The Origins of the Ball Point PenThere are times when failure is almost inevitable because the product or service introduced is so simple that imitation is all but invited. There are some such inventions, however, that in the hands of a superb businessman could be identified with his company. The safety razor is one such invention, which in the hands of King Gillette became identified with his company, and the same is true for soaps, toothpaste, breakfast cereals, and many others. More often than not, however, this does not occur, but to my way of thinking, this is not a blunder from which we can learn. Such would be the case of the ballpoint pen. Mr. Reynolds is often portrayed as its inventor, if not that, its first important promoter.
Reynolds, who was born in Albert Lea Minnesota, in 1892, where his father was a threshing-machine salesman, was always seeking the main chance. After failing out of high school, he became an automobile salesman, and at the age of 20 was an independent tire dealer. Reynolds experienced great success in this business. By 1918 he was a millionaire, only to lose all of his money within four years. This was a preview of what was to come. During the next eight years Reynolds rode a roller-coaster, which resulted in three bankruptcies.
Reynolds moved to Chicago in the early 1920s, where he became a stock-market speculator and was wiped out in the 1929 stock-market crash. After two days searching for new business ideas he came upon a printing shop that sold commercial signs. He purchased the shop, intending to manufacture the equipment used in sign making, which he marketed as "Print-a-Sign." This was another of Reynolds’ successes, and he was liquid once more. He was nothing if not serendipitous. During World War II Reynolds engaged in several businesses, the most successful being the importation of silver cigarette lighters from Mexico, which earned him at least $500,000.
While on a business trip to Buenos Aires in 1945 Reynolds came upon an early ballpoint pen invented by Ladislas Biro, a Hungarian journalist. While ballpoint pens were new, the idea went back to 1888, when John Loud, of whom nothing is known but his name, patented a version but never went into production. A different kind of ballpoint pen was invented by Frank Klimes, a Czech, in the early 1930s and manufactured by him and another Czech, Paul V. Eisner. The first of these instruments, called the Rolpen, was produced and marketed in Prague in 1935. Their patent ran out during World War II, when Klimes was in a concentration camp.
Meanwhile Biro, who fled to Paris when Hitler invaded Hungary, met a Hungarian woman who was married to a wealthy Argentinean, who took an interest in Biro and his invention. When attempts to sell the patent rights to Philips failed, the trio went to Argentina and sold the rights to Henry George Martin, a British promoter, who then organized a company to manufacture the pen, which was called the "Eterpen." Some of them were turned out and given gratis to the United States government for distribution to servicemen. The pen was something of a novelty. Not only could it write on almost any service as well as under water, but it was leak proof, which made Eterpen a favorite with those who flew in military airplanes. The Biro interests licensed its patents for American production in Eversharp, Inc., and to Eberhard Faber in May 1945. Stories of the new pen were now featured in the press, but Eversharp and Eberhard Faber did not move swiftly into production.
Saying nothing to Biro or to Martin, Reynolds returned to the United States, where he had his attorneys study the Biro patent. It turned out that the Biro pens supplied the ink to the ball by means of capillary action. Reynolds developed a pen whose ink was delivered by gravity flow, which his attorney told him was different from the Biros, and so was patentable. He obtained a patent on this method and swung into production before the Biros interests could enter the American market.
Reynolds capitalized his company, Reynolds International Pen, at $26,000. He started production on October 6, 1945, turning out 70 pens the first day. Reynolds decided to market the pens through Gimbel’s Department Store in Manhattan, where they went on sale on October 29 for $12.50. The pens were an instant hit. Gimbel’s sold $100,000 worth in one day and then notified Reynolds that it would take all he could deliver. In the first three months Reynolds was able to sell two million pens through 60,000 retail outlets in the United States and 37 foreign countries, for total revenues of $5.7 million, with a net income of $1.6 million. Gimbel’s alone accounted for 100,000 of the sales. It was one of the most successful new product introductions in American history.
Stung by Reynolds’ success, Eversharp and Eberhard Faber moved into production in December, and their Argentinean-manufactured ballpoint pens to the United States in March, where they were sold as Biros at R. H. Macy & Co. for $19.95. This prompted Reynolds to seek a preliminary injunction against them for harming his sales. The injunction was denied, with Judge Paul Leahy concluding there were too many conflicting questions to act without a jury trial, and as a result, Eversharp and Eberhard Faber were able to market their new American-made Repeater Pen, in May 1946. Reynolds responded that he soon would introduce a second pen with an improved ink chamber that would permit it to write for four years without refilling.
Other companies also entered the field, which by the fall of 1946 showed signs of saturation. In February 1947 Macy’s was able to advertise the sale of a Reynolds pen, the Rocket for 98 cents, or three for $2.79. The next day Gimbel’s advertised the Rocket for 94 cents, or three for $2.59. The great ballpoint pen bonanza had ended.
Reynolds was undismayed. As legal threats faded and production slowed, he turned to other interests. In mid-1947 he announced that he intended to break Howard Hughes’s record of around-the-world flight of 91 hours and 14 minutes. Reynolds also claimed the flight was scientific in nature, since he intended to investigate rumors of mountains higher than Mt. Everest in Tibet.
Reynolds re-outfitted a surplus Air Force light-attack bomber and then teamed up with a veteran flyer William Odom to make the flight in 1948 in under 79 hours. At refueling stops along the way Reynolds mingled with well-wishers and distributed more than 1000 ballpoint pens. By then the pens were retailing for 39 cents.
Soon after his return Reynolds sold his pen business and returned to Print-a-Sign, manufacturing machinery and signs, butt more as a hobby than anything else. He soon dropped from sight.
Did Reynolds blunder? When I started out on my research I had second thoughts and decided to drop this chapter from the book. After reflecting on those episodes of business blunders offered, you might try to figure out how Reynolds could have succeeded better than he did with his ballpoints.
Robert Sobel, When Giants Stumble: Classic Business Blunders and How to Avoid Them, Prentice-Hall Press, 1999, p.p. viii-xi.
