Editor’s note: The markets and our Chaikin Analytics offices will be closed Monday, September 2, for Labor Day. As a result, we won’t publish our Chaikin PowerFeed e-letter that day. Expect to receive your next issue on Tuesday, September 3. Enjoy the holiday.
From an early age, Chester Carlson had to work hard to support his family…
His dad, Olaf, got sick with tuberculosis when Chester was an infant. Olaf also struggled with arthritis of the spine.
Chester’s mom, Ellen, contracted malaria when her son was about 4 years old. And while Chester was in high school, she died of tuberculosis.
Chester worked all sorts of small jobs to help his parents. As he got older, he’d work for a few hours before going to class. Then, he’d go back after he got out of school.
During this time, Chester fell in love with printing…
He loved his rubber stamps and toy typewriter. He made his own newspaper at age 10. And while working for a local printer in high school, he decided to start a science magazine.
But the process was cumbersome. It took far too long to set the type and print an issue.
As Chester recalled many decades later in an interview…
I don’t think I printed more than two issues, and they weren’t much.
However, this experience did impress me with the difficulty of getting words into hard copy and this, in turn, started me thinking about duplicating processes.
I started a little inventor’s notebook, and I would jot down ideas from time to time.
As the years passed, Chester had to work up to three jobs at once to make ends meet.
But whenever he got time, he kept at it…
Chester wanted to figure out how to make fast and cheap prints.
Most prints used a wet-copy process in those days. That took a lot of time and money. And while working at Bell Telephone Laboratories, Chester faced this frustration over and over.
That all changed in October 1938…
Chester was working in his New York City lab. And he finally had a breakthrough.
In short, he made the first “dry” print.
Chester had invented electrophotography. This idea later became known as “xerography” – a combination of the Greek words for “dry” and “writing.”
Printing copies became a lot easier and quicker. But no one seemed to care like Chester…
He tried hard to share his new way of printing with the masses. And yet, more than 20 companies declined to fund his operations between 1939 and 1944.
Finally, small photographic-paper maker Haloid decided to take a chance on Chester. The company saw gold in his work. And it wanted a way to upstage rival Eastman Kodak.
Haloid and Chester teamed up to make the first Xerox copy machine in 1949. Take a look…
Xerox (XRX) developed the first automatic copier a decade later. The company’s sales skyrocketed. And by the mid-1960s, Xerox owned the printing world.
Xerox got so big that its name turned into a verb. I bet many of you know what I mean…
When workers wanted to make a copy of something, they would say, “Let me Xerox it.”
That doesn’t happen often. It shows how much Xerox ruled the market in that era.
And Xerox didn’t stop there…
The company kept pouring cash into its efforts to develop new technology. It made the first-ever laser printer in 1969. That move kept Xerox on top of the printing world for years.
Xerox’s success is a great example of how one innovative idea can change the world…
Chester could’ve quit many times over the years – from his struggles to support his family as a child through all his jobs as an adult.
But he didn’t. And his work made Xerox a giant.
That dominance paid off well for investors. For example, just look at the stock’s massive run higher in the 1990s…
Today, we’re at the end of the Xerox life cycle. I bet most kids wouldn’t even be able to guess what the name means. And the stock isn’t anywhere close to its old all-time highs.
But the company is far from alone with its name becoming a verb. You’re surely familiar with these examples…
- To watch a movie or TV show, you “Netflix” it.
- To look up something on the Internet, you “Google” it.
- To buy something without driving to the store, you “Amazon” it.
You don’t need me to tell you that Netflix (NFLX), Google parent Alphabet (GOOGL), and Amazon (AMZN) have been among some of the best-performing stocks over the past decade-plus.
These companies are household names. And they’re the more recent examples of businesses that saw their names become verbs.
The same thing will inevitably happen to other companies, too. So be on the lookout for ones that are already going through or are on the cusp of going through this process.
They might just be your next big investing winner.
Good investing,
Pete Carmasino
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