining. He farms corn and soybeans just outside of Omaha, and in 1989 he was elected commissioner of Douglas County, Nebraska.
These kids know where they stand. But many do not. Joanie Bronfman, a social psychologist who specializes in counseling adults from wealthy families, has found that many parents deliberately keep an adult child in the dark about inheritance. They use his uncertainty about his financial future to control his behavior.
Such withholding is but one example of the bad parenting from which wealthy children can suffer. Says Bronfman: ''The public is wrong in assuming children of wealth have happy childhoods. If anything, it's more possible for parents to buy out of parenting altogether.'' The product of just such a buyout is Edoardo Agnelli, 36, son of Fiat's Giovanni Agnelli, 69. Long before he earned the nickname Crazy Eddie at Princeton for his wild behavior, Edoardo had lost his father's favor. To the disappointment of Agnelli, who skied and raced cars, Edoardo, even at age 8, was too timid to dive from the family's yacht. The father paid less and less attention to his son. Once Agnelli promised to take him to a soccer match. Edoardo waited eagerly. The date came, then went: Agnelli had forgotten.
A troubled Edoardo later turned to spiritualism for solace. In adulthood, he gave an embarrassing interview to the Italian press in which he claimed that he was Fiat's heir apparent. His father promptly announced that his own brother Umberto would be his successor and later restructured Fiat to keep it out of Edoardo's hands. Agnelli's niece Delfina Rattazzi has said: ''Yes, we're an exemplary family; others have had discord and have seen the end of their empires. But the other side of the coin is harshness. When one of us goes through a difficult period, he or she feels enormously isolated. It is a family for the strong.''
Having to measure up to one's family name can be daunting. His famous dad is the reason Howard Buffett never had a lemonade stand as a kid: ''I felt discouraged from trying. It seemed nothing I could do would be as successful as what he did. And what I did might reflect badly on him.'' The shadow of the elder Buffett's success stretches across the imagination of his 6-year-old grandchild. Says Howard: ''Little Howie owns ten shares of Coke (KO) stock that he bought with money that he saved. One day my wife was explaining how there's a first time for everything, and he said, 'I don't think there'll ever be a first time I can afford to buy a share of Berkshire Hathaway.' ''
Dilek Sabanci, 26, is more than happy to be a member of the Turkish banking clan and fully appreciates the many blessings her name confers. Yet she says: ''I have to be careful. People always watch me because they have expectations from a Sabanci daughter. I have to act as a role model or else they become the most merciless critics.''
All rich kids suffer from a form of discrimination that Joanie Bronfman calls ''wealthism.'' The term includes the many forms of prejudice ordinary people hold against the rich, but one in particular can be powerfully demotivating: Anything a rich kid accomplishes is apt to be dismissed as dilettantish. Laurie Tisch, 39, daughter of Preston Robert Tisch of Loews Corp. (L), is the chairman of the Children's Museum of Manhattan, where she has helped to raise $7.5 million. Not everyone, however, sees this accomplishment as the fruit of hard work. ''Having Tisch as a last name helps open doors,'' she says, ''but it doesn't mean donations just roll in automatically.''
False flattery can be as galling as uninformed criticism. Asked if people try to befriend him for his money, investment banker Warren Stephens, 33, son of Jackson T. Stephens of Little Rock's Stephens Inc., answers, ''Hell, yes.'' Years of dealing with sycophants have made him wary: ''There's a level of cynicism that will always be there with any new person until, over time, it's worn away or proven correct.''
Laurie Tisch's brother Jonathan, 36, head of the Loews Hotel chain, discovered how many friends his family has when he worked one summer at the front desk of the Loews-owned Americana hotel. He disguised his identity from customers by wearing a name tag reading Jonathan Mark. Whenever the hotel was full, people angry they couldn't get a room would pull rank by insisting they knew some Tisch or another. One day an exceptionally pushy fellow fixed Jon with a withering stare and told him he'd better find him a room ''because I know all three Tisch brothers -- Preston, Robert, and Larry.'' Said Jon: ''Take a hike.''
Howard Buffett is philosophical: ''There are jerks with money and jerks without.'' He regularly suffers from the public's assumption that anyone named Buffett must be rich. ''One night at a restaurant,'' he recalls, ''I pulled out my checkbook to pay the bill, and some guy says, 'Gee, I wish I had that checkbook!' I didn't have the patience to tell him, 'No, buddy, you really don't.' '' Though he tries to behave as if his father's money didn't exist, doing so for long is impossible. ''When I get back to my office this afternoon, there will be nine messages,'' he says. ''Eight of them will be from people wanting something from my dad.''
Successful sons and daughters agree they learn more about how to handle wealth from watching their parents than from listening to them. Like most children of wealth who turn out to be hard workers, Winston Wang, 39, son of Formosa Plastics king Y. C. Wang, 73, credits his parents with showing him the value of work. His lessons are far from over. Wang recently spent a weekend with his father at Formosa Plastics' office in New Jersey. The two discussed business for three hours Sunday, after which Y. C. spent the rest of the day composing faxes to Taipei. Says Winston: ''When he works like that, even on Sunday, I can't do any less.''
''Were we trained how to behave with money?'' Warren Stephens asks. ''By telling? No. By watching? Yes. Neither of my parents ever made a big deal out of money. Their attitude was, Take pride in what you do, enjoy what you do, and things will turn out OK.'' Adds Richard LeFrak, 45, son of developer Samuel LeFrak: ''You observe your parents. If they don't seem to be enjoying what they're doing, then maybe you aren't going to turn out to be a worker. How can you have self-fulfillment just spending the old man's money? I started working when I was 13 and was only too happy to dig in with both feet.''
Rich kids in turn try to pass these attitudes on to their own children. Howard Buffett says, ''There are certain basic things you need to do with kids, whether you have money or not. My mom and dad taught me responsibility: Clean out the gutters and mow the grass. When you do wrong, pay the consequences.'' Teaching his own son Howie how to live with privilege has not been easy. When basketball hero Michael Jordan visited Omaha, Howie wanted to sit at the head table with the other dignitaries. Howard senior had to explain to him that he wasn't automatically entitled to.
Allowances -- and yes, even piggy banks -- can help give children self-discipline and a healthy respect for the value of a dime. Heirs who grew up saving pennies are not likely to mistreat billions later. Recalls Warren Stephens: ''We had an allowance. If you went over -- too bad. There was no more money. It was gone.'' H. Ross Perot, the founder of EDS and later of Perot Systems, says that when his son, H. Ross Perot Jr., was small, ''he was given very little money. One day, a reporter from Australia was in my office when Ross walked in. 'So, young man,' says the reporter, 'how does it feel to be the son of the richest man in Texas?' Ross just stared at him. 'Mister,' he said, 'all I know is I get 25 cents a week.' ''
Andrew Tisch, 41, Laurie and Jon's cousin and the son of Laurence Tisch of Loews Corp. and CBS, desperately wanted a Timex watch when he was 7. ''My parents said, 'Save for it.' '' Now the head of Lorillard (LO), Andy gives his own kids, 7 and 9, $1 a week each in spending money. ''My son wants me to buy him baseball cards,'' he says. ''Oh, does he want baseball cards! I've told him to save up. He needs to learn that things aren't free.''
Winston Wang's 11-year-old is getting the same training: ''My son knows he has a rich grandfather. Sometimes he says, 'Dad, why don't you ask Grandpa to give you some money?' I tell him that's not the right way to think. You have to make your own way.'' Remembering childhood with his own notoriously thrifty dad, Howard Buffett says: ''If you went to the movies, you never knew if he would buy your ticket or not. His attitude was, Everybody pulls his own weight.''
As a boy, Ross Perot Jr., 31, learned the meaning of a quarter one summer shoveling holes for petunia bushes on EDS property. ''Ross was digging away, at 25 cents a hole,'' remembers his father, who was paying. ''It was hotter than you can imagine, and Ross hit bedrock. He stuck with it -- kept right on going. I admired him for it.''
One weakness of rich kids, observes Laurie Tisch, ''is that they have a very low frustration level. You don't have to do something, so you just walk away.'' The best-motivated children are usually those who feel best loved. Says young Perot, who grew up in Dallas: ''Kids have to know you've made them your No. 1 priority. Even when Dad was busy traveling around the country on business, he would fly back to see us if we were in a school play. He always made sure we knew how special we were to him.''
When parents are preoccupied, the right mentor can sometimes fill the gap. According to Oklahoma City newspaperman Frosty Troy, Eddie Gaylord, 33, son of publishing, broadcasting, and country-music mogul E. L. Gaylord, was ''the original spoiled brat.'' But the adult Eddie has turned out to be a responsible, well-liked rodeo patron -- and husband to Miss Rodeo America. What happened? A foreman on the family's Texas ranch took Eddie in tow during the boy's teenage years. Explains Clem McSpadden, rodeo announcer and grandnephew of Will Rogers: ''I've announced rodeos for Eddie. He gives 25 cents of every ticket to charity, though he doesn't like to say so. The first one I did, he gave the money to leukemia. That's what the foreman died of. He'd taught Eddie how to saddle and shoe a horse. There's always some father figure you love, and that was this old foreman -- a man of the soil. Because of him, Eddie's turned out to be a very unpretentious fellow.''
Ross Perot willingly shares credit for his son's strength of character with a Marine sergeant who rode the kid hard during 13 weeks of officer training at Quantico, in Virginia. The man pushed Ross's face in the dirt and challenged him to prove he was something more than a rich boy. ''Surviving that experience,'' says Ross Jr., ''taught me I could do anything I set my mind to.''
Almost all billionaires' children really do want to work. John Sedgwick, author of Rich Kids, says that heirs tell him the worst question they ever have to face is: What do you do? Says Sedgwick: ''Not having a job makes you separate from the rest of the human race.'' The children appreciate that by starting a career or business they will increase their self-esteem and gain independence from their parents. But where parents are bankrolling the experiment, such gains can prove ephemeral.
Howard Buffett farms 406 acres and loves the work: ''I've been farming nine years. It's a very independent type of activity -- everything's up to you. It teaches you a value system and gives you an instrument to achieve that.'' So far so good.
Except for one thing: ''Dad owns the land. I pay him a percentage of the gross income as rent. I probably shouldn't tell you this, but the rent is based upon my weight. I'm 5 foot 8, and I weigh around 200 pounds. He thinks I weigh too much -- that I should weigh 182.5. If I'm over, my rent is 26% of gross income. If I'm under, 22%. It's the Buffett family version of going to Weight Watchers. I don't mind it, really. He's showing he's concerned about my health. But what I do mind is that, even at 22%, he's getting a bigger payback than almost anybody around. Somehow he always manages to control the circumstances.''
Wise parents give their offspring maximum career freedom. Some kids who easily could get work in family businesses don't because they feel their parents are trying to hustle them into it. Says Ross Perot: ''It's important to give your kids a lot of rope -- sons especially.'' Apparently the rope was long enough for Ross Jr. After he got out of the service in 1985, ''I said to Dad, 'What sort of things can I help you do?' He said he wanted me to take over the real estate operations. Dad likes raw land.'' Junior has since turned 4,800 acres near Fort Worth into Alliance Airport, catering to manufacturers and shippers, not commercial passengers.
Jon Tisch felt he needed to ''make a name for myself'' outside his family's hotel businesses. After college, he got a job in Boston as a TV cameraman and was later promoted to producer. He's quick to point out, ''This was 12 years before Uncle Larry was involved in CBS.'' Eventually, his work won him two Emmy nominations. Jon, who now runs Loews Hotels, feels the TV experience has made him a better innkeeper: ''It trained my eye for details that matter to a guest, like dirty ashtrays and sconces that are askew. Hotels are really just another part of the entertainment industry.''
Will Hearst III, 41, son of William Randolph Hearst Jr., broke a family tradition by becoming the first Hearst to graduate from college. In this case, from Harvard, the school his famous grandfather had left after only three years. Though Will could have worked exclusively in Hearst Corp. sinecures, he chose instead to help Jann Wenner launch Outside, an outdoor adventure-travel magazine. Today Hearst runs his family's flagship paper, the San Francisco Examiner, to which he has added Pacific Rim bureaus and a Sunday magazine called Image.
Not every heir to a family business feels he has to refuse the cup three times. Some are not the least bit hung up about their good fortune. Says Warren Stephens, the Arkansas investment banker: ''I've never felt I had to establish my independence. I'm not sure I want to be totally independent. I'm given more opportunity right here.'' He thinks the reason some kids are crushed by family money or tradition is that ''they get caught up thinking about it too damn much. They carry some sense of guilt, like 'Isn't this terrible.' I don't see it as terrible. It's the American way. Our attitude has been, Let's see if we can't lift this family up. The money's there for you to use and to enjoy. It's not there for it to use you.''
If money is a tool, these inheritors believe, call it the world's best hammer. Richard LeFrak thought about starting his own law practice. ''But hey, I like it here,'' he says, referring to the LeFrak real estate empire. ''This is the family business. I'm the only son of an only son. I saw it as an opportunity and a responsibility. I hope someday my own two sons, at their own initiative, will want to join us.''
Some heirs feel compelled to put themselves at risk or to undertake extraordinary challenges. Terminally comfortable, they need to prove to themselves they're still breathing. Says John Sedgwick: ''They're sponges for experience. Comfort pushes them toward extremes.'' John Levy, a Mill Valley, California, consultant to parents and children coping with inherited wealth, concurs: ''They turn either to venture capitalism or kayaking.''
Many prefer arenas where money cannot buy them victory. Gordon Getty, 56, one of oilman J. Paul Getty's five sons, has withstood appraisal as a composer of symphonic music; now he has opened up a second front as a concert singer. A music critic for the San Francisco Chronicle, reviewing Getty's July performance of selections from Schubert's Die Winterreise song cycle, wrote: ''It should be irrelevant that when Gordon Getty goes public as a singer he is doing so as one of the world's richest men. Yet there was no other reason for attending his recital Friday night.'' The review described Getty's voice as ''a groan lapsing into a growl'' and ''a bark that becomes a howl.''
Gordon's great-nephew Paul Balthazar Getty, age 15, garnered better reviews for his screen debut as Ralph in this summer's remake of Lord of the Flies. With evident pride, he told a London paper, ''The film people did not know who I was.'' Balty -- as he is known to friends at home in Southern California -- insists his only acting instruction so far has been ''a few tips from Jack Nicholson, who I see at baseball games.'' His latest film is Young Guns II.
Business and the arts do not exhaust the rich kid's avenues for self-expression. Charity can serve as well. Lisa Simmons, 34, has taken charge of her corporate-raider father's charitable giving. A former Vista volunteer, she is president and sole staff person of the Harold Simmons Foundation, where she reviews, approves, or rejects funding requests. Last year the foundation pledged more than $40 million to the University of Texas for a cancer institute and a Simmons Arthritis Research Center: ''My Dad suffers from arthritis,'' she says. Did she choose philanthropy out of a deeply felt sense of social obligation? No. ''I just liked the work.''
Old movies appealed so strongly to David Packard, 49, son of Hewlett-Packard's co-founder, that he decided to restore a vintage movie palace, the Stanford, that he remembered from his youth in Palo Alto, California. Nearly eight million Packard Foundation dollars later, the Stanford reopened this year with its own collection of 2,000 classic silent films and talkies, and one of the mightiest Wurlitzers around.
Packard personally designed the console's electronic controls -- the apple doesn't fall too far from the tree. ''I didn't know anything about theater organs,'' he says, ''but I decided the Wurlitzer was too important to our enterprise to leave it to volunteers.'' Meanwhile, his wife, Pamela, got so wrapped up in replicating the exact shade of the Stanford's original stage curtain that vats of dye filled the Packards' kitchen. David feels satisfied with what the two have accomplished: ''We've been doing extraordinary business -- 7,000 people a week. Still, that's just enough to pay our way. It all takes a lot of my time now.''
In philanthropy, in personal relations, and in professional life, sons and daughters of wealth often have to work harder than ordinary people to win respect and credibility. The extra cost is part of their mixed birthright. They work to establish their worth to themselves and for the pleasure that accomplishment can bring. But at bottom, they work because, as Laurie Tisch puts it, ''there's something to be said for wanting to be like everybody else."