Today in Tedium: It’s a pretty common thing these days for a company to make a pivot, to change up its business model midstream because of some perceived weaknesses of the original approach. Small startups do it all the time; so, too, do massive corporate giants. (May I introduce you to Meta?) But I think a big thing to keep in mind is that changing a business model in an age where the ultimate product you’re moving around is chunks of electronic data? That’s something a lot different from having to basically shift your business model from, say, selling playing cards to developing video games (as one famous hard-pivoting company, Nintendo, was famous for doing). In the spirit of thinking ambitiously, in today’s Tedium, I want to highlight a few examples of companies that made pivots so extreme that you probably would have never guessed they switched gears so drastically. — Ernie @ Tedium
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What makes a hard pivot, anyway? Setting some ground rules
This is one of those pieces where I feel I kind of need to explain what I’m hoping to do here to ensure we’re all on the same page.
The tech industry is famous for such pivots—Twitter, for example, started as a podcasting app, while Slack was born from the remnants of an unsuccessful massively multiplayer online game.
But the thing is, redoing code or changing organizational focus isn’t as hard as literally recalibrating a company that builds physical goods to pivot, and therefore, this piece will focus on companies that make a more in-depth shift in focus, where they sell something that they previously had no experience in making.
A hard pivot can’t be a natural extension of the brand’s current focus. For example, Starbucks somewhat famously changed its approach from selling specialty coffee beans to running coffee shops, a change in focus that reshaped the company, yes, but didn’t really stop them from selling their primary product.
A good example of what a pivot looks like is that of Hassenfeld Brothers, a company that formed in 1923 as a Rhode Island textile firm. Early on in its history, the company focused on selling pencil cases, eventually expanding to pencils. But the company apparently decided that making school supplies just wasn’t exciting enough, so it expanded into things like modeling clay. Eventually the firm started making toys, to varying degrees of success, before landing on a genuine hit—a toy called Mr. Potato Head, which leveraged actual potatoes.
That company, originally called Hassenfeld Brothers, evolved into Hasbro. Its primary corporate competitor, a company called Mattel, experienced a similar shift and expansion in focus. At first, the company sold picture frames, then moved into doll houses, then more formally into toys with its Uke-a-Doodle, released in 1947. If there is a difference between Mattel and Hasbro in terms of how they expanded, it comes down to velocity—Mattel figured out it wanted to be a toy company within just a couple of years, while it took Hasbro two decades in the wilderness to make a similar discovery … and three decades to score its first hit.
Sometimes a shift in ownership is enough to force a pivot. For example, Berkshire Hathaway spent the first century and a half of its existence focused on textiles before one of its investors, reacting to a perceived slight, ended up purchasing the company outright. (Yes, that investor was Warren Buffett.) The company’s original model was failing, but Buffett decided to use this company he bought as the base of operations for fields he hoped to expand into, particularly insurance. Now, the company, essentially a holding company these days, is highly diversified and its history as a textile manufacturer is largely forgotten.
Lots of companies have corporate histories like this—because not everyone can be fortunate enough to come up with a big idea right off the bat.
The company that made this music box would soon become more famous for making vacuum cleaners.
The company that started by selling music boxes, but most people know for making vacuum cleaners
On a very basic level, you could argue that vacuum cleaners and music boxes have one important thing in common: They are designed to make noise.
But that’s where the similarities end. One makes very pretty noises. The other makes loud, grating noises. And each serves a different role in our lives.
The company Regina produced both of these things at different points in its history, with the company once having household-name status in the case of its vacuum cleaners and representing the vanguard of music boxes in its day. But the shift represents an attempt at reshaping a corporation around a product that was quickly growing in relevance.
This all starts with a man who was really into music boxes. Gustave Brachhausen, a German national who produced music boxes in his home country, moved to the U.S. in the late 1800s with his business partner, Paul Riessner, with the goal of helping to build a market for music boxes in the American market.
For decades, that’s what Brachhausen and Riessner’s company built—high-quality music boxes that could play songs using a disc-based mechanism. But over time, the corporate strategy started to change, in part because of the fact that Thomas Edison had already made music boxes obsolete thanks to his invention and marketing of the phonograph.
Brachhausen desperately looked for another model to build success, first moving to player pianos, then printing presses, then a head-on competition in the phonograph market. Eventually, he found the vacuum cleaner, which had nothing to do with music, but everything to do with Regina’s success as a corporation.
The only vacuum cleaner patent to Gustave Brachhausen’s name. (Google Patents)
In some ways, maybe it makes sense that Brachhausen moved to vacuum cleaners. After all, he was an engineer, and music boxes and vacuum cleaners both require engineering. A lot of the inventions that he created for the music box required elements such as stop mechanisms and motor mechanisms, devices which had to be built with a high degree of precision, given the fact that they were in a device as small as a music box.
But looking through his patent file, which features numerous different inventions related to disc-based music boxes, it’s nonetheless kind of bizarre to come across the final patent attached to Brachhausen’s name—a vacuum cleaner.
Talk about an identity crisis of an ad.
The shift in focus was so sudden that it created interesting challenges from a marketing standpoint. A 1910 ad that ran in House and Garden highlighted the challenge. Despite the ad focused mostly on the company’s new line of pneumatic cleaners, a small portion of the ad, in hard-to-read tiny type, seems designed to remind folks that yes, this is the same company that makes the music boxes.
Over time, Regina became a purely vacuum-driven play, and by midcentury was a household name in vacuums. Notably, in the 1990s, the company brought in Pigpen, the famously messy character from the Peanuts cartoons, to promote the company’s carpet cleaners.
The company eventually fell into merger hell, at various points being owned by Philips Electronics, Oreck, and the corporate owners of the Dirt Devil brand. But recently, the company relaunched under new corporate ownership, in case you’re in the mood for owning a vacuum developed by a corporate ancestor that started out making music boxes.
Three decades before Namco made Pac-Man, it made mechanical rocking horses for department stores. (Wikimedia Commons)
Five famous multinational conglomerates that started out selling things that they aren’t known for today
- Samsung. With roots from just before World War II and reaching a formative stage between WWII and the Korean War, the Samsung empire is more than just electronics—a lot more. But when the company first started, it sold dried fish and noodles. Quite the shift.
- Shell. The name is not a misnomer; back when the petroleum company Shell was founded, seashells were highly desired items among antique collectors for interior design reasons. The company, as noted on its website, began life as an antique business that imported goods from around the world. One of those things, soon enough, would be oil.
- Mazda. While known today as a Japanese automaker, the company’s roots are as the Toyo Cork Kogyo Co., Ltd, a firm that produced cork in the 1920s. It didn’t make its first vehicle until 1931, when the Mazda-go, a tricycle-style truck, first went on sale. The company was named for Ahura Mazda, an early god of harmony, intelligence, and wisdom. (Mazda isn’t the only Japanese manufacturer to pivot to cars from an unrelated field—Toyota started as the subsidiary of a loom manufacturer.)
- Bandai Namco. Despite being known for selling a combination of toys (mostly from the Bandai side) and video games (mostly from the Namco side), both companies did not start out in those businesses. Bandai started as a subsidiary of a textile wholesaler which spun off a toy division in 1950, while Namco started out in an even more novel way—it was formed to distribute mechanical rocking horses on the rooftops of department stores. Really.
- American Express. As I noted in a 2015 piece on the history of credit cards, AMEX didn’t become known for credit cards until the 1960s. So what was the original business? Easy—they were focused on express mail, delivered via stage coach or horse.
(via Worthpoint)
When your primary product turns out to be relevant to another industry: The story of Kutol Products Company
These days, the company Kutol doesn’t exactly strike one as being in a particularly exciting line of work. For one thing, it sells soap dispensers in corporate settings, something that a lot of companies admittedly do today.
But what if I were to tell you that they accidentally invented one of the most famous toys the world has ever seen? You might be surprised.
See, Kutol started as a family business in Cincinnati, and had two corporate focuses—hand cleaners, like its current corporate focus, and wallpaper cleaner.
Kutol’s popular wallpaper cleaner, before it found its true calling. (via Newspapers.com)
Wallpaper cleaner, you say? See, here was the problem. Before electricity was common, people had to heat their homes through somewhat dirtier means, such as coal. Coal brought the heat, obviously, but it also brought a bit of a mess. Wallpaper, as a result, would need cleaning to pull off the extra sediment.
(Some people still use coal today, though admittedly a lot less than did a century ago.)
Kutol was for years the dominant manufacturer of this material. But eventually, other less-messy sources of home heating became more popular, which meant that Kutol’s wallpaper cleaner would eventually become less relevant over time. (Also not helping: vinyl wallpaper, which was easier to clean.) But it turned out that wallpaper cleaner had gained a reputation of being a useful alternative to clay that could prove useful for kids.
Kay Zufall, a school teacher in New Jersey, read an article suggesting that wallpaper cleaner could be a useful tool for crafting, and tried it out with her students—to great success. Part of the reason for this is that, by design, wallpaper cleaner was not designed to stick to surfaces in the way that, say, traditional clay does. That meant that it was much more flexible and kid-friendly. And it also was made of non-toxic materials, which was another benefit of the substance.
Zufall had an inside line to Kutol—her brother-in-law, Joseph McVicker, ran Kutol, taking over from his father in the early 1950s. She suggested a re-brand of wallpaper cleaner to Play-Doh, even suggesting the name. That proved a huge success, with the company selling it under another brand name, Rainbow Crafts. Eventually, that company was purchased by Kenner, and today, Play-Doh is well-entrenched in the toy industry.
While this boring-looking company, Kutol, may be stuck selling soap all these years later, the truth of the matter is, the company quietly produced a juggernaut one that has sold roughly 3 billion cans, and is now produced by a company that started out selling textiles—Hasbro.
These days, we think nothing of pivots. Companies do them all the time as they experiment with their business models and look for ways to improve them.
But it’s worth keeping in mind that this was once not a small endeavor—not a matter of internal reorganization and updating the website, but it came with real costs and a higher potential risk than making a change to a service that ultimately doesn’t look as it once did.
It’s worth keeping in mind that sometimes emerging markets can pull companies in. After all, they have existing infrastructure to leverage, even if they’re not using it in quite the way that they were doing so in the first place. Nintendo may not have sold personal electronics before the 1970s or so, but it had built a reputation with playing cards and later toys that it could leverage when it started to sell video game consoles, at least in Japan.
Likewise, Shell turned out to be a great choice for importing petroleum because it had a lot of experience importing other things. It may not seem obvious, but just as with modern tech companies like Slack or Twitter, failure often sets you up for success.
Even if the success looks more like a vacuum cleaner than a music box.
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