Written by Kevin Jennings
Companies change course and rebrand all the time. As time moves forward, it’s not uncommon for the scope of a company to greatly exceed its original mission. Many of these are lateral moves within the same or similar industries. It’s not outrageous to think that chemical company DuPont originally made explosives before moving on to other chemicals, or that Raytheon’s original technological advances were radio components and the invention of the microwave before they started developing weapons for the military. The latter example may seem like larger shift, but in either case their mission was ultimately the same: to be forerunners on the cutting edge of technology. Today’s episode is about well known companies whose original goals were miles away from what we know them for today.
Marriott is one of the most recognizable names in the hotel industry, but Marriott International has extended their reach beyond the eponymous brand to include subsidiaries such as Sheraton Hotels and Resorts and the Ritz-Carlton Hotel Company. If you’ve done any amount of traveling, at some point in your life you probably stayed at a property owned and operated by Marriott International. How did this behemoth of the lodging industry get its start? Cold, refreshing root beer.
In 1927, at the age of 26, John Willard Marriott left his family farm in Utah and headed to Washington D.C. John was a Mormon, and before attending college he completed two years of missionary work for the Mormon Church in New England. It was during this missionary work while traveling through D.C. that John made an outrageous discovery: it gets hot in the summertime. He was convinced that the residents of America’s capital city were the perfect market to franchise an A&W Root Beer stand.
That May, John located a tiny rental space and prepared his nine stool root beer stand for business. Two weeks after the grand opening, John remembered he left something in Utah, so he went back to marry his fiancé, Alice. They spent their romantic honeymoon driving across the country so that John could get back to the fledgling business. For this humble, Mormon couple, root beer would be their livelihood. The root beer stand that specialized in cold drinks was ironically called Hot Shoppes, and it would become so successful that it would expand into a chain of restaurants.
Hot Shoppes went public in 1953, a full 26 years after John Marriott began his root beer adventure. But ever the workaholic who lived and breathed business, John wanted to go bigger. On January 16, 1957, nearly 30 years after moving to Washington D.C. to open a tiny root beer stand, John opened his first hotel, the Twin Bridges Motor Hotel in Arlington, Virginia. His second hotel, the Key Bridge Marriott opened two years later, and the rest is history.
Samsung’s beginnings are not nearly as humble as Marriott’s. In 1938, the youngest son of a wealthy, landowning family named Lee Byung-chu moved to Daegu city in South Korea to found the trading company Samsung Sanghoe. From the start, the already wealthy Lee had a singular goal in mind: become even wealthier. For those unfamiliar with trading companies, it is essentially just a fancy way to say that Lee had opened a grocery store.
Samsung Sanghoe dealt in dried fish, and locally grown produce and noodles. After nine years of successful business, Lee moved the company’s head office to Seoul, though he was forced to leave once the Korean War started. This did not hamper Lee’s ambition at all, and he proceeded to open a sugar refinery and textile mill.
From the beginning, Lee’s had wanted Samsung to be a leader in as many different industries as possible. He continued expanding into other areas of retail, as well as insurance and securities trading. Everything that Lee touched seemed to turn to gold, and no matter what industry he moved into he was met with great success.
It wasn’t until 1969 that the company produced its first electronic product, a small black and white television. Like all of Lee’s other endeavors, the electronics division of Samsung grew to be one of the largest electronics companies in the world. In fact, there’s about a 1 in 5 chance that your smart phone is a Samsung.
And so after just over 30 years, Lee Byung-chu, who moved to Daegu with nothing but a hope, a dream, and access to his family’s vast fortune, turned a small grocery store into a leader in the electronics world and finally accomplished his lifelong dream of being even more wealthy.
You may have heard this one before, but you’ve probably only heard half the story. Nintendo was founded on September 23, 1889 by Fusajiro Yamauchi in Kyoto, Japan. The company originally produced hanafuda cards, a type of traditional Japanese playing card. At first business was great, and Yamauchi had to hire assistants to help produce cards to keep up with demand. It didn’t take long for demand to start dwindling, however. The cards were slow and expensive to produce, had a high sale price, and were too durable, meaning that repeat sales were virtually nonexistent. The solution? Make shittier quality products.
Okay, that was only one solution, and Nintendo did continue producing the more expensive and higher quality line of cards as well. The other solution was to expand their market into Osaku were gambling was more popular. As with western casinos, continually reusing decks can raise suspicions about cheating, so having a constant source of new cards was very appealing to these gaming outfits. In the early 1900s, Nintendo expanded into producing western style playing cards, and by 1929 they were the largest trading card company in Japan. Most stories jump straight from there to Nintendo producing arcade consoles and handheld electronics, but there’s a bit of an interesting detour first.
World War II hurt Nintendo’s sales pretty severely as western card games were banned and society didn’t have time or interest in light hearted recreational activities. They began to claw back, and in 1959 Nintendo got a contract with Walt Disney to sell cards featuring Disney characters on them. This was great for a few years, but as sales of hanafuda cards had reached all time lows, the company realized that their business was entirely reliant on the children’s market. This was less than ideal as children are fickle, meandering creatures with no money of their own. Once sales of the Disney cards begin to decline in the early 1960s, the company had to try to win back its paying adult customers.
Nintendo was willing to try literally anything, no matter how far it strayed from the roots of their handmade hanafuda cards. Instant noodles had recently become all the rage in Japan, so Nintendo decided to try their hand at instant rice. The failure of that venture was attributed to the product tasting pretty terrible. If food wasn’t going to work, how about sex? Well, it would have been illegal for them to actually sell sex, but they did open a chain of love hotels where other people could sell sex. For those unfamiliar, a love hotel is what Americans might call a “no tell motel”. It is a hotel where rooms are available at low, hourly rates so customers can get down to business without having to pay for a full night. This venture was also largely unsuccessful.
Of everything Nintendo tried, their most successful venture was a taxi service called Daiya. This might have had a chance to reverse the company’s fortunes, but Nintendo’s owner shut the operation down after a series of disagreements with local unions.
In 1969, Nintendo went back to basics and started selling tabletop games like chess, go, and mahjong while heavily investing in research and development. A year later, they would release their first electronic toy, a light gun. In 1971 they partnered with Magnavox to produce a light gun for the Magnavox Odyssey, an early home console, and Nintendo, after 80 years had finally transitioned from hand crafted playing cards for adults to mass produced home electronic games for children.
Avon is known for empowering women and being one of the first companies that offered women a chance to earn their own income, so it may come as a surprise that the company was founded by a man who was just trying to keep women from slamming their doors in his face.
Avon was founded by David McConnell, a New York book salesman. There weren’t a lot of advertising opportunities for young entrepreneurs in the 1880s, so David relied on the tried and true method of direct sales, meaning he was a door to door salesman. The problem with direct sales being so popular is that people would easily get tired of opening their door to listen to a sales pitch from a stranger. It became common practice for salesmen to offer some sort of small gift to residents in exchange for listening to their pitch.
David recognized that most of his potential customers were housewives that were home during the day while the men were at work. He worked with a local pharmacy to make a perfume he could give away small samples of to the women he would encounter so they would open their doors and allow him to try to sell them his books. It seemed like a smart tactic, the only problem was that the women weren’t interested in talking about books and were too focused on the perfume.
It didn’t take long for David to realize that he needed to ditch the books all together and just sell perfume. Despite the fact he lived his entire life in New York, in 1886 David founded the California Perfume Company, a name recommended by a friend because California was known for its pretty flowers at the time. The company had success from the start as David sold his wares door to door across New York and neighbouring states. The women he was selling to were trapped at home all day while their husbands were at work, so they did not have the opportunity to go to stores where they could buy things like perfume.
Despite initial success, David recognized that the company would be better served by having female sales representatives. He hired Persis Albee, a 50 year old mother of two, to sell products and recruit new sales representatives. Persis is the woman responsible for the Avon Lady, and is credited with creating the company’s entire system of distribution and recruitment. Less than a year after the launch of the company, Persis already had a staff of 12 women selling the line of 18 fragrances.
So a man who was just trying to sell books created one of the world’s largest cosmetic companies, a company that was one of the first outlets for women to earn their own income, and he second oldest multi-level marketing company in the world.
Tandy and Coleco
Improbable as it may seem, both of these now defunct computer companies began as leather companies. Tandy was originally the Hinckley-Tandy Leather Company while Coleco was an abbreviation of the original name, the Connecticut Leather Company.
Tandy began in 1927 by selling leather soles, tools, and supplies to shoe repair stores. During World War II, the company expanded into leathercraft, and in 1950 they began opening specialized leathercraft stores. Business was booming due to a growing DIY movement in the 1950’s followed by the love hippies of the 1960’s had for leather and beadwork. As profits increased, the company began to expand and purchase other retail companies. In the early 1960’s, the Texas based Tandy purchased the nearly bankrupt Boston based company RadioShack.
Tandy saw a lot of success selling CB radios through RadioShack, but as the 1970’s progressed the fad died off, so they were looking for the next big thing. Home computer kits had seen some level of popularity, but they were far too complicated for the average consumer to assemble and contained no keyboard or monitor, making them virtually useless. Tandy set to work developing a pre-assembled home computer, and was the third company to release a PC to the public, all three doing so in 1977. Their computer was less than half the price of an Apple II and $200 less than the Commodore’s PET home computer. Due to the cheaper price and easy availability thanks to RadioShack having stores nationwide, Tandy’s TRS-80 held a 60% market share. Their computer was also nicknamed the “trash-80” by users, but the TRS-80 Model II fared much better and Tandy was able to maintain a dominant force in home computing until IBM established its dominance, rendering nearly all competition obsolete.
As for Coleco, though their starting point was the same, their path was a bit different. Founded in 1932, Coleco also specialized in selling tools and supplies to shoe repair stores. Rather than branching into other leather goods, Coleco instead branched off into other shoe materials, starting with rubber footwear in 1938. By the end of World War II, Coleco’s offerings including shoemaking machinery, marble shoestands, and hat cleaning equipment.
Coleco dabbled slightly in leatherwork, but in 1954 when their leather moccasin kit won the Child Guidance Prestige Toy award at the New York Toy Fair, they decided to shift focus from shoes to toys. The company began making plastic toys, as well as becoming the largest manufacturer of above ground swimming pools.
With their new focus on children’s products, they were quick to enter the market of both handheld electronic games and home video game consoles as soon as they began rising in popularity. Their handheld efforts began in 1976, producing popular handheld games like Electronic Quarterback. The popular ColecoVision home console would not come until 1982. The subsequent year they released their home computer, the Coleco Adam, but it was an extremely unreliable machine, and Coleco filed for bankruptcy five years later.
While Tandy Leather still exists, Coleco had divested its interested in the leather industry when it decided to focus entirely on toys and electronics. When their electronics failed, not even their wildly successful Cabbage Patch Kids could save the company.