Thomas Edison - The Khuram Dhanani Blog
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Khuram Dhanani

Thomas Edison

Modern living would be quite different without the variety of inventions developed by Thomas Edison. Electric lights, motion pictures, and recorded sound were the products that came from his laboratories. Edison’s talents lay in creating and successfully marketing a long list of world-changing inventions. Edison was just as successful a businessperson as he was an inventor.

Thomas Alva Edison was born into a lower-income family in 1847. His father was a lighthouse keeper and general handyman at a nearby military post. Edison’s mother home-schooled Thomas, who seems to have suffered from ADD and a temporary hearing loss that may have been caused by scarlet fever or an injury. The remarkable truth is that Thomas overcame these disabilities and became one of the most successful entrepreneurs of the 19th century.

Edison began working as soon as he was able and turned over most of his earnings to his parents. He started by selling newspapers and snacks at the railroad station, then started his own newspaper for the railroad’s regular passengers. Clever and industrious, Edison eventually obtained a job as a telegraph operator and filled his spare time with chemical and mechanical experiments inspired by the education provided by his mother.

At 22, Edison quit telegraphy and began supporting himself with odd jobs while working on a series of inventions. His first patent was for an electric voting machine, but he found no buyers. He had mistaken the market and created a product for which there was no market fit. Sleeping on couches and living at various addresses in the New York-New Jersey area, Edison began working on new telegraph technology.

This began to work out well and his telegraph patents were purchased by a large firm. Edison leveraged the proceeds to develop more telegraphic equipment, following the market and making his new products fit the demand. Still in his mid-20s, Edison had become one of the country’s most highly regarded developers of telegraph technology. 

Early in his career, Edison developed a reputation for sometimes ruthless behavior in business. After Western Union contracted him to develop a telegraph unit that could send two messages at once, Edison double-crossed Western Union and accepted a $100,000 bid for the finished product from a rival company. This was a massive amount of money at the time, but this inappropriate decision started a multi-year legal battle which Edison eventually lost. It was in the midst of this dispute that Edison opened a handsomely appointed laboratory and workshop in Menlo Park, New Jersey, in 1876. This facility became legendary as one amazing invention after another was developed there over the next few years.

Edison was able to significantly upgrade Alexander Graham Bell’s design for the telephone with a transmitter that improved sound quality and volume. The same year, he developed the earliest prototype of the phonograph, creating the first sound recordings in human history. 

Of the many wonders that emerged from Menlo Park, the one most closely associated with Edison is the electric light bulb. Edison accepted $30,000 in funding from a consortium led by the well-known business tycoon, J.P. Morgan. By 1879, Edison and his team of engineers, to whom he had delegated tasks, had designed the first practical incandescent light bulb. The team then turned their attention to establishing a municipal electrical grid. The first such power system began lighting up a neighborhood in Lower Manhattan in 1882. 

Finished with his work on the Manhattan power grid, he built a state-of-the-art laboratory complex near his new home, and it was here that his last great collection of world-changing inventions was developed. Edison resumed work on his phonograph that would be marketable, affordable, and simple to use. This process would take roughly a decade. 

At the same time, he assigned technician K.L. Dickson to work with him to find a way to produce moving images, and they essentially invented the motion picture camera. The earliest films produced by Edison lasted less than one minute and featured popular performers and various lab assistants engaging in a range of visually interesting activities. These included dancing, sneezing, boxing, and, in perhaps the earliest celebrity appearance on film, Wild West Show performer Annie Oakley doing an impressive target shooting routine. 

Edison became friends with another key figure in the American industry, automotive pioneer, Henry Ford during his later years. Ford and Edison genuinely liked and respected each other, maintaining neighboring vacation homes in Florida, and frequently embarked on road trips together with rubber tire innovator Harvey Firestone.

Thomas Edison died in 1931 at 84. At the time of his passing, he held over 1,000 patents and had lived long enough to see that many of them had fundamentally changed human civilization. Electric lighting and power had become the modern standard, the motion picture had been elevated to an art form, and the sounds of the human voice, music, and nature could now be recorded and preserved.

Edison was as successful an entrepreneur as he was as an inventor. Most of his inventions were created with future commercial applications in mind. A master of product-market fit, Edison knew that everyone wanted light, music, entertainment, and comfort. Could anything fill a greater need or be more emblematic of illuminating the path into the future than the electric light and a power grid that lit up every household? He solved a problem affecting everyone, enlisted talented people to help him, and overcame every obstacle until he had a product that worked. 

Unfortunately, Edison could also be an aggressive businessman and a self-promoter. He engaged in countless legal battles over patents, a significant portion of which he lost. In addition, he has been criticized for not properly crediting his brilliant staff of assistants, many of whom were co-creators but were treated as anonymous employees. In many cases, he had simply perfected ideas that had been conceived by others and made them more marketable. 

Like Carnegie with steel,  Rockefeller with oil, and Ford with cars, Edison struck while the iron was hot. Had any of these entrepreneurs waited, other competitors likely would have entered these markets and we would be singing their praises instead. Today, we are in the midst of a digital revolution that will reshape every aspect of our lives. The iron is hot at this very moment. Strike now!

Khuram Dhanani
Khuram Dhanani
kd@softstonecapital.com