Film To Pharma: Kodak’s New Moment And Other Game-Changing Corporate Pivots

The venerable photography company is shifting to drug manufacturing in an effort to fight the pandemic. From Samsung and Slack to Taco Bell and Toyota, here are some of the most dramatic business reinventions.

^This week, Eastman Kodak announced that it would radically refocus its business strategy. After more than a century of making cameras, film and other photography equipment, the Rochester-based company announced it would become a pharmaceutical company, its new mission boosted by a $765 million loan from the U.S. government to produce “starter materials” for generic drugs in an effort to fight Covid-19.

Who could have predicted such a development? Countless investors, who were tipped off by a barrage tweets and local news stories speculating about a new Kodak initiative. On Monday, a day before the deal was announced, more than 1.6 million shares of Kodak were traded, roughly 7 times the average daily volume during the previous 30 trading days. Kodak shares soared more than 1,400% over the next two days, causing its market cap to rocket from an moribund $100 million to more than $1.6 billion. And pointed questions are now being asked about why its CEO, Jim Continenza, was granted 1.75 million stock options shortly before the loan announcement. Continenza’s options were valued at nearly $4 million on Monday. Those shares—which the company claims were scheduled purchases—are now worth about $50 million.

Although the shift to pharmaceutical manufacturing may seem incongruous to those who recall Kodak moments, the company has been producing photographic chemicals for decades. Founded in 1888 by George Eastman, Kodak dominated the photography market for nearly a century—by the 1970s, the firm controlled 85 percent of the domestic camera market and 90 percent of the U.S. film market. And though a Kodak engineer invented the first digital camera in 1975, the company saw it as a novelty, failing to see its revolutionary potential. Increasingly marginalized, revenues peaked in 1996 at $16 billion.

By 2012, Kodak was bankrupt. When it emerged from Chapter 11, the company was considerably leaner—with just over $2 billion in revenue and an emphasis on printing and imaging. Then in 2018, Kodak tried to capitalize on the blockchain frenzy with a pivot to a cryptocurrency for photographers called KodakCoin. The announcement of an ICO spiked the stock price but was delayed and quietly canceled the same year. But Kodak’s latest move could vastly change the fortunes of the company in addition to bolstering America’s pharmaceutical supply chain.

Will Kodak’s new mission work? If history is any indication, other renowned companies have made fundamental shifts in their business models and altered the course of history. Here’s a snapshot of some other impressive corporate pivots.

SAMSUNG

In 1938, when Lee Byung-Chull founded Samsung in Seoul, its business was a galaxy away from smartphones and other consumer electronics. Lee’s original business? Selling groceries, mostly dried fish and noodles. After the Korean War, Samsung expanded into textiles before branching out to electronics in the late 1960s. That move continues to ring up extraordinary profits. Today, Samsung (whose 2019 revenue was $193 billion) controls more than 20 percent of the smartphone category and is the 8th most valuable brand in the world. Samsung’s chairman, Lee Kun-hee (the third son of its founder), is also South Korea’s wealthiest person, with an estimated fortune of $19 billion.

MARRIOTT

What is now a global hospitality company with some 7,300 properties in more than 130 countries and $20 billion in revenue last year, began in 1927 as $6,000 investment (about $89,000 today) in a nine-stool root beer stand in Washington, D.C. Founded by J. Willard Marriott and a partner, the Hot Shoppes chain of restaurants went public in 1953 and four years later, Marriott opened its first hotel in Arlington, Virginia. Today, Marriott International has scores of valuable sub-brands, including Ritz-Carlton, St. Regis and W Hotels.

INSTAGRAM

When Kevin Systrom first dreamed up Instagram in 2010, his vision was not exactly Insta-worthy. Originally named Burbn—after his favorite spirit—the company was created as a check-in app (think: Foursquare), but Systrom (an inaugural Under 30 lister) soon realized that other startups were already crowding that space. After receiving $500,000 in seed funding from Andreesen Horowitz and other VCs, Systrom (and cofounder Mike Krieger) decided to focus on one area: photo sharing. Two months after its release in October 2010, Instagram had more than 1 million users. Today that number is north of a billion, which also happens to be the amount Facebook paid to acquire the company in April 2012.

AVON

When Avon first came calling in 1886, the company didn’t sell cosmetics. Founder David McConnell was a traveling book salesman and gave away fragrances and other beauty products as a sweetener after making a sale. It turned out that customers preferred the freebies. McConnell’s genius was not only selling cosmetics door-to-door, but also recruiting his female customers to be sales representatives. All of that multi-level marketing has paid off. In 2019, Brazil’s Natura acquired Avon in an all-stock deal worth $2 billion

3M

While 3M is now in the headlines for its N95 masks, the company began in 1902 as a small mining company in Northern Minnesota. (Those 3 Ms originally stood for Minnesota Mining and Manufacturing.) The mine turned out to have little value, so the company began selling sandpaper and an adhesive cellophane tape under its Scotch brand. That was just the beginning. Among the other products 3M has produced over the years are asthma inhalers, lint rollers, earplugs, numerous pharmaceuticals and a “Press ‘n Peel” paper bookmark called the Post-it Note. The success stuck. Today 3M makes some 55,000 products and revenue of more than $32 billion last year.

TOYOTA

Innovation is woven into the fabric of Toyota. In 1926, Sakichi Toyoda founded his eponymous company to build automatic looms. By the end of the decade, Toyoda sold the patent to his invention and used the capital (and his assembly line) to produce a new line of automobiles. Even the name pivoted—in 1937, Toyoda’s son, Kiichiro, changed the “d” in his family name to a “t” and started the Toyota Motor Company. Today, Toyota, with $290 billion in revenue last year, is the largest car manufacturer in Japan and was the world’s most valuable automaker until 2020 when it was eclipsed by Tesla.

HP

The original garage geeks, Bill Hewlett and David Packard flipped a coin in 1939 to determine whose name would come first in their nascent technology company. (Guess who won.) Back then, Hewlett-Packard specialized in oscilloscopes, electrical testing devices for audio and signal generators. Then in 1968, the Silicon Valley duo produced the HP 9100A, a desktop scientific calculator that is widely seen as a precursor to the personal computer. The clunky machine was expensive, costing $5,000 (or around $37,000 today). The first mainstream consumer PCs came about a decade later with the Apple II in 1977 and the IBM PC in 1981. But the gamble still paid off. Today, HP still produces laptops, desktops, printers and other computer equipment.

COLGATE

When William Colgate left England in 1804 to seek his fortune in America, he planned to start a small soap company. “Someone will soon be the leading soap maker in New York,” he was reportedly told. “You can be that person.” Two years later, Colgate launched his own soap and candle business, before eventually adding a starch factory. In 1873, sixteen years after his father’s death, Samuel Colgate finally introduced the product for which the brand is best-known today: toothpaste. In 1928, Colgate was acquired by Palmolive-Peet to form what is now Colgate-Palmolive, and while the company didn’t quite become the leading soap maker, its toothpaste remains a global bestseller.

WRIGLEY

The soap business also proved lucrative for William Wrigley, who arrived in Chicago in 1891 with just $32 to his name. As a way to promote his baking powder, Wrigley began giving away chewing gum with every purchase. Like David McConnell and Avon, Wrigley soon discovered that his freebie offering was more popular than his core product and began producing gum instead. His immediate success led to Wrigley become a minority owner of the Chicago Cubs before eventually becoming its majority owner and the namesake of its iconic stadium. In 2008, 76 years after Wrigley’s death, another confectionary giant, Mars, purchased the company for $23 billion.

PLAY-DOH

Fittingly, the company behind Play-Doh was remolded in the 1950s.  In 1912, Kutol, a Cincinatti cleaning products company debuted a product for removing coal soot from wallpaper. Several decades later, with more families using gas to heat their homes, the need for such a soap was vanishing so the company reworked its formula and created a putty-like product in 1955 that was marketed to schools for children’s arts and crafts. Now named Play-Doh, it originally came in just one color (white) but it’s now produced in more than 50 shades. In 1991, Hasbro acquired the company (as part of its acquisition of Tonka) for some $500 million (about $950 million today) and in 1998, Play-Doh was inducted into the National Toy Hall of Fame.

AMERICAN EXPRESS

Founded Buffalo, New York, in 1850 by Henry Wells, William Fargo and John Butterfield, American Express was originally a mail delivery service with an emphasis on speed. (Two years later, Wells and Fargo started a similar company in the American West that still bears their names.) With a headquarters located in Manhattan’s Financial District, American Express enjoyed a relative monopoly on private shipments and by 1857, the company expanded to financial services to compete with the Post Office’s money order business. A century later, American Express entered the charge card business started by Diner’s Club in 1950, and began issuing its signature embossed plastic cards in 1958. American Express changed hands several times over the next few decades, and Warren Buffett’s Berkshire Hathaway now owns about 19 percent of the company, which Forbes estimates is the 28th most valuable brand in the world.

NINTENDO

Long before Super Mario and Donkey Kong roamed the earth, Nintendo was a game-changer in playing cards. Founded in 1889 by Fusajiro Yamauchi, Nintendo made its first major pivot in the late 1950s, it partnered with Disney to use its characters on cards and games. New businesses were added to provide extra revenue streams, including a taxi company and an instant rice line. Then in the 1980s, Nintendo finally scored big with video games and a product line that eventually included Nintendo 64, Game Boy, Wii and Switch. Today, Forbes ranks Nintendo as the 87th most valuable brand in the world, worth an estimated $8.8 billion.

SLACK

In today’s WFH culture, Slack may be a business necessity but it began life as messaging tool in a 2011 multiplayer online game called Glitch. Two years later, one of the game’s cofounders, Stewart Butterfield, launched Slack to claim a piece of the lucrative messaging market as an “always-on chief of staff” for office workers. By 2015 the company became a unicorn, and four years later Slack went public to great fanfare and last year the San Francisco-based startup had revenues of $400 million.

PEUGEOT

If the gears in your Peugeot are grinding, there may be a good reason for that—the French company began as a steel foundry in the early 19th century, producing saws, pepper mills—and coffee grinders. In 1889, Armand Peugeot, grandson of the company founder, released the company’s first horseless carriages and 40 years later, its first mass-produced car, the 201, came off the assembly line. Over the decades, Peugeot has also rolled out scooters and race cars, but it has always remained true to its origins—it still produces a salt and pepper set.

HASBRO

When the Hassenfeld Brothers founded their company in Providence, Rhode Island in 1923, they began by selling textile remnants before expanding to pencils cases and other school supplies. By 1940, the company had essentially become a toy manufacturer and had its first real hit in the 1950s with Mr. Potato Head. With revenue exceeding $4.7 billion last year, Hasbro owns other major toy brands, including Playskool, Nerf and Milton Bradley. And if you think that sounds like a monopoly, well, they own the trademark to that board game as well.

TACO BELL

How different would the fast food landscape look today if Taco Bell had stuck with its original product? In 1948, Glen Bell founded a hot dog stand in San Bernadino, California, but he kept an eye on the competition across the street, a popular Mexican restaurant. After learning how they made tacos, Bell opened a new stand that served Mexican-inspired food and eventually called his new chain Taco Bell. By 1970, the company went public with 325 restaurants before selling to Pepsi in 1987. Today, Taco Bell has more than 7,000 restaurants around the world and is part of Yum! Brands.

NOKIA

The cell phone giant traces its history to a decidedly slower medium—in 1865, engineer Fredrik Idestam opened a paper mill in Tampere, Finland. In the 20th century, the company had expanded into other industries, including forestry, rubber manufacturing and electricity. Then in 1977, Nokia made electronics its focus, building televisions, computers and by the mid-‘80s, mobile phones. By 1992, Nokia had sold off its other businesses to focus exclusively on telecom.

BERKSHIRE HATHAWAY

Ever wonder why Warren Buffett named his company Berkshire Hathaway? He didn’t. Founded in 1839 by Oliver Chace, Berkshire Hathaway began as the Valley Falls Company, a textile manufacturer in Rhode Island. By 1962, the renamed company landed on the 32-year-old Buffett’s radar because he noticed that the stock price rose every time the failing manufacturer closed a mill so he purchased Berkshire Hathaway shares for $7.50 because “it was a statistically cheap stock and a terrible business.” Today, Berkshire’s many businesses include underwear (Fruit of the Loom), insurance (GEICO), fast food (Dairy Queen) and private aviation (NetJets). Class A shares of Berkshire sell for more than $290,000 and Buffett is the world’s fourth richest man—worth an estimated $73 billion, despite having given away more than $37 billion over the past 14 years.