General Electric: An 1892 startup

    LifestyleRelicGeneral Electric: An 1892 startup

    What was the very first startup company? While startups became more popular with the advent of the Internet in the late 1990s, the answer to this question harks back to over a century in the past: General Electric.

    What exactly is a startup? A generally agreed-on definition is that a startup is a young company founded to develop unique products or services and bring them to market through a scalable business model. Startups often seek to disrupt their industries and have us rethink how products and services are made, delivered, and more. Uber and Grab, for instance, sought to disrupt the taxi industry. Like all things, startups can succeed or fail. Those that succeed usually influence or even change industry standards, while those that fail serve as cautionary tales for entrepreneurs looking at staking their claims in various industries.

    Startups often initially receive funding from their co-founders and seek outside investment to improve the product or service. Some examples of outside investment may include money from friends and family, venture capitalists, crowdfunding, or even traditional business loans. The startup then becomes a pillar of the industry or the community, having a local, national, or even international presence.

    Thomas Edison, a co-founder of G.E., was the first recipient of a United States patent for an incandescent lamp, in 1880.

    Thomas Edison, considered one of the greatest inventors and businessmen of his time, founded various companies in several industries in the late 19th century. Many had to do with electricity, namely lamps, dynamos, electric motors, lighting fixtures, sockets, and more. Edison had the backing of powerful financiers such as J.P. Morgan, and members of the Vanderbilt family. Morgan and Anthony J. Drexel merged all of Edison’s research and companies under the Edison General Electric Company in 1889. Upon merging with the Thomson-Houston Electric Company in 1892, General Electric was born.

    Edison’s research, combined with financial backing from Morgan, Vanderbilt, and other financiers, helped create the first startup company. General Electric began to buy up more companies and patents to improve their products and services. Riding the success of the Gilded Age in the United States, General Electric was one of the original 12 companies listed on the Dow Jones Industrial Average in 1896. In fact, it can be argued that the Gilded Age of the late 19th and early 20th century was one of the best times to do business not only in America but the world in general.

    This also leads to another question: when is a company no longer considered a startup? Alex Wilhelm of TechCrunch developed the 50-100-500 rule in 2014 to determine when a company is no longer a startup: revenue exceeding $50 million, 100 or more employees, and a valuation of $500 million or more.

    For a company as old and large and diversified as General Electric, it would take a long time to determine when they surpassed each milestone. However, common sense would dictate that General Electric had more than 100 employees by the time it was listed on the Dow Jones in 1896. Given that the company had immense backing from some of the wealthiest people in the world at the time, it is not unreasonable to assume that its revenue and valuation also surpassed those numbers when adjusted for inflation around that time as well.

    General Electric entered radio and television, forming the Radio Corporation of America (RCA) in 1919 after purchasing the Marconi Wireless Telegraph Company of America. RCA was used to sell radios. In turn, RCA formed the National Broadcasting Company (NBC) in 1926. By 1930, General Electric was ordered to divest itself of RCA due to antitrust violations. This would not stop General Electric from diversifying into other industries.

    The company entered the energy industry, developing aircraft turbo superchargers for military use during World War I and World War II. By the 1960s, they had also diversified into computers, even helping to create the Multics operating system in conjunction with the Massachusetts Institute of Technology (MIT), one of the most prestigious research universities in the world. In 1970, they exited the computing industry, despite being the second-largest user of computers in the United States outside of the United States federal government.

    General Electric reacquired RCA in 1985, specifically to bring back NBC. This USD6.28-billion deal was the largest non-oil acquisition in business history at the time. The 1990s and 2000s had many acquisitions and divestments, too numerous to list here. General Electric was considered the most valuable company in the world in 2000. By 2018, Dow Jones removed General Electric after 122 years from its index. However, the company continues to be in business to this very day due to brand recognition and diversification from its original business.

    Not every startup can become General Electric, but it helps to be one of the best inventors and businessmen of the era partnering with some of the world’s wealthiest people. Many recognizable products and services you use today were once provided by startups. Since business is ever-evolving and consumers’ needs are always changing, who knows what startup could succeed in the future?

    Words by Jose Alvarez
    Also published in GADGETS MAGAZINE March 2023 Issue

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