When Gordon Gund took control of the fortune his father left to him, the odds were high that he wouldn’t do much more than enjoy the spoils of inheritance.
But Gund, 78, is no ordinary heir. He began investing in the 1970s, around the same time he went blind. He bought stakes in the Cleveland Cavaliers basketball team, biotech company Gilead Sciences Inc. and Align Technology Inc., whose clear plastic aligners have been embraced by patients seeking to fix wonky teeth without the metal wires and brackets of traditional braces.
His Align stake, valued at $29 million at the company’s 2001 initial public offering, is now worth $1.7 billion, propelling Gund’s net worth to at least $2.3 billion, according to the Bloomberg Billionaires Index. The firm’s profit topped Wall Street estimates for 10 of the past 11 quarters and its shares have surged 169 percent this year, the best performance by far in the 62-company S&P 500 Health Care Index.
Align’s removable devices have been embraced by teenagers and adults. The company announced this year that 5 million patients started using Invisalign, helping boost revenue by 38 percent in the third-quarter from a year earlier.
It’s the kind of wealth creation not normally seen among billionaire heirs, who have a combined $1.6 trillion and comprise about one-third of the Bloomberg index, a daily ranking of the world’s 500 richest people. Self-made billionaires make up the balance, and their combined $3.6 trillion is more than double the wealth inherited by their peers, and growing at a faster clip.
“In theory, motivation is always going to be greater for founders rather than heirs,” said Dominic Samuelson, chief executive officer of Campden Wealth, a network and education business for generational wealth holders. “It’s absolutely not the norm for wealth to be successfully passed between generations.”
Gund and his siblings trace their wealth to their father, George Gund II, who bought the U.S. patent for decaffeinated coffee after it was stripped from its German owner during World War I. He commercialized the process before selling the Kaffee Hag brand to Kellogg Co. in the late 1920s for $10 million, mostly in stock. Today, the Gund family remains one of the cereal maker’s biggest shareholders with a 7.5 percent stake, worth about $1.6 billion.
Gund’s office in Princeton, New Jersey, is crammed with career mementos, including a signed jersey of LeBron James, the star of Gund’s hometown Cavaliers, which increased in value 20-fold during his two decades as an owner.
He began investing almost a half century ago after a four-week stay in a hospital in the former Soviet Union failed to save his eyesight. He returned home determined to make his mark in business, soon becoming one of America’s earliest venture investors.
“It was really just Kleiner Perkins and a couple of others at the time,” Gund said, referring to the Silicon Valley venture-capital firm that was founded in 1972.