The Maverick and His Machine
Before he was a presidential candidate, Ross Perot was a phenomenally successful businessman. After a stint at IBM where he famously met his annual sales quota in the first few weeks of the year, he founded Electronic Data Systems (EDS) in 1962 with just
$1,000. EDS didn't sell computers; it sold a service, managing complex data processing systems for large corporations that lacked the expertise to do it themselves. Perot built EDS with a military-style, can-do culture that stood in stark contrast to the lumbering corporate giants of the era. The company was lean, aggressive, and immensely profitable, turning Perot into a billionaire.
A Deal with the Detroit Devil
In 1984, General Motors, the world's largest automaker, was struggling. Chairman Roger B. Smith saw technology as a way to modernize the company and believed acquiring EDS would inject a dose of entrepreneurial spirit into GM's sclerotic bureaucracy. GM bought EDS for $2.5 billion, making Perot the auto giant's single largest shareholder and giving him a seat on the board. On paper, it was a visionary move. In reality, it was a marriage between two polar-opposite cultures: Perot's scrappy, fast-moving team and GM's deeply entrenched, committee-driven hierarchy.
An Unworkable Alliance
The culture clash was immediate and intense. Perot, now inside the belly of the beast, was appalled by what he saw. He openly criticized GM's lavish executive perks, inefficient practices, and inability to compete with Japanese automakers. He famously quipped that at EDS, "when we see a snake, we kill it. At GM, they form a committee on snakes." His public feud with Chairman Roger Smith became legendary. Perot believed he was trying to save GM from itself, while Smith and the board saw him as a disruptive and insubordinate force who simply couldn't accept that he no longer owned the company.
The $700 Million 'Hushmail'
By late 1986, the tension was unbearable. GM's board decided it had to get rid of its loudest critic. In an extraordinary move, the company paid Ross Perot roughly $700 million to buy back his stock and resign from the board. The agreement came with a gag clause, effectively paying him to stop criticizing GM. Perot later called the payment "hushmail," not greenmail, and publicly stated that the money would have been better spent building a new, world-class auto plant and creating jobs. GM rejected his offer to put the money in escrow, finalizing one of the most expensive and public corporate divorces in history.
The Ultimate Comeback
Being kicked out didn't sideline Perot for long. While the buyout deal included a non-compete clause, it wasn't ironclad. In 1988, just two years after his ousting, Perot founded Perot Systems. His comeback wasn't about rejoining EDS; it was about building a direct competitor from the ground up, staffed with many of his loyal former executives from EDS. The new company was an immediate success, proving that Perot's magic was in his methods, not just his original company. Perot Systems went on to become a major force in the IT services industry and was eventually acquired by Dell in 2009 for $3.9 billion.
