Power Failure: The Rise and Fall of an American Icon - Hardcover

Cohan, William D.

Hardcover

ISBN 10: 0593084160 ISBN 13: 9780593084168

Verlag: Portfolio, 2022

Inhaltsangabe

NEW YORK TIMES BESTSELLER

The New Yorker Best Books of 2022 • Financial Times Best Books of 2022 • The Economist Best Books of 2022

The dramatic rise—and unimaginable fall—of America's most iconic corporation by New York Times bestselling author and pre-eminent financial journalist William D. Cohan

No company embodied American ingenuity, innovation, and industrial power more spectacularly and more consistently than the General Electric Company. GE once developed and manufactured many of the inventions we take for granted today, nearly everything from the lightbulb to the jet engine. GE also built a cult of financial and leadership success envied across the globe and became the world’s most valuable and most admired company. But even at the height of its prestige and influence, cracks were forming in its formidable foundation.

In a masterful re-appraisal of a company that once claimed to “bring good things to life,” pre-eminent financial journalist William D. Cohan argues that the incredible story of GE’s rise and fall is not only a paragon, but also a prism through which we can better understand American capitalism. Beginning with its founding, innovations, and exponential growth through acquisitions and mergers, Cohan plumbs the depths of GE's storied management culture, its pioneering doctrine of shareholder value, and its seemingly hidden blind spots, to reveal that GE wasn't immune from the hubris and avoidable mistakes suffered by many other corporations. 

In Power Failure, Cohan punctures the myth of GE, exploring in a rich narrative how a once-great company wound up broken and in tatters—a cautionary tale for the ages.

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A former Wall Street investment banker for seventeen years, William D. Cohan is the New York Times bestselling author of The Price of Silence, Money and Power, House of Cards, and The Last Tycoons, which won the 2007 FT/Goldman Sachs Business Book of the Year Award. He also wrote Four Friends: Promising Lives Cut Short and Why Wall Street Matters. He was a longtime special correspondent at Vanity Fair and is a founding partner of Puck, a new digital media venture. He writes often for the opinion pages of The New York Times and The Financial Times and he is a writer at large for AirMail. Over the years, he has also written for Bloomberg Businessweek, Fortune, The Atlantic, Institutional Investor, The New York Times, The Nation, and The Washington Post, among other publications. Cohan is a graduate of Duke University, the Columbia University School of Journalism, and the Columbia University Graduate School of Business.

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Chapter One

A Child of
Two Fathers

Ask most people about the origin of the General Electric Company in and around 1892, and you'll hear all about Thomas Alva Edison and his inventions-the carbon filament incandescent lamp, the dynamo, the phonograph, and the motion picture camera. But GE, and its extraordinary success after some initial financial hiccups, was actually more the doing of another restless entrepreneur, Charles Albert Coffin, whose visionary thinking and aggressive acquisitions drove the company forward in its early years. Coffin doesn't get nearly the accolades, or ink, of Edison, but it turned out that Coffin was by far the superior businessman, a gene Edison lacked. In any event, Coffin and Edison started out as competitors in the race to electrify America, but they soon joined forces and both of their powerful DNAs would become entwined in GE.

Born in December 1844, Charles Coffin grew up in Fairfield, Maine, north of Augusta, after his grandfather, a farmer, settled there at a time when the federal government was offering free land to people who would move to uninhabited wilds. Charles's grandfather was a minister of the Society of Friends, also known as the Quakers. After graduating from Bloomfield Academy in 1862, Charles moved to Lynn, Massachusetts, to live with an uncle so that he could attend a "commercial" school in Boston. That uncle was a partner in a shoe manufacturing company, Micajah C. Pratt and Company. When Pratt died in 1862, Coffin's uncle inherited the business and his nephew joined him there. At that time, Lynn was the center of the nation's burgeoning shoe industry, and Pratt's business was an important part of it. The industry was automating rapidly, with sophisticated machines replacing the artisans and craftsmen of an earlier era. Coffin quickly proved himself adept at shoe design. He then moved into sales and proved skilled at that task as well. He started making regular calls in the western United States. It turned out Coffin was a talented businessman. He "must have borne the hallmark of genius from the outset," John Broderick, a former colleague, wrote about Coffin.

In 1873, Pratt's shoe company was renamed Charles A. Coffin and Company for its leading executive. Coffin built a new plant by the railroad station in Lynn in order to snag customers as they were coming off the train, before they could venture farther into town to one of his competitors. The company thrived under Coffin and he soon began to consider other business opportunities. By the 1880s, new inventions like the telephone (1876) and the incandescent lightbulb (1880) were poised to create entirely new industries. There were fortunes to be made in high tech, and one such invention was sitting in Coffin's backyard.

The Lynn Grand Army Post, an armory in Coffin's hometown, was considering lighting its new building with one of the newfangled dynamo systems, a forerunner of the electrical generator. Dynamos were among the first commercially viable ways to generate the electricity used in manufacturing and, eventually, to light people's homes. Silas Barton, a local newspaper owner, and Henry Pevear, a local leather manufacturer, who were tasked with the project, noticed that the building had a rudimentary yet out-of-date six-light dynamo sitting in its basement. The name on the dynamo read "American Electric Co., New Britain, Connecticut."

Barton and Pevear set off for New Britain, where they hoped to meet with Elihu Thomson, a former Philadelphia high school teacher-turned-inventor, who had moved to Connecticut and founded American Electric. Thomson had partnered with Edwin Houston, his former physics teacher from Philadelphia's Central High School. Thomson and Houston together had built a number of electrical contraptions, including induction coils, an arc lamp, and a dynamo. Thomson showed the dynamo to a friend, who then invited a curious cousin to see a demonstration of how it worked. Thomson, then twenty-six, told the cousin he could build a better dynamo, "one that will run any number of lights you want." The cousin responded well to Thomson's idea: "Let's build a four-lighter. I'll stand the expense." Thomson installed his first souped-up dynamo in an all-night bakery. The next one was in a brewery. When the brewery later caught fire, one of the firefighters sent to douse the flames couldn't get over Thomson's dynamo. "What the dickens kind of a light is that?" he said. "You pour water on her and she won't go out."

But as is the case with start-ups (then and now), Thomson and Houston were in need of capital; their initial venture together was in the process of fizzling out. When they came to Lynn to install the armory's new generator, the newspaperman and the leather manufacturer put them together with Coffin to discuss the possibility of Coffin injecting fresh capital into American Electric Co. and moving it from Connecticut to Massachusetts. On February 12, 1883, the newly recapitalized American Electric Co. opened for business in Lynn, Massachusetts, under a new name, the Thomson-Houston Electric Company. Coffin had bought out the inventors' old investors and was now in the process of recapitalizing and retooling their power and lighting company for the future, under his control.

There was one small hitch. Unlike with the shoe business, Coffin now found himself leading a business without a market. Broadly speaking, there were few customers for an electrical power company in 1883. It's hard to imagine today, but there were no grids to deliver electricity to homes and businesses; there were few, if any, electric appliances and it was a serious challenge to convince consumers that electric light was preferable to whale oil or candles. What if the whole contraption exploded? Or went up in flames? Out of necessity, the Thomson-Houston sales force became proselytizers, fanning out across the country to share the powerful message of arc lamps and electric light. The company had to teach its engineers how to install and to operate the equipment. At times, it was a hard sell, in the same way that getting people to use the internet was not so easy at first.

This thirst for customers led to the creation of local power and light companies, backed by wealthy investors and supported by local governments eager to provide the new technology to their citizens. "Mr. Coffin and his associates set out to sell electricity," The New York Times reported. "Their main objective was to get electricity to the people. They began establishing power plants in every place possible, where people could make use of it simply by connecting up."

The company eventually moved into a new three-story building on Western Avenue in Lynn. The new building had so much space at first that Pevear, the leather manufacturer, wanted to use some of it to dry his animal skins. But the new electricity business was a big success, nearly immediately. Growth was swift. In 1884, the new venture was supplying electricity to five central stations with 365 arc lamps. A year later, there were thirty-one stations supplying 2,400 arc lamps. Business was booming in part because of a decision to use electricity to power streetcars. The horse-driven commuter systems had to go, and the electric streetcar system that the company built connecting Boston to Lynn, some ten miles away, helped put it on the map by 1888.

Coffin had an interesting approach to raising the capital he needed. Rather than approach friends and family, as was more typical, he preferred to put together a constellation of what he dubbed "men of large means." Some of his earliest investors read like a who's who of Boston Brahmins: Henry L. Higginson, an investment banker and the founder of the Boston Symphony Orchestra; S. Endicott Peabody, a merchant and father of the founder of Groton School (his great-grandfather, Joseph, one of the wealthiest men...

Details zur Ausgabe

• Verlag: Portfolio
• Erscheinungsdatum: 2022
• Sprache: Englisch
• ISBN 10: 0593084160
• ISBN 13: 9780593084168
• Einband: Gebundene Ausgabe
• Anzahl der Seiten: 816
• Kontakt zum Hersteller: Nicht verfügbar
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