Writing lies at the foundation of modern society.
It is a technology that few of us think about, and today, we will explore the company behind
the pen, BIC.
Before the advent of metal pens, the western world's writing instrument of choice was
the quill.
Finding bird feathers wasn't very hard, and ever since 600 AD that's how most writing
was done.
Once the Industrial Revolution got underway, improved metallurgy and mass production techniques
resulted in the dip pen.
It was essentially a metal nib mounted on a handle; it could barely hold more ink than
a quill and it's practical use was about the same.
The first truly practical pens appeared at the end of the 19th century.
They are what we call fountain pens, and the innovation behind them was that they had a
reservoir of ink inside.
The first commercially successful fountain pens were built in 1884 by this guy, Lewis
Waterman.
He was originally an insurance broker, but one day when signing a very important contract,
the prototype fountain pen he had bought for the occasion broke and leaked ink on the whole
document.
This accident eventually resulted in the deal getting cancelled and Waterman losing his
job.
Making the best out of a bad situation, Waterman decided to build a better fountain pen, and
it was his design that truly made fountain pens the dominant writing instrument of the
next half century.
It wouldn't be until the 1930s that fountain pens would finally meet their match.
The man responsible for that was Laszlo Biro, a Hungarian journalist.
He had noticed that the ink used in newspaper printing dried quickly, leaving the paper
dry and smudge-free.
When he tried using the same ink in a fountain pen, however, it wouldn't flow into the
tip because it was too viscous.
After seven years of trial and error, Laszlo developed a new tip for his pen consisting
of a ball that could freely rotate in a socket.
As the ball ran along the paper, it would siphon ink from an internal cartridge and
spread it out evenly.
What Laszlo had created was the ballpoint pen, but the timing of his invention was a
bit unlucky.
As Hungarian Jew, Laszlo was well aware of what was happening in Germany, and so in 1938
he packed his bags and moved to Paris.
While there, he got the lucky chance of meeting the president of Argentina, Agustín Pedro
Justo.
He was so impressed by the ballpoint pen that he told Laszlo to emigrate to Argentina, which,
of course, he did, as he wanted to be as far away from Germany as possible.
Once in Argentina, Laszlo set up a company for his pens and by 1943 he was selling them
to His Majesty's Royal Air Force in the UK.
This first generation of ballpoint pens wasn't perfect, however; the metal case was prone
to leaking and the ink would often clog.
Most of Laszlo's non-government clients ended up returning their pens, which drove
his company to the brink of bankruptcy.
To keep the company afloat, Laszlo resorted to selling the rights to his pen in Europe
and in the US.
The man who bought the European rights to the ballpoint pen was a Frenchman, Baron Marcel
Bich.
He had entered the pen business in 1945, when he had bought a damaged factory on the outskirts
of Paris and used it to start making fountain pens.
Marcel fell in love with the ballpoint pen, and in 1950 when he heard that Laszlo was
selling the patent, he threw $2 million at Laszlo to get it.
With the patent in hand, Marcel used his considerable resources to acquire plastic and precision
stainless steel technology from Switzerland.
Now, keep in mind, plastic was still a very new invention in the early 1950s and it had
only been commercialized a few year prior.
The shaping machines Marcel bought were cutting edge for their time, capable of shaping metal
down to 10 micrometers.
The design of Marcel's pens was as simplistic as it was brilliant:
The pen's barrel was shaped similarly to a pencil, making it very hard to roll off
a table, and since it was made of transparent polystyrene, it was easy to see when you were
running out of ink.
What truly made Marcel's endeavor successful, however, was his understanding of economies
of scale.
You see, the pens that Laszlo sold were very expensive, and although they were vastly superior
to fountain pens, it was very hard to justify spending the equivalent of one week's wage
for one pen.
Marcel, however, streamlined his production and bought everything in bulk, allowing him
to sell his pens for a fraction of the cost: only 50 centimes, the equivalent of 18 cents
in the US.
Marcel's initial plan was to sell the pens under his family name, but once people told
him how English speakers were pronouncing it, he decided to drop the H.
Thus, in 1950 he established Societe BIC and began flooding France with his trademark pen,
which he called the BIC Cristal.
Unsurprisingly, the pen was an instant hit, surpassing everything on the market both in
terms of quality and price.
Within 3 years, Marcel was selling 40 million pens annually.
He could barely keep up with the rising demand and so he started opening subsidiaries left
and right: by 1954 he was operating across Western Europe,
and just two years later his pens were also sold in South America and Africa.
Marcel didn't enter the US market until 1958, and he did so in a very interesting
fashion.
Remember our friend Lewis Waterman?
He was the insurance broker who started making fountain pens in the late 1880s.
The company he had started was now the largest manufacturer of fountain pens in the US, but
the ballpoint revolution had left them near bankruptcy.
To gain a foothold in the States, Marcel offered to buy Waterman and he did so for $1 million.
He repurposed most of Waterman's factories to make ballpoint pens, and he kept the fountain
pen division as a luxury brand, which is still around to this day, although as a separate
entity.
In 1961 French artist Raymond Savignac created the BIC Boy, which has remained a part of
the company's logo ever since.
That year the company replaced their stainless steel ballpoints with much harder tungsten
carbide, which they still use today.
By the end of the 1960s BIC pens were sold on every inhabited continent, and Marcel was
looking for other products to add to his arsenal.
In line with his philosophy, he needed something cheap and disposable that people would use
every day: a pocket lighter turned out to be the perfect candidate.
Much like with the ballpoint pen, Marcel's affordable lighter outperformed all available
alternatives and was capable of producing 3,000 flames over its lifetime.
Its release in 1973 was met with universal acclaim and today lighter sales make up over
35% of the company's revenue.
Just two years later Marcel found another market he could conquer.
In what was essentially a declaration of war on Gillette, BIC released a disposable safety
razor in 1975.
They heavily undercut Gillette and have been a thorn in their sides ever since.
Although BIC have had a hard time outcompeting Gillette, razor sales are still a big chunk
of their business, making up almost 24% of their sales today.
As a lifetime watersports enthusiast, Marcel established BIC Sport in 1979, which made
windsurf equipment and sailboards.
Although BIC Sport is still around today, it is a very minor part of the company and
it hasn't been very successful.
Marcel's future endeavors, however, would fare even worse.
A few months after starting BIC Sport, Marcel decided to enter the clothing market by purchasing
Guy Laroche from its founder for $10 million.
At first the deal seemed great, but with the legendary fashion designer in failing health
and incapable of making new designs, the fashion company soon became unprofitable.
When Guy himself died in 1989, things became even worse after a series of failed successors.
Marcel was also getting pretty old at that point and was starting to make mistakes, like
when he tried to enter the perfume market in 1989 and failed so miserably, that he scrapped
the whole line of perfumes just two years later.
Marcel died in 1994, and his son Bruno took up the reigns to fix the company.
His first move was to strengthen BIC's hold on the pen business by buying Wite-Out and
Tipp-Ex, the two largest correction brands in the world.
He sold the unprofitable Guy Laroche in 2001, and it eventually ended up in the hands of
a Chinese company.
Since then BIC has tried to venture into the realm of consumer electronics by selling mobile
phones, tablets and hydrogen fuel cells, but the results have been lackluster at best.
Even today, their most successful products are Marcel's original trifecta: pens, razors
and lighters.
In fact, just in 2016 BIC sold 7 billion pens, 2.5 billion razors and 1.5 billion lighters.
If time has shown anything, it's that the company's success lies in the simplicity
of their products and judging by their failure to profit from anything more complex than
a ballpoint pen, they would do well to continue honoring Marcel's legacy.
Thanks for watching!
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full Behind the Business playlist for the interesting stories of other big companies.
Once again, thanks a lot for watching, and as always: stay smart.
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