Henry Ross Perot

Businessman and activist, Henry Ross Perot (born 1930) founded the successful data processing company, Electronic Data Systems (EDS). He entered politics in 1992 as the Independent Party candidate for U.S. president.

Ross Perot was born in Texarkana, Texas, on June 27, 1930. His father was a cotton broker and horse dealer. The young Perot was much impressed by his father's negotiating skills and by his mother's discipline and religious principles. Perot grew up in Texarkana and spent one year at the local junior college. He then attended the U.S. Naval Academy, graduating in 1953, the president of his class. After graduation, he spent four years at sea.

At the Naval Academy Perot had received a basic education in engineering. He had no special training in electronics or computing. However, his personal qualities impressed an IBM representative who visited him on the aircraft carrier to which Perot was assigned. When Perot left the Navy, he was hired by IBM to sell computers in Dallas. He was most successful. At the same time Perot became convinced that a business could make money by leasing unused computer time to clients who needed it. IBM wasn't interested in the concept, so in 1962 Perot started his own business, Electronic Data Systems. His first client, Collins Radio in Iowa, flew tapes and personnel to Dallas to have programs run on a computer at an insurance company there.

In the years that followed, EDS expanded. Operating under contract, EDS personnel ran entire data processing departments for insurance companies, banks, and state and national governments. In the mid 1960s the U.S. Congress passed national health insurance programs for the poor and elderly. These programs, Medicaid and Medicare, were administered by individual states. EDS expanded its programs for processing medical insurance claims from private companies to state offices. This business accounted for about a quarter of EDS income by 1968 and proved highly profitable. At the end of the 1960s EDS went public. Perot sold a small fraction of his shares in the business for $5 million.

In the following decades Perot became known for his international and philanthropic concerns. During the Vietnam War, reportedly in response to a request from government officials, he tried to improve the treatment of American prisoners of war in North Vietnam. In December of 1969 Perot attempted to send two planeloads of food, gifts, and medical supplies to the prisoners. The Vietnamese refused to accept delivery of the goods, but the publicity surrounding the episode may have led to improved conditions in the prison camps. In 1973, after the return of the prisoners, Perot financed a weekend party for those who had been held at the Son Tay camp, as well as for a team of Green Berets who had tried unsuccessfully to rescue them in late 1970. Perot also sought out veterans for staff positions at EDS. The firm set strict standards of dress and conduct for its employees. It also required trainees to sign a contract stating that if they left the company to work for a competitor within three years of their hiring, they would reimburse EDS $12, 000 for their training.

In the early 1970s EDS attempted to improve data processing on Wall Street by purchasing a subsidiary of a stock brokerage firm. Unfortunately, the firm was in serious financial difficulties. Perot himself invested some $97 million in this firm and in another brokerage firm, before deciding to dissolve both businesses in 1974. He lost some $60 million in the process.

In the late 1970s EDS expanded to international operations. Its first overseas contract was with a Saudi Arabian university. Then, in 1976, the firm was hired to manage data processing for the social security system of the Shah of Iran. Two years later Iranian officials concluded that EDS had been paying too much money to its Iranian advisers. Iran stopped payment on its contract, and EDS notified the government that it was suspending operations. Two leading EDS officers were arrested and imprisoned. Perot set out to win their release, even paying a quiet visit to Iran himself. An EDS rescue team was formed and trained, but did not penetrate the prison where the men were held. Reportedly at the urging of an Iranian employee of EDS, an Iranian mob broke into the prison and released all the prisoners. The EDS officials escaped and, with the rescue team, fled the country on foot. Perot encouraged the British journalist and novelist Ken Follett to write a sympathetic account of the episode.

As EDS grew, it was ever on the lookout for new markets. At the same time auto manufacturer General Motors sought to diversify its holdings. Investment bankers at the Wall Street firm of Salomon Brothers suggested EDS as one of several possible acquisitions. Roger Smith, the chairman of GM, greatly admired entrepreneurs like Perot and hoped that EDS might be able to unify data processing in his company's diverse operations. Smith did not consult his own data processing staff about the proposed merger. He also apparently was unconcerned by EDS's lack of experience in the use of computers in design and manufacturing.