Many rags to riches stories start with an individual who came from nothing and climbed their way to the top through sheer determination, talent, and a lot of luck. However this story is slightly different, this story is of a man that came from something, then by choice had nothing and adapted to his new life to become one of the most successful men in American business history. This is the story of Shahid Khan, a Pakistani-American billionaire and business tycoon.
Lahore to The Y
Shahid Rafiq Khan was born on July 18, 1950, in Lahore, Pakistan to a middle-class family. His father was an entrepreneur and lawyer by profession and his mother a maths teacher by trade. After inheriting money from his paternal grandfather, Khan’s father started his own law school, hoping the young Khan would follow in his steps and study law. However, the youngster had dreams that were too big for his hometown Lahore. Khan fell in love with the American dream and desperately wanted to move to the States to further his studies and chase down his fortune. After much deliberation and eventually securing the funds to send their young son on his future path, a 16-year-old Khan boarded a plane to Chicago, not knowing what the future would hold for him. Upon his arrival in the United States, Khan was dropped off in the small campus town of Champaign, home to the University of Illinois. The young Pakistani boy was on his own, not sure where to go. His first plan of action was to find accommodation, a local Union Hotel was his first stop, however at $9 a night, this was way too expensive for the 16-year-old and he would eventually find a place to rest at the local YMCA, which was only $2 a night and slightly within Khan’s budget. As he laid down his head that night, Shahid Khan was determined that the next day would be the first day of his hunt for the American dream. That dream would start with a $1,20 an hour dishwashing job.
Life in American would be an instant culture shock to the young boy from Lahore. Not only was he in a foreign country, with foreign cultures but also foreign weather. The day before Khan arrived in America, Illinois would see one of its most severe blizzards in history, with 2 feet of snow within two days. This was the first time Khan ever experienced snow, let alone a town completely covered in it, compared to the intense heat of his native Pakistan. However, he would embrace this change in environment, adamant not to just be another stranger in a strange land. In an unfamiliar environment, most humans cling to others like them. It’s comfortable in a time of a difficult transition. Khan took a different route. Instead of seeking others who could relate to his immigrant story, Khan signed up for fraternity rush as soon as he could, eager to meet people who weren’t like him in his new home. He signed up for the Beta Theta Pi house, traditionally an all-white Anglo Saxon Protestant fraternity. It was here that he would embrace various American cultures, from racing cars to sports that were quite foreign to him. In Pakistan, cricket was the main sport, in Illinois, it was football and basketball.
A Bumper of An Idea
While studying to become an electrical engineer, Khan got a part-time job at an automotive manufacturing company called Flex-N-Gate and upon graduation, the 21-year-old was made a permanent hire as a manager at the company. Khan spent seven years overseeing production at Flex-N-Gate and he didn’t like what he saw. Their bumpers were inefficiently manufactured. He used his background in engineering to tinker with the process and make it less complicated. What he eventually came up with completely revolutionized the business. Rather than making a bumper from a bunch of different parts, Khan came up with a design that was crafted from a single piece of steel, slimming down a truck’s rear end and improving the vehicle’s fuel efficiency. In 1978, Shahid took out a small business loan and set up shop for himself. He called his new company Bumper Works and customers flocked to him from the get-go. General Motors needed his bumpers to help them slim down their Chevy LUV pickup truck to make weight requirements. Chrysler needed to lighten up its Dodge D50. Both trucks sought Khan’s slimmer, lighter bumper to solve their problems. However, Flex-N-Gate wasn’t going to let Khan go and set up a competing shop so easily. They sued him for stealing trade secrets. Knowing an injunction would cripple his new company before it ever really got off the ground, Khan hired the cheapest attorney he could find and then spent nights in the law library at his alma mater, crafting a defense after long days overseeing production at Bumper Works. This legal battle went on for two years. Khan won each case, fighting them instead of settling. The strategy paid off. After the Illinois Supreme Court declined to hear Flex-N-Gate’s second appeal in 1980, Khan bought out his former employer and nemesis entirely. Even outside of this costly lawsuit, Flex-N-Gate had been losing $50,000 a month. It was bleeding cash and assets just as Khan’s company was taking off. That was one competitor down. Khan combined Bumper Works and Flex-N-Gate and made a list of his competitors.
Soon after, a deal with GM threatened to put his business under. They wanted to use Khan’s bumper design across their entire line of vehicles. There was no way Flex-N-Gate could ramp up production fast enough to make that happen. GM had his design and would use it, they had no use for the small business Khan founded. But Khan wasn’t going to let it go that easily. Isuzu was going to begin importing a low volume of cars and trucks to the U.S. Khan asked GM to put him in touch with Isuzu. They did. Khan turned to his alma mater once again, hiring some Japanese computer science Ph.D. students to travel with him as interpreters. He slowly gained the trust of the Isuzu executives at just the right time. The Japanese carmakers were about to make their push into the U.S. markets in a big way. They needed suppliers. As the Japanese import market grew, Khan’s business grew with them. After he landed Isuzu, Mazda soon followed. Then, he hit the big time, landing Toyota as a Flex-N-Gate client. By 1989 he was their sole bumper supplier. By 2001, the company’s sales were topping more than $1 billion per year. Not everything has gone smoothly. There have been some tax issues along the way relating to tax shelters and back taxes. But all that has been resolved. Today Flex-N-Gate’s parts are in more than two-thirds of the 12.8 million vehicles sold in the U.S. every year including models from all three big American automakers. In essence, Khan conquered both Japan and Detroit.
From Football Fan to Football Owner
Having become a massive football fan since his varsity days, Khan was turning his eye team ownership. As Khan’s wealth grew, he periodically checked the present valuations of NFL teams, wondering if he was rich enough yet to buy one. He had ideas as a fan as to what this team or that team should be doing to be more successful. Then he reached a point where he realized financially, ownership might become a possibility. In 2010 Khan won the bidding for a 60% stake in the St. Louis Rams. However, real estate billionaire Stan Kroenke, who held a minority stake, had the right to match any offer for the rest of the franchise. At the last second, Kroenke exercised that right, shutting Khan out. In total Shahid spent more than two years negotiating his deal for the Rams. All for nothing. There turned out to be a silver lining to that deal going sour. Right after Khan lost out on the Rams, Jacksonville Jaguars owner Wayne Weaver approached him to let him know he wanted to sell his team. Weaver was tired of fighting the inherent difficulties in the Jacksonville market. Even back in 2010, the Jags were considered the franchise most likely to relocate to America’s second-largest metro area, the one who has not had an NFL team since 1995, Los Angeles. Khan had learned a lot from the Rams deal and when the opportunity to purchase the Jaguars was presented, he moved fast. In October 2011, the final price for the Jacksonville NFL franchise was hammered out on a cocktail napkin in the bar of the Omni Jacksonville Hotel. Khan agreed to an all-cash deal of $620 million plus he would assume the $150 million of Jags’ debt. He took out $300 million in loans against Flex-N-Gate to make the deal happen.
As owner, Khan set out to turn the Jaguars around not just on the field, but amongst the fans. He wants to shake the reputation the Jaguars have as a failed franchise. They’ve offered a number of promotions under Khan’s ownership, like college-themed nights for Florida Gators fans that include a meet and greet with Gator alumnus Tim Tebow, the ability for fans to bring outside food into the stadium, and free admission for toddlers. In the summer of 2013, Khan bought another troubled professional sports team– the London soccer club Fulham F.C. of the Premier League from Mohamed Al Fayed. The deal was finalized on July 12, 2013, with the amount estimated between $150 and 200 million, the official purchase price was not disclosed. Fulham faces similar perception issues as Jacksonville does. Khan is up for the challenge.
Khan realizes he is the epitome of the American dream. He worked hard, tenaciously created his own luck, and built a 7 billion dollar personal fortune. His flowing black hair, handlebar mustache, and sunny smile reflect the deep satisfaction Khan has with what he’s been able to achieve. While much of the manufacturing industry in the Midwest’s rust belt deteriorated over the last 40 years, in that same time period, Khan built a multi-billion dollar company from the ground up, becoming one of the biggest automotive parts suppliers in North America. Khan employs more than 13,000 people at 52 factories around the world.
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