If you wanted to get very rich in America, where would you start? In their new book The Everywhere Millionaire, economists Owen Zidar of Princeton and Eric Zwick of the University of Chicago detail the results of more than a decade spent piecing together millions of tax records and other data to map a part of the American economy that had been hiding in plain sight: the impressive fortunes being built by owners of privately held businesses. Buried in that data are surprising insights into what the most financially successful entrepreneurs have in common.
The authors estimate that roughly three million Americans have become what they call “Everywhere Millionaires,” collectively holding more than $65 trillion in wealth. Zidar and Zwick calculate that about 1.7 million Americans have amassed fortunes of at least $10 million through private-business ownership. They’re car dealers and HVAC contractors, dentists and restaurateurs, beer distributors, and owners of construction companies. For every public-company CEO, there are more than 1,000 private-business owners worth more than $25 million.
Of course, no one knows better than the Inc. community that many of America’s most successful companies aren’t venture-backed tech companies or Wall Street banks, but the kind of businesses that power everyday life in this country. This year’s top 50 on the Inc. 5000 include businesses offering trucking, metal siding, pool supplies, and wound care, to name just a few.
One reason economists have missed the scale of this world is structural. The vast majority of privately held companies are so-called “pass-through” businesses—S corporations, partnerships, and other entities whose profits are taxed via their owners’ individual tax returns. But because the IRS has long kept personal and business data in separate silos, the government knew very little about these private businesses.
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Zwick and Zidar, who worked at the Treasury Department during the Obama administration, took a deep look at the people behind these businesses and how they got there. The result is nothing less than the largest and most detailed dataset on entrepreneurs and other private business owners ever assembled. Viewed in aggregate, it offers a remarkable new window into the elements of entrepreneurial success. Zidar spoke with Inc. about what they found.
Are there industries that surprised you that produce these “everywhere millionaires”?
Some are really mundane. We talked to a guy who distributes toilet paper. A guy who makes trash bags, who sold his business for $300 million. One guy we really wanted to put in the book, who wouldn’t talk to us, owns one of the biggest repo companies in the country, based out of Nevada. He repossesses cars, and he’s very wealthy.